Obama's Tax Increases: Heralding The Beginning Of The Second Great Depression

Are you ready for double-digit unemployment and double-digit inflation rates? We haven't seen that since Jimmy Carter. But, they are on their way here again.

Barack Obama's tax-and-spend liberal policies are the same exact policies that Jimmy Carter tried and the same exact policies that took us into the recession of late 70's/early 80's. We got out of that recession by cutting taxes and letting the American economy grow.

Only this time, Obama's policies are Carter's policies on steroids. The results are going to be even more catastrophic than Carter's, and those of us who remember 1979 know exactly how catastrophic they were. It was the first time since the Great Depression that we has a misiery index over 20. (Misery index = inflation rate plus unemployment rate.)

Here is what Barack Obama wants to do to our economy according to Jake Tapper of ABC News:

President Obama's budget proposes $989 billion in new taxes over the course of the next 10 years, starting fiscal year 2011, most of which are tax increases on individuals. 1) On people making more than $250,000. $338 billion - Bush tax cuts expire $179 billlion - eliminate itemized deduction $118 billion - capital gains tax hike Total: $636 billion/10 years 2) Businesses: $17 billion - Reinstate Superfund taxes $24 billion - tax carried-interest as income $5 billion - codify "economic substance doctrine" $61 billion - repeal LIFO $210 billion - international enforcement, reform deferral, other tax reform $4 billion - information reporting for rental payments $5.3 billion - excise tax on Gulf of Mexico oil and gas $3.4 billion - repeal expensing of tangible drilling costs $62 million - repeal deduction for tertiary injectants $49 million - repeal passive loss exception for working interests in oil and natural gas properties $13 billion - repeal manufacturing tax deduction for oil and natural gas companies $1 billion - increase to 7 years geological and geophysical amortization period for independent producers $882 million - eliminate advanced earned income tax credit Total: $353 billion/10 years

Several things to notice here:

1. Look at all the new taxes on oil and gas companies. How high do you think the price for a gallon of gas will go? How badly do you think that will affect low and middle income families? It is not only the gas that will go up in price but anything that has to be transported will go up in price as well. That includes food, clothing and any other consumer commodity that must be transported by ship, truck or rail.

2. The total revenue on these new taxes is $989 billion. That doesn't even cover the porkulus/spendulus bill (1.3 trillion total in spending and interest) and represents only about half of Obama's proposed $1.75 trillion deficit! Who among you really believes that the Dems are going to stop their tax-and-spend orgy at people making more than $250,000 per year? How long before the proposed new taxes extend downwards towards people making $100,000 per year, or $75,000 per year or $50,000 per year? I'm betting months.

I have historical fact on my side for that last assertion. In 1992, Bill Clinton promised that his new taxes would not affect anyone making less than $90,000 per year. After they added up all the numbers, a new tax law was passed through Congress which levied new taxes on people making as little as $36,000 per year. So much for unkeepable promises.

These new taxes will mark the beginning of the Second Great Depression, just as Smoot-Hawley heralded the onset of the First Great Depression.

When all is said and done, the Democrats will only have themselves to blame for the coming financial disaster, but you can be certain they will be trying to pass the blame off on someone else.

You can access the complete entry on-line here:

Obama's Budget: Almost $1 Trillion In New Taxes Over Next 10 yrs, Starting 2011
Jake Tapper
ABC News
February 26, 2009

A Letter To Virginia Senators Warner And Webb, And Representative Wolf

Another bailout? Another failure in the works? Why won't Congress learn?

If you are from Virginia, feel free to copy this letter and send it in:

Dear [Congressional Representative], I am writing this letter to ask you to vote “Nay” on the proposed bailout of the Detroit “Big Three” automakers. While it is true that the American economy has been in a recession since last December, it is also true that we cannot kick-start it by placing yet another burden on the children and grand-children of the American taxpayer, especially a burden of a program that is doomed to failure. As a case in point, I show you the $700 billion bailout of Wall Street that was supposed to fend off a market crash. Not only was that bailout a complete and total failure, but it saddled a $905 billion debt on our children and grand-children. And even beyond that, the pork that existed in that bill was nothing short of unpardonable. After all, those toy wooden arrows, wheat research grants and subsidies for Puerto Rican rum didn’t do a damn thing to shore up the markets. And now, the Federal Government wants to make the same mistake again, only this time with Detroit. There comes a time when you simply must let a business fail. Detroit has reached that time. The legacy costs they have incurred over the years are too much for them to overcome and certainly not worthy of the hard-earned dollars that the American taxpayer will be forced into paying for them. As a case in point for this, I show you the Jobs Bank program that the United Auto Workers negotiated with the Big Three. In this program, workers are literally paid not to work. How long can any business maintain such a ridiculous policy? It is true that there is talk of “suspending” this program, but that won’t help since it means the program could come back and force more legacy cost on the automakers. It needs to be killed completely along with several other concessions to the UAW that have contributed to the legacy costs that are right now killing Detroit. The best way to fix the problem is to allow the Big Three to go into Chapter 11 and re-organize. This is the most viable option as is evidenced by the other big automakers in the United States who have plants in California, Tennessee and South Carolina. None of them are in trouble nor are they asking for any kind of bailout nor are they beholden to any labor unions. If the Big Three want to survive, they should look to Toyota, Honda and BMW as models for restructuring. One last point I want to make. Small businesses all over Virginia are in danger of failing due to the bad economy. Hairdressers are losing business because people don't have the money to get their hair done as often. Garages are losing business because people are putting off auto repair for as long as possible. Painters, plumbers and carpenters are losing business because people are putting off home repairs as long as possible. But despite the fact that small businesses here in Virginia are in danger of failing, no one has been proposing a government bailout for us. Please apply that same standard to Detroit. Thank you.

The FairTax Can Fix The Recession

A good, short essay about how the FairTax would fix the recession we are sliding into right now. Full text here:

Instead of borrowing money from China to pay a "rebate" to American taxpayers, the FairTax makes America THE "offshore" investment magnet for the world. We have lost more than 12 trillion dollars of American capital to offshore locations in recent years. That money, jobs and a whole lot more capital will flow here when we have eliminated the corporate income tax, capital gains taxes and personal income taxes. And as long as we're counting wasted money, tax preparations, hours spent on returns, tax lawyers and accountants cost our economy $265 billion annually. To that figure add the $350 billion the income tax system comes up short on taxes owed every year. My goodness, that wasted money is coming close to the size of a stimulus package. Our tax system is damaging the American economy because the tax writing process is not about the economy--or taxpayers. It is all about Members of Congress having the power to reward friends and contributors, punish opponents and inept attempts to manipulate citizen behavior through the tax code. Add to that the profit motive of of thousands of tax lobbyists and you end up with 67,500 pages of tax regulations and a system that rewards debt over wealth, encourages cheating and mistakes, and has enough gimmicks to feed an army of academicians, tax lawyers and lobbyists who study the arcania. For Pete's sake, we've turned the CPA profession into seeing eye dogs leading us through the maze of tax regulations instead of a profession skilled at helping us grow our savings and investments. Can the American people escape being victimized by the self-interest of Congress and force enactment of the FairTax? The question is really whether the citizenry can still direct the government, as the Founding Fathers envisioned. In this, the FairTax idea, now widely distorted by those who profit from the income tax system, is more than a better tax system--it is a test of whether our form of Democracy still works hundreds of years after our first tax revolution. Ken Hoagland FairTax National Communications Director

You can access the original essay on-line here:

The FairTax Fixes The Recession
Ken Hoagland
FairTax.org
January 31, 2008

Economic Freedom: What Does It Really Mean To Us?

TownHall Chairman Doug Wilson has a good one for us today. In a nutshell, he tells us that without economic freedom, we will have no freedom at all. But how do we lose this "economic freedom?" Higher taxes means less freedom. More government spending means less freedom. More government regualtion means less freedom. If it seems like the government that has pledged to protect our freedom is the one entity that is destroying our freedom, then you have not misread anything I've written.

From Mr. Wilson's column:

More than at any time in recent memory, troubled citizens want the government to address their most basic problems. Whether it’s healthcare, the economy or the mortgage crisis the common thought process seems as follows: “I have a problem. What is the government going to do about it?” This is a dangerous, if slightly understandable impulse—and it is one that Washington does nothing to curb. Consider, for example, that Washington’s response to the current economic slowdown consists largely of tax rebates despite the fact that supply-side tax cuts would do more to stimulate the economy by incentivizing work and investment in a way that a check-in-the-mailbox never will. But a rebate, of course, reinforces the notion that government gives and takes as it pleases, and that it can and will cater to the needs of its increasingly dependent citizens.

What we need more than anything else from our government is for them to get out of our lives and out of our pockets.

The Heritage Foundation and the Wall Streel Journal have a joint venture known as the "Index of Economic Freedom." I referenced this index regarding Great Britain in a previous blog entry here:

A Hidden Tax On New Cars, NY Times Lies About Veterans And Great Britain Is "Mostly Free"
84rules
January 17, 2008

Mr. Wilson looks at few categories the Index takes into account:

Investment The United States scored 80 out of 100 in the Index’s category of investment freedom, tied with four other nations in second place. According to the Index, the U.S. received points because it does not require foreign investors to register with the federal government, nor does it restrict the purchase of real estate on a national level. The U.S. lost points, however, because of its restrictions on foreign investment in banking, mining, defense contracting, certain energy-related industries, fishing, shipping, communications and aviation. While the U.S. allows for relatively free investment, it should move to ease some of these restrictions in order to expand investment opportunities. Spending Last year, U.S. government expenditures equaled 36.6 percent of gross domestic product. Thus, the U.S. rates 59.81 in the Index’s rankings for size of government; that’s fully 35 points behind Hong Kong, the most economically free nation in the world. Despite the severity of the problem, excessive spending has long been a concern limited mostly to political junkies and economists. No more. In an increasingly global and competitive economy, the U.S. must reduce its spending in order to limit public debt and foster private enterprise. Business Climate The Index confirms what many enterprising individuals have long known: America is a great place to do business. Accordingly, the U.S. received a 91.7 rating for business freedom. These high scores result, in part, from the fact that business owners are largely free to launch, maintain and close businesses with impunity. Across the globe, it takes an average of 43 days to start a new business. By contrast, one needs an average of only six days to start a business in the U.S.

As things stand now, the United States is ranked #5 on the list of economically free nations. But as always, such rankings are precarious and can be upset with the slightest change in policy.

Read on:

[A]s Thomas Jefferson put it, “the price of freedom is eternal vigilance.” One way we can remain vigilant in the protection of our economic freedom is to support the extension of the Bush tax cuts. Indeed, my friend Ed Feulner, president of the Heritage Foundation, has noted that if the Bush tax cuts are allowed to expire in 2010, the U.S. will almost certainly fall from its position among the five most economically free nations in the world. Ultimately, true economic freedom stands in stark contrast to the populist instinct to encourage government meddling in the economy. In light of this, our duty this political season is clear: We must demand nothing less from our candidates than full support for true economic freedom for all Americans.

In a Capitalist society, freedom isn't just about being able to take your family on vacation to Disney World every year. It's about having the power to make autonomous decisions in your life. To choose which doctor you want to see, to choose which job offer you want to take, to choose where you want to live, to choose what car you want to buy, to choose what you want to eat, to choose how many children you want to have.

But all of those options come from having the economic power to make choices. Higher taxes, more government spending and more restrictive regulations reduce our economic freedom and unjustly limit our choices. We already know that a major economic recession is heading this way at full steam. How should we deal with it when it gets here?

Just something to think about as we head into the 2008 election year.

You can access the complete article on-line here:

No Freedom Without Economic Freedom
Doug Wilson
TownHall.com
January 28, 2008

Oil Prices Down For Fear Of Recession, Rupert Murdoch Against The NY Times, GOP Takes On Earmarks, And Malaysia Goes After Christians

Lots going on today as "Black Tuesday" rolls onward. Markets around the world slid yesterday on fears of a U.S. recession. Our markets were closed due to the MLK holiday but opened to expected losses, until the Fed cut interest rates by three-quarters of a point and now the market is on the rise again. I'm not sure how well that is going to play out since I am not an economist, but do I seem to recall that slashing the rates like that devalues the dollar which in turn leads to higher prices for us abroad.

That means that foreign markets will be losing confidence in the U.S. economy and it is already showing.

Here are the market indices from Asia yesterday:



But we've also found out that the price of oil is going down. Many people will see that as a positive sign, but I think it is a portent of more troubles ahead.

From the Associated Press:

Oil futures dropped sharply Tuesday on mounting concerns that the U.S. economy may be heading toward a recession that would dampen demand for crude. While the Federal Reserve’s interest rate cut helped crude futures recover some of their earlier losses, many investors doubt the move will stave off a serious slowdown. “Whenever you see a rate cut of that magnitude between (Fed) meetings ... it conjures up images of desperation,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Ill. ... High energy prices also have been cited as a force pushing the economy toward recession. If oil prices continue to fall, as many analysts now expect, that could relieve some pressure on the economy. At the pump, gas prices have mostly fallen in recent weeks after rising sharply earlier in the month as oil set a new record above $100 a barrel. Overnight, the average national price of a gallon of gas held steady at $3.01 a gallon, according to AAA and the Oil Price Information Service. But prices have fallen 2.3 cents a gallon since Friday. Other energy futures also fell Tuesday. February heating oil futures dropped 4.74 cents to $2.46 a gallon on the Nymex, while February gasoline futures fell 4.59 cents to $2.2575 a gallon. February natural gas futures dropped 17.6 cents to $7.817 per 1,000 cubic feet. In London, Brent crude futures for March delivery fell 4 cents to $87.47 a barrel on the ICE Futures exchange.

Did you get all that? Although it looks like prices are trying to stabilize themselves in the free market, the truth is that this is a sign of decreased spending potential and decreased amounts of capital in the overall economy. That will lead to higher unemployment and then to a recession.

Get ready. It's coming. (But, I really do hope I am wrong.)

You can access the complete article on-line here:

Oil Prices Sink On Fears Of A Recession
Associated Press via MSNBC
January 22, 2008

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Ed Lasky at the American Thinker gives us some great scoop on Rupert Murdoch and his plan to unseat the New York Times as the nations' "newspaper of record." Given how poorly the Times has been managed over the last few years, it shouldn't be hard for Mr. Murdoch to accomplish.

From Mr. Lasky's column:

Legendary media baron Rupert Murdoch has just completed his purchase of the Wall Street Journal - a paper that also enjoys nationwide reach, but one that has heretofore focused on the world of business. Change is afoot. Murdoch is a man who makes no "small plans"; he makes "big plans". ... Murdoch's goal is to transform the Journal into a rival of the Times, and then surpass it, making the Journal the nation's preeminent general interest newspaper. Given Murdoch's history, zeal, resources and talents -- all qualities sadly lacking in the fourth generation of Sulzbergers, as symbolized by Pinch -- the Times will be toppled. The downfall of the Times was almost pre-ordained once family members placed Pinch Sulzberger in control of the paper. He had no real world experience to prepare him to lead the Times. He had two brief sinecures working for other companies (he was a reporter with the Raleigh Times and the London correspondent for the Associated Press) before joining the family paper. Once he was "promoted" to be both the publisher and Chairman of the Board (duties that many believe should be divided between two people for ethical as well as business reasons), he was uniquely positioned to do double the damage to the paper. And damage he has done. Indeed, his greatest "accomplishment" seems to be his ability to drive the paper and his extended family fortune into the ground. ... One can envision something of what the future will bring when the Wall Street Journal enjoys all the benefits that other parts of News Corporation will provide. As it is transformed into a paper geared toward all the American people, features that are developed at other Murdoch properties can be easily "parachuted" into the printed pages of the Journal. Entertainment news? No problem. News Corporation has wonderful connections via its Twentieth Century Fox operations. More religious coverage for an increasingly religious America? News Corporation recently purchased Belief.Net, a key website for people who want to better understand their faith (an acquisition that would be unlikely to pass muster at the religiously secular New York Times). More local news, more international news? Easy access with ownership of over 100 newspapers around the world and Fox radio and TV outlets throughout America. The News Corporation can be its own in-house Associated Press combining the people in place with the wherewithal to put even more of them in place) to report from outposts around the world.

In short, look for the Wall Street Journal to supplant the NYT in the years ahead.

Think it can't happen? Notice that the New York Post, also owned by Murdoch, already has a larger circulation in New York City than the Times has.

You can access the complete article on-line here:

Toppling The Times: Rupert Takes On Pinch
Ed Lasky
The American Thinker
January 21, 2008

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During the 2006 Congressional midterm campaigns, the Dems loudly proclaimed that they would put and end to Congressional earmarks. But alas, they've done no such thing. According the Jed Babbin at Human Events:

The process of earmarking -- despite conservatives’ efforts this year and Democratic leadership promises to the contrary -- was kept concealed from the public’s view last year. Congressmen such as John Murtha (D.-Pa.) -- the uncrowned king of earmarks -- have fought successfully against disclosure because they do not want any accountability for what most observers agree is the waste of billions of tax dollars. Now, a small group of Republican House conservatives is planning a move that could force reform on House Democrats and the Senate. These conservative members -- including Representatives Jeb Hensarling (Tex.), Mike Pence (Ind.) and Jeff Flake (Ariz.) -- are planning a major initiative against congressional earmarks on which they will try to get conference-wide agreement at the Republican retreat scheduled for Wednesday through Friday of this week at the Greenbrier Resort. According to a congressional source, the conservatives plan to ask the entire Republican House Conference to agree to a yearlong moratorium on earmarks.

Will this plan work? Jed goes on:

The impact of this moratorium could be significant. First, it would demonstrate the commitment of House Republicans to real reform of how the peoples’ money is spent. Second, if it is followed by the appointment of Flake to the Appropriations Committee, it would be, in the words of our source, “putting our fox in the henhouse.” The source also said that the House GOP meeting at which committee members will be chosen was, only last Thursday, postponed until after the retreat, which opens the window of opportunity wider for the conservatives’ move. If the conservatives succeed in obtaining agreement to the moratorium and then in getting Flake on the Appropriations Committee, the Democrats will be under enormous pressure. They will be Flake’s only targets.

Sounds good to me! Looks like someone on the GOP side of the ailse finally got some brains and a backbone to go with them. I, for one, will be very anxious to see how the Dems respond if the GOP can actually get this plan into place.

You can access the complete column on-line here:

House GOP Prepares One-Two Punch On Earmarks
Jed Babbin
Human Events Online
January 22, 2008

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And finally, we have more disturbing news coming out of an Islamic dominated nation. (Are you really surprised by this?) Malaysia is confiscating Christian Children's books because they violate Sharia Law. From the Washington Times:

Malaysian authorities confiscated Christian children's books, claiming the illustrations of prophets such as Moses and Abraham violate Islamic Shariah law. The independent news agency Malaysakini reported the Internal Security Ministry confiscated the literature from bookstores in two cities and one small town in mid-December. ... The Rev. Hermen Shastri, general secretary of the Malaysian Council of Churches, confirmed the report and accused the government of persecuting Christians. "The officials have offended the sensitivities of Christians because their publications and depictions of their Biblical personalities have now become targets of unscrupulous Muslim officials bent on curtailing religious freedom in the country," Mr. Shastri said. "Immediate steps should be taken to amend administrative rules and regulations, especially in the Internal Security Ministry, that give a free hand to enforcement officials to act on their whim and fancies," he said. Christians, Hindus and other religious groups in Malaysia say they are increasingly being targeted as the nation gradually cedes jurisdiction to Shariah courts.

Tolerance? Diversity? Religion of peace? Hello?

You can access the complete article on-line here:

Malaysia Seizes Christian Books
Elizabeth Eldridge
The Washington Times
January 22, 2008

Are Polls Worth Anything? And A Recession On the Horizon?

It is damn near impossible to turn on a TV news show, or pick up a newspaper or magazine without hearing or reading the words "According to the latest poll ..." I get sick and tired of it for the simple fact that no one from Gallup or Rasmussen or Zogby has ever polled me. Nor have they ever polled any of my friends or family.

What gives? We are average people with average lives. Aren't we the very type of people that the polls claim to represent?

Well, yes, but the polls almost never reflect our views. Why?

Because polls can be manipulated and twisted, that's why.

Writing for Human Events Online, Timothy P. Carney has this:

Pollsters don’t just call a random, representative sample of the electorate and tally up their responses. They make many assumptions: how many independents will vote, who counts as a “likely voter,” how many seniors will vote, and so on. If the pollster’s sample has 15% senior citizens, but he estimates that seniors will comprise 20% of the electorate, he will weight his results. There’s tons of guessing and tweaking. A couple of tweaks in the wrong direction, and you’ve got the wrong guy winning.

And it is not just the guesswork that should be questioned, it is the geography of the demographics as well. For example, if I took a poll of 5000 inner-city residents across the United States, I could rightly claim that it was a nationwide poll. But did the results actually reflect the nation as a whole? Not likely.

Thus, it can clearly be seen that Carney's most profound observation is right on the mark: Polling is an art, not a science.

Carney also offers three pieces of advice, of which the first is most important:

Basically, don’t trust polls.

You can access the complete article on-line here:

Why The Polls Were Wrong In New Hampshire
Timothy P. Carney
Human Events Online
January 14, 2008

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I know, most people don't like to talk about a slowing economy if they can avoid it. In fact, back before the big crash of 1929, people absolutely refused to listen to any naysayers who would question the strength of the U.S. economy during the 1920's. Well, they got a pretty big shock on Black Thursday (or Black Tuesday depending on when you think the Great Depression kicked off).

Irwin M. Stelzer, writing for the Weekly Standard has a few observations about the current market trends:

Economists and analysts are rushing to revise their 2008 forecasts, and journalists are competing for page one placements with scary stories about evicted homeowners sleeping in the streets, and consumers filing for bankruptcy. Western singer Kris Kristofferson did not have fallen CEOs and other investment bankers in mind in mind when he sang about the man who "Once ... had a future full of money, love, and dreams, which he spent like they was goin' out of style," but it is an apt description of many shell-shocked bankers and investors. They have reason to worry. Oil finally hit $100 per barrel, sending share prices tumbling, gold prices soaring in anticipation of renewed inflation, and developing nations deeper into poverty. Food prices continue their upward trajectory and, combined with gasoline prices that are due to break new records, are reducing consumer discretionary-spending power to a mere shadow of its former self. Latest surveys suggest that even soaring exports will not keep the U.S. manufacturing sector from slowing down, with falling sales of autos a particular drag. So desperate are dealers to clear inventory-laden lots that one has taken out a magazine ad offering 12-year financing to anyone who thinks he can afford the gasoline guzzled by one of the Rolls Royces sitting on his lot. Most important, last month the unemployment rate soared from 4.7 percent to 5 percent, with more industries losing than gaining jobs.

I think there is reason for concern. So, one of my New Year's Resolutions is to have a nice long talk with my financial advisor and figure out a strategy. No, I am not going to do any kind of advertising here. I am simply offering the advice that now is the time to start thinking about a major economic downturn and how to ride it out.

More:

We know, too, that as the greenback depreciates in value, foreign central banks are less and less inclined to keep stores of pictures of American presidents in their vaults, and more interested in diversifying their currency holdings. The dollar's share of central banks' holdings of foreign reserves has fallen from 66.5 percent to 63.8 percent in the past year. Equally important, oil-producing nations, which until now have accepted dollars-for-crude, and have pegged their currencies to the dollar, are finding it increasingly difficult to hold to that policy. The dollars they are getting, which they use to pay the large foreign workforces on which their work-shy citizens rely, buy less and less when remitted to the wives and families of these workers. That is causing social discontent of the sort that horrifies the ruling classes in the Arab countries. My guess is they will begin pegging their own currencies to a basket of currencies that includes the dollar, but in which the euro is importantly represented. A negative impact on U.S. influence in the region is one possible consequence.

And that all points to trouble. Now, the U.S. economy will survive but how well individual citizens weather the storm will depend on who takes the situation seriously.

You can access the complete column on-line here:

Uncertainty Reigns
Irwin M. Stelzer
The Weekly Standard
January 8, 2008