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Genuine Trumps Gimmick

The failure of Barack Obama to comprehend the financial crisis, let alone deal with it effectively, is crumbling the façade of his competence as President. His minions, as a result, are going through the classic first stage of grief and loss, the stage of denial. That denial is performed through their ludicrous comparisons of Obama to Ronald Reagan, as if the blundering and desperate moves by the present President can be said to be reasonable and prudent, let alone considered the equal of Reagan's leadership. To understand why the comparison is not valid in any sense, we must consider the nature and causes of the two presidents' economic environments.

Ronald Reagan and Barack Obama each inherited a recession when they came to office. That's not unusual, though - Presidents Kennedy, Ford, and Bush also inherited recessions when they arrived at the White House, and in fact Presidents Taft, Cleveland, Buchanan, Van Buren, and Washington were also greeted with recessions upon their arrival (in Cleveland's case it was upon his return to the White House). Recessions are cyclical, and so far no one has been able to prevent them from happening, although a bad president can make things worse if he bungles the job. The point here, is that recessions are not 'republican' or 'democrat' in their cause per se, but should be examined in the specific causes of each and their conditions created upon the nation.

The recession which greeted Barack Obama was caused by three forces - the burst of the housing bubble, the credit crunch brought about by bank speculation, and the liquidity crisis in the domestic auto industry. The initial symptoms were an unemployment of 7.2% in December 2008 (7.6% in January 2009) and a 3.85% inflation rate.

When Ronald Reagan took office, the recession he faced was more profound, because of the heretofore unimagined combination of unemployment and inflation rising at the same time. The chief causes of that recession were the rising price of oil and instability in the Middle East. The initial symptoms were an unemployment rate of 7.2% in December 1980 (7.5% in January 1981) and a 15.81% inflation rate.

You cannot change what you cannot control. This is the essence of why Reagan's economics were so radical. Reagan established four general goals he believed were essential to setting a sound economic course:

1 - Reduce the growth of government spending
2 - Reduce the marginal tax rates on income from both labor and capital
3 - Reduce regulation, and
4 - Reduce inflation by controlling the growth of the money supply.

While not perfect in its results, Reagan accomplished all four goals and established conditions for an unprecedented boom in business and prosperity.

Obama's plan is far less complete, and in spirit opposes every one of Reagan's goals, by massively increasing government spending, raising taxes on both individuals and corporations, drastically increasing regulation and driving inflation upward, deliberately so in the case of energy and finance costs. Essentially, President Obama is rolling the dice on some old notions of Keynes, hoping that simply spending massive amounts on his pet projects will renew economic prosperity by simply spending money. Any parent with a teenager knows the flaws in such thinking; spending is not desirable in itself, but only when it creates the necessary results. In the individual case, this means you pay the rent or mortgage and you buy your food, before you ever entertain the idea of buying that SUV or investing in that can't-miss IPO. When a teenager wastes his money, he is depending on his parents to cover his needs, but the parents have to be responsible themselves for keeping sound priorities and enforcing discipline. In the case of the government, it's necessary for government to be cautious about spending and to think through its goals and abilities before engaging on a new bout of projects. It's catastrophic, nothing less, when a government becomes reckless in spending and in committing its resources without consideration of the critical needs. Obama's "stimulus" package spent almost eight hundred billion dollars - before interest - without creating even one private-sector job, without addressing even one home foreclosure in process, and without even addressing consumer confidence. This is the government version of trying to justify spending mortgage money on a hooker.

- continued -

Everything has to be paid for. That's as basic as economics gets, yet somehow it gets ignored when government is putting together a budget. Literally trillions of dollars are being committed with no reasonable explanation of how it will be paid. When anyone, even the President, tells you that "only the rich" will see their taxes go up, do the math. There are simply not enough "rich" people to pay all these costs and bear these new taxes.

The historical record warns that the massive tax hikes envisioned by the Obama Administration will result in less revenue than they intend to collect. This is because what gets rewarded gets repeated, and what gets punished stops. And in practical terms, this means that when people and corporations are punished for succeeding financially under US tax law, they will find alternatives to paying taxes. They will move business off-shore, they will stop spending money on goodwill initiatives, they will hire fewer people and pay less to their employees, because the government is destroying their effective business models. Obama's heavy-handed plan for tax and spending with government in control of every major initiative, has no successful model in practice in the world.

Comparing Barack Obama to Ronald Reagan is pathetic and arrogant, to say the least. While it must be admitted that Obama is a far better actor than Reagan ever was, he cannot hope to be even half the leader that Reagan was.


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Comments (83)

DJYou've not becom... (Below threshold)
JFO:

DJ

You've not become hysterical in your last 2 postings. Kinda sad to see and I have respected your posts for the most part.

It's pretty simple DJ. He's been president for about 52 or so DAYS!!!!!

Stop with the Chicken Little crap will ya? You look ridiculous.


heh. Didn't bother to actu... (Below threshold)
DJ Drummond:

heh. Didn't bother to actually read the post, did you JFO?

So let's see - the 'richest... (Below threshold)
JLawson:

So let's see - the 'richest' 2% somehow have trillions of dollars that Obama can tap squirreled away somewhere... but it's apparently not in the banking system, real estate, gold, silver, or the stock market. (Must be one hell of a lumpy mattress...)

And all Obama has to do is TAKE it from them, and spread it around, and it'll be free unicorns and kittens for everyone!

Why do I just doubt that the current administration actually has a clue? Could it be from personal experience, living a paycheck to paycheck life for a decade or two? Understanding that no matter how cuddly that 'free kitten' is - the little beast is going to be expensive in the long run?

There's just way more promised out than the tax base can possibly support, and the Stimulus isn't helping. You can print more money to pay for things - but that has its own hazards. I don't want to see us go the way of Germany in the '20s or Zimbabwe with hyperinflation.

Somehow, I think 'rich' is going to end up being pegged at anything over $120k for a couple before this administration is done. And we may be lucky if that's as low as it goes.

Excellent post, DJ. <... (Below threshold)

Excellent post, DJ.

Folks like to forget that the most difficult part of Reagan's policy was choking inflation by restricting the money supply. That was bitter medicine to take at the time but it worked. Obama is doing the opposite, which is politically easy in the short term, dreadfully expensive in the long term.

Using the excuse that Obama... (Below threshold)
BluesHarper:

Using the excuse that Obama was only at the helm for 52 DAYS is getting old too.

How many Funniest Home Video's do you have to watch to know that the guy is going to get it in the groin. And the 'guy" this time is us.

Man bouncing on a trampoline. Guess what is going to happen? Man does a successful flip, or someone gets hurt?

Skateboard dude tries to shoot the hand rail of the cement steps. Want to guess what happens?

Do you need to wait? Should you wait? If you have an opportunity to stop it and you don't even try, what does that say about you?

Conservatives need to at least try to stop this or we are to blame also. If we are wrong - please pass the crow. I would rather eat crow than dust.

But that's just me.

"heh." Every word DJ cause ... (Below threshold)
JFO:

"heh." Every word DJ cause I like to read what you write.

"The failure of Barack Obama to comprehend the financial crisis, let alone deal with it effectively, is crumbling the façade of his competence as President. His minions, as a result, are going through the classic first stage of grief and loss, the stage of denial. "

So that statement was a joke then?

You are in de... (Below threshold)
DJ Drummond:

You are in denial, dude. It's kind of obvious by now ...

So that statement was a jok... (Below threshold)
GarandFan:

So that statement was a joke then?

No, JFO, Obama is a joke. You think people are picking on your guy now. Give it 4 more months. BTW, that's about the expiration date on "It's all Bush's fault" as well.

Just wait until 'cap and trade' hits and everyone pony's up additional expenses 'cause those magical unicorns aren't generating enough "free" energy.

Only the left is surprised ... (Below threshold)
WildWillie:

Only the left is surprised that an inexperienced man in an empty suit who speaks well cannot govern. Taxing and spending your way out of this crisis is so unwise as is stuffing the stimulus and 09 budget with pork. This is a disgusting government we have up there now. ww

Obama would do OK if he lai... (Below threshold)
sam129:

Obama would do OK if he laid down the bong.

1 - Reduce the gr... (Below threshold)
jmc:
1 - Reduce the growth of government spending

Reagan was spending 28.7% of "national income during his term. Carter spent just 27.9% of natonal income. So there you go DJ spending increased under Reagan.

2 - Reduce the marginal tax rates on income from both labor and capital

Then Reagan signed the Tax Equity and Fiscal Responsibility Act which was the largest tax increase in American history.

3 - Reduce regulation, and

Reagan did reduce regulation on Banks. A republicna mantra that has us here today.

4 - Reduce inflation by controlling the growth of the money supply.

This is controlled by the fed. The head of the fed during Reagan's term was appointed by Carter.


So basically every acheivement DJ listed Reagan either didn't do, or Carter did.


Also, Of course unemployment under Carter was 7.5% under Reagan it jumped in 1982 to 10.8% and the economy grew at -2.2% the worst showing since the great depresion.

So my question to you again DJ is, if Ronald Reagan is the greatest president of the last 100 years, and the economy got worse his first two years in office, How is Obama supposed to fix the economy in two months? In fact, can you name any president who fixed a recession in two months? Just one?

Sometimes DJ actually defen... (Below threshold)
Brian:

Sometimes DJ actually defends his posts (up until he -- uniquely among Wizbang authors -- starts deleting comments that effectively disprove his points).

Other times, he can't even muster a minimal defense, and instead resorts to personal insults, along with claims such as "if you're disagreeing with me, I must have hit a nerve".

This must be one of the latter posts.

Only the left is surpris... (Below threshold)
hyperbolist:

Only the left is surprised that an inexperienced man in an empty suit who speaks well cannot govern.

And that's why Willie only votes for inarticulate hobos!

DJ: your financial system needs far more regulation. The one in my country is very heavily regulated, which might curtail profits, but it is rated the best in the world in terms of overall stability. Our financial sector is not suffering a whit right now, whereas countries to the left of mine--Iceland, for instance--are worse off than even the United States.

The point: less regulation is not necessarily better, though of course regulation for no reason is a waste of time and resources. The solution: be empirical. (And, real market empiricism requires oversight and at least a minimal amount of regulation.)

Only the left is surpris... (Below threshold)
Brian:

Only the left is surprised that an inexperienced man in an empty suit who speaks well cannot govern.

No, it wasn't a surprise at all. Though I disagree with your assessment that Bush spoke well.

as is stuffing the stimulus and 09 budget with pork. This is a disgusting government we have up there now.

Take it up with the Republicans, willie.

If it's budget time, it's good to be a red state.

...
Mississippi Republican Sen. Thad Cochran led his colleagues by raking in more than $470 million in 204 earmarks. Mississippi's junior Republican, Roger Wicker, pulled in more than $390 million.
...
Senate Democrats and Republican ate roughly the same amount from the government trough on a solo basis, although Democrats have one and half times as many members.
...
Of the top ten earmarking senators... only three of the top ten are blue states. In the top 20, only six blue states are represented.

The failure of Bar... (Below threshold)
jp2:
The failure of Barack Obama to comprehend the financial crisis, let alone deal with it effectively, is crumbling the façade of his competence as President.

lol

Brian, Never make ... (Below threshold)
maggie:

Brian,

Never make assumptions about who is deleting
comments.

I don't need to. He's admit... (Below threshold)
Brian:

I don't need to. He's admitted to it. I'm not revealing anything new.

jmc,Re # 11<... (Below threshold)
Harmon:

jmc,

Re # 11

1. Are cherries the only fruit you harvest when reviewing statistics?

2. You do know the difference between marginal tax rates and tax receipts receipts don't you?

3. Chris Dodd and Barney Frank have more to do with the current banking crisis than Regan's deregulation efforts a generation ago.

4. Who gave the Fed chairman the encouragement, political backing and cover for his actions?

"Presidents Kennedy, Ford, ... (Below threshold)
Herman:

"Presidents Kennedy, Ford, and Bush also inherited recessions when they arrived at the White House" -- DJ

If you're talking about Bush I, that's bullshit, his recession began in July 1990, and if you're talking about Bush II, it's also bullshit, his first term recession began in March 2001. See http://www.nber.org/cycles.html

"President Obama is rolling the dice on some old notions of Keynes, hoping that simply spending massive amounts on his pet projects will renew economic prosperity" -- DJ

Hey, it worked for FDR, you know, the guy whose portrait a grateful country placed on the dime. Heck, Paul Krugman worries whether Obama's spending plans aren't large enough. (Unlike you, DJ, he won the Nobel Prize in economics). So, what's your plan, DJ? More tax cuts for the wealthy??? The country's already tried that. It failed miserably, unemployment rising notably under Bush II and even under Reagan, whose first term saw unemployment rate hit double digits.

jmc,Re # 11<... (Below threshold)
jmc:

jmc,

Re # 11

1. Are cherries the only fruit you harvest when reviewing statistics?

The difference between you and I, is that I have a statistic. You beleive Spending under Reagan was reduced, because you want to beleive it. I bleive it didn't because the numbers show it didn't. Looks like you cherry pick which part of reality you like to deal with don't you?

2. You do know the difference between marginal tax rates and tax receipts receipts don't you?

irrelevant, He stil signed the biggest tax increase in American history.

Chris Dodd and Barney Frank have more to do with the current banking crisis than Regan's deregulation efforts a generation ago.

Wrong.

4. Who gave the Fed chairman the encouragement, political backing and cover for his actions?

Wasn't Reagan. The fed chairman is confimed by congress every four years. and since Carter appointed the man i think he deserves more credit that some guy who comes along later and goes "Rah-Rah"

Brian, I said our governmen... (Below threshold)
WildWillie:

Brian, I said our government up there now is disgusting. That was all inclusive. Unlike you, I do not back any team just to wear the jersey. They have to earn my support.

JMC, you are right, Jimmy Carter was a great president. He did everything correctly. His handling of Iran was a master stroke. He ability to deal with the energy crisis is the thing of legends. He was so good, we didn't deserve him for another four years. You must have a poster of him hanging over your bed. Read your history buddy. You may learn something.

A cliche: Lies, damn lies and statistics. They can say whatever you want them to. ww

I think it goes beyond that... (Below threshold)
soupy:

I think it goes beyond that. Even some democrats are asking he veto it and so he says no its last years business. (referring to the lastest spending) Well, the dems were in charge of the buget for the last 2 years. He just expects everyone to be to dumb to know that.

JMC, you are righ... (Below threshold)
jmc:
JMC, you are right, Jimmy Carter was a great president. He did everything correctly.

You know, I wasn't arguing about Carter. I was demonstrating that Reagan hadn't managed to turn the economy around in two years, and then asking how one would blame Obama for not turning around the economy in two months when the great Reagan couldn't do it in two years?


That average fifth grader would understand that, after I have written about five posts on the subject. You, alas, are not smarter than a fifth grader.

A cliche: Lies, d... (Below threshold)
jmc:
A cliche: Lies, damn lies and statistics. They can say whatever you want them to.

You hear that DJ? when you wrote:

"The symptoms were an unemployment of 7.2% in December 2008 (7.6% in January 2009) and a 3.85% inflation rate. "

it was all lies that say whatever you want them to. Statistics are useless according to ww

If you're talking about Bus... (Below threshold)
Mycroft:

If you're talking about Bush I, that's bullshit, his recession began in July 1990, and if you're talking about Bush II, it's also bullshit, his first term recession began in March 2001. See http://www.nber.org/cycles.html

19. Posted by Herman | March 4, 2009 7:26 PM
------------------

No, you are the one full of bullshit. That recession started around April 2000 - I know, I was there and *MY* job was lost around that time. The Y2K bubble burst, because nothing happened, and then the internet bubble followed.

Then there was Clinton's slight of hand on taxes. He told everyone he was cutting taxes, and all he did was to cut withholding. Those of us with half a brain raised our withholdings voluntarily to not get zapped at the end of the year.

The failure of Barack Ob... (Below threshold)
wolfwalker:

The failure of Barack Obama to comprehend the financial crisis, let alone deal with it effectively, is crumbling the façade of his competence as President.

Wishful thinking.

Do you really expect the stupid sheep who voted for this socialist bastard to figure out how clueless he is, and how much damage he's already done and plans to continue doing to the United States? I hope you're not holding your breath waiting.

No, you are the o... (Below threshold)
jmc:
No, you are the one full of bullshit. That recession started around April 2000 - I know, I was there and *MY* job was lost around that time. The Y2K bubble burst, because nothing happened, and then the internet bubble followed.

A recession doesn't start when some random guy on a blog loses his job. A recession starts when their is a reduction of GDP for two straight quarters.

"According to the National Bureau of Economic Research (NBER), which is the private, nonprofit, nonpartisan organization charged with determining economic recessions, the U.S. economy was in recession from March 2001 to November 2001"

Jesus, do a little homework.

Um... I'm not a financial g... (Below threshold)
ExSubNuke:

Um... I'm not a financial guy, so bear with me. But based off what jmc just posted, if a recession "officially" starts after 2 quarters of reduction in GDP... then wouldn't the declared start (March '01) predicate that it have actually BEGUN 1 quarter prior to the recession being declared, officially?

Also, not to bemoan the point, but are we talking "reduction in GDP" as in, GDP drops from a peak, or are we talking "reduction in GDP" as a derivative, where the rate of growth starts slowing before the actual VALUE of GDP starts falling?

In either case, the slowing would begin LONG before Bush took over. I seem to recall the warnings from 1.5 - 2 years ago, that the economy was in trouble because it was slowing.

So let's be intellectually honest here.

So, what's your plan, DJ? M... (Below threshold)
GarandFan:

So, what's your plan, DJ? More tax cuts for the wealthy??? The country's already tried that. It failed miserably, unemployment rising notably under Bush II.

Smoking the weed again? I forgive you. The MSM wasn't exactly beating the drums for Bush when the unemployment numbers were consistantly LOWER than under Clinton's administration. As for the economy, before tanking, it was hustling right along for a damned long period of time.

After your man finishes with "the rich", who's next?

Ya gotta like jmc -<p... (Below threshold)
apb:

Ya gotta like jmc -

The simple faith of a small child that believes Obama will turn the economy around. How precious.

Reagan eventually turned the economy through fiscal and monetary policy - knifing the growth of government, cutting taxes, and shutting down the money supply.

Obama is spending multiple generations of taxpayer income to grow government and increasing taxes in the bargain.

So jmc's gone Full Retard on Reagan without understanding that his policies gave us growth and prosperity; all of Obama's policies are in direct opposition to those that have proven to work.

So now, jmc, stories are already surfacing about small business people training themselves to get below that magical $250K income barrier. Greedy SOB's, right? You know, dentists, doctors, restaurant owners, lawyers, shopkeepers...

So where's the big Zero going to get his tax flow if all the $250K people bail? The level's gonna push down, baby. It's going to hit middle America HARD. Thanks for voting!

Um... I'm not a f... (Below threshold)
jmc:
Um... I'm not a financial guy, so bear with me. But based off what jmc just posted, if a recession "officially" starts after 2 quarters of reduction in GDP... then wouldn't the declared start (March '01) predicate that it have actually BEGUN 1 quarter prior to the recession being declared, officially?

That is a logicical hypotheis ESN, and I could see why you you would have it. it is wrong though. A recession is offically dated in retrospect. So,

"a peak in business activity occurred in the U.S. economy in March 2001. A peak marks the end of an expansion and the beginning of a recession. The determination of a peak date in March is thus a determination that the expansion that began in March 1991 ended in March 2001 and a recession began."

"Also, not to bemoan the point, but are we talking "reduction in GDP" as in, GDP drops from a peak, or are we talking "reduction in GDP" as a derivative, where the rate of growth starts slowing before the actual VALUE of GDP starts falling?"

It is GDP as a derivative.

"In either case, the slowing would begin LONG before Bush took over. I seem to recall the warnings from 1.5 - 2 years ago, that the economy was in trouble because it was slowing."

Yes, the warning signs were there a year or so before, just as they were a year or two before this one.

So let's be intellectually honest here.

I was.

hyperbolist -How's... (Below threshold)
apb:

hyperbolist -

How's that medical system of yours working for the sick up in the Great White North? Looks like we're headed to join you, and I'd like to know if we're headed for one great DMV-style clusterf*ck.

You are a first class idiot... (Below threshold)
jmc:

You are a first class idiot APB

The simple faith of a small child that believes Obama will turn the economy around. How precious.

I'll give you a thousand dollars if you can find a post in this thread where I said Barack would do anything. I asked a question which no one has answered. Can't find it? You must have lied then.

Reagan eventually turned the economy through fiscal and monetary policy - knifing the growth of government, cutting taxes, and shutting down the money supply.

And the man doesn't post one shred of evidence. I post figures, you just say it is. maybe you are just making more crap up?

Obama is spending multiple generations of taxpayer income to grow government and increasing taxes in the bargain.

Said that man ignoring that spending actually went up under Reagan and that reagan actually passed the largest tax increase in history.


So jmc's gone Full Retard on Reagan without understanding that his policies gave us growth and prosperity; all of Obama's policies are in direct opposition to those that have proven to work.

Said the retard who doesn't post any evidence.

So now, jmc, stories are already surfacing about small business people training themselves to get below that magical $250K income barrier. Greedy SOB's, right? You know, dentists, doctors, restaurant owners, lawyers, shopkeepers...


Got a figure? one figure? Come one how many are doing that? or did you just make that up too?

So where's the big Zero going to get his tax flow if all the $250K people bail? The level's gonna push down, baby. It's going to hit middle America HARD. Thanks for voting!

I'm not sure were you are going to get anything.

No, you are the one full of... (Below threshold)
Mycroft:

No, you are the one full of bullshit. That recession started around April 2000 - I know, I was there and *MY* job was lost around that time. The Y2K bubble burst, because nothing happened, and then the internet bubble followed.
A recession doesn't start when some random guy on a blog loses his job. A recession starts when their is a reduction of GDP for two straight quarters.

"According to the National Bureau of Economic Research (NBER), which is the private, nonprofit, nonpartisan organization charged with determining economic recessions, the U.S. economy was in recession from March 2001 to November 2001"

Jesus, do a little homework.

27. Posted by jmc | March 4, 2009 8:36 PM |

--------------------

I did. I studied it well during the 2000 year. And I studied it well during the whole of the 1990s, while Clinton was in. Clinton's whole thing about "creating jobs" was bullshit too. I was able to work 5 of them myself, as none of the lasted more then about 6-12 months. Because of all the short term prospects, noone could get thru them to find the longer term jobs.

The difference is that the Clinton recession was effectively nuetralized by Bush and by 911. And Obama is accelerating the recession. Just wait a little while and you will see.

So now, jmc, stories are... (Below threshold)
Brian:

So now, jmc, stories are already surfacing about small business people training themselves to get below that magical $250K income barrier. Greedy SOB's, right? You know, dentists, doctors, restaurant owners, lawyers, shopkeepers...

Only the stupid ones, who don't understand how marginal tax rates work.

jmc <a href="http:... (Below threshold)
retired military:

jmc

http://www.washingtonpost.com/ac2/wp-dyn/A38826-2004Jan22?language=printer
Economists Say Recession Started in 2000

Bush took over Jan 20, 2001. SO you are saying that the recession started Mar 2001.

That means umm 41 days after Bush took office the recession started. Yeah okay. All as a result of those 41 days correct?

http://www.the-privateer.com/chart/dow-long.html
Dow Jones index
Sept 17, 2000 8920 The biggest one day fall (685 points)

January 14, 2000 11723 The "Clinton bull" high

That's right the stock market high during that time frame was JAN 2000. Bush took over a full year later.


JMCHeard of the DO... (Below threshold)
retired military:

JMC

Heard of the DOT COM BUBBLE? That is sorta like the housing bubble.

http://en.wikipedia.org/wiki/Dot-com_bubble

The "dot-com bubble" (or sometimes the "I.T. bubble"[1]) was a speculative bubble covering roughly 1995-2001 (with a climax on March 10, 2000 with the NASDAQ peaking at 5132.52)

Check out the NASDAQ chart on that link. Shows a nice peak and then a nice STEEP FALL all before Bush took office.


http://www.schwab.com/public/schwab/research_strategies/market_insight/todays_market/recent_commentary/client_q_and_a.html#recession_start

Major U.S. bear markets
high-to-low period High-to-low
return Time to break
even

Sept. 2000 to Sept. 2002 - 44.7% 4.1 years


JMCIn fact Bush wa... (Below threshold)
retired military:

JMC

In fact Bush was accused of talking down the economy by Gore when it was supposedly doing so well.

http://www.realclearpolitics.com/articles/2006/05/the_bush_economy.html
You may recall that when Governor Bush was President-elect Bush in December of 2000, he met with business leaders in America -- American business leaders in Austin. They told him, in effect, "Congratulations, you ran a fine campaign, and, oh, by the way, you'll be inheriting a hurting economy." Their prognosis in that day in Austin was grim, but they were right.

Order books were drying up, investment was falling, consumer confidence in purchases were dropping off sharply and markets were tanking.

The stock market began its decline in mid-January 2000, dropping from an all-time high of more than 11,700 in the Dow to below 9,800 in early March 2000, on its way to its first calendar year loss since 1994.

The dot.com bubble also burst in 2000. The Nasdaq, site of some of the largest IPOs in history, peaked on March 10th, 2000. And by December 2000, the time of our meeting in Austin, it had dropped by more than 50 percent.

The economy itself began slowing in the third quarter of 2000 as GDP declined by an annual rate of 0.5 percent. And all of this took place before George W. Bush set foot in the Oval Office


-------

So JMC

ANyone who says that Bush didnt inherit a recession is an idiot.

BTW


Question:
What does this represent

-
..|
...|
....___
...........|
............____
....................|
.....................--->

Answer:

The Dow Jones after an Obama speech.


The very idea that anyone w... (Below threshold)
Bruce Henry:

The very idea that anyone would forgo the opportunity to earn $10,000 to avoid paying $396 in taxes is so stupid only a Wizbanger would believe it.

JMC Said"Yes, the ... (Below threshold)
retired military:

JMC Said

"Yes, the warning signs were there a year or so before, just as they were a year or two before this one.

"

Oh YOU MEAN WHEN PELOSI AND REID AND THE DEMOCRATS WERE IN CHARGE OF CONGRESS, PROTECTING FANNIE AND FREDDIE, PASSING LAWS AND SINCE THE HOUSE OF REPRESENTATIVES PROPOSES ALL SPENDING BILLS IT WAS THE DEMS WHO RAN UP THE DEFICIT THE LAST 2 YEARS UNDER BUSH.

Gotcha JMC.

What a buffon.

I was able to wor... (Below threshold)
jmc:
I was able to work 5 of them myself, as none of the lasted more then about 6-12 months.

A recession is certainly not defined as your inability to hold a job.

When you argue that the Eco... (Below threshold)
Adrian Browne:

When you argue that the Economy is somehow Barack Obama's fault you're negating the whole Bush Administration -- pretending it didn't happen. Bush used all his political capital on Conservative causes and this is how you pay him back.

Sad.

Hey, retired moron. The rec... (Below threshold)
jmc:

Hey, retired moron. The recession started in march 2001. Sorry if you don't like facts, but that is the way it is.

Because anybody who read my posts knows I didn't comment on Bush, or Congress or whose fault the 2001 recession was. All i did is factually state when it happend. You can make up all the shit you want but go look up the recession of 2001 and and you'll see it is listed

jmc,Sorry about th... (Below threshold)
apb:

jmc,

Sorry about the insinuation that Obama would do anything; I misread your whining about Reagan's first 2 years as endorsement of Obama. Obama's a socialist douchebag; don't know how I mucked that up - mea culpa.

I posted figures yesterday about Regan's policies reducing CPI and core inflation. GDP grew from Carter's putrid .5% to almost 4%. Inflation dropped from over 10.3% in 1981 to 3.4% in 1984.

You cite Reagan's "largest tax increase in history" - use your idiot savant powers and explain the net .7% increase in taxes against a 7% reduction in inflation. Show me the damaging net effect.

I knew you'd soil yourself over the deficit spending on military, but that was cold-war spending on military not giveaways on freeloading douchebags - whether pathetic banker friends of Dodd and Frank or morons that falsified information to take on loans they could not possibly repay.

I'll wait to see if you're able to understand the "evidence" you so desperately need from the above numbers.

As for the $250K number, you either understand that Obama is increasing the top-level rate from 35% to 39.6%, or you don't.

Since you're obviously a shut-in, here's the explanation from future tax-avoiders:

http://abcnews.go.com/Business/Economy/story?id=6975547&page=1

You either understand normal human behavior, or you don't.

As for getting hit with the taxes - no way. Above my pay grade. But I have the intellect to know that small business will get hammered.

Brian -You actuall... (Below threshold)
apb:

Brian -

You actually cited TNR - the rag fronted by Chait? The same rag that dropped a load of Foer and Beauchamp on all of us?

Cripes.

Sorry about the i... (Below threshold)
jmc:
Sorry about the insinuation that Obama would do anything; I misread your whining about Reagan's first 2 years as endorsement of Obama. Obama's a socialist douchebag; don't know how I mucked that up - mea culpa.

No need to apologize, reading problems seem a big epidemic in the conservative movement though. WW thought the post was a defense of Jimmy Carter. You thought it was something else, in a later post where I explain the dates of a recession Retired Military starts yelling about Pelosi. No one ever answered the question I asked six times though.

I posted figures yesterday about Regan's policies reducing CPI and core inflation. GDP grew from Carter's putrid .5% to almost 4%. Inflation dropped from over 10.3% in 1981 to 3.4% in 1984.

Actually the feds policies reduced inflation. The Chairman of the fed. Volker was a carter nomination. I also pointed out how growth was --2.2% the lowest since the depression. unemployment went from 7.5% to 10.8%. in 1982 Then (Please pay attention this is the question I've been asking which every conservative has ran away from.)

Asked, If the economy got worse under Reagan his first two years, why do you expect barack to have fixed it in two months? Also, name a president who fixed a recession in two months on the job, four or five months after it started. Just one please.

This is only the seventh time I have asked. The way things are going though, I'm sure I'll get a response raving about Howard Dean instead of an answer to the question.

Adrian Browne -Bus... (Below threshold)
apb:

Adrian Browne -

Bush administration isn't negated - we can't escape war spending any more than we can escape the 25% bonus spending Congress tacked on the appropriations bills. Likewise we can't escape the net policy of community reinvestment act, and the acts of piracy by the banking system.

I knew you'd soil... (Below threshold)
jmc:
I knew you'd soil yourself over the deficit spending on military, but that was cold-war spending on military not giveaways on freeloading douchebags - whether pathetic banker friends of Dodd and Frank or morons that falsified information to take on loans they could not possibly repay.

I'll give you another thousand if you can tell me where I talked about military spending. I have to ask at this point, does anyone on the right actually read a post before they respond to it?

The failure of Barack Ob... (Below threshold)
Steve Crickmore:

The failure of Barack Obama to comprehend the financial crisis, let alone deal with it effectively, is crumbling the façade of his competence as President

We are talking like not even 50 days of Obama's presidency taking over from a fourth quarter alone in 2008, with the announcement of an astonishing over 6 percent loss of growth.

Meanwhile when Reagan was president inheriting a recession that started as a downturn in 1979, and became the deepest recession, since the depression of the thities, what was Reagan's reaction if you can call it that?


The recession was nearly a year old before President Ronald Reagan finally admitted on October 18, 1981, that the economy was in a "slight recession".[21]

The "Reagan recession," coupled with budget cuts (which were enacted in 1981 but began to take effect in 1982), led many voters to believe that Reagan was insensitive to the needs of average citizens. Reagan's approval ratings sank. In January 1983, Reagan's popularity rating fell to 35%--approaching levels experienced by Richard Nixon and Jimmy Carter at their most unpopular moments.[22][23][24] Although his approval rating did not fall as low as Nixon's during Watergate, Reagan's reelection seemed unlikely.[25][26][27]

Pressured to counteract the increased deficit caused by the recession, Reagan agreed to a corporate tax increase in 1982. However, he refused to raise income taxes or cut defense spending. The Tax Equity and Fiscal Responsibility Act of 1982 instituted a three-year, $100 billion tax hike--the largest tax increase since World War II.[28]

The 1982 mid-term Congressional elections were largely viewed as a referendum on Reagan and his economic policies. The election results proved to be a major setback for Reagan and the Republicans. The Democrats gained 26 House seats, which at the time was the most for the party in any election since the "Watergate year" of 1974.

That is quite a successful record of economic leadership to emulate for the next two years of an Obama presidency. Odd I don't think you will find Obama asleep at the cabinet table or making such a willfully stupid statement as Reagan did in 1981, that "trees cause more pollution than automobiles do".


jmc -I'll state th... (Below threshold)
apb:

jmc -

I'll state this simply - Obama's policies will NOT 'fix' this recession. Not a matter of months or years - this administration's policies will NOT fix this recession. Period.

This administration's policies will result in double-digit inflation and continued unemployment; there is zero business confidence in the growth of government and stupidity along the lines of cap and trade.

Unless, of course, you're counting on all of us to work for the gummint.

Here's a better thought - why is the big Zero not enlisting Volcker in the current fracas?

Sorry again, jmc -... (Below threshold)
apb:

Sorry again, jmc -

"So there you go DJ spending increased under Reagan."

Not that you personally cited military; Reagan's spending increase was primarily due to the military.

I'll state this s... (Below threshold)
jmc:
I'll state this simply - Obama's policies will NOT 'fix' this recession. Not a matter of months or years - this administration's policies will NOT fix this recession. Period.

Well, that's clarevoyent. I wonder whether GW messed things up so bad that they won't be fixed for decades myself. I tell you what though, the depth of this problem is such that obama certainly won't have fixed for 2-3 years.

This administration's policies will result in double-digit inflation and continued unemployment; there is zero business confidence in the growth of government and stupidity along the lines of cap and trade.

That's a leap. We know business doesn't have confidence in the economy. I would say it is because they think the wreckage is too great to repair fast.

Unless, of course, you're counting on all of us to work for the gummint.

Money is not in circulation, this is called a liquidity trap. No one is spending. In order to get the ecnomy going spending has to occur.

Here's a better thought - why is the big Zero not enlisting Volcker in the current fracas?

GW is no longer president, why would he talk to volcker?

Crickmore -You're ... (Below threshold)
apb:

Crickmore -

You're making the same mistake as jmc - Reagan's tax increases were against falling inflation; still a net positive for the population, and the increases came against a large increase in the workforce - not tax increases into a shrinking workforce and increasing inflation.

As for Obama - nothing will trump his moron-in-chief Carol Browner and her proposal of treating CO2 as a pollutant. That's against all historical norms of CO2 in the atmosphere, and the fact that a truly "green" Earth should have a CO2 level about 3 times what it is now.

jmc -What happens ... (Below threshold)
apb:

jmc -

What happens when money frees up against limited supply of goods? (drums fingers, waiting ...)

Not that you pers... (Below threshold)
jmc:
Not that you personally cited military; Reagan's spending increase was primarily due to the military.

Well, a debate on how much we should spend on the military is a seperate issue. I was just responding to the claim spending decreased under Reagan. It didn't. One could argue that they think the spending was justified though, or for a good cause.


What happens when money frees up against limited supply of goods? (drums fingers, waiting ...)

With more money in circulation people have more money to invest, or buy goods. that increases demand, which in turn causes companies to increase supply to meet that demand. that's what happens when money is in circulation.


Anyway, seriously, no sarcasm intended, have a good night. I enjoyed the debate, but must go to bed.

JMC""Presidents Ke... (Below threshold)
retired military:

JMC

""Presidents Kennedy, Ford, and Bush also inherited recessions when they arrived at the White House" -- DJ

If you're talking about Bush I, that's bullshit, his recession began in July 1990, and if you're talking about Bush II, it's also bullshit, his first term recession began in March 2001"

HERE YOU CLEARLY ARE IMPLYING THAT GW BUSH DID NOT INHERIT A RECESSION.

Trying to say that Bush didnt inherit a recession is like marrying a woman who is 7 and a half months pregnant and when the baby shows up claiming you didnt know it was coming.

You are the moron. GET A CLUE AND ACTUALLY READ WHAT YOU WROTE.

Again this downturn didnt start until after the DEMORATS took control of Congress. Congrats on being with the losers yet again.

Sorry you dont like the facts but there they are.

I will see you in 10 months blaming Bush for the DEPRESSION we are in all the while saying
"AINT OBAMA THE GREATEST"

Question:
What does this represent

-
..|
...|
....___
...........|
............____
....................|
.....................--->

Answer:

The Dow Jones after an Obama speech.

jmc -"With more... (Below threshold)
apb:

jmc -

"With more money in circulation people have more money to invest, or buy goods. that increases demand, which in turn causes companies to increase supply to meet that demand. that's what happens when money is in circulation."

In our current situation, the result is inflation in the short run; without business confidence (and a passed-on increase to consumers due to cap and trade) it's also inflationary in the long run.

We'll continue the discourse.

JMC (post number 19)<... (Below threshold)
retired military:

JMC (post number 19)

a"Presidents Kennedy, Ford, and Bush also inherited recessions when they arrived at the White House" -- DJ

If you're talking about Bush I, that's bullshit, his recession began in July 1990, and if you're talking about Bush II, it's also bullshit, his first term recession began in March 2001.
"


JMC (Post number 11)

"How is Obama supposed to fix the economy in two months? In fact, can you name any president who fixed a recession in two months? Just one"

So Bush was in office about 45 days prior to the start of the recession which according to JMC Bush didnt inherit. I guess it occurred like magic one minute it wasnt there and the next minute it was.

JMC also states that no president can fix a recession in 2 months. Of course he totally ignores that fact that a recession was declared within 45 days of Bush taking office but yet declares that Bush didnt inherit a recession.

Congratulations JMC, you dumbass. Open your mouth a little wider and put your other foot in it.

Put down the KOOL AID and actually read WHAT THE HELL YOU WRITE.

Brian -You actual... (Below threshold)
Brian:

Brian -
You actually cited TNR - the rag fronted by Chait? The same rag that dropped a load of Foer and Beauchamp on all of us?

In other words, you can't dispute the facts of the article, so you drop back to ad hominems. When you have nothing to say, you'd save everyone time by just keeping quiet.

JMC:You are a dull... (Below threshold)
Thomas Jackson:

JMC:

You are a dullard of the worst sort. Yes unemployment did go up during the first two years of Reagan's forst term. What did you expect after Carter so effectively destroyed the economy? Volecker was in part responsible for the disaster and had he not gotten Reagan's backing the inflation would have continued.

Your brillant rebutal of "wrong" is so effective a use of evidence that it reminds one of one of Oberman's more lucid moments.

Obama has destroyed the economy. Denying Frank and Dodd's role in subprime lending as well as Clinton is a joke.

Does anyone see the DJI hitting 9,000 next year? The year after? Any bets if Obamie can hit 14,000?

My bet is we'll see 6,000 long before we see 14,000. And contrary to normal recessions, if Obama gets his cap and trade through I can see the President 666 depression lasting for some years.

But that's what our Kenyan wants isn't it?

"He told everyone he was... (Below threshold)
Oyster:

"He told everyone he was cutting taxes, and all he did was to cut withholding. Those of us with half a brain raised our withholdings voluntarily to not get zapped at the end of the year."

And it's happening again. Thankfully, it's only about $13 dollars a week.

It was Carter AND a democra... (Below threshold)
WildWillie:

It was Carter AND a democratically lead congress that caused the deep recession.

Barry is being excused for only being in office for 50+ days, yet he has spent more money in those 50+ days then any president in our history. But to the lefties, we cannot question it because he has only been in office 50+ days.

You cannot compare what is happening now to any past economic down turn. We all know this crisis happened because government oversight was not doing its job. You know who controlled the oversight don't you? ww

I don't always believe in b... (Below threshold)
MPR:

I don't always believe in bottom line analysis but, the facts are that Ronaldous Magnus loved the country and believed in American exceptionalism and greatness. Obamalala does not. All of us that voted for R.R. knew that before we voted for him. All of us that didn't vote for Obamalala knew about him before we didn't vote for him.

It's clear to just about an... (Below threshold)

It's clear to just about anyone who has a basic understanding of economics that Obama's ideas will hurt the economy. If the economy recovers any time soon, it will be in spite of, not because of what Obama has done.

P.S. The housing crisis was a result of irresponsible banking (encouraged by Democrat policies) AND irresponsible borrowers.

http://www.rightklik.net/


I see that the DOW is down ... (Below threshold)
retired military:

I see that the DOW is down about 150 points (per the chart on drudge) so far today. I am wondering the cause. Did Obama call a press conference today?

Ronald Reagan wasn't half t... (Below threshold)
max:

Ronald Reagan wasn't half the man Barack Obama is.

Wherefore art thou, DJ?

Someone already pointed it ... (Below threshold)
hyperbolist:

Someone already pointed it out, but just to reiterate:

ABC News doesn't understand how tax brackets work, and neither do wingnuts. If you earn $255,000 per year, you would only pay at the higher rate on the $5,000 above the $250,000 threshold. So, basically, you would be a f*cking idiot to try and reduce your own income as a response to an increased tax rate on the highest earners.

Do carry on explaining for us how Barack Obama is responsible for a crisis that is fundamentally Wall Street's fault; and please, don't stop with the St. Ronnie love-in either. It's pretty funny.

HyperWhat you are ... (Below threshold)
retired military:

Hyper

What you are saying is true. But do you realize that instead of paying 34% of every dollar in federal taxes you are now paying 39% in federal taxes on every dollar earned above $250k.

For some folks that extra 4-5% or so they are paying ON TOP of the outrageous amount they are already paying isnt worth what they can do in the meantime such as enjoy their family more.

Why work 60 hours a week when you are giving more than 1/3rd of your paycheck to the federal govt.

On top of that states are increasing income taxes as well. So instead of 39% if you live in a state like NJ or California you are paying an additional 6-8% OF YOUR MONEY into state income tax. Then throw local taxes in.

So in essense some are working for what is essentially half pay once they hit the $250 mark.

Say they make $300k. Of that extra $50k they earned a full $25K is going to various govts for taxes. People are saying enough is enough and they would rather spend their time enjoying the money they make under 250K than bust their ass only to give the govt HALF of what they are making above it.


For those that are having t... (Below threshold)
retired military:

For those that are having trouble grasping this simple concept. Lets do this.

Say you can retire from your current job tomorrow at half pay. So tomorrow you can quit your job and still get a paycheck for half of what you are making now. Would you continue to work at your present job? or quit there and collect 50% of your paycheck for doing nothing.

Extremely doubtful. This is basically the same concept.

You are right JFO. The econ... (Below threshold)
WildWillie:

You are right JFO. The economists were all telling us to prepare or help avoid the current crisis. You putz. ww

r_m, if that's your point, ... (Below threshold)
hyperbolist:

r_m, if that's your point, then it's fair. But if a dentist working 50 hours per week for $260,000 abandons some patients to get his/herincome at or under $250,000, then I maintain that there's something wrong with that person.

In terms of the political ramifications, despite pleas from CNBC and Fox bobbleheads, most people simply are not motivated by the financial concerns of those in the highest tax bracket. So yes, raising taxes on the top 2% of the population will certainly affect those people, but for a small business owner with $500,000 gross income and $200,000 net income, they would actually receive a federal tax break. This is true based on Obama's current tax plan. Now Hannity and Cramer and Kudlow will try and spin it to incite a populist hue and cry, but that's because they don't care about the middle class. ("Middle class" meaning those earning less than $250,000/year--which includes the majority of upper class earners as well.)

For 8 years the trickle-down economics that these boobs pontificated about failed to benefit those who--theoretically--would be the ones trickled upon, so the supply siders will have to find a new tack. Bleating about socialism is falling upon deaf ears--the Ayn Rand fan club notwithstanding.

Your second comment about "half pay" doesn't make sense because the incremental difference between the rates is so far from "half" that your analogy falls apart.

HyperThink of it a... (Below threshold)
retired military:

Hyper

Think of it as working for 55% pay before the tax hike and 50% after the tax hike.

So before the tax hike you are paying a total of 45% (federal state local) taxes into various govts.

After the tax hike you are paying 50% plus into federal state local etc

Yes you are only paying an additional 5% tax or so but for some folks the 45% timeline was the break even point for folks to continue to work. That was their point in saying "working X hours here is worth me being away from my family, not taking a day off, etc" Throw that extra 5% or so on them and they say screw it.

It wont affect those people making say $750k + because it would be too big of a drop for them in income. But a lot more folks are on the $250-$260 line than the $750k line.

-----------
You mention the last 8 years but if you look at the stats the rich were paying more in taxes than before despite the tax cuts. The poor were paying less. And the revenue to the govt was at record levels. Unfortunately so was the spending by the govt. Not just dems but republicans. But the highest 2 budget deficits for Bush (I believe) was in 2007 and 2008 both years of which the dems were in charge of the house of representatives where Spending bills originate. In addition, if you remember the dems were saying Bush was spending too little on a lot of things and accusing him of cutting the budget for just about anything non military.

In addition, you have to look at not just personal income taxes. You have to look at the effect of the Cap and trade on just about everything. It means higher prices. This is commonly known by those who are paying attention. Wall Street pays attention and reacts to how things being said now may affect the future.

Cap and trade isnt the only thing. Look at the discussion on charity donations. A lot of folks "tithe" to one degree or another. That means they will continue to give pretty much the same whether they get a tax break or not. That is just like adding additional taxes on to them. You can argue that that is their personal choice but it is also their personal choice in working extra hours to make a little extra money as well.

Again this is just but 2 examples of what is being talked about. Talk matters, especially if the President is the one talking.

------------

On an off note I went home at lunch today and saw that Obama was speaking at a press conference. The DOW is also down 200+ points right now. Coincindence? I think not.

HyperAnother way t... (Below threshold)
retired military:

Hyper

Another way to answer your question is this.

Why do people give cash to charities (not speaking religous now) with the express purpose of writing it off on their taxes. Say they could write off 100% of $100 they give to charity A. Well that just reduces their taxable income by $100. At the top federal rate they can only save about $35-$40 on the taxes they paid. Why donate $100 when they are basically only able to save $40 tops on their taxes?

yet folks still do it.

Same concept.

You make sense, r_m, and I ... (Below threshold)
hyperbolist:

You make sense, r_m, and I know that tax receipts actually went up when tax rates were lowered on top earners, but the middle class has been taking a sh*t-kicking the past few years relative to the upper earners. Tax relief for the middle class might produce the same net benefits for the economy as the upper-bracket cuts while directly benefiting a greater number of people. And, since (as far as I know) there is no mathematical model that can explain the correlation between lower taxes and higher tax receipts, this seems worth trying.

People did vote for this sort of thing, so it's only fair to see how it plays out over the next few years. Took Reagan a while--and a large tax increase--to stimulate the post-Carter economy, so it's only fair to give Obama the benefit of the doubt.

I would say, however, that Tim Geithner seems to have no idea what he's doing right now...

Say they make $300k. Of ... (Below threshold)
Brian:

Say they make $300k. Of that extra $50k they earned a full $25K is going to various govts for taxes. People are saying enough is enough and they would rather spend their time enjoying the money they make under 250K than bust their ass only to give the govt HALF of what they are making above it.

Your point is mathematically faulty. The choice isn't between 50% taxes and 0% taxes. You're just arguing the marginal difference between 34% vs. 39% federal, which using the other numbers in your scenario translates to a comparison of 50% vs. 46% taxes total. So your claim is that someone would be willing to work hard to bring in $50K extra if they could keep $27K of it (46% taxes), but if they only got to keep $25K of it (50% taxes) then they'd rather forgo that to spend time with their family. The difference is only $2K.

Say you can retire from your current job tomorrow at half pay. So tomorrow you can quit your job and still get a paycheck for half of what you are making now. Would you continue to work at your present job? or quit there and collect 50% of your paycheck for doing nothing.
Extremely doubtful. This is basically the same concept.

No it isn't. Again, you're comparing 50% income with 0% income. In your scenario, if I quit my job tomorrow, I'll make nothing, not half-pay. What you're really asking here is this: if my take-home pay went from 54% net to 50% net, is that enough to make me quit my job and take it all the way down to 0%?

Brian"No it isn't.... (Below threshold)
retired military:

Brian

"No it isn't. Again, you're comparing 50% income with 0% income. In your scenario, if I quit my job tomorrow, I'll make nothing, not half-pay"

I was using an example that many in the military use after having served 20 years. After the 20 year mark it used to be (they changed it about 20 years ago) that you were eligible to retire at 50% pay (Now I believe it is either 35 or 40%). Therefore you were only basically working to make an additional 50% of your base pay because if you retired you would get 50% of your base pay anyway.

I am sure that those in the military understood the analogy as it is a common enough saying in the military that after you have served 20 years you are basically working for half pay. After 30 years (when you were eligible for 75% retirement pay) you were basically working for only 25% of your paycheck becuase you wouuld get 75% if you retired and did nothing.

Obviously you have never served in the military. If you have than you probably had your head under a rock.

And in the first half of your post yes what I was saying is that for some folks that extra bit of money they would make before the new taxes doesnt justify the extra effort when they would be taking in effect a $2000+ a year pay cut. There are numerous reports of people making just that decision.

Ask union members (or members of Congress) to take a $2k a year paycut and see what type of reaction you get.

Brian said" if I q... (Below threshold)
retired military:

Brian said

" if I quit my job tomorrow, I'll make nothing,"

Please note my sentence here Brian


"Say you can retire from your current job tomorrow at half pay. So tomorrow you can quit your job and still get a paycheck for half of what you are making now. "

The wording of the sentence IMPLIES a hypothetical situation. And for jobs such as union jobs, congress, the military, etc when you RETIRE you do get a pension.

Speaking of which Congress has no problems tampering with our pensions but they get (I believe) 100% base pay for life after serving only 6 years. Must be nice.

I was using an example .... (Below threshold)
Brian:

I was using an example ... that you were eligible to retire at 50% pay

That's a poor example. We're not talking about people working for a pension, we're talking about small business owners.

And in the first half of your post yes what I was saying is that for some folks that extra bit of money they would make before the new taxes doesnt justify the extra effort when they would be taking in effect a $2000+ a year pay cut. There are numerous reports of people making just that decision.

You're still saying that those people would rather make nothing rather than $25K, all because they lost $2K. If $2K is that important to those people, it's highly doubtful they'd willingly give up the $25K. The very definition of cutting off your nose to spite your face.

It would be different if the numbers were more dramatic. Say I used to work extra to make an additional $27K, but now all I'd get is $3K because taxes were 94%. In that scenario, yeah, perhaps I would decide that an additional $3K is not worth it extra work. But the actual numbers are much closer. It's $27K vs. $25K.

You're not going to convince anyone that a small business owner would willingly forgo $25K profit because a year ago it used to be $27K.

Ask union members (or members of Congress) to take a $2k a year paycut and see what type of reaction you get.

They'd not like it, for sure. But what you're saying is that some of them would quit their jobs over it, because it was no longer worth it to them to work for the lower wage. That's ridiculous.

The wording of the sentence IMPLIES a hypothetical situation.

That's fine, but it has to imply a realistic hypothetical situation.

BrianI agree that ... (Below threshold)
retired military:

Brian

I agree that to me it doesnt make much sense to me to do so. But then I figure if I cant find a $10 an hour job then two $5 an hour jobs is something I will do if I need to. For the record currently I am not making anywhere near either $10 an hour or $250k a year.

However, if you have someone who is financially secure and at that point in their lives where they are tired of the rat race than for them it is worth it.

You have folks leaving high paying jobs to go live out in rural areas and making a lot less money. It happens. This could be the straw for folks.

"You're not going to convince anyone that a small business owner would willingly forgo $25K profit because a year ago it used to be $27K.

"

If that extra $25k means working 10 -20 hours a week extra or having to deal with extra regulations (ie more employees, having to add health care for employees, etc) it may be enough to cause them to say to hell with it, it isnt worth it. For most people who work at a small business there is a point of diminishing returns reached and for some folks that point can cause rather dramatic reactions.

"That's fine, but it has to imply a realistic hypothetical situation."

I shot from the hip as it is something that as I said I have personal exp from in the military. I was trying to illustrate a point. Maybe you feel poorly but I feel it is one that most people understood the point I was trying to make.

You have folks leaving h... (Below threshold)
Brian:

You have folks leaving high paying jobs to go live out in rural areas and making a lot less money. It happens. This could be the straw for folks.

Once again, since you don't seem to understand your own argument... you're suggesting that having their income SLASHED from $300K/year to $298K/year is going to make someone quit their job and move to the wilderness. That's just plain absurd.

If that extra $25k means working 10 -20 hours a week extra or having to deal with extra regulations

And again, it's the same extra work that previously brought them $27K. You're arguing that losing $2K is enough to make someone voluntarily forgo the other $25K also. Once again, it's absurd. "I used to have a client that earned me profit of $100K/year, but now that I only get to keep $96K, it's not worth it to me, and I dropped him." You can't possibly claim that with a straight face.

I shot from the hip as it is something that as I said I have personal exp from in the military. I was trying to illustrate a point.

Your example of a military guy being able to retire with 50% pension has has nothing to do with a small business owner with no pension evaluating marginal tax rates. Perhaps you meant to hypothesize that after 19 years of working toward his 50% pension, having it reduced to 46% would make him resign, since it was no longer worth it to him. You may know people who would throw away 19 years of work over 4%, but I sure don't.

Maybe you feel poorly but I feel it is one that most people understood the point I was trying to make.

Sorry, you have no basis for thinking that. Only two people have engaged your hypothetical, and at least 50% of us find it flawed.

BrianLets try it t... (Below threshold)
retired military:

Brian

Lets try it this way.

Say for example you work 40 hours a week and make 250k a year.

Now you sit down and do some figuring. You can work an extra 10 hours a week and gross another 50k a year income.

Now that extra 50k a year gross will net you an additional 25k (about) net increase income.

You may think okay sounds good but just barely worth it.

However with the increase in taxes that extra 50k gross may only net you an increase of 23k. (just putting numbers up - no need to use a calculator here, as you said the difference is small relatively speaking but there is one).

You may think nope the extra money isnt worth the extra effort at work. granted there is only a 2k or so difference before and after but for some that is enough for some folks to say to hell with it.

I honestly dont see how the 50% pension example went so far over your head. But the above example may be clearer for you.

'When you have nothing t... (Below threshold)
Oyster:

'When you have nothing to say, you'd save everyone time by just keeping quiet."

Brian, stop.

You're killin' me.

To show the detrimental eff... (Below threshold)
retired military:

To show the detrimental effects of higher tax brackets I did a little experiment.

Using turbo tax I figured my taxes on current income. It worked out to about $8k.

I then doubled my income (using the theory going from 40 hours a week to 80. Now almost noone ever doubles their salary becaue they double the hours worked unless they are working 2 minimum wage jobs rather than one).

My total taxes owed went up to over $26k.

Where as my take home increased by about 90%, my taxes more than tripled. In addition, I have no desire to work 80 hours per week to increase my income by that much. My incentive for doing was was substantially more than listed in above conversations but to me the extra hours just are not worth it.




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