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Alan Greenspan - Fear Undermines America's Economy

In a Financial Times editorial, former Federal Reserve Chairman Alan Greenspan bluntly states the reason for the current economic slump here in the US:

It is going to take years to address the unprecedented complexity of final rulemaking required in the massive Dodd-Frank bill. The inevitable uncertainty engendered will inhibit financial innovation and intermediation, and render the rules that will govern a future financial marketplace disturbingly conjectural. This is bound to have a significant impact on economic growth. Business planners must now confront a much wider set of scenarios that could affect the profitability of contemplated long-term commitments.

As you may recall, the Dodd-Frank bill ended up being a 2,319 page monstrosity that no one actually read and few even partially understood. (In contrast, 2002's Sarbanes-Oxley financial reform bill was only 66 pages long.) And when you add in the 2000+ pages of ObamaCare, next year businesses will face literally hundreds of new rules and regulations, with additional guidelines, clarifications, and new rules being added yearly until at least 2014.

The most odious of these regulations are the new ObamaCare rules governing 1099 forms filed by businesses. Beginning in 2012, all businesses will be required to file a Federal 1099 form every time it purchases more than $600 worth of product from another company. This would include fuel, office supplies, meals, travel expenses, vehicle maintenance -- you name it. Imagine having to track thousands of receipts and keep records on the parent corporations that own every gas station and restaurant you or your employees patronize. Can you think of a better way to force businesses to reduce or severely restrict their spending? How is this going to help the economy?

Some Democrats realized the error of their ways, but Speaker Pelosi deliberately forced the failure of a vote to repeal the measure. The Wall Street Journal explains:

Most Democrats now claim they were blindsided and didn't understand the implications of the 1099 provision--which is typical of the slapdash, destructive way the bill was written and passed. As the critics claimed, most Members had no idea what they were voting on. Some 239 House Democrats voted to dump the 1099 provision in August, and the repeal would have passed except Speaker Pelosi rigged the vote procedurally so it needed a two-thirds majority. She thus gave Democrats the cover of a repeal vote without actually repealing it.

As Greenspan explains in his editorial (warning: lots of "financialese") businesses are hanging onto an unusually large amount of liquid assets (cash) and investing a historically low percentage of revenue in higher-risk long-term illiquid assets (durable goods, labor). Consumers are also worried about the massive income tax hikes that could hit starting January 1, 2011, so they have begun to significantly decrease their spending. Businesses responded by cutting another 39,000 jobs in September.

And the Democrat response? Blame Bush, blame Bush some more, and if that doesn't work, keep blaming Bush. It's no wonder that Newt Gingrich has dubbed the Democrats "the party of food stamps" -- there are now over 40 million Americans receiving food stamps, and nothing in the way of ideas from the Democrats except for more pork-barrel "stimulus," trillion-dollar deficits year after year, "comprehensive immigration reform" (read: amnesty), and Cap and Trade, which will send energy prices through the roof.

We can stop the march toward the Democrats' vision of a European-style socialist government here in America -- and the inevitability of astronomical tax rates, permanently high unemployment, unsustainable welfare roles, sluggish economic growth, and crushing national debt -- by voting Republican on November 2.

We can stop the socialism. We can stop the fear.


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Comments (17)

We misunderstood the fall o... (Below threshold)

We misunderstood the fall of the Berlin Wall. I think it fell the other way. It has just taken us this long to see it.

The totalitarianism of guns and barbed wire fell, at least in its everyday presence. Now we have the totalitarianism of "you shouldn't do that" and "you have to do this."

One of the effects of this ... (Below threshold)
David Spence:

One of the effects of this massive proliferation of rules and regulations, (not to mention the unintended consequences thereof), is that they have now far exceeded the government's ability to enforce them. If I, an individual taxpayer, am faced with choice of taking the time and trouble to figure out the true corporate name and address of the hardware store from which I bought $700.00 of shingles for a rental home or saying, "Alright, big-boy, why don't you come down here and make me,? I'm going with the latter. If the American public gives a collective middle finger to D.C. and simply refuses to participate in this BS, they will soon discover how absolutely ineffectual this massive government really is.

But...but...but...they're d... (Below threshold)

But...but...but...they're doing this for our own "good"!

Right Dane?

A modest proposal: repeal a... (Below threshold)
Jay Guevara:

A modest proposal: repeal all legislation passed after Jan. 20, 2009, and outlaw the Democrat Party.

The economy will skyrocket.

Should I run as a write-in candidate?

Simple economic plan to end... (Below threshold)

Simple economic plan to end the recession:
1. 2010 has no taxes. FairTax starts in 2011 at 25%(33%).
2. Economy stabilizes in 2010, with investment and industry flourishing. The cost of governing during 2010 is put on the tab, as usual.
3. 25%(33%) FairTax reduces national debt faster than we spend. Tax reduced to 20% within 5 years, 15% the year after that, and remaining at that level as long as Republicans control Congress.

I can dream, can't I?

"Should I run as a write-in... (Below threshold)

"Should I run as a write-in candidate?"

Got my vote, seeing as they won't let me shoot the bastards.

Bluenight 15% Fede... (Below threshold)


15% Federal Income tax which requires 2/3 majority to raise.
Sunset of SS and Medicare in 15 years.

Student Loan program eliminated
All Federal entailments are Sunset every 24 Months with Full account reports presented at the 18 moth period.

Corporate Tax rates reduced to 15%

Capital Gains at 10%

No taxes on savings.

Gradual Elimination of EPA, DOE OSHA and IRS as they are constituted today.
We need to
1) Reduced the Tax Burden
2) Reduce Spending
3) Allow the Private sector to grow so that over time we can absorb all those government jobs that will be eliminated.
4) All federal workers enjoy the same pay scale as the US military.

Of course, the dreaded "dou... (Below threshold)
Jim Addison:

Of course, the dreaded "double dip recession" is virtually guaranteed, just for starters.

There are far more chilling specters waiting, though - the debt commitments already made are crushing, and who will buy them with the diminished capacity of the recession economy? People ignorantly worry about China's ownership of our debt, but that is simply their wise judgment of the best place to put the US dollars they collect by the "trade deficit." We ought more fear a China with fewer dollars to place due to our decreased purchases, because we must then attract others to buy our debt. And that means higher interest rates.

Bernanke and Obama have only disguised the depths of our financial problems by postponing the reckoning by a year or two. The charade cannot continue much longer.

Sad thing is so many people... (Below threshold)

Sad thing is so many people have accustom to entitlements. Medicare, Medicaid, Social Security, Welfare and all the other social programs big and small out...how do you break that?
What did people do with their sick elderly before nursing homes came about? I know people do live longer. Women use to have to choice to stay home! No longer, most women I know work because the have help the husband bring home the bacon to live a decent life and not in some slum, really to cover the taxes fed/st/property.
We have few children because that is all we can afford, but I see it DAILY welfare families having much bigger families because someone else is supporting them. And the men are just fine with this. How did we get here?
And this is not prejudice against people on welfare, but feelings with plenty of reality attach to it.

"How is this going to he... (Below threshold)

"How is this going to help the economy?"

What makes you think it was designed to?

The bill seems to be a massive heap of ideas thrown together with no regard for how they interacted. No great suprise there - everyone sticks in their bit, it's not a LARGE bit, and certainly nothing complex or troublesome in itself, so why bother checking to make sure it'll play well with the other bits in the bill? It's important, as a legislator, that you've got your name in the bill so you can take credit later on.

But the problem is that the difficulties of each bit don't simply add together - they multiply. That's not taken into consideration by the legislators - because they've got pretty much no idea how business even runs. THEY, you must understand, are beneath such paltry things as making a living or ensuring that the business they depend on runs at a profit.

And then there's that world - 'profit'. A lot of folks on the left have convinced themselves that any sort of profit by any business is morally wrong.

So you end up with an administration that doesn't have any idea what to do to help business, which sees the processes they come up with as much more important than the results of that process, and hates the thought of businesses prospering.

Why shouldn't government be scared - they're seeing the rules they're supposed to run under constantly changing, they have no clue what's coming next, and the last thing they need is another set of convoluted regulations that will provide no real benefit for either business or the government - and require even more effort to comply with.

It's funny - the folks in Washington see business as the source of their money, they do what they can to take as much revenue as possible from them, they MUST understand that without business they won't have jack shit to do anything at all with - and yet they do what they can to take as much revenue as possible without any regard for whether businesses in the US even survive.

I think they do understand they're killing the golden goose. But they don't give a damn.

Can you imagine how long a ... (Below threshold)
David Spence:

Can you imagine how long a 2012 Republican president will be able to blame this crowd for not only "putting the car in the ditch" but driving it of the cliff? I'd say a good 3 years.

The Won misunderstands the ... (Below threshold)

The Won misunderstands the select lever on the Vehicle of The Union D=drunk R=reality.

#7 You left out the NEA, the UN and foreign aid (understandable since there are so many useless expenditures by the feds)

Olsaljer, There... (Below threshold)


There some other things I wanted add but it late. One is that all budgets must be written in plain language ( that being defined as a 8th grade reading level). and no more than 4 pages. Once people start to see the Billions of dollars spent the UN and a lot of foreign aid will become hot buttons and the Congress will not be able to hide the graft.

I also like to see all laws limited to the size of the Constitution and can not contain references to other laws without them being included. Transcripts of all meetings held on bill. This would
1) Allow people to read and vote on something they understand.
2) Would help eliminate pork.
3) Make everyone accountable.

Finally all account rules that apply to the private sector would apply to government.

The entire capital would be frog marched out the door how SS, MC and FM/FM are being run.

I and my friends like to si... (Below threshold)

I and my friends like to sit around and conjecture what a good libertarianesque gov't. would look like too. Of course if you think that just because the R's take over in Nov. we will move towards that...well I have some ocean front property in Nebraska I'd like to sell you!

Let's face it both political parties like the current system of strong central government, I mean what other profession can a person come in on the ground floor, with a net worth of maybe 200k, and within a decade of employment be a multi-millionaire and have a retirement plan that is the envy of the most ardent union negotiator?

Even if the R's had 400 house seats and 80 in the Senate, do you really think there would be fundamental change in our government, with power flowing from states and indiv. to Washington as was intended? There is no way that these career politicians would drive to replace the 16th amendment with a flat tax or include term limits for themselves. How about re-confirmation of federal judges every 10 years, due to increase life expectancy etc.? Not gonna happen.

A new convention is about the only way that power will be taken back, and they work very, very hard to keep us complacent enough to make sure we don't demand that!

A note on the flat tax idea. Always a good one but if you go that route you must exclude a certain amount of income, if the tax is "flat" for all income earners, then someone making 40k/yr would end up paying a greater part of their income to taxation. That person would pay, at 25%, 10k/yr in fed. tax, now after state and local income and property tax, how would they be able to afford their mortgage, insurance and other expenses? Remember under a true flat tax there are no deductions.

Deke -Check out th... (Below threshold)

Deke -

Check out the FairTax.Org site - it answers your objections.

for all those claiming ther... (Below threshold)

for all those claiming there will be no difference between a Dem led House vs a GOP led House in 2011 I would point out that many of the 2010 freshman class will be first timers and almost none of them will be "career" politico's ... they can and will be a powerful block that can force these sort of fundamental changes in Washington ...
If they eliminate earmarks and the vote trading that happens with that we will see some significant changes to the culture of DC ...

Ah, socialism, is there any... (Below threshold)
Tsar Nicholas II:

Ah, socialism, is there anything it can't destroy??






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