Obama and the Economy

[McBell]

I said "so far"

nag nag nag

Fine.
point for you.

*grumble grumble grumble*

 

[Revoltingest]

Come to think about it, George W. Bush did send everyone a check. Great minds think alike Mestemia.

That's a myth. Very few people I personally know actually got one. Most of us didn't qualify for one reason or another (eg, too much income).

 

[Revoltingest]

I think that by now, I have established that I'm no conspiracy theorist. The fact that the statement was made by an insider is the only reason I gave it any weight. Obviously, the money isn't going into the economy right now, so you tell me - where is it?

Good question. Banks are being required to have a higher ratio of deposits to loans than before. That, & the current climate of high risk, mean that they're retaining more money. That makes more sense than the conspiracy theory. Insiders can be crazy too....actually, crazies seem over-represented in gov't.

I understand your feelings. It should then be pretty obvious that big business isn't helping the country get out of the mess we are in.

Business (big & small) is the only way out. But what should they do if their markets aren't growing? They can't start hiring, buying & producing without being able to sell the increased production. We need to get gov't out of the way. I spend more of my time dealing with gov't than with my business. I just finished winning a 2+ year to get my illegally high property taxes lowered about 40% per property. Now I have a new fight with the IRS over payroll taxes for 2007, 2008 & 2009....years in which I had no employees. When one battle ends, another looms. Government is run by crooks & fools with way way too much power over us.

 

[Revoltingest]

I'm not saying that no corporations ever pay any taxes. You and I both know that such a sweeping generalization would be foolish. I am saying that, since the Bush tax cuts took effect, the largest corporations have experienced a windfall of not paying taxes. Not that it should come as any surprise, but the energy corporations (read that as "oil companies") have made out like bandits. They have (collectively) paid virtually nothing over the last decade or so.

I have no idea what the totals are.

You have no idea, yet you're certain they pay little or no taxes. How do you know this then?

I listen to NPR all day. They foster a climate of thinking the wealthy & big business don't pay much in tax. They do this using the "parade of horribles fallacy", focusing on examples to make their point, rather than cogent analysis of the entire situation. It's easy to see where people get beliefs based upon the opinion of some talking heads rather than on actual data.

But let's say Ford pays no taxes. If the gov't started taking a few billion a year, who do you suppose will pay these taxes? The shareholders (eg, retirees, investors) who see their dividends reduced? The car buyers who will pay higher prices. Increased taxation in a declining economy is a recipe for full blown depression.

The double hit that shareholders get is wrong (in my opinion). Then again, if corporations were not treated like individuals (fiscally speaking), that problem would be resolved.

If you're referring to the recent USSC decision regarding spending for political speech, corporations have rights similar to an individual for this purpose, but not for taxes. Corporations are not treated as individual citizens...their financial liability is limited, their tax rates are different, loss pass thru is different, etc. Have you ever formed or owned one?

 

[The Voice of Reason]

I gotta go here Phil, How many jobs has Obama created so far? Not saved or created either OK?

I understand the question, but I have to ask why you don't want to count jobs saved?

I'm not really sure how you could quantify that, but if you could, why wouldn't you want to count it? I mean, he inherited negative job growth, so to me, a job saved would count every bit as much as a job created.

 

[Engyo]

I understand the question, but I have to ask why you don't want to count jobs saved?

I'm not really sure how you could quantify that, but if you could, why wouldn't you want to count it? I mean, he inherited negative job growth, so to me, a job saved would count every bit as much as a job created.

Should probably count as equal or better. How many people have a new job that is the equal of or better than the job they lost in this recession?

From the accounts I hear, the trend is to the new job generally having lower pay/benefits in addition to often being in an industry in which the jobholder has less experience & qualifications. It would be interesting to see some statistics on this.

A case in point: http://www.takeourjobs.org

 

[The Voice of Reason]

Business (big & small) is the only way out. But what should they do if their markets aren't growing? They can't start hiring, buying & producing without being able to sell the increased production. We need to get gov't out of the way. I spend more of my time dealing with gov't than with my business.

I work as the Director of Operations for an international company. Trust me, I don't need the lesson in how money flows through the economy.

While I agree with your statement that we need business (big and small) to get us out of this morass, we disagree (greatly) on how to get that process started. When orders come in, a company does not ask where the money came from to spur that order. It simply responds to the request for more of its goods. If the government is the customer, that's fine. This is exactly what drives the military industrial complex. Spending by the government is absolutely the most effective method for jump starting this sagging economy.

You and I agree on the other end of the process - when the economy is up and running at full speed, we need to reign in government spending and get to work on reducing our national debt.

The bottom line is, if the government stops spending right now, this economy is going to go straight into the toilet.

Government is run by crooks & fools with way way too much power over us.

I understand the frustration, and to a degree, I concur. On the other hand, I don't think that everyone in government is a fool, or that everyone is corrupt. The problem is that we (as an electorate) allow the corrupt and the liars to remain in power through our apathy. Shame on us.

As for the power that government holds, I see that as a necessary evil. Without someone working in regulation, companies are left to their own devices. If history teaches us anything (especially recent history), it's that companies tend not to have a conscience.

 

[The Voice of Reason]

You have no idea, yet you're certain they pay little or no taxes. How do you know this then?

Okay, here you go. http://money.cnn.com/galleries/2010/news/1004/gallery.top_5_tax_bills/index.html
Please note the effective income tax rate paid in the US in the stories about the 5 companies.

I listen to NPR all day. They foster a climate of thinking the wealthy & big business don't pay much in tax. They do this using the "parade of horribles fallacy", focusing on examples to make their point, rather than cogent analysis of the entire situation. It's easy to see where people get beliefs based upon the opinion of some talking heads rather than on actual data.

You seem to think that I owe you a nicely formatted spreadsheet that lays out the tax filings for every company in the last thirty years. That ain't happening. You claim that all these corporations are paying taxes out the yingyang, and that they will go broke if they have to pay another red cent to Uncle Sam. I'll offer your own argument back to you. Show me the total taxes paid by each company, and show me how close to bankruptcy they are. Does that sound like a ridiculous demand on my part?

But let's say Ford pays no taxes. If the gov't started taking a few billion a year, who do you suppose will pay these taxes? The shareholders (eg, retirees, investors) who see their dividends reduced? The car buyers who will pay higher prices.

This is one of the oldest arguments put forth. If Ford decides to pass that cost along to the consumer (as it does with other costs of business) that is their choice. As a free market capitalist, you tell me - which manufacturer will sell the most product - the one that passes all of that cost along, or the one that takes a slightly smaller margin of profit?

Increased taxation in a declining economy is a recipe for full blown depression.

We aren't talking about increasing taxes. We are talking about collecting the taxes that these companies ALREADY OWE.

Corporations are not treated as individual citizens...their financial liability is limited, their tax rates are different, loss pass thru is different, etc. Have you ever formed or owned one?

Yes, I have started two different companies in my own name, and I am in the process of acquiring an existing company with two other business associates. Your statement about corporations and their liabilities is greatly effected by the form of incorporation, but you already know that.

 

[Revoltingest]

While I agree with your statement that we need business (big and small) to get us out of this morass, we disagree (greatly) on how to get that process started. When orders come in, a company does not ask where the money came from to spur that order. It simply responds to the request for more of its goods. If the government is the customer, that's fine. This is exactly what drives the military industrial complex. Spending by the government is absolutely the most effective method for jump starting this sagging economy.

If the gov't spends money, they must get it from somewhere. Is it by printing, taxation or borrowing? Either way, it is wealth taken from the private sector, which is a damper on the economy. The gov't justifies this by saying that if the private sector spends a dollar, the gov't is better off taking that dollar & generating....say $3 worth of activity. I don't trust this model, not just cuz it makes no sense, but also because other gov't predictions have failed, eg, that unemployment wouldn't go above 8%.

The bottom line is, if the government stops spending right now, this economy is going to go straight into the toilet.

It's been going further & further into the toilet with this massive deficit spending
strategy. This is akin to a gambler solving his financial problems by gambling more.

I understand the frustration, and to a degree, I concur. On the other hand, I don't think that everyone in government is a fool, or that everyone is corrupt. The problem is that we (as an electorate) allow the corrupt and the liars to remain in power through our apathy. Shame on us.

The most corrupt & inept of them make the prettiest promises, eg, Obama. People as a group generally don't learn. 2012 might not yield better quality voting.

As for the power that government holds, I see that as a necessary evil. Without someone working in regulation, companies are left to their own devices. If history teaches us anything (especially recent history), it's that companies tend not to have a conscience.

Regulation is absolutely necessary. The problem is inept, corrupt & overly ambitious regulators.

 

[Revoltingest]

Okay, here you go. http://money.cnn.com/galleries/2010/news/1004/gallery.top_5_tax_bills/index.html
Please note the effective income tax rate paid in the US in the stories about the 5 companies.

I read a couple. When you lose money, it's true that you don't pay taxes...usually, but not always. Still, the article is anecdotal, rather than comprehensive.

You seem to think that I owe you a nicely formatted spreadsheet that lays out the tax filings for every company in the last thirty years.

A little histrionic, eh? I'm just thinking there is a gov't breakdown showing sources of revenue over a period of years. I don't demand that you support your claim that they all pay little or no taxes, but I won't accept it either. (Aggressive claims should be supported. Example: When I've made the novel claim that federal regulation increased under Bush, I cited economic papers.) I do know that all the small business around me take their income out as wages so as to avoid corporate taxes. This is why most corporations don't pay them...they're small & run for the benefit of the principals.

You claim that all these corporations are paying taxes out the yingyang, and that they will go broke if they have to pay another red cent to Uncle Sam.

I made no such claims. I do believe that they pay a lot of tax. I also believe that if you increase the tax, then we consumers will ultimately pay it. Therefore, it pays to not soak them, ie, taxes should be reasonable. Did I mention that there's no free lunch?

I'll offer your own argument back to you. Show me the total taxes paid by each company, and show me how close to bankruptcy they are. Does that sound like a ridiculous demand on my part?

See above.

This is one of the oldest arguments put forth.

What's wrong with an argument's age?

If Ford decides to pass that cost along to the consumer (as it does with other costs of business) that is their choice. As a free market capitalist, you tell me - which manufacturer will sell the most product - the one that passes all of that cost along, or the one that takes a slightly smaller margin of profit?

I was addressing the notion that we cannot simply bail ourselves out of a gov't financial crisis by just raising taxes against evil corporations. There will be an associated cost, & we will pay it.

We aren't talking about increasing taxes. We are talking about collecting the taxes that these companies ALREADY OWE.

If they owe back taxes, rest assured that the IRS will pursue them for it.

Yes, I have started two different companies in my own name, and I am in the process of acquiring an existing company with two other business associates. Your statement about corporations and their liabilities is greatly effected by the form of incorporation, but you already know that.

Then why the remark that corporations are fiscally the same as citizens? If you've formed a corporation, then you'd be well aware of their structures.

 

[Darkness]

Some interesting figures from today's Washington Post:

In January 2009, at the beginning of Obama's presidency, the Dow was at 7,949 and the economy had lost 779,000 jobs that month.

This week, the Dow is at 10,300 and people are complaining because the economy "only" gained 83,000 jobs last month.

Also, financial reform passed today.

I find it absurd that the Republicans are complaining that Obama isn't getting the country out of the mess that they created fast enough, especially when they fillibuster or vote lock-step against every bill that comes up in the Senate.

Now, I am a Democrat, so please do not take what I am about to say as opposition and react defensively to it. The economy needs to expand at well over 100,000 jobs a month in order for it to keep pace with the expanding population base. 83,000 is certainly better than 779,000 jobs lost, but it is not what we need to avoid another lost decade or Japan style-malaise. It is somewhat disingenuous for the Administration to take claim for the "recover." The stimulus plan just offset the decrease in spending by state and local governments, so it really only had a stabilising effect of keeping Government spending in the economy at the same level. Every Keynesian economist realised that the stimulus needed to be larger. I am not saying we should not have passed it, but it was about the worst example of Keynesian fiscal stimulus I have seen. The financial reform bill is a step in the right direction, but it leaves too many decisions in the hands of the Federal Reserve and the discretion of the new Consumer Protection Agency. We need written rules that are concrete enough that they cannot be dissolved by regulators who believe the market is self-regulating. Like Paul Krugman said, we need a set of rules that will operate effectively should Sarah Palin become president.

My favourite quote from John Maynard Keynes is, "The long-run is a misleading guide to current affairs. In the long-run we are all dead. Economists set themselves too easy a task, too useless a task if in tempestuous seasons they can only tell us that when the storm is passed the ocean is flat again."

 

[Revoltingest]

The financial reform bill is a step in the right direction, but it leaves too many decisions in the hands of the Federal Reserve and the discretion of the new Consumer Protection Agency. We need written rules that are concrete enough that they cannot be dissolved by regulators who believe the market is self-regulating. Like Paul Krugman said, we need a set of rules that will operate effectively should Sarah Palin become president.

So very true dat! Be it Obama or Palin, a system should perform well regardless of which leader reigns.

My favourite quote from John Maynard Keynes is, "The long-run is a misleading guide to current affairs. In the long-run we are all dead. Economists set themselves too easy a task, too useless a task if in tempestuous seasons they can only tell us that when the storm is passed the ocean is flat again."

I hate this quote for a couple of reasons. The long run is what should define good policy, ie, setting up rules & facilities to encourage productivity, stability & equitability. In the short run, even economists lack the wisdom to design a response to a problem, but I admit that they would be the ones to do it. Unfortunately, politicians are the ones who actually decide upon & implement the solutions, & their concerns are more political than economic. Economists (a diverse lot) play no real role, because leaders will hire the ones who say what they want to hear. So it doesn't matter if a Friedman, Keynes or Krugman is the one with the truth....one's agenda would be picked based upon the whim of the leader de jour.

If it sounds like I think we're doomed, it's cuz I think we're doomed.

 

[Troublemane]

Personally, I cannot blame Obama for the state of the economy, as he is really just an activist and he has absolutely no understanding of economics or how to get this country back on track.

Couple that with the totally inept congress, who are celebrating the passage of a "financial reform" bill (which gives government the power to seize control of any company they deem is acting fiscally irresponsibly....), which they claim makes "too big to fail" a thing of the past :biglaugh:

So yeah, with the White House going around making statements like "the economy really is much better now", making claims that the stimulus created OR saved 3 million jobs... meanwhile unemployment figures have dropped, not because people have been getting jobs, but because unemployment benefits have run out for over a million people. (if you check, you find that while unemployment claims has dropped, last month in the same amount extensions for unemployment benefits increased, so it really means that people have lost their benefits, not that they have become suddenly employed)...

Ya, with the White House making absurd claims like this, and a Congress that celebrates passing a bill which basically is going to massively weigh heavy on small business (and help big business, who have the funds and lawyers to work around it), at a time when small businesses are struggling and afraid of what their taxes are going to be next year anyway (what with the Bush Tax Cuts about to sunset, and Obamacare about to kick in)....I think it is ridiculous to think this president or congress should be held responsible for anything happening in the economy.

I mean, quite clearly they have not a freakin clue about anything they are doing, or how it will effect the economy, so I say why blame them? they are just politicians, after all! :trampo:

 

[Internecivus Raptus]

I dunno; everynody vilifies Bill Clinton, but somehow he managed to run surpluses for several years in a row while dealing with sex scandals and with the opposition in control of Congress. Maybe we oughta be figuring out how that happened................

I agree. Clinton was an excellent financial manager. Bush criticized Clinton for running surpluses, saying that the American people had been overcharged and needed a "refund". Then the Republicans passed the two Bush tax cuts that exploded the deficit.

 

[Internecivus Raptus]

Personally, I'd like to see a second stimulus package that is directed toward small businesses and working class people.

When that has had time to impact the economy (say two years), then I'd like to see us start really carving up the budget.

Exactly. We shouldn't even be looking at the deficit as long as we're still in danger of dipping back into a recession. According to Paul Krugman, who won the Nobel Prize in economics, we haven't even begun to spend the amount of money in stimulus that we need to get out of this.

 

[Internecivus Raptus]

Every Keynesian economist realised that the stimulus needed to be larger.

I agree. From what I've read, we haven't spent anywhere near what we need to.

 

[Darkness]

So very true dat! Be it Obama or Palin, a system should perform well regardless of which leader reigns.

I perfect reason why even if a dictator is good, a dictatorship is a terrible idea.

I hate this quote for a couple of reasons. The long run is what should define good policy, ie, setting up rules & facilities to encourage productivity, stability & equitability. In the short run, even economists lack the wisdom to design a response to a problem, but I admit that they would be the ones to do it. Unfortunately, politicians are the ones who actually decide upon & implement the solutions, & their concerns are more political than economic. Economists (a diverse lot) play no real role, because leaders will hire the ones who say what they want to hear. So it doesn't matter if a Friedman, Keynes or Krugman is the one with the truth....one's agenda would be picked based upon the whim of the leader de jour.

I have another Keynes quote that is just perfect. Last one I promise. "The whole conduct of life... into a sort of parody of an accountant's nightmare. We destroy the beauty of the countryside because the unappropriated splendours of nature have no economic value. We are capable of shutting off the sun and the stars because they do not pay a dividend." Economics is an amoral system, so it needs a political vision to guide it.

If it sounds like I think we're doomed, it's cuz I think we're doomed.

Can I have a place on your compound if the world goes to hell?

 

[Revoltingest]

I have another Keynes quote that is just perfect. Last one I promise. "The whole conduct of life... into a sort of parody of an accountant's nightmare. We destroy the beauty of the countryside because the unappropriated splendours of nature have no economic value. We are capable of shutting off the sun and the stars because they do not pay a dividend." Economics is an amoral system, so it needs a political vision to guide it.

I concur with that one. We may quibble about the details of that vision, but a vision is useful.

Can I have a place on your compound if the world goes to hell?

Revoltistan has a very liberal immigration policy. Welcome aboard!

 

[Aquitaine]

The financial reform bill is a step in the right direction, but it leaves too many decisions in the hands of the Federal Reserve and the discretion of the new Consumer Protection Agency.

Aye, and considering the sheer lack of transparancy from the Federal Reserve, as well as the lack of Congressional oversight, I personally wouldn't want more power to be given to that institution.

 

[Mercy Not Sacrifice]

Just in case anyone's forgotten.