Stop the Obama Tax Hikes

Let us survey the wreckage of Obamanomics, which followed in detail the opposite of every policy of Reaganomics.

Unemployment has been near 10% for over a year now, after reaching 9.7% in August 2009. The Bureau of Labor Statistics reports the U6 unemployment rate, which includes the unemployed, those marginally attached to the labor force (discouraged), and those working part time for economic reasons, at 17%, nearly the highest since the Great Depression.

African Americans suffer long-term, depression-level unemployment of nearly 16%, Hispanics 12.6%, teenagers 27.1%. The employment-population ratio, the percent of Americans with jobs, has spiraled down from over 63% in 2007 to 58.3% today.
Nearly 15 million Americans are unemployed, over 40% of those, 6.2 million, unemployed for over 6 months, also the highest since the Depression. Another 2.6 million were marginally attached to the work force, having looked for a job in the past year and given up. Another 9.2 million are working part-time "because their hours had been cut back or because they were unable to find a full-time job." That leaves 26.6 million Americans unemployed or underemployed.

The Census Bureau reports that 44 million Americans are in poverty, the highest in the 51 years it has been keeping records. A record number of Americans are on food stamps, and under Obamacare soon a record 85 million Americans will be on Medicaid, the health care program for the poor. In September, a record 100,000 Americans lost their homes in foreclosure.
Before this latest recession, as previously noted in this column, U.S. recessions since World War II have lasted an average of 10 months, with the longest previously being 16 months. This latest recession started in December 2007, 35 months ago. Even if the recession technically ended last summer, America should not be suffering all this economic misery nearly 3 years after the recession began.

Quite to the contrary, historically the American experience has been the worse the recession, the stronger the recovery. Real economic growth in the first 4 quarters of Reagan's recovery from the deep 1981-82 recession was a whopping 7.7%. Even the recovery under President Ford from the deep 1973-74 recession sported real economic growth of 6.2%. A similar boom was generated after the 1960-61 recession by the Kennedy tax rate cuts, even though that recession was not so severe.

TAKE ACTION: Stop Obama from Killing The Bush Tax Cuts!

America is teetering on the brink of a Greece-style total economic meltdown. The CBO (Congressional Budget Office) has issued an urgent warning to the spendaholics in Washington: either control your spending or the U.S. will face a debt crisis even more severe than Greece or Ireland. --

Take Action to PRESERVE the Bush Cuts by Selecting Here!

But under President Obama's policies, the downward spiral in economic growth has already begun again. Real GDP growth has fallen from 5% in the fourth quarter of 2009, to 3.7% in the first quarter of this year, to near 2% in the second and third quarters. Indeed, more than a year after the recovery supposedly got under way, GDP is still below its previous peak in the fourth quarter of 2007. By contrast, in the Reagan recovery, the economy soared past its previous peak in 6 months.

This is the result after 3 years of historically easy, expansionary, Fed monetary policy, with interest rates at record lows near zero percent. There is nowhere for those rates to go from here but up. The economy this year has also benefitted from the specter of Obama's sharply increasing tax rates starting next year, causing producers to scramble to earn what they can before the grim reaper arrives. The increased regulatory costs of the EPA's developing anti-carbon crusade, financial reg reform, and Obamacare will also push the economy down not up next year.
This is all why the Fed recently announced that it is going to bring back inflation to try to revive the economy. That shocker is already causing chaos in the markets, with gold soaring to new records, well past the S&P 500, the dollar steadily declining, and commodity prices spiking, including ominously oil.

Of course, this Fed reflation is not going to work either, because as Milton Friedman explained long ago, easy money from the Fed does not change the real economy. It is just going to bring back the 1970s with a vengeance, combining long-term stagnation with inflation. This is the result of President Obama's stubborn, Rip Van Winkle return to the Keynesian economics of the 1970s, play acting like nothing has happened since 1980 to prove how braindead those economic policies are.

Dr. Obama's Marxist Elixir

In this economy, President Obama's plan is to increase the top tax rates on the nation's employers and investors for every major federal tax, starting on Jan. 1. That includes a nearly 20% increase in the top two income tax rates, counting the phaseout of deductions and exemptions. The top capital gains tax rate is scheduled to soar by nearly 60%, counting the application of Obamacare's new 3.8% tax on investment income. The tax rate on dividends is scheduled to nearly triple, from 15% to 43.4%, counting the new Obamacare tax as well. The Obamacare legislation also increased the Medicare HI payroll tax rate by 62% for higher income earners. The death tax would also be restored with a 55% top rate.

Does that sound like what our country needs right now? Is that going to create jobs, or lose jobs? Art Laffer explained earlier this year what we can expect from such a tax tsunami, [W]hen the U.S. economy comes to 2011, the train's going to come off the tracks…. The tax boundary that will occur on January 1, 2011 tells me that GDP growth in 2010 will be some 6% to 8% higher than GDP growth in 2011. A year on year decline from trend of some 6% to 8% in GDP growth would represent a larger collapse than occurred in 2008 and early 2009.

Written by PETER FERRARA The American Spectator – Cross-Posted at CAA Opinion on November 10, 2010, 12:45 PM

Blog Comments

Name:  Matt Comment:

One quick cure for the unemployment rate...DEPORT THE ILLEGALS STEALING OUR JOBS!!! Never mind, Obama would rather give them amnesty and free government benefits while they get paid under the table and pay no taxes.

Name: Jo Ann Allen Comment:

This illegals invasion is a total disgrace to our nation and it has to be stopped NOW it is sucking the life blood out of this country we have no obligation to support these people that have broken the law coming here in the first place and the more stuff you give them FREE is just going to encourage more illegals to come and get all the free stuff CAN'T YOU PEOPLE SEE THAT OR ARE YOU TO STUPID TO SEE IT we are spending money on these outlaws that SHOULD BE SPENT ON OUR OWN CITIZENS there are plenty of poor and homeless citizens that could use that help I AM FED UP WITH THIS CRAP WANTING TO GIVE EVERYTHING TO ILLEGALS AND AT THE SAME TIME WANTING TO DENY OUR OWN CITIZENS YOU COULD PUT ALL OF THE MONEY YOU SPEND ON ILLEGALS TO BRING DOWN THE DEPT OF THIS COUNTRY DO IT NOW STOP PAYING ILLEGALS TO COME HERE.

Name:  Jo Ann Allen  Comment:

This illegals invasion is a total disgrace to our nation and it has to be stopped NOW it is sucking the life blood out of this country we have no obligation to support these people that have broken the law coming here in the first place and the more stuff you give them FREE is just going to encourage more illegals to come and get all the free stuff CAN'T YOU PEOPLE SEE THAT OR ARE YOU TO STUPID TO SEE IT we are spending money on these outlaws that SHOULD BE SPENT ON OUR OWN CITIZENS there are plenty of poor and homeless citizens that could use that help I AM FED UP WITH THIS CRAP WANTING TO GIVE EVERYTHING TO ILLEGALS AND AT THE SAME TIME WANTING TO DENY OUR OWN CITIZENS YOU COULD PUT ALL OF THE MONEY YOU SPEND ON ILLEGALS TO BRING DOWN THE DEPT OF THIS COUNTRY DO IT NOW STOP PAYING ILLEGALS TO COME HERE.