About Me

Name: ApolloSpeaks
Email: reninvest2007@aol.com Biography
Loading...

Create Your Own Blog Find Other Townhall Blogs

Comments

Blog Roll

OBAMA'S FISCAL CLIFF FOLLY

Posted by ApolloSpeaks on Monday, December 03, 2012 12:00:17 PM

 

Is the economic dunce in chief about to kill his recovery like FDR did in 1937?

I posted this comment on HuffPo:
 
Has the worst presidential reelection victory in US history spun Obama's head around  and warped his political and economic judgment? After Geithner's meeting with Republicans last week it certainly appears so. It appears that Obama has completely lost his mind and is ideologically obsessed with his class warfare nonsense and ridiculous assertion that fixing the debt and deficit hinges on taxing the rich-the most productive members of our society. After telling the public in 2010 that not extending the Bush tax rates on all Americans (rich, poor and in between) would damage his fragile, pathetic, trickle growth Keynesian recovery how will Obama explain himself if the economy should worsen and possibly crash into a recession upon letting the Bush rates expire? 24/7 Fox News, Rush Limbaugh, the Conservative Media, John Boehner, McConnell and the Republicans will be raising a storm that the mainstream media can't ignore about Obama intentionally crashing the economy as a premeditated plan to pin the blame on Republicans and win back the House for the Dems. If this is what Obama has in mind (and defying his own warning about the disastrous consequences of letting the Bush rates expire he lets that happen) he will not escape blame if the economy tanks-and Republicans will keep the House and possibly capture the Senate. Indeed, this act of economic folly will be seen as one of the greatest miscalculations and blunders in US political history.
 
Bob Morrow writes:
 
"Apollo,
 
Your PROOF that the economy will tank is...?

You completely ignore that Obama wants the tax rates for middle and lower income people left in place, and taxes raised for those over $250,000. It's the Republicans who refuse. And you blame their actions on Obama??? Where's your rant against them?

Your universe is truly twisted...as is your post."

My reply

The proof lies in the history of raising taxes on upper income Americans, especially during an economic crisis. After Wilson raised top marginal rates from 9% to 70% to pay for World War I the economy in 1920 went into a deep depression with businesses failing, banks closing and unemployment surging. After Hoover raised top rates from 24% to 65% in 1932 the UE rate hit 25% the following year, the highest in our history. After FDR raised top rates from 65% to 90% in 1936 (and imposed an excess profits tax on corporations) the UE rate soared to 20% in 1937 with 2 million workers losing their jobs. And I could go on.

Bob Morrow replies

"You're only telling a small part of the story, Apollo.  Upper tax rates remained above 70% from 1936 until 1981.  From 1948 (I don't have numbers for earlier) until 1975 the unemployment rate rose above 6% TWICE, and that's in 27 years.

You are also trying to infer that those UE numbers are only because of higher taxes on upper incomes.  That's complete and utter bunk, and you know it. 

Wilson reacted to a depression brought on by returning troops from WWI which created a surge in the civilian labor force and the sudden drop in war-time production  The depression lasted 18 moths, the unemployment rate went from 5.2% to 11.7%.  And the largest fault for that was massive deflation, wholesale prices falling by 36.8%.

Hoover's tax raise was ACROSS THE BOARD, with a graduated surcharge and a raise of corporate rate from 13.75 to 15%.  "The Revenue Act of 1932, was one of the greatest increases in taxation ever
enacted in the United States in peacetime. The range of tax increases
was enormous. Many wartime excise taxes were revived, sales taxes were
imposed on gasoline, tires, autos, electric energy, malt, toiletries,
furs, jewelry, and other articles; admission and stock transfer taxes
were increased; new taxes were levied on bank checks, bond transfers,
telephone, telegraph, and radio messages."  (-Wiki)

What you fail to grasp Apollo is that Hoover and FDR's huge tax hikes are nothing compared to Obama's call to raise rates on ONLY TOP EARNERS by returning to the Clinton era rates of 39%.  What's 39% compared to Hoover's 65% and FDR's 90%? It's a trifle."

My reply

Who is telling only part of the story? There were post-war recessions where unemployment rose above 7%: one under Truman (1948-49), and two under Ike ( 1958-58 & 1960-61). Were it not for the boom in exports due to an exploding demand for US goods and services from a war ravaged world the economy after the war would have crashed from the same burdonsome, insane FDR tax rates that killed the recovery in 1937 and discredited the New Deal.

What ended the Wilson Depression and sent the economy soaring in the 1920s was Harding/Coolidge slashing taxes, spending and  crushing regulations. They took the  boot of big government off the neck of the American people put there by Wilson. This created an environment of certainty, optimism and growth for consumers, businesses and banks that brought unemployment down to unheard of levels of under 2%-not seen again until World War II.
 
Because the economic illiterate in the White House (with his pathetic trickle growth Keynesian recovery) is narrowly and stupidly focused on tax hikes, new stimulus spending and regulations (not cutting taxes, spending, gov't growth and control) to rein in the deficit and debt a pessimistic business community seeing the worst ahead is scared sh*tless that the expiration of the top Bush rates is just the beginning of massive Hoover-FDR-like soak the rich tax hikes. Consequently we're seeing a dangerous recessionary drop in capital investments: businesses aren't hiring, investing and expanding to protect their profits-and venture capital investment is also in decline  Obama (who's projecting the image of an anti-business, tax-em-to-death class warfarer) is foolishly doing the opposite of what Harding/Coolidge, Kennedy/Johnson and Ronald Reagan did to restore certainty and confidence about taxes and regulations to the business and finance world. Obama's scaring the job creators and lenders and that's utterly stupid.
 
 
Bob Morrow replies

"Sorry, that's not going to happen.  The public already blames CONGRESS, specifically the Republicans.  It's the REPUBLICANS who created this cliff.  Only FOX blames Obama. Besides 65% of the electorate agree with Obama that the Bush rates should expire on the rich. "

My reply

If we go over the cliff and the economy tanks at first the Republicans will get the blame until the public is reminded of Obama's warning in 2010, and how he extended all the Bush rates to avoid hurting the economy. Moreover, before anything else the public wants the booming recovery promised by Obama in 2009; the public is always for higher taxes on the rich in good and bad times; but they don't see any connection between tax hikes on anyone and creating the promised boom. Americans want a robustly growing economy and give very little importance to bloody tax hikes.
 
Websites linking this piece are as follows:
 
Email ItEmail It | Print ItPrint It | CommentsComments (0) | TrackbacksTrackbacks (0) | Flag as offensiveFlag as Offensive