Obama and the Economy

© 2010 Rick Adamson

By Rick Adamson 9.22.10

I must admit that I am astonished at President Obama’s lack of understanding of economics and business. He seems to believe that he can (or should be able to) manage all things from the oval office.

His omnipotent personality causes him to get involved in things he has no business doing, e.g. his comments about not going to Las Vegas resulted in the cancellation of 400 conventions in the city according to Nevada Governor, what business is it of his whether a Mosque is built in Manhattan?, calling the police stupid for arresting a belligerent College professor, opposing Arizona’s new Immigration Law (before reading it), whereby people are just trying to protect themselves because the Feds will not.

He should just quit babbling and get out of the way.

He is currently acting out of desperation (due to the upcoming election) to do something (anything) to stimulate the economy. The problem is a lack of demand and he cannot do much about that domestic demand. He has proposed giving business additional write-offs for research and development and for purchased equipment. There is also a tax credit provision on the books for hiring employees.

These types of incentives will not work because businesses will not respond until there is a demand for their products or services. They will not hire people in order to get a tax credit if there is nothing for the employee to do. They will not buy equipment just to get the write-off if they do not need the equipment.

One way to stimulate demand is to encourage companies to export products. What about some incentives/tax breaks in this regard? This would allow business to be more competitive (reducing their selling prices) and result in more exports.

It should be noted that the countries with the best economies at the present time are exporting countries like China, India, Germany and Japan.

Stimulating demand domestically is very difficult and it probably will take a long time to recover because people have been so badly burned.

I think the best thing Mr. Obama could do is to reduce the uncertainly about government policy and let the private sector take care of itself. This could be done by making the Bush Tax cuts permanent, stop all talk about raising any taxes (cap and trade, taxes on companies operating outside of the country, eliminating the Bush Tax cuts and higher taxes on oil and gas companies).

Let’s eliminate as much uncertainly as possible and let the private sector move ahead.

Mr. Obama does not seem to understand that tax increases on companies do not hurt those companies because they just increase the price of their products. So, it forces the consumer to pay higher prices which further reduces demand. This is the opposite of what we now need.

I wish he would just get out of the way and let the economy recover naturally, because it cannot be done by Washington.

More on the Coming Tax Increases

Some Thoughts About the Pending Tax Increases

© 2010 Rick Adamson

By Rick Adamson 9.12.10

The Democrats constantly refer to the Bush tax cuts as tax cuts for the rich. That is a lie. The majority of the tax reductions went to those in the not so rich category.

It has been reported that by letting the Bush tax cuts expire Government revenue would increase by $700 billion per year. It has also been reported that of that figure about 10 percent would come from those making over $250,000 per year.

That leaves 90 percent or $630 billion to be paid by the rest of us. So much for the promise of no new taxes on the middle class.

It, therefore, seems logical that if 90 percent of the tax increase (resulting from the expiration of the Bush tax
cuts) will come from the not so rich then 90 percent of the tax reductions went to these same not so rich people in the first place. This proves that the Bush tax cuts were not only for the rich.

The Bush tax cuts were not such a bad idea. They removed the marriage penalty, increased the child tax credit, made the death tax much more reasonable and reduced the tax rates for everyone, among many other good things.

For example, it has been reported that almost 50 percent of taxpayers do not pay any income taxes. Thanks go to Bush not Obama. This percentage will go down if the Bush tax cuts are allowed to expire and cause more folks to pay tax.

If Obama is so hell bent on taxing the rich just make one simple change. Make the Bush tax cuts permanent and add a new tax bracket for income over 250,000—39.6. Stop.

In addition, in my personal opinion, the estate tax should be reinstituted for estates above $5,000,000 with a maximum rate of 35 percent.

As an aside, the problem with our deficit is not so much the tax cuts but the fact that Government spending increased so much. Spending increases have exceeded the effect of the tax cuts by nine times.

Lastly, we could just scrape the whole damn mess and put in the Fair Tax Plan. To read about that select the “A case for the Fair Tax Plan” post.

USA Today Article on Debt

Check out this article:

http://www.usatoday.com/news/opinion/editorials/2010-05-06-editorial06_ST_N.htm