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FreeRepublic , LLC PO BOX 9771 FRESNO, CA 93794
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Posted on 01/17/2003 5:30:08 PM PST by kattracks
Capitol Hill (CNSNews.com) - The former majority leader of the Republican-led U.S. House of Representatives said Friday he welcomes attempts by President Bush's opponents to steer public debate toward the issue of the economy.
Dick Armey, who recently retired from the House after representing a Texas district for nine terms, the last four as Republican majority leader, said the attempt by Democrats to distract attention from the public approval of President Bush's handling of the war on terrorism will backfire.
House and Senate Democrats held press conferences and wrote editorials throughout the week criticizing the president's $674 billion economic stimulus plan.
"It is a fiscally irresponsible, ineffective, ideologically driven wish list that is oblivious to the problems our faltering economy is facing, one that looks far more like a sugar-coated political placebo than a real policy prescription to cure what ails America's economy," wrote Sen. Joseph Lieberman (D-Conn.), one of a half-dozen Democrats competing to take on Bush in the 2004 presidential elections, Sunday.
"If I were talking to the White House today, I'd say, 'Go ahead and change the subject. Make my day,'" said Armey, the new co-chairman of Citizens for a Sound Economy (CSE). "Because if you turn the discourse to the president's economic plan, the president will gain ground on his opponents."
Armey believes that as more details of the president's plan are revealed to the public, support for the proposal will increase.
"It finally comes down to what I've always said," Armey told reporters during a telephone conference call Friday, "Republicans always prosper when the public does understand, Democrats always prosper when the public doesn't understand.."
Results of a poll taken by the Tarrance Group for CSE support Armey's contention.Open Tarrance Group Power Point Presentation
"We asked two questions - support for the economic plan and the president's job approval - both at the beginning of the survey and after a series of fact questions," explained Ed Goeas with the Tarrance Group.
"With only 59 percent hearing something about [the president's plan], of those voters 42 percent approved, 39 percent disapproved," he continued. "After running through the 12 fact points, it moved to 68-27."
From Jan. 13-15, pollsters asked 1,000 registered voters, 26 questions, including whether they would be more or less likely to support the Bush plan based on information about its 12 major components:
- "The tax cuts passed by Congress last year would be made effective immediately, and the amount withheld from a taxpayer's paycheck would be decreased right away, meaning higher take home pay for workers this year." 74 percent favored, 3 percent opposed, 22 percent had never heard of this element.
- "The marriage penalty tax would be eliminated now, instead of the year 2009, lowering taxes for millions of married couples." 77 percent favored, 4 percent opposed, 15 percent had never heard of this element.
- "The child tax credit would be increased to $1,000 per child; this means a person would get $400 more in tax relief, per child, this year." 80 percent favored, 3 percent opposed, 14 percent had never heard of this element.
- "This year, millions of working people would be moved into the lowest tax bracket of 10% in order to help lower income families get a solid start to economic freedom." 75 percent favored, 6 percent opposed, 18 percent had never heard of this element.
- "Under President Bush's economic plan, the top one percent of wage earners would pay a greater share of the income tax burden than what they pay now." 60 percent favored, 7 percent opposed, 30 percent had never heard of this element.
- "The tax deduction for small businesses to purchase equipment would be increased from $25,000 to $75,000." 71 percent favored, 3 percent opposed, 23 percent had never heard of this element.
- "The plan would eliminate the double taxation of dividends for stockholders. This means that dividend payments made to individuals would not be counted as taxable income." 62 percent favored, 4 percent opposed, 32 percent had never heard of this element.
- "With the new plan, seniors would get over half the tax relief resulting from the elimination of the taxation on dividends." 75 percent favored, 5 percent opposed, 19 percent had never heard of this element.
- "In addition to tax relief, President Bush's economic plan also calls for unemployment benefits to be extended to help those Americans who have been recently unemployed." 81 percent favored, 2 percent opposed, 15 percent had never heard of this element.
- "In addition to regular unemployment benefits, a new Personal Re-employment Account system would be set up to provide resources to help displaced workers find a job more quickly." 83 percent favored, 3 percent opposed, 13 percent had never heard of this element.
- "With the new Personal Re-employment Accounts, unemployed Americans who find a job within 13 weeks or less would be able to keep any leftover money in their re-employment account as a bonus. This encourages people to find work more quickly." 72 percent favored, 4 percent opposed, 22 percent had never heard of this element.
- "Please tell me if hearing this information would make you more likely or less likely to support the President's economic plan. The President's economic plan takes a significant step towards fundamental tax reform, by making the tax code simpler, fairer and flatter." 76 percent more likely, 19 percent less likely.
Goeas stressed that the Tarrance Group was careful in constructing the survey not to lead respondents toward predetermined conclusions.
"These were clearly not 'push' questions that you may have seen in other types of surveys," he said noting the second half of the statement on the $1,000 child tax credit.
While the statement would have been technically accurate without including the fact that taxpayers making less than a certain amount would only receive an additional $400 per child in 2003, Goeas felt it would be misleading not to include the additional information.
Economists Weigh In
The National Taxpayers Union organized a group of 111 economists, who signed a letter to Congress Friday encouraging members to adopt the key elements of the Bush plan.
"As a rule, government cannot create wealth or expand the economy," the signatories concluded. "Government can, however, hinder economic growth through excessive taxes, high marginal tax rates, over-regulation, or unnecessary spending. Accordingly, elected leaders should be working to adopt measures that curb or halt government policies that are hurting the economy."
Goeas said his telephone survey results match the opinions he has received in person from focus groups around the nation over the past five days.
"Clearly [the president] has a good plan here that, if communicated to the American public, will be very successful and very well received," the pollster said.
Democrats continued picking the plan apart throughout the week, attacking even the most popular of its provisions. Sen. Mark Dayton (D-Minn.) criticized the proposed $1,000 per child tax credit and efforts to make previously passed income tax cuts immediately effective.
"Combine those two tax proposals, the 2001 and the 2003, that's $144,600 average tax cut per year to the wealthiest one percent of the people in this country," Dayton said earlier in the week.
As the survey noted, those individuals would actually pay a larger share of the income tax burden than they currently pay, according to Goeas.
"If we get the facts out, the results are extremely positive," he concluded. "But if we allow this to denigrate into class warfare, which is what we have seen from the Democrats over recent weeks ... then we're dealing with a whole different [situation]."
Armey said overcoming Democrats' attempts to paint the plan as a gift to "the rich" will be the key to gaining public support.
"When Americans - at all income levels, whether they be investors or not - know what is, in fact, in this plan, they like it," Armey theorized. "The only way you can defeat this plan, in terms of the understanding of the American people, is to misrepresent it."
E-mail a news tip to Jeff Johnson.
Send a Letter to the Editor about this article.
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FreeRepublic , LLC PO BOX 9771 FRESNO, CA 93794
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We may be the only super-power, but gold has closed up against the dollar 7 weeks in a row. I am not sanquine. As the young people (now old) used to say "the times are a changing."
Joe Lieberman for president? HAHAHAHAHAHAHAHA OOHAAA HAHA
Such a whiney whacked out little man. Might have to vote for him in the primary.
The liberals and Demoralrats are starting to hallucinate from all of their kool-aid drinking. (Media whores are their kool-aid dealers)
You are .......correct.
Which economy, which government, which market will they put their money in that will return them a safer and better yield?
Your statement is technically possible but highly unlikely. There is no other super power and no other economy and no other market system that even comes remotely close the the safety and yield combination you can get over the long haul in US markets, whether they be government bonds or public equities.
You cannot state that possibility and be taken seriously unless you state where the money is going to start going. People are not going to pull it out and then put it under a mattress. It will be invested elsewhere. The elsewhere is that place that either offers more safety if that is what the investor desires, or more yield if the investor desires that. The great news is usually that other place will be a different US market, which is okay too.
The other thing about your scenario that strains credulity is your proposal that this kind of movement could be immediate. But this is not reasonable because the millions of bonds issued are at thousands of different maturity dates. Each time the government sells bonds, they are sold not at a arbitrary interest rate, but at a rate the market sets. If people begin to stop buying them, the government will raise the interest rate until demand picks back up.
This is never a dramatic shift or spike, but trends up and down based not on what buyers think about US fiscal policy, but upon what buyers think of US fiscal policy versus fiscal policies of other bond issuing government entities.
All that said, I think it is important for the government to set and abide by sound fiscal policy which means that during good economic times we should break even or run a slight surplus. It would be unsound, IMHO, to run huge surpluses but to give back tax rebates in those years. That would make the economy grow even more, which would dramatically reduce our GDP to debt ratio. This ratio, btw, is the lowest it has been in 25 years or so.
Do you think the stability of the US economy and/or the ability of the US Government to pay its debts to bondholders is that tenuous? Where can you find any government anywhere in history so stable? I will answer that for you - you cannot.
American power and strength has never been so overwhelming as it is now. Do you realize that we spend more on defense and military than the next twenty countries combined? Does that mean this will go on forever? No, of course not. But that is not the point. The point is, is there anywhere, any government, any market, that looks more promising than the US for the next 5, 10, 15, 20 years?
No, of course not.
The Americans are delighted with their economy; they congratulate themselves on their prosperity, and offer their economic success to the world as an example. For them, the rest of the world (except for Europe perhaps, Great Britain and other anglo-saxon countries) simply does not know how to manage things.
The graph (at the end of article), explains why they are so satisfied with their economy.
In 1948, the total amount of dollars held by Central Banks around the world amounted to some $15 billion dollars – the dollar reserves of those banks. The total of gold, valued at $35 dollars an ounce, also in Central Bank reserves, amounted to some $34 billion dollars. In physical terms, the gold weighed 970 million ounces. The value of gold in the reserves of the Central Banks of the world, the U.S. included, amounted to over twice the value of the dollar reserves.
For twenty years, up to 1968, the increase in the amount of dollars in the hands of Central Banks of the world was quite restrained, although constant. The United States were careful to restrain their monetary and credit expansion, because the dollars held by foreign Central Banks were redeemable in gold. During those years, however, the U.S. were steadily losing gold reserves to those Banks, as they satisfied the demands for redemption of their dollar I.O.U.’s. (dollar bills).
In the years leading up to 1968, General de Gaulle in France had been firm about the Bank of France’s policy of dollar redemption for gold. In the Spring of 1968, the good General found himself facing a near revolution, and was almost overthrown. World leaders noted the curious coincidence of events.
The flight of gold from the U.S. persisted, notwithstanding arrangements between the more developed countries, not to demand gold for dollar redemption among themselves.
Finally, on August 15th, 1971, President Nixon threw in the towel, and simply ceased redeeming dollars with gold, at any price. In 1944, the Bretton Woods monetary arrangement had stipulated that dollars would serve as Central Bank reserves as good as gold, because all dollars would be redeemed for gold on demand at the rate of $35 dollars per ounce. Nixon killed the Bretton Woods agreement.
There was no new international agreement. The Central Banks of the world simply went on receiving dollars for their reserves, without any possibility of redeeming them for gold. World Central Bank reserves, as far as dollars were concerned, became simply papers.
As the graph shows, once the U.S. were freed of the commitment to redeem dollars, they embarked on an unrestricted credit expansion. Dollars in the hands of foreign Central Banks were like checks that are never cashed. A lovely arrangement, for the United States.
From 1971 to 1997, the U.S. provided reserves to foreign Central Banks, in an amount in excess of $1.1 trillion dollars (that is, one million and one hundred thousand millions of dollars) of green paper dollars, created out of nothing by their monetary and financial system. (The amount is approximate, but the approximation is sufficient to show the colossal increase).
On the other hand, the rest of the world had to buy these dollar reserves, by exporting products to the U.S. From the U.S. to the rest of the world: papers. From the rest of the world to the U.S.: merchandise, companies, banks, properties and equity. Things of value, in other words.
The effect on the United States has been to provide them with a bonanza, a bonanza available to anyone who might have a limitless credit card, whose balance it is unnecessary to pay, and which is forever going up.
This is the postwar bonanza for the U.S., which Americans tend to think is due to their superior productive and organizational ability. Actually, it is the collection of tribute from the world, on a scale which makes the Roman Empire pale by comparison. The Americans have had an imperial "bread and circuses" at the expense of the rest of the world. No wonder they are smiling!
Their apparent success allows them to preach to the rest of the world on the need for banking transparency, on the need for more open banking systems, on the need for the elimination of corruption and cronyism from the financial systems of the rest of the world. They proclaim the need for adapting to globalization, which favors the U.S. because it allows the Americans to buy up the world with their paper dollars. For the same reason they proclaim the need for privatizations, which are indeed desirable, if privatization did not imply that Americans can buy, not with goods, but with papers, anything they desire, especially strategic resources such as, for example in the case of Mexico and Brazil, "Pemex" and "Petrobras".
Unlimited imports of merchandise – the credit card has no limit – allow the U.S. to continue the credit expansion, for cheap imports keep prices under control. The U.S. has transferred its inflation, to the rest of the world, exporting it in the form of dollar reserves in Central Banks around the world.
When dollars arrive in foreign countries, the local Central Bank purchases the dollars in exchange for the local currency. More reserves equals more local currency. More currency means prices rise; as prices rise, cheap exports to the U.S. decline. The remedy: devaluation. Other countries must devalue their currencies in order to have the privilege of receiving papers from the U.S. Devaluation destroys local financial and productive systems, because in order to persuade local savers from exchanging their local currencies for dollars, interest rates, for instance in Mexican pesos, are raised. Mexico and Brazil are classic cases.
It is a curious fact that not one Nobel prize winner has pointed out these extraordinary circumstances. The reason must be, that dollar reserves are such a gigantic tribute operation, that it is not convenient to point out these things.
Privatization, opening to U.S. investment, globalization, transparency, and the struggle against corruption, are words which hide the purpose: to concentrate unlimited power, by using irredeemable dollars to buy up the world.
The graph shows that gold in world Central Banks has for all practical purposes not increased in 50 years: there is only 12.3% more gold in their vaults, in ounces, than there was in 1948.
From the U.S., we cannot expect any advice whatsoever, that goes against U.S. interests. It is we – Mexico specifically - who must determine what our interests are; protecting them is our affair. The U.S. will never tell us that our situation, worse day by day, is the consequence of the monetary system which the U.S. controls. Brazil, the most recent victim. Ecuador, another. Argentina is stumbling. Hong Kong and China will devalue sooner or later. Chavez in Venezuela will fail to turn his country around. We are all in the same dollar reserve boat. For Mexico, dollarization, currently being suggested by some American politicians and seconded by myopic Mexican businessmen, is surrender to the U.S.
Mexico must think fast. We must reform our monetary and financial system, and base it upon a currency with a real value, which will not depend on the dollar reserve system which guarantees instability. Only a silver currency can meet that vital requirement.
http://www.plata.com.mx/plata/plata/worldres.htm is the URL for this article and the table.
Admittedly, this man is angry and critical. He is a Mexican proponent. But it does seem he has a point. Whether and how we can continue as we are is the question. Recently our Balance of Payments has been increasing (record last week?)and the value of the dollar visa vis gold is changing for the worse. If you think of gold just as another international currency, then as ours deteriorates there will be enormous strains on other countries and especially those who hold dollar denominated assets.
First, he blames the US for the irresponsible fiscal policies of third world governments. Surely you do not subscribe to the "blame America first" mantra, do you? I suppose the problems of the rest of the world has absolutely nothing to do with their patent disregard for private capital formation and their pathetically weak judicial structure to protect it. What I mean is, they tax the heck out of capital to make it incredibly unproductive, confiscate it from those who are most productive with it in spite of their overbearing taxation when the government decides that the economic problems they are having are a result of greedy capitalists and the real solution is a socialistic one.
I mean, give me a break, look at today's headlines in Venezuala. Are you going to say with a straight face that their economic problems are our fault? They have incredible natural resources and a leg-up on the rest of the world due to their unique geographical location so that they should be or at least be on the way to becoming a real economic force. But are they? No. And if you have to look anywhere further than the fascists and socialists for the proper place that blame should reside then you are a willfully ignorant.
Contrast that with Japan that has virtually NO natural resources yet due to their relatively (relative to the rest of the world, not us) good protection of capital and strong legal and judicial system that protects their capital markets, they have become an economic juggernaut (even though they have been in a recession for about 10 years).
While there are many flaws in the US system, the flaws are more than mitigated by the governments in the rest of the world not understanding the value of capital markets and how to protect and nurture them. Heck, most of the US government officials do not understand it well enough but somehow they have remained protected and have been nurtured.
The old gold standard had its pros but it also had some definite cons. But I assure you that we are not in the situation merely due to eschewing that standard. Our debt is huge on its face, but it is the smallest it has been in the last 30 years as a percent of GDP.
The credit card example is more one for third world countries, not us. We have always made good on our promissary notes and that is the ONLY reason they are so valued around the world. The history of our borrowing and the fact that our GDP to debt ratio (our ability to pay in the future, so to speak) is so much better than most.
No one is forcing them to hold these dollars. If they would like to buy cars with them, our auto industry will be happy to oblige. Would they like some semiconductors? How about some wheat, or corn? We have a lot of things here that they could buy with these dollars, and if they would shut up and spend them instead sitting on them and bitching, our unemployment would go down, our balance of payments deficit would drop, and they wouldn't have so many of those nasty dollars cluttering up their vaults.
Our business hours are typically 9 to 5, Monday through Friday. They can call or write. All dollars are welcome; come spend them.
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