Posted on 09/10/2011 5:43:39 AM PDT by Kaslin
Who would have really expected a 300-point stock market plunge on the day after President Obama’s so-called jobs speech?
Yes, worries over new fears of a Greek default ripped through the markets on Friday. As did fears of an al-Qaeda bombing plot on the tenth anniversary of 9/11. But you can’t help but think that at least some of the stock plunge is a signal of no economic confidence in Obama’s plan.
And for that matter, who really expected an unbelievably large $450 billion plan? That’s way more than 50 percent of the original $800 stimulus package in 2009 -- which did not work.
Leaked reports leading up to the speech suggested a $300 billion plan -- already way too big. But $450 billion? At a time of massive deficits and debt? And a downgrade? How is this going to be paid for? That’s what many folks want to know. Obama didn’t tell us.
In very round numbers, the package comes to $250 billion of temporary payroll tax cuts of one kind or another, with another $200 billion in new spending on infrastructure, unemployment benefits, and direct aid to state and local governments. But didn’t we learn from Obama Stimulus One that more government spending doesn’t grow the economy or reduce unemployment?
And while more than half of the president’s new package is called “tax cuts,” the reality is that these are temporary tax cuts. Even though tax rates are reduced for both employers and employees, it’s just for one year.
That blunts the true incentive impact of the tax cuts. Businesses like to look ahead at least three to five years for their employment planning. And they’re already worried about the tax and regulatory mandate costs of Obamacare, which has become a great deterrent to job creation. But nobody makes clear business decisions based on temporary one-year tax cuts. That’s not the way business works.
The only true incentive effects come from permanent, economy-wide reductions in tax rates. And that’s what’s been missing all along from Team Obama’s thinking.
For example, it is quite possible that some new jobs will be created in election-year 2012 as a result of the temporary payroll tax cuts. But those jobs will be borrowed from 2013, when the economy risks expiring as the temporary tax cuts go away.
So this becomes a very expensive exercise, one that will yield very little or nothing in the way of permanent job creation or economic growth.
The president does talk about corporate tax reform, but he has no specifics on it. He never mentions the tax-free repatriation of $1 trillion in overseas profits booked by U.S. firms, or for that matter a territorial business-tax approach that would stop the double tax on foreign earnings. This repatriation idea would have been a layup. The whole world wants it. But not the White House.
Out on the campaign trail, Mitt Romney, Jon Huntsman, Rick Perry, and other GOP candidates are talking about fundamental tax reform for individuals and businesses, the kind that can provide the permanent incentive effects needed to supercharge the economy. But not the White House.
And out in the business community, everyone is talking about a regulatory moratorium, or rollback, to lower the cost structure of doing business. But Obama only talks about this in the vaguest terms.
Stop the NLRB and EPA. Hold back on Dodd-Frank and Sarbanes-Oxley. Provide confidence on taxes and regulations for the whole private-investment sector.
Nope. Not the White House. President Obama’s latest vision on taxes once again singles out energy companies, successful high-end earners, and small-business entrepreneurs for future tax hikes, rather than across-the-board rate-flattening and deduction-ending.
The best part of the Obama’s speech was the segment about free-trade agreements with Panama, Colombia, and South Korea. But somehow this never gets done.
As for infrastructure spending, it has its place (though not a Fannie Mae-like bank). But America needs new incentives to propel entrepreneurship and dynamism for brand-new business start-ups and technologies. And throwing more money at state-and-local-government unions is just a pathetic political bailout.
What we really need is a long-term program that gets government out of the way and lowers spending, tax, and regulatory barriers wherever they exist. But at bottom, the president’s plan is a big-government plan. It’s not a private-sector plan.
If left to its own devices, America’s free-market capitalism will produce growth and jobs. But it won’t happen in a targeted and temporary straight jacket.
“Who would have really expected a 300-point stock market plunge on the day after President Obama’s so-called jobs speech?”
It was obvious.
It is to be paid for by that $500 billion spending increase that they snuck through silently in the senate late thursday night. That’s how.
The one that was reversed engineered to look like something it wasnt. It was crafted to “appear” to be a bill against further spending which would go to Obammy and he would veto it then it would come back to the Senate and get overridden so that it “looked like” the pubbies had voted against it. It all slid through without any notice.
A rational energy policy would include:
1) An aggressive drilling program including the Gulf of Mexico and ANWAR.
2) Developement of shale resources.
3) Approval of the Keystone pipeline.
I believe all of these things are within the authority of the president. Implementing a program like this would create jobs and help eliminate uncertainty in the energy sector. Obama would have none of it.
The fact that Obama did not even give lip service to energy indicates that he has no idea what actually makes an economy run. There will be no economic expansion until he is gone.
Certainly not the idiot "experts" of whom most economic reports are "unexpected".
Lets be accurate though. It was an increase in the debt limit, not a spending increase.
Let me sum up Obama’s plan:
You MIGHT get a tax break, a tax credit or your dog gets a bone, if you fill out this form and beg your overlords for some relief.
Greece will default. It is inevitable..just a question of how soon it occurs..this coming week, perhaps?. The Germans will NOT throw any more $$$ into the Aegean.
The Greek default will implode several major European banks...and this is making US banks nervous. They are counterparties to them in many financial transactions.
What everyone is ignoring is the report, last week, that the Fed had loaned about $1.5 trillion to overseas ( non US) banks and financial institutions during the last crisis..often with lousy or NO collateral. The Fd had been repaid...but I don't think that it could do it again in the current political climate..it owuld cost Obama the election..
It's just more bankrupt America rhetoric.
About 99 out of 100 of EVERYBODY in the world?
“”What we really need is a long-term program that gets government out of the way and lowers spending, tax, and regulatory barriers wherever they exist. But at bottom, the president’s plan is a big-government plan. It’s not a private-sector plan””
Big Government results in unprofitable Business.
The technical indicators show the stock market will soon drop another 1000 points.
Saturday morning Rassmussen poll is out. O is at -23 approval rating with only 20% strong approve. Today also marks the point where, for the first time, the 7-day average of the Abyss Index (total approve minus strong disapprove) is below zero.
C'mon November, 2012!
I made money on it.
Only about 150 million conservatives and other sane people.
And for that matter, who really expected an unbelievably large $450 billion plan?
Everyone paying attention except Rip Van Winkle, Donna Brazile and Chris Matthews.
There are silver linings. We're refinancing.
Of course, the last time I went short on something was back in the early '90s... I sold some stocks short, and the market turned around and never looked back (until recently). I'm pretty sure I was personally responsible for turning the market around.
Obama needs a straight jacket he’s all but killed capitalism.
1. the post obama speech dive is SOP for the market.
2. Obama ONLY promises temporary BS. (see open bank account get free toaster)
3. temporary is WORSE than doing nothing because it creates the assumption that WORSE is comming.
4. Obama is only guaranteeing tax increases for EVERYONE.
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