Economics Archives

The DNC, Taxes and Chapped Lips

Thus is the title of Danny Carlton’s description of how dealing with a little discomfort in the short term leads to a better outcome in the long term, if you have the maturity to both stop licking your lips and stop raising taxes. Democrats have made it easier for Congress to raise taxes (surprise, surprise) enabling what he calls Chapped Lips Syndrome as applied to society.

Attacking the wealthy feels good in a myopic, class-envy, immature way, but makes the economy suffer. If the economy suffers, those with less will inevitably suffer more. A mature, intelligent society will encourage business (within reasonable restrictions) and solve the problem. The immature society will continue to attack the rich and make the economy continue to slide downhill.

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Smashing the Charity Stereotypes

The New York Times asked, “Are we cheap?” Liberals give their opinions on that.

“Yes,” they say. Former President Carter recently said the rich states “don’t give a damn” about people in poor countries. And when it comes to helping the needy in poor countries, U2 singer Bono says, “It’s the crumbs off our tables that we offer these countries.”

Crumbs because many other countries, such as Norway, Portugal and Japan, give a larger share of their wealth to needy countries.

The United States gave out $20 billion in foreign aid last year, but as a percentage of our wealth, we rank 21st out of the 22 major donor countries.

Actress Angelina Jolie is horrified by it.

“It’s disgusting. It really is disgusting,” she said. “I think most American people, you know, really do think we give more. And I know that they would if they could understand how little they give and how much more we can afford to give, absolutely, without even noticing it.”

But what these folks are ignoring is that America is one of the most generous countries in the world when you look at how we take personal responsibility for our charity. As much as the general consensus has inched more and more towards the idea that it’s the government’s job, a very large segment of our population understands that “rugged individualism” not only means being personally independent but also means taking personal responsibility for the needy, and not shoving it off onto some other group or institution. Predictably however, those who do gauge things by institutional or governmental charity are blind to the reality of the generous America.
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Economy Keeps Cranking

Just in time for the election.

The U.S. unemployment rate dropped to its lowest in nearly 5-1/2 years during October as 92,000 more jobs were added and hiring in each of the two prior months was revised up, a government report on Friday showed.

The October new-jobs figure was below Wall Street economists’ expectations for 125,000 but the Labor Department said a total 139,000 more jobs were created in August and September than it had previously thought. It revised up September’s job-creation total to 148,000, or nearly three times the 51,000 it reported a month ago, and said there were 230,000 new jobs in August instead of 188,000.

The unemployment rate fell in October to 4.4 percent from 4.6 percent in September. It was the lowest unemployment rate since 4.3 percent in May 2001 and was likely to fan concerns that labor markets are growing tight and could contribute to inflation pressures.

Actually, this isn’t really “just in time” for the election, as the economy has been chugging along quite well ever since the tax cuts. Please just remember who wants to repeal those.

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About Those Tax Cuts…

Looks like they continue to do what the Bush administration said they would. The economy keeps growing, and with it, tax receipts.

The federal budget estimate for the fiscal year just completed dropped to $250 billion, congressional estimators said Friday, as the economy continues to fuel impressive tax revenues.

The Congressional Budget Office’s latest estimate is $10 billion below CBO predictions issued in August and well below a July White House prediction of $296 billion.

The improving deficit picture _ Bush predicted a $423 billion deficit in his February budget _ has been driven by better-than-expected tax receipts, especially from corporate profits, CBO said.

People have more to spend, and they’re spending it, growing the economy, creating jobs, and increasing tax receipts, just like they did after the Reagan tax cuts.

So what do the Democrats plan to do if they win back control of Congress?

To do that [don’t increase the deficit], [Pelosi] said, Bush-era tax cuts would have to be rolled back for those above “a certain level.” She mentioned annual incomes of $250,000 or $300,000 a year and higher, and said tax rates for those individuals might revert to those of the Clinton era. Details will have to be worked out, she emphasized.

“We believe in the marketplace,” Pelosi said of Democrats, then drew a contrast with Republicans. “They have only rewarded wealth, not work.”

But the more money you have, the more you can spend and keep the job & economic growth fueled. Yeah, let’s penalize those who are doing the most to increase tax receipts by taking their money away. Why do Democrats think it makes sense to siphon off tax money before it’s used, removing it from the marketplace, rather than collect it as part of an expanding economy?

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It’s Not (Just) the Economy, Stupid

Gas prices are dropping. On queue, Bush’s poll numbers are rising. Again, just further proof that setting public policy based on poll numbers is never a good idea.

When the Clinton administration folks came up with the phrase, “It’s the economy, stupid”, all that meant was that they were poll driven. Want to push through your agenda? Manipulate the economy so that folks feel like things are better, and you can claim a “mandate”. That’s not the way to run a government. The Republicans have, correctly, not jumped at quick fixes for the most noticeable economic data point–gas prices–and they have paid for it in presidential approval ratings and hence in the liberal punditry as well. Republicans did the right thing, in spite of the short term problems in PR it would cause them. The market has corrected itself and the emotional sector of the public is coming back on board.

The economy is important, make no mistake. But it’s not so important that, as the catch-phrase implied, it’s the main thing. The economy is not something that government should be overly meddling in. Unfortunately, too much of the public has been conditioned to think that the state should run the economy, and when prices are high it’s the government’s job to “fix” things. They don’t see that, all over the world and throughout history, the more control of the economy the government had, the less free the people were, and the worse the economy functioned. Look at the socialist countries of Europe or the failure of centrally Communism for prime examples.

The people run the economy. Let ’em.

Update: Well, speaking of gas prices, Betsy is pointing out the (unfortunately) predictable response of some to assume that the Bush administration is, indeed, practicing manipulation of gas prices for just such a bump in the weeks leading up to the mid-term elections. C’mon, folks, this is pathetic. She notes that USA Today provides the very obvious, market-driven (and even weather-driven) reasons. Is 40% of the public really that unaware of the news of the day that they’re willing to believe this? Given some of the manipulation they’ve come to expect from their government (that is, when they want the government to do it), I suppose it’s not completely unsurprising. But it is disappointing.

Update #2:  Back Talk uses some statistical analysis to show that because these two graphs correlate doesn’t mean one causes or influnces the other.  He notes that, for example, Bush’s popularity jumped before the 9/11 gas price jump rather than after.  He also shows a graph of Bush’s popularity vs. housing prices, but nobody’s tying those two numbers together.  Very good points and worth considering in this discussion.  I would only add that most folks know, day to day, what the gas prices are and not many know the value of homes around them very often, so gas prices would affect their perception more.  But I do appreciate Engram’s points.

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Why I (Still) Hate Polls

Polls drive me nuts. A measure of emotion is trumpeted as hard news and the media suggest that such numbers should drive public policy. One poll says that over a third of American’s think 9/11 was an inside job. But this is as much a measure of emotion as it is consideration of the (well-debunked) theories. In another poll, it says that 54% of people are angrier than they used to be. And Bush’s poll numbers have really tanked.

But what does this mean, really?

With a hat tip to Ian Murray at The Corner, and speaking of “tanking”, check out this graph that charts the President’s poll numbers against the price of gas. It’s incredible how closely the ups and downs of both track. As gas prices go up (on the graph, a higher prices is shown as a lower point), Bush’s numbers go down. You can almost predict one from knowing the other.

Yet pundits and journalists say that Bush should change his policies because of poll numbers. Tell ya’ what; can he get a mandate for allowing the NSA wiretaps if he repeals the federal gas tax? I mean, if polls should really matter that much, it follows, right?

One more reason why we don’t have a direct democracy. Thank you, Founding Fathers.

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Let the Political Paranoia Resume

Drudge’s big headline this afternoon is that gas is down to $2.05/gallon in Iowa. Did I not catch the news story proclaiming that the federal government had moved in and enforced price controls?

No, I (and you) missed nothing of the sort. Instead, as the Captain notes, market forces (remember those things?) are at work.

A number of factors play into this drop in price. First, as the article notes, the summer driving season has passed. Gas prices normally drop after Labor Day as children go back to school and family vacations make their way to the scrapbook. Also, this season has seen much lower levels of violent weather, and while we’re not out of hurricane season yet, the chances of a really damaging storm in the Gulf of Mexico gets less likely with each passing day. Traders buy oil on futures, which means their speculation now extends past the hurricane window — and since they had built bad weather into previous pricing, it makes sense that we would see a sharp drop now.

It seems that, just as Al-Qaeda has, the market, the weather, and American families have conspired to give the Democrats one less campaign issue. In the same way as leftist paranoids looked with suspicion on the release of terrorist videos, prepare for more hand-wringing over the “curious timing” of this news.

Yes, the market has been allowed to work and prices are now coming down. Understand, however, that I loved high gas prices. My wallet didn’t all that much, but I can telecommute 3 or 4 days a week, so it didn’t complain too loudly. But there were so many upsides to high prices, most of which liberals purport to love. There was the encouragement to conserve or telecommute or car pool. The higher prices increased the demand and the funding for research into alternative energy sources. They helped pay for college tuition (people in the middle class work for oil companies, too, y’know). There was so much good that came from them, yet liberals wailed and whined about it. Truth is, they’d rather the prices go up due to a tax increase so the government gets the money rather than R&D departments of the evil “Big Oil”. Then they could siphon it off, pad their wallets, and be magnanimous with the scraps as grants to R&D departments of the evil “Big Oil”.

By the way, will all the Democrats who wanted to blame Bush for the high gas prices now turn around and credit him for lowering them? Hold not thy breath.

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The Super-Rich

Want a good look at a member of the super-rich? Take a look in a mirror. Most likely, by historical standards, the person you will see is extremely wealthy.

So says Donald Boudreaux at TCS Daily. He ticks off a short list of things that show how truly wealthy we are (e.g. longer life expectancy, indoor plumbing, no smallpox). However, his answer to the question as to why we have all this advancement isn’t the typical answer of “technology”. While that’s a big reason, there’s a deeper answer which, among other things, allows that technology to be invented.

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