Tuesday, December 11, 2007

Bushonomics in Action: A Hard Landing for the U.S. Economy Coming

Despite the lunatic ravings of the ridiculous right-wing cheerleader Larry Kudlow ("The Bush boom continues") at National Review, most REAL economists are predicting a recession for 2008:

So it is time to move away from the soft landing vs. hard landing discussion and start considering seriously how deep the coming recession will be; in the view of this authors the 2008 recession will be more deep, protracted and painful than the short recessions of 1990-1991 and 2001; this time around – unlike 2001 when only tech investment faltered - most components of aggregate demand are under threat: falling residential investment, falling capex spending by the corporate sector and now evidence of a sharp slowdown and near stall of private consumption that accounts for 70% of GDP. When the US saving-less and debt burdened US consumer is now under threat the risk of a more protracted and severe recession than the mild one of 2001 are significant.

Yes, the savings rate is the lowest since the Great Depression and credit card debt is closing in on $1,000,000,000,000. And the Bush-Cheney administration has added over $3,000,000,000,000 to the national debt since 2001--40% of all the debt in our history. Republican economics has been a disaster for America. Oh, and those "beneficial" tax cuts? Well let's take a look:

If there's one thing that Republican politicians agree on, it's that slashing taxes brings the government more money. "You cut taxes, and the tax revenues increase," President Bush said in a speech last year. Keeping taxes low, Vice President Dick Cheney explained in a recent interview, "does produce more revenue for the Federal Government." Presidential candidate John McCain declared in March that "tax cuts ... as we all know, increase revenues." His rival Rudy Giuliani couldn't agree more. "I know that reducing taxes produces more revenues," he intones in a new TV ad.

If there's one thing that economists agree on, it's that these claims are false. We're not talking just ivory-tower lefties. Virtually every economics Ph.D. who has worked in a prominent role in the Bush Administration acknowledges that the tax cuts enacted during the past six years have not paid for themselves--and were never intended to. Harvard professor Greg Mankiw, chairman of Bush's Council of Economic Advisers from 2003 to 2005, even devotes a section of his best-selling economics textbook to debunking the claim that tax cuts increase revenues

NONE of the Bush-Cheney predictions on job growth from the tax cuts has come through. Federal revenue has increased only modestly. And the Clinton economy of the 90s has proven superior in every way to the grotesque kleptocracy presided over by the Boy King. Now the subprime mortgage crisis is rippling through the economy, credit is being crunched, and a lot of big money people are in a cold sweat panic.

I hope there isn't a recession in 2008. Too many people get hurt by them in too many terrible ways. I hope all the economists who predict this are wrong. But if they're right, I know who will be to blame: Bush, the Republican congress of 2001-2007, Alan Greenspan urging people to use their homes as a cash register, and all the spineless Democrats who let it happen. If there is a recession, coupled with the ongoing mess in Iraq, I think it spells doom for whatever sacrificial lamb the Republican Party runs for president. Then President Clinton, President Obama, or President Edwards will have to dig us out of the dungheap that W and his conservative friends have left them.

It won't be easy.


Anonymous said...

You were a history teacher? Or were you an Economics teacher? Yes Americans can not and will not save. This is a fact of the Me-Now lifestyle we live in. The Mortgage crisis is not caused by the government. It was caused by people who do not know or do not care to know how much they can afford on a house. Also, there are predatory lenders out there that only want the sales commission on the mortgage. This is not a government issue now or in the past.

I am opposed to the tax plan of the two leading Democrat candidates. Their so called Death Tax is anti-saving. No tax till $1 million than 65% tax rate. Why save to pass on. $1 million is not a lot of money these days. I bet your house in Hawaii is worth at least $500,000 with the rising prices of houses in the US. They also are proposing to raise the capital gains tax back to 35%. This would cripple the market at the time the baby boomers are retiring and have saved all their money. The market would tank and the US would be back to the days of the Nuclear family with Parents living with their kids and grand kids.

A lot of credit is taken and a lot of blame is put on the president for the economy. It doesn't matter who the president is, they do not effect the economy as much as the average US citizen thinks.

Joseph said...

First of all, the name of the party with which I am affiliated is "Democratic" not "Democrat". Democrat Party is a pejorative term started by Joe McCarthy in the 50s and used by right wingers today. I reject it and refuse to leave it uncorrected when I see it.

As I indicated, there are multiple culprits in this situation, which needs to be reiterated, I suppose.

Greenspan drove the mortgage bubble to help ease us out of the collapse of the tech bubble. This is commonly acknowledged.

I looked here in vain for Obama's ESTATE TAX (not "death tax"--another right wing term meant to deceive people), so maybe you can link me up:


The Bush tax cuts have had a disastrous effect. (And Iraq spending isn't even all official.) The fall of the dollar (and the threat of OPEC and China's central bank switching to the Euro to denominate their holdings) is traceable in large part to the lack of fiscal discipline by the U.S. Govt. When the Govt. is soaking up HALF A TRILLION A YEAR in credit, it has a rather nasty effect on everything else.

Conservative economic "theory" has crashed and burned. It must be abandoned before it's too late.

Anonymous said...

It sounds to me that you have no problem paying for taxes that go to waste. I hope that when I die in a few years that I can pass on to my two daughters what I have. With the current value of my house I will exceed the $1 million amount. Why should the government get 65% of my life savings. This makes no sense to me. You must be single with no children to think that it is OK of the government to take your money after you have died.

Joseph said...

No one has proposed taking 65% of the excess of your estate. The maximum that the law would allow after 2011(I think) would be 55% on estates past a certain level, and NO ONE is advocating keeping it there. It will stay at the 2009 level.

From the Clinton web site:

Cost: The new college tax credit and other initiatives in this agenda will cost approximately $8 billion per year. These costs will be financed without increasing the deficit by eliminating the guaranteed student loan program and allocating a portion of the savings from freezing the estate tax at $7 million per couple rather than allowing it to be completely repealed. Freezing the estate tax at $7 million per couple will have no effect on 99.7%of estates. It will mean instead that the 10,000 wealthiest estates in the U.S. do not receive a further tax cut.

From the Center for Budget and Policy priorities:

Increases in the exemption level have drastically reduced the number of estates subject to tax. Already, the number of taxable estates has dropped from more than 50,000 in 2000 to fewer than 13,000in 2006, and it will fall to about 7,000 when the exemption level rises to $3.5 million ($7 million per couple) in 2009. Put another way, a little over 2 percent of all estates were subject to tax in 2000. Today, only one-half of one percent of people who die — that is, 5 in 1,000 — pay any estate tax, and that number will fall to 3 in 1,000in 2009 .

And that $7 million figure will STAY under Clinton's proposal. Will you leave an estate of over $7million?

It took me about 5 minutes to find these figures. Try doing some research some time so that you actually know what you're talking about, instead of repeating right-wing mythology.

And btw, I have a family and a substantial potential estate. (Not, however, one where I would even pay a DIME of estate tax.)

Just for the record.