Category Archives: Economics

Miscellaneous economy stuff

The Party of No

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Democratic Party obstructionism continues in the Senate. Recall that the Democrats refused to allow over 300 House-passed jobs-related bills even to come up for debate in the last session and how they shut down the Federal government over a House-passed spending bill that fully funded the government but that didn’t have an additional 2% of what the Democrats demanded.

They’re at it again. The House has passed a bill that fully funds the Department of Homeland Security for the year, which under the last session’s compromise passed in December, had only been funded through the end of this month. The bill also rolls back a number of President Barack Obama’s unconstitutional immigration “executive actions.” Obama’s minions in the Senate are vowing to block the bill, to filibuster it.

Obama has promised to veto the bill, should it make it past the Senate Democrats’ obstructionism. Obama and his minions are fully prepared to shut down HHS, to walk completely away from what little border security they’re willing to provide today, if they can’t have 100% of their way.

Senate Majority Leader Mitch McConnell (R, KY) has made the question clear:

It’s a debate that will challenge our colleagues on the other side with a simple proposition. Do they think presidents of either party should have the power to simply ignore laws that they don’t like? Well, will our Democratic colleagues work with us to defend key democratic ideals like separation of powers and the rule of law? Or will they stand tall for the idea that partisan exercises of raw power are good things? The House-passed bill we’ll consider would do two things. Fund the Department of Homeland Security and rein in executive overreach. That’s it. It’s simple….

Remember the Democrats’ behavior in 2016.

Middle Class

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While we’re on the subject of President Barack Obama’s alleged concern for the middle class of Americans (OK, only Obama makes the allegation with any seriousness, but work with me here), Investor’s Business Daily has another take on the Obama Recovery.

The graph below is a good summary of that take:ObamaEconomicChallenge

The Obama recovery is worse than four years behind Obama’s promised schedule. It hasn’t caught up. It hasn’t caught up with the Reagan Recovery, with his “failed” Reaganomics. It hasn’t even caught up with the average of the recession recoveries we’ve been through since WWII, a period of some 70 years, 3+ generations of Americans.

As IBD put it,

[T]he growth gap between Obama’s economic policies and Reagan’s is now $2.4 trillion in lost GDP and a stunning 14.4 million in lost jobs [the bracket in the lower figure of the graph is a typo].

Finally, as IBD summed up the situation (more or less)

[W]e [need] someone in the White House who understands what it takes to produce real, sustained economic growth, and not just “underlying” suggestions of it.

Here Comes the Extortion

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Nice business you got there. Be too bad if it got shut down for some reason.

The United Steelworkers union told its workers at nine US refineries and chemical plants to strike early Sunday morning….

And they’ve gone ahead and walked out, trying to shut down nine refineries from Houston to LA. For demurring on paying the union vig. USW’s threat to the viability of these refineries ultimately could affect

30,000 workers at 230 refineries, oil terminals, pipelines, and petrochemical plants[.]

USW threatening the viability of a company for not paying up is an overstatement, you think? These refineries still have to make payroll—even of those union workers who no longer are working and earning their paychecks—they still have supplier bills to pay, they still have maintenance bills to pay, they still need to run their R&D programs, they still…. They can’t, though, if they can’t refine petroleum and have a product to sell to earn the revenue needed to pay those bills.

The USW knows that. It’s why they’ve chosen to strike—to attack the viability of their target companies and so to force their surrender.

In the final days of negotiations, the union rejected multiple offers from Shell, which led negotiations on behalf of US refinery operators.

Notwithstanding that, USW International President Leo Gerard claimed in wide-eyed innocence,

Shell refused to provide us with a counteroffer and left the bargaining table. We had no choice but to give notice of a work stoppage.

It’s time unions lost their exemption under the Clayton Antitrust Act, the successor law to the Sherman Antitrust Act which bars companies—and the USW is a company—from abusing their monopoly power. A monopoly power the USW clearly has with its near total control over the labor force of these refineries, and a monopoly power the USW clearly is abusing with its naked threat to the viability of those companies through its refusal to work—its refusal to let those companies earn the revenue they need to pay their bills.

Death Taxes

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Or, as President Barack Obama likes to call them, “trust fund taxes.” Either way, it’s another Progressive attempt to steal the gains of one family—now with its parent safely dead—to transfer them to another group of “families” of whom Obama approves.

As the graph below demonstrates, this latest wealth “redistribution” grab by Obama would represent, if it’s passed, a 36% increase to a world-beating 68% of a family’s hard-earned accumulated prosperity.InternationalDeathTaxRates

Not even the famously social-tax heaven of the UK confiscates that much of a family’s wealth on the death, nor do the social democracy nations of France, Belgium, Spain, Finland, Norway, etc. Russia and the People’s Republic of China have no death taxes at all.

Here’s the deal:

Under current law, when a parent or grandparent dies, the increase in the valuation of his or her asset from when it was originally purchased is not taxed.

This is to offset the effects of the estate tax.

But

Obama’s plan would tax estates and impose the regular capital gains tax on inherited assets—a business, property, or stocks.

That business, far from being a Buffet’s holdings in Berkshire Hathaway, or a Gate’s holdings in Microsoft, is typically the family’s only asset: a mom and pop business that mom and/or pop have spent a lifetime building, with little to no outside cash available with which to pay the Obama vig. They’d have to sell the business; they’d have to sell their children’s future to pay up. That property usually is the family home, which the family finally was able to afford in the late afternoon of the deceased parent’s life. Those stocks…. No trust funds here.

But, no worries. Obama and his Democrat Party Know Better. Their money, temporarily reposing in our hands for a few years, will be well used. Obama says so.

Austerity

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President Obama called for an end to “mindless austerity” on Thursday as he announced his desire to end “sequester” spending cuts in his budget for 2015.

No, Obama wants to perpetuate—even expand—the deliberate austerity of excessive government spending and ever-rising taxes. His “budget” calls for a 7% increase in Federal spending to be paid for with increased taxes, including increases in the death tax on inheritances (which Obama is attempting to disguise by calling it a “trust fund” tax). Indeed, Obama’s “thinking” on taxing was exposed by his attempt to tax Americans’ savings for our children’s college, our 529s.

If the Republicans and Conservatives in Congress are smart, they won’t waste time on the Obama stuff. They won’t even respond to his nonsense. They’ll just ignore it and pass a conservative budget that includes both tax reform and tax rate reductions.

Obama’s going to veto anything this Congress passes, anyway; his vetoes should simply be used to shape the ’16 elections.