Posts Tagged 'Obamanomics'

Obama’s Bank Tax and Economic Failures

By Caomhin

Only an idiot would raise taxes during an economic downturn.  Obama is proposing to raise taxes during an economic downturn.  I guess the logical flow there is self evident.

Obama is seeking to impose new taxes on the financial industry for engaging in risky business, such as lending to consumers even when firms know the risk but are forced to do so by government regulation.  As we all know, people like Barney Frank refused to let anyone investigate Fannie or Freddie prior to the financial meltdown, which was a key component to the exposure that tax payers faced when TARP was enacted.  Government laws and regulations, such as the Community Reinvestment Act, signed into law by Jimmy Carter and approved by a liberal Congress, helped to create and exacerbate the financial crisis by lowering underwriting standards on lending.  As the government and elected officials provided cover for the bubble to grow, when it finally popped, they immediately tried to shift blame to the private marketplace, which in fact, would not have allowed the bubble to grow to point that it did, absent government interference.  Liberal backing media supported the government in shifting the blame onto financial firms and the free market despite overwhelming evidence to the contrary.

When the bubble forced, TARP was enacted to shore up the bottom line of financial firms, essentially to cover them from insolvency due to the number of bad loans that were issued, which were, in part, issued due to government regulations.  As you also know, many firms, have already paid back TARP funds with interest.  Some firms never wanted TARP funds in the first place but were forced to do so.  They have also paid these funds back.  Yes, there are firms out there who have yet to pay back the funds are are not back on solid footing as of yet, but Obama’s new tax scheme punishes all financial firms as well as consumers alike and must not be allowed to pass.

From Fox News:

The proposed 0.15 percent tax would last at least 10 years and generate about $90 billion over the decade, according to administration estimates. It would apply to about 50 of the nation’s biggest banks, those with more than $50 billion in assets, and include many institutions that accepted no money from the $700 financial industry bailout.

Fees and taxes, as history have taught us, are passed down to consumers as they increase the cost of operation.  If input costs are increased, we know then, that output costs are increased.  Economics is very clear on this lesson, both in theory and in practice.  At least part, if not all of these fees will be passed directly onto the consumer.  Obama is also seeking to “recoup” TARP funds from companies who didn’t receive TARP funds at all. Funny how that works, huh?

Also important to note per Market Watch:

The fee would also not apply to General Motors Co., Chrysler, Fannie Mae (FNM 1.10, -0.02, -1.79%) or Freddie Mac (FRE 1.38, 0.00, 0.00%) , but would cover most other large firms that benefited either from the TARP or from other federal assistance, including help from the Federal Reserve.

GM, Chrysler, Fannie, and Freddie, all have direct ties to the government, hence they are going to be exempt from Obama’s proposed fees.  I guess this means that if you are in part controlled by the government you are exempt from laws.  See my earlier post on Unions that also illustrates how those with close ties to Democratic Party are also being exempted from laws and taxes that Obama is attempting to implement.

Two things here seem to jump out almost immediately.  The first is that the Obama administration has no economic or business acumen.  With unemployment at 10% and rising, Obama has no answers, and the proposals he is generating will only exacerbate, not alleviate the issue.  His refusal to allow the free market to operate is crushing the American people.  The second is that Obama will only seek to punish those who oppose him and will attempt to shield his supporters from being subject to the laws that he wants to impose upon our nation.

With regards to government intervention in the mortgage market place, at least the President of the Federal Reserve Bank of Philadelphia, Charles Plosser, is speaking out:

“I believe it is important that we [complete the purchases] and reduce our participation in this market, so the private market can once again resume a significant role,” Plosser said. “It cannot do so as long as the Fed is the dominant player, and we would risk delaying the return to normal market functioning rather than promoting that return were our sizable purchases to continue.”

Plosser added that the Fed had been “crowding out” private-sector investors in the MBS market.

The Fed must unwind its other stimulus programs as well. “An appropriate exit strategy to withdraw or restrict the massive amount of liquidity that we have made available to the economy will have to be put into action to keep the inflation rate from rising to unacceptable levels,” he said.

The extra-low federal funds rate must be raised as the economy returns to growth, Plosser remarked. He expects the economy to grow between 3% and 3.5% this year and the next. However, the unemployment rate will probably remain elevated, restraining consumer spending.

There are those who recognize the disruptive force the government is having on the marketplace and it is a positive note that they are speaking up.  Not explicitly mentioned here is that Plosser is also warning about stagflation.  Reading those bolded sections makes this abundantly clear.  Plosser, as many others, included myself, have long argued, is alluding to the fact that government intervention is going to result in high rates of unemployment and inflation, aka stagflation.

Unless or until the Obama administration gets out of the way and allows the free market to operate, Americans will suffer and the economy will not be allowed to reach its full potential.  Foolish policies such as government take over of huge sections of the economy, raising taxes (see also the impending tax hikes coming next year if the Bush Tax Cuts are not expanding, impacting every tax bracket in the United States), a lack of transparency into the operations of quasi-government agencies, as well as poor fiscal and monetary policies will prolong the depression that the government has essentially created.  Whether it is pride, politics, or lack of knowledge guiding this administration we continue to pay the price for their failure.  Now, with looming tax increases, we are seeing it increasingly quantified.

Advertisements

Cap and Trade Lie Exposed

By Caomhin

Leftists were adamant that opponents to the Cap and Trade bill were lying, that cost would be minimal and that opponents of this legislation were stating a falsehood when we noted that this bill would lead to a large tax imposed on every American and have very negative effects on our economy.  Guess who was correct:

The Obama administration has privately concluded that a cap and trade law would cost American taxpayers up to $200 billion a year, the equivalent of hiking personal income taxes by about 15 percent.

A previously unreleased analysis prepared by the U.S. Department of Treasury says the total in new taxes would be between $100 billion to $200 billion a year. At the upper end of the administration’s estimate, the cost per American household would be an extra $1,761 a year.

Obama officials released this study, not energy groups or opponents of the legislations but the SUPPORTERS of this legislation.  Obama’s own Administration (remember, the Treasury is led by tax cheat Tim Geithner) concluded this and concealed this information, all the while trying to maintain the lie that they won’t raise taxes on “95%” of Americans.  Of course we all knew he and his liberal allies were lying about this but we’re the ones who were catching flack for calling them out on it.  I’m not holding my breath for an apology either.  However, how dishonest can one be to conclude that the upper range for the tax burden on the average American family will be an extra $1,761, withhold that information and then dump the info after being sued under the Freedom of Information Act to release it?

Two other pieces to take away from the article, the first:

One odd point: The document written by Jaffee includes this line: “It will raise energy prices and impose annual costs on the order of XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.” The Treasury Department redacted the rest of the sentence with a thick black line.

The Freedom of Information Act, of course, contains no this-might-embarrass-the-president exemption (nor, for that matter, should federal agencies be in the business of possibly suppressing dissenting climate change voices). You’d hope the presidential administration that boasts of being the “most open and transparent in history” would be more forthcoming than this.

Declan McCullagh has that right, though I’m a bit more cynical than that.  Obama has been on record even after this horrific bill passed the House maintaining that taxes on the middle and lower classes wouldn’t be raised by one cent, but he KNEW that was false per these documents.

The last point to take away is the hilarious update where the Environmental Defense Fund says that the Treasury Department is wrong about the cost of Cap and Trade on the average American family because the Treasury Department hasn’t factored in the “redistribution of revenue.”

Obamanomics is Kneecapping America

By Caomhin

Sound harsh?  In reality, that’s not harsh enough.  We here at ToOurRepublic.com have been trying to sound the alarm even while Obama was on the campaign trail and we spoke against against President Bush’s bailouts as well.  Liberals and big government GOPers are still trying to say that these plans are working.  They are not.  Obama, while hiding on vacation, released the horrendous news, unemployment to stay at near 10% (far above where he said it would be if his Stimulus Porkfest passed), with deficits exploding by over 22% over the next 10 years due to his spending…in 7 months.  Worse yet, they are killing our ability to be productive in the present and in the future:

The federal government faces exploding deficits and mounting debt over the next decade, White House officials predicted Tuesday in a fiscal assessment far bleaker than what the Obama administration had estimated just a few months ago.

Figures released by the White House budget office foresee a cumulative $9 trillion deficit from 2010-2019, $2 trillion more than the administration estimated in May. Moreover, the figures show the public debt doubling by 2019 and reaching three-quarters the size of the entire national economy.

Obama economic adviser Christina Romer predicted unemployment could reach 10 percent this year and begin a slow decline next year. Still, she said, the average unemployment will be 9.3 in 2009 and 9.8 percent in 2010.

I wonder people like Arlen Specter still feel good about themselves about passing that deficit exploding bill that produced nothing except an unemployment rate that will continue to climb into 2010.  I distinctly recall, not even three weeks ago Obama saying,

“While we have rescued our economy from catastrophe, we have also begun to build a new foundation for growth.”

Bumping the national debt up to $9 trillion dollars and unemployment staying near 9.8% in 2010 is not a “catastrophe?”  Does Obama even know what economics or reality is?  He can not truly believe this.  This has to be his ego talking.  Nobody can be that disillusioned about the economy.

Some members of the media are seeing the extreme danger in Obama’s deficit bloating and are calling him out on it, not even allowing him to use his “Blame Bush,” excuse anymore, because, well, it’s a huge lie:

President Barack Obama’s budget would produce $9.3 trillion in deficits over the next decade, more than four times the deficits of Republican George W. Bush’s presidency, congressional auditors said Friday.

Worst of all, CBO says the deficit under Obama’s policies would never go below 4 percent of the size of the economy, figures that economists agree are unsustainable. By the end of the decade, the deficit would exceed 5 percent of gross domestic product, a dangerously high level.

White House budget chief Peter Orszag said that CBO’s long-range economic projections are more pessimistic than those of the White House, private economists and the Federal Reserve and that he remained confident that Obama’s budget, if enacted, would produce smaller deficits.

Even so, Orszag acknowledged that if the CBO projections prove accurate, Obama’s budget would produce deficits that could not be sustained.

Oh, so we’re supposed to feel good about Peter Orszag saying the he thinks the CBO is too pessimistic?  This is he same guy in whom Obama relied to tell us that unemployment would not go above 8% if his Stimulus Bill passed, the man who was so far off the mark in all his projection (all on the wrong side) that people are starting to demand he resign.  This is who they roll out to try and convince the American people that Obama knows what he’s doing and that his numbers can be trusted?  From all appearances, I wouldn’t let this guy balance my check book.  Remember this picture, which it now appears that the CBO was probably too optimistic when it came up with their figures?

bushobamadeficit

If you haven’t already read Pete DuPont’s article from The Wall Street Journal entitled, “The High Cost of Liberalism,” you owe it yourself to do so.  It’s a stunning look into the future at just some of the tax increases that are going to have a tremendously negative impact on all Americans, from Main Street to Wall Street.  For the record, he mentions that it’s possible that the Democrats will keep most of President Bush’s tax cuts (which need to stay into place…and FYI if you have a a Roth 401(k) that was a result of Bush’s tax legislation as well) but I don’t buy it.  The Democrats have put us in such dire straits that they’re going to look for every penny they can get their hands on.  The people who will face the greatest impact if the Bush Tax Cuts expire?  The people making between $26,500 and $32,500 who face an 87% tax increase if they let the Bush tax cuts expire.  We’re losing our ability to compete and maybe even earn a decent living in the present and the future if we continue down this path.  The madness must be stopped.