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Spending Daily
Spending Daily | July 18, 2012
Who built that?
In response to the President’s remarks, Gretchen Hamel, executive director of the Public Notice, writes for Red Alert Politics, “Government does not create business, and in fact, hinders many of them through excessive regulation, taxes and politics. But, in a world where politics trumps reality, the only way to make sense of more government spending is to take credit from the only thing that is working, our small businesses and hard working Americans. Hopefully, instead of taking the credit, the government can instead get out of the way of businesses that strengthen our economy, create American jobs, and care more about creating great products than taking the credit.”
The Wall Street Journal also writes in an editorial,”The Presidential election has a long way to go, but the line of the year so far is President Obama’s on Friday: ‘You didn’t build that.’ Rarely do politicians so clearly reveal their core beliefs…The President who says he wants to be transformational may be succeeding—and subordinating to government the individual enterprise and risk-taking that underlies prosperity. The question is whether this is the America that most Americans want to build.”
Cronyism Built That
The Washington Free Beacon reports on, “President Obama’s record of rewarding political donors with taxpayer dollars and plum administration posts…The most publicized instance of so-called ‘crony capitalism’—investing taxpayer dollars in firms tied to political donors—is the failed solar panel company Solyndra.” George Kaiser, “a major stakeholder in Solyndra through his Kaiser Family Foundation,” said at a Tulsa Rotary Club meeting, “‘There’s never been more money shoved out of the government’s door in world history, and probably never will be again, than in the last few months and in the next 18 months. And our selfish parochial goal is to get as much as it for Tulsa and Oklahoma as we possibly can.’…Taxpayers, meanwhile, are unlikely to recover much of the money invested on their behalf.”
Democrats’ Tax Cut Loophole
The New York Times reports, “Senate Democrats — holding firm against extending tax cuts for the rich — are proposing a novel way to circumvent the Republican pledge not to vote for any tax increase: Allow all the tax cuts to expire Jan. 1, then vote on a tax cut for the middle class shortly thereafter…Virtually every Republican in Congress has taken the pledge, pushed by Grover Norquist’s Americans for Tax Reform, never to vote for a tax increase — a pledge both parties see as a serious impediment to a tax compromise. But if tax rates snap back to the levels of the Clinton presidency on Jan. 1, any legislation to reinstate some of those tax cuts — but not all of them — would be considered a tax cut.”
Tax Hikes Could Hit 2.1 Million Business Owners, Cost 710,000 Jobs
The Washington Post reports, “Should Congress allow the tax rates for the nation’s highest earners to expire at the end of the year, millions of small businesses could be forced to cut jobs and wages, placing an enormous strain on the already sluggish economic recovery, according to a new study….Ernst & Young conducted this latest study in an effort to predict the long-term economic impact of letting the top rates increase at year’s end — and the findings stand in stark contrast to the repeated assurances from Democrats that their proposal would have minimal effect on small business owners.” The study found,”the plan would actually subject 2.1 million business owners to higher rates; specifically, those who pay pass-through taxes, like most partnerships, LLCs and S-Corporations. The result, less capital in the hands of business owners and diminished labor supply, would cost the United States an estimated $200 billion in economic output and 710,000 jobs. Moreover, business owners and the unemployed won’t be the only ones adversely affected, according to the study, which predicts that employers would also be forced to trim their workers’ wages by 1.8 percent.”
Fed’s “bleak new assessment of the U.S. Economy”
The Wall Street Journalreports, “Federal Reserve Chairman Ben Bernanke delivered a bleak new assessment of the U.S. economy to lawmakers on Tuesday but remained guarded about what, if anything, the Fed would do about it. Policymakers at the central bank lowered their growth projections in June and seem to be preparing for additional moves to spur the economy in the weeks or months ahead…’We are looking very carefully at the economy, trying to judge whether or not the loss of momentum we’ve seen recently is enduring and whether or not the economy is likely to continue to make progress towards lower unemployment,’ Mr. Bernanke said.”
Fiscal Cliff Now Greater Worry Than European Crisis
The Washington Post reports, “The main threat to the economy is shifting from what others may do to us to what we are doing to ourselves. For much of the year, economists worried about the impact of the slowdown in Europe on the U.S. economy. Now, analysts say anxiety about the impact of the fast-approaching fiscal cliff — the series of federal spending cuts and tax hikes set to take effect at the beginning of 2013 if Congress and the Obama administration do not act — is displacing Europe as the primary threat to the nation’s sputtering economy…’While our analysts are somewhat less worried about the impact of European bank strains,’ a Morgan Stanley report said Monday, ‘the negative impact of fiscal cliff uncertainty is becoming more widespread.’”
Washington Lawmakers Regret Voting for the Worst Case Scenario
Politico reports, “The looming across-the-board budget cuts that could put scores of Americans out of work next year are all President Barack Obama’s fault. That’s according to congressional Republicans — the majority of whom voted for the deal that laid the groundwork for the cuts in the first place. But Republicans who backed the sequester arrangement then aren’t making any apologies now… It may have seemed like a fine idea at the time, but now that the reality of steep cuts to the military are coming into focus, Republican lawmakers don’t like what they see.” Sen. Susan Collins (R-Maine) laments, “I was assured by leadership that when I agreed to vote for the Budget Control Act — which I did to prevent our country from defaulting on its obligations — that sequestration would never happen, that it was such a dire remedy that it would force the supercommittee to act, and obviously that proved not to be true.”
Avoiding Another Shutdown
Politico reports, “Top congressional Republicans are plotting ways to avoid a government shutdown fight when the fiscal year ends Sept. 30, believing the partisan brinkmanship that defined last year’s budget battles would be devastating to their party heading into the November elections. In early September, House Republican leaders want to pass a three-month temporary funding measure that sticks to last year’s debt-limit agreement, according to aides involved with the planning. But that could spark a fight with some House and Senate conservatives who yearn for the lower funding numbers in Rep. Paul Ryan’s budget.”
Deja Vu: Geithner Calls for “Substantial” and “Well-Designed” Program for Economic Growth
Appearing on CNBC’s Kudlow Report, Treasury Secretary Timothy Geithner said, “What the economy needs right now is very substantial and well-designed program for support of economic growth.” CNBC reports, “Treasury Secretary Timothy Geithner said the economy is ‘definitely slower,’ but defended the Obama administration’s actions and said Washington needs to take aggressive action to promote growth … Both sides, though, face a looming fiscal catastrophe at the end of the year when a series of tax increases and spending cuts kick in if Congress cannot reach deficit-reduction goals.”
