Sunday, September 5, 2010
The Looming Obama Depression
The Looming Obama Depression
The longer President Obama refuses to acknowledge the direction of our nation's economy the greater the impact will be when the looming depression that awaits is named in his honor. For a leader who has had the advantages of an Ivy League education, he seems to be an excessively poor student of history. But in 120 days no one will be able to dispute that the economic mess the United States finds herself in belongs to anyone except President Barack Hussein Obama.
The basis of this reality is rooted in two truths that became quite pronounced this week. The first is that President Obama is ignoring the very real direction the nation is headed. The second is that he is purposefully ignoring the impact his looming historic tax increases will have. Both are contributing to the pessimism that overarches the morale and tone of the entrepreneurial framework of the future.
This week President Obama took to the White House press corps and by extension to the nation to claim that the nation saw job growth of 67,000 jobs in August. Even if this number was real it would be a pitifully tiny percent of the 14,885,000 who are both on unemployment (1 in 10 Americans) as well as those 23,768,000 who are underemployed (working but not earning enough for basic needs - 1 in 5 families).
The bigger problem for the president however is that the number isn't real. The fact is the nation saw 114,000 people added to the unemployment lines in August and the net jobs lost for the month sat at 54,000. In all the "summer of recovery"--as both President Obama and Vice President Biden pronounced it--saw 238,000 more jobs disappear. Telling the nation that his plans have taken the economy in the right direction, and implying that the nation is seeing a recovery in the area of employment is either willfully dishonest, or painfully, even treacherously naive. At the rate of this "recovery" another 317,333 workers could be sitting on the sidelines before the end of the year.
Additionally we are now on track to see the single largest collection of tax increases ever proposed take the Obama economy even further into the tank. In less than 120 days President Obama's plan to add a collective 18.6% to the federal tax burden will continue the economic downward spiral into record breaking depression-era territory. And remember he repeatedly said--on the campaign trail--that he should be elected expressly to prevent the nation's economy from complete deterioration.
Instead unemployment that was growing in the transition from Bush to Obama has exploded to double what it was under Bush. Even worse this means that while 14,885,000 Americans are claiming unemployment assistance, some 23,768,000 families are presently struggling through work that they have but are unable to meet their basic needs.
And about the time we are belting out Auld Lang Syne this holiday season, President Obama will raise all five income levels of tax categories between 3-5%.
Ironically the President will be raising the rate on the category that is home to seventy-five percent of all small businesses in America by the largest increase.
I call it ironic because it is the small business community in America that hires 2 out of every 3 new workers in America.
Eventually it all adds up.
The president is not pushed on this issue by the press. The president's team pretends that these realities do not exist. The president himself is willing to perpetuate the false notion that the stimulus package set up a "recovery summer" that in truth ended up in greater pain than it began with.
None of this takes into effect the additional costs that will be incurred by taxpayers when the full implementation of President Obama's control of one-sixth of the economy through the manipulation of how we receive health care benefits kicks in. And not that it has great likelihood of passing this year, but if by some miracle it did, the Obama tax penalties that would be incurred by every citizen in the nation under the proposed "Cap & Trade" legislation would add even greater misery to the growing pile.
All of these pending tax increases will be put into effect against well more than 95% of American tax-payers. Speaking of which that certainly contradicts his most famous campaign line.
In 1929 Irving Fisher observed that a number of trends led to the worst depression of our nation's history.
How many of these fit in today's scenario:
Debt liquidation and distress selling
Contraction of the money supply as bank loans are paid off
A fall in the level of asset prices
A still greater fall in the net worths of business, precipitating bankruptcies
A fall in profits
A reduction in output, in trade and in employment.
Pessimism and loss of confidence
Hoarding of money
A fall in nominal interest rates and a rise in deflation adjusted interest rates.
President Obama is ignoring and misrepresenting the rate of growth (or lack thereof) in the job numbers, and his economic team has laid the groundwork for the harshest attack on small businesses and every family in America that pays taxes effective January 1, 2011.
By every indicator this pundit can see, we are poised for tragedy... and I didn't get an Ivy League education!
Kevin McCullough is the nationally syndicated host of "Baldwin/McCullough Radio and columnist based in New York. He blogs at www.muscleheadrevolution.com. His second book "The Kind Of MAN Every Man SHOULD Be" is in stores now.
Posted by Brett at 11:12 PM