More on the Impact of Obama's Tax Incrases

As we know the the Bush tax cuts or the Obama tax increases are scheduled to take effect on January 1. This is will be one of the largest tax increases in history. It also well known that tax increases tend to put a damper on economic activity and will prolong a recession. For example consider the Roosevelt's "soak the rich" tax increases which lead to the Roosevelt recession and prolonged the Great Depression.

In order to estimate the impact of tax increases on GDP, the Chair of Obama Council of Economic Advisers, Christian Romer with her husband David, an economics professor at UC Berkley conducted a study published in the latest issue of the American Economic Review. This academic journal is well respected and perhaps the world's leading publication for academic economic work.

In the paper, "The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks" concluded that every dollar of tax increases reduced economic activity by three (a multiplier effect). The key findings of the paper are"The behavior of output following these more exogenous changes indicates that tax increases are highly contractionary. The effects are strongly significant, highly robust, and much larger than those obtained using broader measures of tax changes." Translating from academic economic speak to the language of the Vice President, the results are big f&#@ing deal.

I wonder how this squares with upcoming tax increases. Maybe this time is different?

- The Professor

Impact of Coming Obama Tax Increases

Our friends at the Heritage Foundation have posted this brief analysis of the coming Obama tax hikes which commonly referred to as the expiration of the Bush tax cuts. This is a great summary of the upcoming largest tax hike in history. One interesting feature is a link to a calculator so you can see the bite for your personal situation.

Not only does this send more resources to Washington, raising taxes on our fragile economy will have adverse impacts and will prolong the Great Recession. For example during the 1930s, taxes where raised as part of FDR's soak the rich program. The result was the depression within the depression which was known as the Roosevelt recession. Due to the poor performance of the economy FDR was completing not running for a third time. It was the shift of focus on the gathering storm of World War Two which lead him to run for the unprecedented third term.

Looks like history may indeed by rhyming.

- The Professor

Show Followup (After Class Reading) - 7/27/10

Below is are some the articles we discussed on WMOX yesterday. These would make for good after class reading.

• Club for Growth ratings for Congress. This index looks at how each member of Congress voted on polices such as fiscal responsibility, taxes and health care reform and how they impact the climate for economic growth. For the the Mississippi delegation scored well expect Rep. Thompson earned a zero putting him last on the scorecard for pro-growth polices.
• To understand how much the Bush Tax Cuts contributed the federal deficit see this article from the Wall Street Journal. The article "The Bush Tax Cuts and the Deficit Myth" by Brian Riedl of the Heritage Foundation.
• Are we irrationally pessimistic. Check out my earlier post based on a piece in the New York Times by Ross Douthat, "The Pessimism Bubble."
• From Kaiser Health News, "Where Are the Innovators in Health Care Delivery?" by John Goodman. This piece shows that innovations occurs when patients not 3rd parties control health care dollars and decisions.

Enjoy

- The Professor

WMOX Agenda - Tuesday July 27, 2010

I will be coming over from the 'burbs of Brandon in the am to join the Morning Show crew. As usual we have a full agenda which no doubt will change by the morning or during the show. Here are some of the things on the agenda for the morning:

• Latest thoughts on the economic recovery including the truck index and the latest unemployment rate.
• Is there any value in another stimlus program?
• How is the TARP (bailout) program going? Who has paid back the money and have the taxpayers made money?
• Club for Growth's Congressional Scorecard and the rankings for Mississippi's delegation.
• The coming tax increases in 2011 due to the expiration of the Bush tax cuts.
• Liberals lack understanding of basic economics. Surprise?!
• What is behind the explosion of interest in Hayek's Road to Serfdom?
• A couple of new book picks, Niall Ferguson's The Ascent of Money and Warren Kozak biography of General LeMay, LeMay.
• The new 4D experience at the World War II museum in New Orleans.
• What ever listeners which to talk about.

WMOX now has streaming video and audio so tune in online if outside the airwaves of Meridian. I have link on my website if you want to log on and join the discussion. We start at 6:15 am cdt and run till just before 10 am cdt. We also have some show archives there.

Looking forward to talking to the folks in Meridian

- The Professor

Well Intended Men of Zeal

In light of all of the well intentioned but flawed and far reaching legislation coming out of DC these days, the words of Justice Brandeis are worth reflecting on: "Experience should teach us to be most on our guard to protect liberty when the government's purposes are beneficent. Men born to freedom are naturally alert to repel invasion of their liberty by evil-minded rulers. The greatest dangers to liberty lurk in insidious encroachment by men of zeal, well-meaning but without understanding. "

It is perhaps ironic that these words were written in the context of civil liberties and wiretaps in Olmsead v. US. Certainly, this applies in the area of economic life as well. No doubt this is why Milton Friedman choose it as the opening quote for his 1980 classic, Free to Choose.

- The Professor

Heritage Foundation Webcast on the Oil Spill

Yesterday on WMOX, he had great discussion with Rory Cooper of the Heritage Foundation on their recent visit to the gulf. In our discussions, he mentioned I event they were hosting regarding what they learned on the ground. I just finished watching the event and it is first class. It features John Young, a parish councilman from LA and great advocate for his constituents, and frequent guest on WMOX James Carafano. It is well worth the time to watch which is about an hour.

- The Professor

Haley 2012 Buzz in Washington Post

This morning on WMOX, we discussed this piece in the Washington Post of Governor Barbour 2012 plans. The main point of the piece is captured by its title, "It's either Haley's comet to 2012 or GOP kingmaker." Bottom line, the Governor will be a player in 2012 in a variety of ways.

- The Professor

WMOX Agenda - Wednesday July 14. 2010

I will be coming over from the 'burbs of Brandon in the am to join the Morning Show crew. As usual we have a full agenda which no doubt will change by the morning or during the show. Here are some of the things on the agenda for the morning:

• During the 8:20 am cdt segment will feature another series of discussions with experts at the Heritage Foundation. Joining us will be Rory Cooper who lead the team of experts that visited the Gulf last week to see the oil spill response first hand.
• Happy Bastille Day
• Is the political climate changing for big r reform?
• What is behind the explosion of interest in Hayek's Road to Serfdom?
• Have the prospects for the GOP in 2010 brightened and why?
• Latest thoughts on the economic recovery including the truck index and the latest unemployment rate.
• How is the TARP (bailout) program going? Who has paid back the money and have the taxpayers made money?
• Latest thoughts on the oil spill including observations from the coast last week.
• Club for Growth's Congressional Scorecard and the rankings for Mississippi's delegation.
• The coming tax increases in 2011 due to the expiration of the Bush tax cuts.
• Liberals lack understanding of basic economics. Surprise?!
• A couple of new book picks, Niall Ferguson's The Ascent of Money and Warren Kozak biography of General LeMay, LeMay.
• The new 4D experience at the World War II museum in New Orleans.
• What ever listeners which to talk about.

WMOX now has streaming video and audio so tune in online if outside the airwaves of Meridian. I have link on my website if you want to log on and join the discussion. We start at 6:15 am cdt and run till just before 10 am cdt. We also have some show archives there.

Looking forward to talking to the folks in Meridian

- The Professor

Heritage Hour - Live from the Gulf

Last week the Heritage Foundation sent a team of experts to the Gulf to get a first hand look at impact of the oil spill. In their group were experts in the areas of Homeland Security, energy and environmental policy. During the 8:20 am cdt segment this Wednesday July 14 (Bastille Day), the leader of the team, Rory Cooper, will join us on WMOX. To prepare for this important discussion which hits close to home, check out their blog entries under "Live from the Gulf."

If you are in the Meridian, MS area tune in to 1010 AM for this latest installment of the Heritage Hour. You can also watch and listen to us live on the net on the streaming video section of my website.

- The Professor

Stossel on Friedman's Free to Choose

Several weeks ago, John Stossel did a show on Milton Friedman's classic, Free to Choose. The video is now available on Hulu. For earlier comments on Free to Choose follow this link.

- The Professor

Rep. Paul Ryan's Roadmap

One of the rising stars of GOP is Representative Paul Ryan of Wisconsin. He is article and well versed in economic issues. He caught a lot of national attention when he went toe to toe with the President over health care funding last winter.

One of the initiatives which he has lead is the roadmap. This report analyzes the federal budget and presents a comprehensive proposal to restore fiscal discipline. Today, Bloomberg had a article about his efforts on this front.

Keep an eye on him. I except good things from him over the coming years.

- The Professor

The Gipper v. Obama

This is from one a email a Tea Party organization in their Tea Party Wire. Consider the contrast between The Gipper and Obama.

- The Professor

Need a reason to burn down a university?
Posted: 06 Jul 2010 07:17 AM PDT

Well, here ya go…
Although, I think eliminating the US Department of Education and forbidding it’s former employees to ever again work for any government agency or anywhere in the US “education” system would probably work better.

With a tip of the hat to The Daily Caller,

First he won the Nobel Peace Prize within a year of moving into the White House, and now, with less than 18 months of executive power under his belt, historians agree that President Obama is one of the greatest U.S. presidents this country has ever seen. Well, cracks the top 15, at least.
Using a multi-category rating scale, a Siena College Research Institute survey of 238 historians, academics and political scientists ranked Obama as the 15th greatest president since the nation’s founding. Sandwiched between Andrew Jackson and Lyndon Johnson, the 44th president beat out Ronald Reagan by three slots.

This exercise in JackAssery ranks right up there with the polls showing that US citizens don’t have a clue about who we won our independence from. At least the polls asked “ordinary citizens”. This exercise in mental masturbation asked “historians” who, while unnamed in the article, one could reasonably assume have graduate level educations from various universities.
So, let’s look at this proposition.

Obama:
 Inherited a recession and followed policies that kept the recession in place. Maybe.
 He holds the all time record for deficits in just one year in office and still thiks government creates “jobs”.
 The CEO of Verizon – head of the Business Roundtable – who’s been in BO’s back pocket since before day one, is now saying that O’s policies of overreaching government are the cause of no growth in the private sector.
 O’s made a world tour apologizing for America and pitching the idea that she’s just another second rate country.
 The Democratic controlled Congress can’t (won’t) pass a budget.
 We’re looking at a “double-dip” recession at best. Could very well be a depression if some adults don’t show up.
 The residential housing market has been the recipient of billions upon billions of dollars of “help”. The National Assn of Realtors announced last week that the housing market is just not sustainable without government help.

Reagan:
 Inherited a stagnent economy with interest rates around 20%.
 Inherited a government that conventional wisdom said was “un-governable”.
 Inherited a Cold War that no one though we could win.
 Had a Democratic House that fought his spending initiatives for rebuilding the military – a constitutional obligation of the federal government.
 He rebuilt the US military into a world beating fighting force, restoring their morale and honor.
 Won the Cold War. When The Wall fell, that was a tribute to Ronald Reagan. And a slap in the face to both the entire Democratic Party (who still hasn’t gotten over the fall of the USSR) and institutional Republicans.
 Restored the ideal of American Exceptionalism so totally derided (then and now) by Democrats.
 Brought interest rates down, created an environment for private sector job growth and business investment. Totally turned the economy around.

The choice is simple. Obama is turning America into Detroit. Reagan left us with A Shining City on a Hill. I’ll take the Shining City on a Hill. The historians are free to move to downtown Detroit.

WMOX Agenda - Thursday July 8. 2010

Correction: - WMOX appearance is Thursday 7/8/10. It helps if you read your calendar after vacation as opposed to working from memory.

I will be coming over from the 'burbs of Brandon in the am to join the Morning Show crew. As usual we have a full agenda which no doubt will change by the morning or during the show. Here are some of the things on the agenda for the morning:

• Is the political climate changing for big r reform?
• What is behind the explosion of interest in Hayek's Road to Serfdom?
• Have the prospects for the GOP in 2010 brightened and why?
• Latest thoughts on the economic recovery including the truck index and the latest unemployment rate.
• How is the TARP (bailout) program going? Who has paid back the money and have the taxpayers made money?
• Latest thoughts on the oil spill including observations from the coast last week.
• Club for Growth's Congressional Scorecard and the rankings for Mississippi's delegation.
• The coming tax increases in 2011 due to the expiration of the Bush tax cuts.
• Liberals lack understanding of basic economics. Surprise?!
• A couple of new book picks, Niall Ferguson's The Ascent of Money and Warren Kozak biography of General LeMay, LeMay.
• The new 4D experience at the World War II museum in New Orleans.
  What ever listeners which to talk about.

WMOX now has streaming video and audio so tune in online if outside the airwaves of Meridian. I have link on my website if you want to log on and join the discussion. We start at 6:15 am cdt and run till just before 10 am cdt. We also have some show archives there.

Looking forward to talking to the folks in Meridian

- The Professor

Jefferson and Reagan Speak

Making the rounds on the Internet are two very creative "speeches" by Thomas Jefferson and Ronald Reagan about the problems facing the country today. These two speeches use quotes and video from two of America's best President that apply timeless principles to our challenges. They are both thoughtful and uplifting.

For the Jefferson speech visit The Intellectual Activists and for the Gippper go this site.

- The Professor