Dems’ Won’t Let a Recession Get in the Way of their Spending Habit

July 24, 2012

Sinking Earnings Signal a Recession Could Be Around the Corner, But Dems Still Want Job-Destroying New Tax Hikes on Small Businesses

New economic data suggest that another recession could be around the corner as earnings remain weak and the job market struggles.
The rough state of the economy is noteworthy given President Obama’s repeated promises not to raise taxes during a weak economy and his own prior admissions that doing so would prove destructive to job creators.
Yet now Democrats are breaking their promise not to raise taxes during a weak economy so that they can finance their addiction to government spending.

New economic data suggest that another recession could be around the corner as earnings remain weak and the job market struggles:

“EARNINGS SHOW RECESSION MAY BE ‘FAST APPROACHING’”: (Jeff Cox, “Earnings Show Recession May Be ‘Fast Approaching,’” CNBC, 7/23/2012)

ESTIMATES FOR FUTURE EARNINGS HAVE “DROPPED TO LEVELS NOT SEEN SINCE THE DAYS OF THE 2008 FINANCIAL CRISIS”: “Estimates for the third and fourth quarters have been dropped to levels not seen since the days of the 2008 financial crisis, below even the muted 2 percent expected level of inflation.

“That’s an ominous recession sign for an economy that has barely managed to attain positive growth this year even with the strong level of earnings beats, according to an analysis by Nicholas Colas, chief market strategist at ConvergEx in New York.” (Jeff Cox, “Earnings Show Recession May Be ‘Fast Approaching,’” CNBC, 7/23/2012)

“US POVERTY ON TRACK TO RISE TO HIGHEST SINCE 1960s”: (Hope Yen, “US Poverty on Track to Rise to Highest Since 1960s,” Associated Press, 7/23/2012)

MIDDLE CLASS INCOME ON THE DECLINE: “Since median inflation-adjusted family income peaked in 2000 at $64,232, it has fallen roughly 6 percent. You won’t find another 12-year period with an income decline since the aftermath of the Depression.” (Jeff Cox, “Earnings Show Recession May Be ‘Fast Approaching,’” CNBC, 7/23/2012)

“FORECLOSURE CRISIS HITS OLDER AMERICANS HARD,” 1.5 MILLION HAVE ALREADY LOST THEIR HOMES: (“Foreclosure Crisis Hits Olders Americans Hard,” Associated Press, 7/19/2012)

PLURALITY BLAME OBAMA FOR THE BAD ECONOMY: “Two-thirds of likely voters say the weak economy is Washington’s fault, and more blame President Obama than anybody else, according to a new poll for The Hill.” (Sheldon Alberts, “The Hill Poll: Majority of Voters Blame President for Bad Economy,” The Hill, 7/23/2012)

FEDERAL RESERVE: UNEMPLOYMENT TO “REMAIN ELEVATED FOR ANOTHER FIVE TO SIX YEARS”: “Federal Reserve officials agreed at a meeting in June that unemployment would remain elevated for another five to six years, but most did not regard that as a reason for the Fed to expand its efforts to stimulate growth, according to an official account published Wednesday.” (Binyamin Appelbaum, “Fed is Torn on Tipping Point for Action,” The New York Times, 7/11/2012)

The rough state of the economy is noteworthy given President Obama’s repeated promises not to raise taxes during a weak economy and his own prior admissions that doing so would prove destructive to job creators:

OBAMA IN DEC. 2010: TAX INCREASE “WOULD HAVE BEEN A BLOW TO OUR ECONOMY JUST AS WE’RE CLIMBING OUT OF A DEVASTATING RECESSION”: “…tax rates for every American were poised to automatically increase on January 1st… would have been a blow to our economy just as we’re climbing out of a devastating recession.” (President Obama, Remarks At Bill Signing, 12/17/10)

OBAMA IN NOV. 2010: “IF WE ALLOW THESE TAXES TO GO UP… THE ECONOMY WOULD GROW LESS”: “If we allow these taxes to go up, the result would be that a lot of people most likely would spend less, and that means that the economy would grow less.” (“Remarks by the President and Vice President to Chrysler Plant Workers in Kokomo, Indiana,” The White House, 11/23/10)

ANOTHER BROKEN OBAMA PROMISE: “YOU DON’T RAISE TAXES IN A RECESSION.”(“Obama: We Must ‘Help Elkhart Reinvent Itself,’” MSNBC, 8/5/09)

Yet now Democrats are breaking their promise not to raise taxes during a weak economy so that they can finance their addiction to government spending:

“DEMOCRATS THREATEN TO GO OVER ‘FISCAL CLIFF’ IF GOP FAILS TO RAISE TAXES”: (Lori Montgomery, “Democrats Threaten to Go Over ‘Fiscal Cliff’ if GOP Fails to Raise Taxes,” The Washington Post, 7/16/2012)

FEDERAL RESERVE CHAIRMAN BEN BERNANKE: IF DEMS GET THEIR WAY “RECESSION WOULD OCCUR EARLY NEXT YEAR”: “The Congressional Budget Office has estimated that, if the full range of tax increases and spending cuts were allowed to take effect–a scenario widely referred to as the fiscal cliff–a shallow recession would occur early next year…” (Bernanke testimony before the Senate Banking Committee, Federal Reserve Web site, 7/17/2012)

710,000 JOBS COULD BE DESTROYED BY DEMOCRATS’ TAX HIKE PLAN: (Robert Carroll and Gerald Prante, “Long-Run Macroeconomic Impact of Increasing Tax Rates on High-Income Taxpayers in 2013,” Ernst & Young, July 2012, Appendix C)

$201 BILLION HIT TO THE ECONOMY: (Robert Carroll and Gerald Prante, “Long-Run Macroeconomic Impact of Increasing Tax Rates on High-Income Taxpayers in 2013,” Ernst & Young, July 2012, Appendix C)

1.8% DROP IN WAGES: “Real after-tax wages would fall by 1.8%, reflecting a decline in workers’ living standards relative to what would have occurred otherwise.” (Robert Carroll and Gerald Prante, “Long-Run Macroeconomic Impact of Increasing Tax Rates on High-Income Taxpayers in 2013,” Ernst & Young, July 2012)

JOINT COMMITTEE ON TAXATION: 940,000 SMALL BUSINESSES TO GET HIT BY DEMOCRATS’ LATEST TAX HIKE: “Congress’s Joint Tax Committee—not a conservative outfit—estimates that in 2013 about 940,000 taxpayers will have enough business income to meet Mr. Obama’s tax increase threshold.” (Editorial, “Off the Tax Cliff He Goes,” The Wall Street Journal, 7/10/2012)

EMPLOYERS HIRING 25% OF WORKFORCE WOULD BE HIT BY TAX HIKES UNDER DEMOCRATS’ PLAN: (Susan Eckerly, “Letter Urging Congress to Hold a Vote Extending All of the Current Individual Tax Rates,” NFIB, 9/21/2010)

MORE THAN HALF OF NET BUSINESS INCOME WILL BE HIT BY HIGHER TAX RATES UNDER OBAMA PROPOSAL: “And of the roughly $1.3 trillion in net business income, about 53% will get hit with the higher tax rates. This is because millions of businesses report their income as sole proprietors and subchapter S corporations that file under the individual tax code.” (Editorial, “Off the Tax Cliff He Goes,” The Wall Street Journal, 7/10/2012)