Dems Pushing Us Toward Perhaps the Most Predictable Economic Crisis in History

Economists Warn That the Already Weak Economy Will Go Into Recession From Democrats’ Proposed Tax Hikes and Devastating Defense Cuts 

• Economic data from this week continue a depressing drumbeat of bad economic news with few signs of a turnaround in sight.
• As bad as things are, economists say they could get a lot worse. If Democrats are successful in imposing new tax hikes on small businesses and devastating defense cuts, experts predict the economy will go into another recession.
• America faces perhaps the most predictable economic recession in its history, but instead of avoiding it, Democrats are using the looming devastation as a political “weapon” to feed their spending addiction. 

Economic data from this week continue a depressing drumbeat of bad economic news with few signs of a turnaround in sight:

AP: “U.S. ECONOMIC DATA ADD TO SIGNS OF SLOWING RECOVERY”: (Christopher Rugaber, “US Economic Data Add to Signs of Slowing Recovery,” Associated Press, 7/19/2012)

“RETAIL SALES IN JUNE FELL FOR THE THIRD STRAIGHT MONTH”: “Retail sales fell in June for the third straight month, the government said this week. That led many economists to downgrade their estimates for growth in the April-June quarter.” (Christopher Rugaber, “US Economic Data Add to Signs of Slowing Recovery,” Associated Press, 7/19/2012)

“DATA SHOW U.S. ECONOMY MIRED IN WEAKNESS”: (Lucia Mutikani, “Data Show U.S. Economy Mired in Weakness,” Reuters, 7/19/2012)

PHILLY FED: “GAUGE OF EMPLOYMENT DECLINED SHARPLY TO A NEAR THREE-YEAR LOW”: “The Philadelphia Federal Reserve Bank said its business activity index was a minus 12.9 in July compared to a minus 16.6 last month. A reading below zero indicates contraction in output in factories in eastern Pennsylvania, southern New Jersey and Delaware. New orders dropped for a third consecutive month and a gauge of employment declined sharply to a near three-year low.” (Lucia Mutikani, “Data Show U.S. Economy Mired in Weakness,” Reuters, 7/19/2012)

“U.S. ECONOMY IS DOWNSHIFTING”: “The U.S. economy is downshifting, even as the housing sector is finally showing signs of life. … Consumer spending is sputtering, manufacturing growth has slowed, and businesses have grown cautious about splurging on new machines and computers. Most economists now expect second-quarter growth to come in much slower than the first quarter’s tepid 1.9% pace, and they say that the outlook is darkening.” (Neil Shah, Jie Jenny Zhou and Nick Timiraos, “Housing Stirs, But Economy Slows,” The Wall Street Journal, 7/18/2012)

CBS/NYT POLL: 53% OF INDYS SAY OBAMA’S POLICIES WILL “NEVER” TURN AROUND THE ECONOMY: (“The Presidential Race Remains Close,” CBS/NYT Poll, 7/11-16/2012)

39% APPROVE OF OBAMA’S HANDLING OF THE ECONOMY, 55% DISAPPROVE: (“The Presidential Race Remains Close,” CBS/NYT Poll, 7/11-16/2012)

64% THINK OBAMA’S POLICIES CONTRIBUTED TO THE WEAK ECONOMY: (“The Presidential Race Remains Close,” CBS/NYT Poll, 7/11-16/2012)

OBAMA JOBS COUNCIL A NO-SHOW FOR THE LAST SIX MONTHS: (Carol E. Lee and John D. McKinnon, “Jobs Council is Sidelined as President Courts Voters,” The Wall Street Journal, 7/18/2012)

As bad as things are, economists say they could get a lot worse. If Democrats are successful in imposing new tax hikes on small businesses and devastating defense cuts, experts predict the economy will go into another recession:

DEMOCRATS’ POISON PILL FOR THE ECONOMY:

STUDY: UP TO 10 MILLION JOBS COULD BE LOST FROM DEMS’ DISASTROUS PLAN: “The negative fiscal shock exceeds Gross Domestic Product (GDP) growth in any year over the past two decades, and when considering economic multipliers, the contraction could approach ten percent, which would amount to the biggest year-to-year decline since 1932. This upper-bound estimate would result in a loss of 10 million jobs, according to the administration’s methods.” (“New Study Examines Economic Effects of the Fiscal Cliff,” American Action Forum, 7/17/2012)

NATIONAL ASSOCATION OF MANUFACTURERS: 3.44 MILLION JOBS COULD DESTROYED BY SEQUESTER FROM 2012 – 2022: (“Defense Spending Cuts: The Impact on Economic Activity and Jobs,” National Association of Manufacturers, Accessed 7/18/2012)

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)

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)

$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)

ECONOMISTS: DEMOCRATS’ PLAN TO CAUSE ANOTHER RECESSION:

FEDERAL RESERVE CHAIRMAN BEN BERNANKE: RECOVERY “COULD BE ENDANGERED” BY DEM TAX HIKES, DEFENSE CUTS: “…fiscal decisions should take into account the fragility of the recovery. That recovery could be endangered by the confluence of tax increases and spending reductions that will take effect early next year if no legislative action is taken.” (U.S. Senate, Committee On Banking, Housing, And Urban Affairs, Hearing, 7/17/2012)

“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)

“ADDITIONAL NEGATIVE EFFECTS LIKELY TO RESULT FROM PUBLIC UNCERTAINTY”: “These estimates do not incorporate the additional negative effects likely to result from public uncertainty about how these matters will be resolved.” (Bernanke testimony before the Senate Banking Committee, Federal Reserve Web site, 7/17/2012)

CBO: BLOW OF TAX HIKES AND SEQUESTER COULD CAUSE RECESSION: “The potential changes are part of the $607 billion so-called fiscal cliff of automatic spending cuts and tax increases that the Congressional Budget Office has warned could push the country into a recession.” (Richard Rubin, “Senate Democrats Split From Obama On Taxing Dividends,” Bloomberg, 7/15/2012)

“RESULTING BLOW TO THE ECONOMY NEXT YEAR COULD BE ENORMOUS”: “…economy-shaking consequences if no deal is reached… resulting blow to the economy next year could be enormous.” (John Bresnahan and Manu Raju, “The Democrats Play Hardball,” Politico, 7/16/2012)

America faces perhaps the most predictable economic recession in its history, but instead of avoiding it, Democrats are using the looming devastation as a political “weapon” to feed their spending addiction:

NO. 2 SENATE DEMOCRAT: TAX HIKES AND CUTS TO DEFENSE ARE A LOADED “WEAPON”: “Democrats believe Republicans might be willing to compromise once the spending cuts and tax increases are felt.

“‘That may be the only way to bring some Republicans into a position of talking,’ Sen. Richard J. Durbin of Illinois, the assistant Democratic leader, said late last week. ‘We’re not going to unload our weapons at this point.’” (Lisa Mascaro, “Congressional Democrats Dig In on Fiscal Cliff Scenario,” Los Angeles Times, 7/16/2012)

“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)

“SENIOR DEMOCRATS” ARE READY TO “PLUNGE THE NATION BACK INTO RECESSION” IF THEY DON’T GET THE TAX HIKES THEY WANT: “Emboldened by signs that GOP resistance to new taxes may be weakening, senior Democrats say they are prepared to weather a fiscal event that could plunge the nation back into recession if the new year arrives without an acceptable compromise.” (Lori Montgomery, “Democrats Threaten to Go Over ‘Fiscal Cliff’ if GOP Fails to Raise Taxes,” The Washington Post, 7/16/2012)