Wednesday, May 27, 2009
I know that the MSM, President Obama, politicians, and talking heads seem to find the time to say the we're in "the worst economy since the Great Depression," but I wish they'd take some time and look at some economic facts before they imply that our economic rough patch is anywhere near the horrific economic times of the 1930's. Someone who has taken the time to provide such facts in perspective is economist Donald Marron(formerly of the President's Council of Economic Advisers). In a well organized chart(see below), Marron points out the small declines in previous recessions going back to 1929/33 and one can clearly see from the declines in GDP that no economic downturn so far in breaks a sweat compared to the declines during the Great Depression. Here's a look:
*Hat tip to David Marron at http://dmarron.com/
Tuesday, May 12, 2009
About a week or so ago, President Obama came before the American people and noted that he was closing the "tax loophole," on the various American corporations that have factories our operations in foreign countries. Now a lot of people in this country might think that this is action is good news because the government is going after "tax dodging corporations," but when you remove the ribbon and wrapping paper from this gift you soon realize that the present is mere socks and underwear. Now while I'm don't claim to be an economist, I do know that this move on behalf of the Obama administration will create far more trouble for this nation and our economy for a paltry some of tax dollars. Luckily, we've got the columns of Robert Samuelson to set the record straight on the economic impact that such an action will bring about. Samuelson lays out a "user friendly" observation on what will occur in his most recent column "The Great Tax Dodge Demystified." Here's what caught my eye:
Now is the time to reform our corporate taxes to a system of lower rates and more economic freedom to place us at a comparative advantage and attract more multi-national corporations to base their operations here. Unfortunately, the Obama administration is willing to destroy the economic recovery and put American multi-national corporations at an economic disadvantage with the other multi-nationals around the world to get some huzzahs and greater taxes.
Myth: Aided by those overpaid lobbyists, American multinationals are taxed lightly -- less so than their foreign counterparts.
Reality: Just the opposite. Most countries don't tax the foreign profits of their multinational firms at all. Take a Swiss multinational with operations in South Korea. It pays a 27.5 percent Korean corporate tax on its profits and can bring home the rest tax-free. By contrast, a U.S. firm in Korea pays the Korean tax and, if it returns the profits to the United States, faces the 35 percent U.S. corporate tax rate. American companies can defer the U.S. tax by keeping the profits abroad (naturally, many do), and when repatriated, companies get a credit for foreign taxes paid. In this case, they'd pay the difference between the Korean rate (27.5 percent) and the U.S. rate (35 percent).
Myth: When U.S. multinationals invest abroad, they destroy American jobs.
Reality: Not so. Sure, many U.S. firms have shut American factories and opened plants elsewhere. But most overseas investments by U.S. multinationals serve local markets. Only 10 percent of their foreign output is exported back to the United States, says Harvard economist Fritz Foley. When Wal-Mart opens a store in China, it doesn't close one in California. On balance, all the extra foreign sales create U.S. jobs for management, research and development (almost 90 percent of American multinationals' R&D occurs in the United States) and the export of components. A study by Foley and economists Mihir Desai of Harvard and James Hines of the University of Michigan estimates that for every 10 percent increase in U.S. multinationals' overseas payrolls, their American payrolls increase almost 4 percent.
Myth: Plugging overseas corporate tax loopholes will dramatically improve the budget outlook as multinationals pay their "fair" share.
Reality: Dream on. The estimated $210 billion revenue gain over 10 years -- money already included in Obama's budget -- represents only six-tenths of 1 percent of the decade's tax revenues of $32 trillion, as projected by the Congressional Budget Office. Worse, the CBO reckons that Obama's endless deficits over the decade will total a gut-wrenching $9.3 trillion.
One thing that I'm highly concerned about the "nationalized health care" policy being proposed by the Obama administration is the fact that it will place pointy-headed bureaucrats in charge of our medical care thus pushing our decisions and that of the Dr. aside. One only has to look at Canada or the UK to see how such a system has led to a scarcity of "miracle drugs", top of the line and timely cancer care, state of the art technology, not to mention excessive waiting lines. Even more this system leads to the rationing of medical care to the folks who are deemed "eligible" or "viable" for this procedure or that medicine by a government bureaucrat sitting in D.C. I believe that Hugh Hewitt summed up what could be coming down the pike in his May 5, 2009 op/ed "Flu pandemic today, health care rationing tomorrow," in which he noted":
I for one hope that such legislation will fall to the wayside, but such can only happen if the American people become aware of what President Obama and his supporters have in store for us.Almost anyone familiar with the push for what is euphemistically called “health care reform” knows that many experts on the left believe that far too many dollars are spent on providing health care to people in the final weeks or months of their earthly lives. If controls can be placed on these expenditures, then more of the government’s resources will be available for younger and much healthier people.Thus, rationing’s first target is going to be the expensive demands made by the elderly. The new system will simply scoff at the idea of a liver transplant for anyone over the age of 65. Or 60. Or maybe even 55. Liver transplants are expensive.Rationing’s second target will have to be those very expensive services laid out for the profoundly disabled. Any ideology which rejects the value of even completely healthy late term fetuses (and support for late term abortion rights absolutely means the rejection of that value) is simply not going to be able to support the expenditure of scarce resources on hugely expensive medical interventions on behalf of the severely handicapped.After the easy cuts are made at the beginning and end of life, expect the government to begin to squeeze on disfavored behaviors via the minimization or withdrawal of medical care for, say, lung cancers in smokers or heart disease among the obese.
*Now being a Sci-Fi fan, one can imagine this progressive inspired utopian dream world emerging in our near future.