Thursday, April 26, 2007

And they say the Bush economy sucks...


Blogger Izdatyel said...

First Point: High tax revenues do not somehow miraculously negate the assertion that the "Bush economy sucks".

Secondly, the following quote from the article is rather telling:

"'This reflects the fact that Americans in high-income brackets had a very good year in 2006,' said Lou Crandall, chief economist at Wrightson ICAP in Jersey City, New Jersey."

Exactly. One of the leading arguments for why the Bush economy sucks has to do with the fact that the gap between the wealthy and poor is growing, and that the middle class is shrinking.

It's nice to hear that high income Americans are making more than ever - but it doesn't mean anything for the other 99% of Americans whose spending power has shrunk and whose lives have become more difficult under the Bush regime.

Finally - increased tax revenues don't mean a hell of a lot when Bush & Co. are spending the nation's dollars faster than they can get their hands on. Bush is the spendiest president in our country's history - by a wide margin, at that.

So yes, the Bush economy "sucks".

4/27/2007 3:31 PM  
Blogger Izdatyel said...

In today's economy news:

"Economy Crawls, Raising Recession Fears"

4/27/2007 4:27 PM  
Blogger Matt said...

Izy... good and understandable points all.

However, it can't be overlooked that these "high income" bracket taxpayers far and away represent the small business owners in America. The fortune 500 is just that, 500 big companies, w/ their 500 respective sets of executives. It is widely understood that most Americans are employed in small to medium business settings, and the risk takers creating these jobs fall into "high income" brackets even though their actual take home pay doesn't always reflect the same.

Here's the catch... as most of these businesses come in the form of LLC's, Sole Proprietorships, Partnerships, or S Corps, the profits of these businesses each year pass through to these owners. But, as one might guess, the owners are rarely taking this all home, though they're personally responsible for the tax burden. The reality is that they have expansions, business plans, capital expenditures, emergency accounts to replenish, and much more that competes for these same 'profits.'

This record setting day of individual income tax receipts reflects a vibrant and healthy small to medium business environment. Which translates into a strong jobs market. And, although many like to think back to the 'hey day' of the 'Clinton economy,' the fact is that the majority of the buzz from that era surrounded what turned out to be a bubble in the tech sector. A related and interesting point is that even after cleaning up after the 90's tech bubble, Bush has managed a lower average unemployment rate than Clinton's administration managed in its time over the economy. If I'm not mistaken, the economy under Bush has added an average of 180,000 jobs per month, pushing us to our current near "full employment" rate. I'm not saying each administration hasn't had its high and low points w/ regards to unemployment rates. But, on the whole Bush has managed a lower average unemployment rate, in a much more perilous and dynamic period of time, with an ever growing population. In plan english, this means the economy under Bush has employed more people on a jobs ratio and actual number basis.

With regards to your complaint on the spending habits of the Republicans in recent years (both parties frankly, as evidenced by the $20B in pork attached to the latest war funding bill), I couldn't agree more with your frustration. It is beyond comprehension how the Republican Congress went from the Contract w/ America in 1994 (strongly rooted in fiscal conservatism) to their behavior in recent years. It totally irks me that Bush didn't veto any of those spending bills. I think it served us all well to boot them from power (for now :)..) to teach them a lesson for their spending & corruption problems. These guys are unbelievable... it reminds me of something Joseph Smith said way back when about authority and corruption. hmm...

One little point from your post I'd put in perspective is federal spending as a ratio of GDP. While I readily concur we're spending more (dollar for dollar) than ever, the federal government HAS in reality spent more as a ratio of GDP in the past. Not only does our significantly larger economy today justify some expansion in pure dollar expenditures, but so does inflation in the intervening period, a major war effort on two fronts, and ever expanding entitlement programs like Social Security. I'd say it's a little disingenuous, or at least unfair to not put this spending in context. But, at the end of the day, I 100% agree the feds are spending too much, and that we should do our best to reign it in, reform unsustainable entitlement programs, cut waste, control pork, and get back to the balanced budget days of the Clinton & Republican Congress years in the 1990's.

Anyway, on another economic topic, an area of the economy that honestly scares me is the housing bubble. I know the entire country isn't in a bubble, but some markets definitely had been or still are in a bubble. Metro DC definitely got hit hard. I was on the verge of buying a home here when I came out about 2 years ago and I am counting my lucky stars I didn't! Phew!

4/27/2007 6:18 PM  
Blogger Matt said...

As for the Q1 GDP, I'll wait for the restatement before I try and analyze that. Nearly every quarter in recent years it has adjusted upward. And, while I can't forecast the future, I'd bet it will again. Besides, we all know the difference between a blip and a trend. Right? Quarter over quarter of strong growth cannot be dismissed with one, not even restated yet quarter.

4/27/2007 6:18 PM  

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