Obamanomics: Is It Working?

  • Posted: 04 March 2009 08:33 PM

    It’s early in the game but the markets don’t seem all that excited about Obamanomics and the grand New Deal-style economic plan.

    There’s a lot of jawboning from the White House and perhaps time is the president’s economic ally. But I don’t see this recently signed stimulus plan winning over the hearts and minds of the people.

    What (besides) lots of time is needed for this program to become a winner with the people?

         
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    Posted: 04 March 2009 08:54 PM #1

    On The Road To Socialism? We’ve Arrived!

    By PATRICK J. BUCHANAN | Posted Tuesday, March 03, 2009 4:20 PM PT

    In his campaign and inaugural address, Barack Obama cast himself as a moderate man seeking common ground with conservatives.

    Yet his budget calls for the radical restructuring of the U.S. economy, a sweeping redistribution of power and wealth to government and Democratic constituencies. It is a declaration of war on the right.

    The real Obama has stood up and lived up to his ranking as the most left-wing member of the Senate.

    Barack has no mandate for this. He was even behind John McCain when the decisive event that gave him the presidency occurred ? the September collapse of Lehman Bros. and the market crash.

    Republicans are under no obligation to render bipartisan support to this statist coup d’etat. For what is going down is a leftist power grab that is anathema to their principles and philosophy.

    Where the U.S. government usually consumes 21% of gross domestic product, this Obama budget spends 28% in 2009 and runs a deficit of $1.75 trillion, or 12.7% of GDP. That is four times the largest deficit of George W. Bush and twice as large a share of the economy as any deficit run since World War II.

    Add that 28% of GDP spent by the U.S. government to the 12% spent by states, counties and cities, and government will consume 40% of the economy in 2009.

    We are not “headed down the road to socialism.” We are there.

    Since the budget was released, word has come that the U.S. economy did not shrink by 3.8% in the fourth quarter, but 6.2%. All the assumptions in Obama’s budget about growth in 2009 and 2010 need to be revised downward, and the deficits revised upward. Look for the deficit for 2009 to cross $2 trillion.

    Who abroad is going to lend us the trillions to finance our deficits without demanding higher interest rates on the U.S. bonds they are being asked to hold? And if we must revert to the printing press to create the money, what happens to the dollar?

    As Americans save only a pittance and have lost ? in the value of homes, stocks, bonds and other assets ? $15 trillion to $20 trillion since 2007, how can the people provide the feds with the needed money?

    In his speech to Congress, Obama promised new investments in energy, education and health care. Every kid is going to get a college degree. We’re going to find a cure for cancer.

    Who is going to pay for all this? The top 2%, the filthy rich who got all those Bush tax breaks, say Democrats. But the top 5% of income earners already pay 60% of income taxes, while the bottom 40% pay nothing.

    Those paying a federal tax rate of 35% will see it rise to near 40% and will lose a fifth of the value of their deductions for taxes, mortgage interest and charitable contributions.

    Two-thirds of small businesses are taxed at the same rate as individuals. Consider what this means to the owner of a restaurant and bar in Los Angeles open from noon to midnight, where a husband and wife each put in 80 hours a week.

    At year’s end, the couple find they have actually made a profit of $500,000 that they can take home in salary. What is the Obama-Schwarzenegger tax take on that salary? Their U.S. tax rate will have hit 39.6%. Their California income tax will have hit 9.55%.

    Medicare payroll taxes on the proprietor as both employer and salaried employee will be $14,500. Social Security payroll taxes for the proprietor as both employer and employee will be $13,243.

    In short, U.S. and state income and payroll taxes will consume half of all the pair earned for some 8,000 hours of work.

    From that ravaged salary they must pay a state sales tax of 8.25%, gas taxes for the 50-mile commute, and tens of thousands in property taxes on both their restaurant and home.

    And, after being pilloried by politicians for having feasted in the Bush era, they are now told the tax deduction they get for contributing to the church is to be cut 20%, while millions of Obama voters, who paid no U.S. income tax at all, will be getting a tax cut ? i.e., a fat little check ? in April.

    Any wonder native-born Californians are fleeing the Golden Land?

    Markets are not infallible. But the stock market has long been a “lead indicator” of where the economy will be six months from now. What are the markets, the collective decisions of millions of investors, saying?

    Having fallen every month since Obama’s election, with January and February the worst two months in history, they are telling us the stimulus package will not work, that Tim Geithner is clueless about how to save the banks, that the Obama budget portends disaster for the republic.

    The president says he is gearing up for a fight on his budget.

    Good. Let’s give him one.

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    “Even in the worst of times, someone turns a profit. . ” —#162 Ferengi: Rules of Acquisition

         
  • Posted: 04 March 2009 09:13 PM #2

    Yes, by all means, let’s just bring out all of the ugly partisan sniping to the board.  rolleyes

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    “Mom, someone’s wrong on the internet again”

         
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    Posted: 04 March 2009 09:23 PM #3

    DawnTreader - 05 March 2009 12:33 AM

    It’s early in the game but the markets don’t seem all that excited about Obamanomics and the grand New Deal-style economic plan.

    There’s a lot of jawboning from the White House and perhaps time is the president’s economic ally. But I don’t see this recently signed stimulus plan winning over the hearts and minds of the people.

    What (besides) lots of time is needed for this program to become a winner with the people?

    It will take a lot of time to mend the economy. The troubles started in August 2007, US entered recession in December 2007, but no effort was taken until the start of TARP in October 2008 but only now have the proper steps been implemented to fix the US economy. The market only reacts to growth in corporate earnings, which are still far away. A credit crises is an ugly beast, unlike the 2001-03 or 1991-92 recessions. It will take a lot handwringing, wisdom, and long-term thinking to get us out of this mess.

    TanToday - 05 March 2009 12:54 AM

    On The Road To Socialism? We’ve Arrived!

    By PATRICK J. BUCHANAN | Posted Tuesday, March 03, 2009 4:20 PM PT

    In his campaign and inaugural address, Barack Obama cast himself as a moderate man seeking common ground with conservatives.

    Buchanan isn’t an economist, but a second rate demagogue and a failed politician as he never got elected to any office. As such, he should be take in small doses.

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    Tightwad.

         
  • Posted: 04 March 2009 10:06 PM #4

    litespeed - 05 March 2009 01:13 AM

    Yes, by all means, let’s just bring out all of the ugly partisan sniping to the board.  rolleyes

    Year upon year of criticism and outright mockery of Bush was informed and pertinent commentary.

    But questioning whether socialism is good for Apple investors is “ugly partisan sniping”.

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    Posted: 04 March 2009 10:59 PM #5

    litespeed - 05 March 2009 01:13 AM

    Yes, by all means, let’s just bring out all of the ugly partisan sniping to the board.  rolleyes

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    “Even in the worst of times, someone turns a profit. . ” —#162 Ferengi: Rules of Acquisition

         
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    Posted: 04 March 2009 11:54 PM #6

    DawnTreader - 05 March 2009 12:33 AM

    What (besides) lots of time is needed for this program to become a winner with the people?

    Sometimes lemons can be turned into lemonade. But can you ever make a mudpie taste good?

    To make this “program” palatable (not necessarily a winner), it would need to put cash into the hands of taxpayers. Note I said *payers*, not the 40% who pay nothing and often do nothing except work minimum wage jobs and feel entitled to a handout. Yes, they’re working, but are they sacrificing?

    The “program” needs to reward sacrifice. Buoying up bankers making multi-hundred-thousand dollar salaries is asking no one to sacrifice. The rewards are going to those with poor judgement. The diligent and thoughtful get stuck with the bill.

    My wife and I have been recycling for years, and produce one small kitchen bag of trash per week. Composting and recycling takes care of the rest. At least 30% of our salary goes to savings and investments. Since Obama’s election we have moved to a renewable source of energy to heat our home (wood). I have chosen not to fire a marginal worker and am hiring two more. My wife and I now car pool. I took the train from New England to Washington. We have cut five percent more from our take home pay and directed it to retirement investments. We’ve doubled up on one of two home loans, and paid off *all* our credit cards. We cut all the fat in less than two months, shored up the fringes, and are now faced with higher taxes that will unravel our plans. For people we don’t know and wouldn’t respect for their lack of judgement.  This is not a patriotic duty, this is coercion.

    We don’t wear Nikes, don’t ever go to Starbucks, don’t have a flat screen TV, don’t go on ocean cruises, don’t drive SUVs, and don’t really care about who did what to whom in Hollywood. We didn’t vote for Obama, because we feared our daily sacrifice would be met with a call for even more. There are Ants and there are Grasshoppers. The Grasshoppers have landed, and have started to munch. Heaven help us all.

    Perhaps I should join Ragnar and change my handle to “John Galt”. I’m almost ready to stop turning the crank that keeps it all going.  Thank goodness for Apple, the single shining light in Galt’s Gulch. smile

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    Posted: 05 March 2009 12:22 AM #7

    Obamanomics is not working because it gives me little confidence to invest. Moreover, people keep lowering the S&P earnings estimates because they are beginning to realize that the recovery will come later and later in the year. From my perspective last week’s snow storm that led to my getting the DTS stuck at the end of the drive and stimulated today’s purchase of an Escalade was economically more stimulating than Obama’s rhetoric. My purchase was one of only two cars sold all day.

    In other news Bill the dog thought the snow was wonderful.

    [ Edited: 05 March 2009 12:30 AM by Eric Landstrom ]

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    Black Swan Counter: 9 (Banks need money, Jobs needs a break, Geithner has no plan, Cuomo’s grandstanding, .Gov needs a hobby, GS works for money, flash crash, is that bubbling crude?).

    For those who look, a flash allows one to see farther.

         
  • Posted: 05 March 2009 01:03 AM #8

    Ragnar Danneskjold - 05 March 2009 02:06 AM
    litespeed - 05 March 2009 01:13 AM

    Yes, by all means, let’s just bring out all of the ugly partisan sniping to the board.  rolleyes

    Year upon year of criticism and outright mockery of Bush was informed and pertinent commentary.

    But questioning whether socialism is good for Apple investors is “ugly partisan sniping”.

    Sorry, I didn’t see anything having to do with aapl in Tan’s post, but carry on.. I just hope we can keep it civil.

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    “Mom, someone’s wrong on the internet again”

         
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    Posted: 05 March 2009 01:06 AM #9

    DawnTreader - 05 March 2009 12:33 AM

    It’s early in the game but the markets don’t seem all that excited about Obamanomics and the grand New Deal-style economic plan.

    There’s a lot of jawboning from the White House and perhaps time is the president’s economic ally. But I don’t see this recently signed stimulus plan winning over the hearts and minds of the people.

    What (besides) lots of time is needed for this program to become a winner with the people?

    I thought you were a Mod, not a fire starter? Jeez, when will you stop with the constant bashing? Don’t we have threads elsewhere on TMO for this crap? You’re turning into a joke.

         
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    Posted: 05 March 2009 01:30 AM #10

    rezonate:  My history and profile of saving sounds very similar to yours, though I life on the left coast.  My house is paid for; our savings rate is about 30%, we have just $2000 to pay on a car loan, we have five Macs, we recycle dutifully.  But my conclusion is the opposite of yours.  Whatever the origins of this crisis?and it is abysmally stupid to blame it just on poor people who took out bad loans?I think Obama is doing exactly what has to be done to get us out of it.  More tax cutting ala the last 28 years of ?borrow-and-spend, greed is good, and regulation is bad? of Republican governance would be a huge mistake.  We’ve been there, done that, and look where it finally stranded us at low tide.

    Thank God Steve Jobs is a Democrat, or we would have had a corporation that went for the quick bucks at the expense of long-term building, much like Dell.

         
  • Posted: 05 March 2009 02:18 AM #11

    ChasMac77 - 05 March 2009 05:06 AM
    DawnTreader - 05 March 2009 12:33 AM

    It’s early in the game but the markets don’t seem all that excited about Obamanomics and the grand New Deal-style economic plan.

    There’s a lot of jawboning from the White House and perhaps time is the president’s economic ally. But I don’t see this recently signed stimulus plan winning over the hearts and minds of the people.

    What (besides) lots of time is needed for this program to become a winner with the people?

    I thought you were a Mod, not a fire starter? Jeez, when will you stop with the constant bashing? Don’t we have threads elsewhere on TMO for this crap? You’re turning into a joke.

    I’m sorry you feel insults are necessary. The question is: What besides lots of time is needed for this program to become a winner with the people? I don’t see where that has happened yet.

         
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    Posted: 05 March 2009 07:31 AM #12

    firestorm - 05 March 2009 05:30 AM

    rezonate:  My history and profile of saving sounds very similar to yours, though I life on the left coast.  ... More tax cutting ala the last 28 years of ?borrow-and-spend, greed is good, and regulation is bad? of Republican governance would be a huge mistake.  We’ve been there, done that, and look where it finally stranded us at low tide.

    Thank you for the reasoned and respectful comments. I’m not trying to be incendiary, just thoughtful in response to DT’s questions. When I do a straight alignment of my approach, it comes down solidly on the side of libertarian - leave me the heck alone, and I promise to do the same. I seem to remember somewhere how in 1994 the administration removed or softened a lot of the controls that were emplaced to keep human nature in check. Things like the uptick rule, and home loan restrictions. One front for these changes was to “help” disadvantaged people get into homes. The back end seems always to be “get reelected to progress a liberal or conservative agenda”.

    I was thinking that this mentality was the CHANGE we’d get from a new administration, but it seems things are business as usual. Change, faced with decades of rampant government spending and earmarks is not MORE government spending and earmarks. Change is SACRIFICE, and doing something different. Perhaps cutbacks in government programs, removal of the governmental fat, and reductions in the number of people feeding off the government (either by working for the GVMT or bellying up to the trough). 

    The reason I think the gestalt of investors and by extension the population at large see this program as generally unpalatable is because the human BS detector is finely tuned. And it has detected a resounding and solid LACK of Change. And is now powerless to stop it.

    Gosh, the more I reflect on just how awful this “program” makes me feel, the more I want to go play in the snow like Bill the dog!

    On a positive note, the shares we sold (accumulated over a decade) as a downpayment on our house have been over half replenished in just over a year. If the economy stays this way for a while, the share count is gonna look really good if the “program” ever kicks in. And then they’ll be worthless because of inflation. (ducks) (grin)

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  • Posted: 05 March 2009 08:55 AM #13

    As an European dutch guy i find it amazing that you guys in the U.S. are still divided in two camps…. maybe that russian professor is right: the U.S will fall apart and your civilwar was just a sad attempt to keep it together….

         
  • Posted: 05 March 2009 09:31 AM #14

    Honestly, I think it’s all stasis. You had a parabolic rise the last couple of years that couldn’t be sustained. Now you have a parabolic fall. As everyone now knows, there is no such thing as buy and hold. Buy now and sell ‘em in 10 years before the next crash grin .

    Has it ever been that when something went up it didn’t go back down? and vice versa?

    Dutch guy, our politicians like to try to pit us against each so we don’t turn our attention to their sorry, lying asses, but in the end we always stand together.

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    “Mom, someone’s wrong on the internet again”

         
  • Posted: 05 March 2009 09:35 AM #15

    litespeed - 05 March 2009 01:31 PM

    Dutch guy, our politicians like to try to pit us against each so we don’t turn our attention to their sorry, lying asses, but in the end we always stand together.

    Well Litespeed… I believe it when i see it….on this board I haven’t….ever….  even during a War and a severe crisis you are separated and the discussions dont prove me wrong so far…