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Obamacare Implodes
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Obama’s Rising Inequality
May 8, 2013 | 101 comments
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Downsize the Liberals
May 1, 2013 | 53 comments
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Fight Back! Privatize the FAA!
April 24, 2013 | 65 comments
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Fallacies and Charades
April 17, 2013 | 14 comments
The Obama Watch
Bush Tax Cuts Still Working — For Now
They’ve rescued Obama once. After 2012 he’ll try to get rid of them again.
(Page 2 of 3)
But the economy today has received a reprieve, not a permanent stay of execution. President Obama, if reelected, is still pledging to impose his tax increase tsunami in 2013, which is when the Obamacare tax increases become effective in addition to the scheduled expiration of the Bush tax cuts. This will impose a hefty double whammy in increasing the tax rates of virtually every major federal tax on precisely those who create new jobs and invest in the economy.
Then there is still another major storm on the horizon. The Fed’s incredibly loose, indeed bordello-style, monetary policy first caused gold prices to start to spike. Then it caused a declining dollar. Now it has caused commodity prices to soar, with oil climbing over $100 a barrel.
For those who do not know how to read the monetary policy smoke signals, which includes everyone miseducated in Ivy League schools, that spells coming inflation. Worse than inflation for the economy will be what the Fed will have to do to stop it.
By this summer, the Fed will have worked America into a 1970s style monetary policy trap. Inflation will be surging into the 4-6% range. If the Fed continues into the 2012 election year with its easy money, zero interest rate policies, inflation will continue surging higher and higher.
But if the Fed finally reverses course with a tight monetary policy to stop inflation and restore stable prices, interest rates will at first rise. Without the Fed available to buy up federal debt with newly printed money, the government will have to bid up market interest rates further to sell its blizzard of federal bonds, bills, and notes. That will secondarily cause a downturn in the stock market.
The full contractionary effect of such monetary policies has been shown to arrive with long lag times of a year to a year and a half. The only question will then be will the resulting recession occur before the election or after. Either way, if President Obama is reelected, in 2013 the contractionary effect of his across the board tax rate increases on the nation’s employers and investors will add to the monetary policy downdraft to create one horrendous double dip recession.
But even this is not all that President Obama is doing to ensure that Coming Crash of 2013. He is carrying on a regulatory jihad against American energy production. He is shutting down drilling both offshore and onshore. We can’t even drill today in the National Petroleum Reserve! Coal and even natural gas are under assault. And despite President Obama’s occasional rhetoric, no new nuclear power plant construction is anywhere in sight in the U.S., though 60 new reactors are being built around the world, from Brazil, to Argentina, to Lithuania, to India, even Sri Lanka, with 20 being built in China alone.
In addition to the direct loss of jobs and economic production they’re causing, these policies are depriving the American economy of reliable, low cost energy supplies. The resulting rising price of energy, represented by $100 oil, is like an additional tax on the economy.
With the deficit today already at $1.645 trillion, if we suffer another serious recession in 2013, how high will the deficit soar then? Well over $2 trillion? With the Fed out of the debt monetizing business, will America even be able to borrow that much on world markets? Or will America effectively be bankrupt then, just like Greece? The European Union addressed that with a trillion dollar bailout package. But who will bail out America? Who even could try?
The Tea Party to the Rescue
This nightmare scenario can still be stopped, and America’s world leading economic prosperity restored. The first step on the road to real recovery is for House Republicans to pass a permanent extension of the Bush tax cuts, ASAP.
But that is just a small down payment on what is needed. Full reform to restore global competitiveness to the American economy requires fundamental tax reform for both the individual and corporate income taxes, establishing a flat 15% rate for both while closing loopholes. That would include a 15% capital gains tax rate and a 15% rate for corporate dividends as well. The Alternative Minimum Tax (AMT) and death tax must be abolished as counterproductive additional layers of taxation. Capital investment in plant and equipment must be allowed an immediate deduction, as under “expensing,” rather than arbitrary, stretched out depreciation.
Federal spending must then be shoehorned into the revenues produced by this tax code designed to maximize long-term economic growth. That will not be as hard as might seem, with the resulting booming revenues from a booming economy. The key to permanently balancing the budget is fundamental, structural entitlement reform that changes from the ground up how the programs work and achieve their goals. (This is explained in detail in my forthcoming book from HarperCollins this spring, America’s Ticking Bankruptcy Bomb: How the Looming Debt Crisis Threatens the American Dream, and How We Can Turn the Tide Before It Is Too Late.)
For Social Security, that means empowering working people with the freedom to choose to pay some of their payroll taxes to start in their own family savings, investment and insurance accounts to finance part of their future retirement benefits. Over time that option would be expanded so that the personal accounts can ultimately finance all of the benefits financed by the payroll tax today, replacing the payroll tax entirely. That would result in dramatic long-term reductions in federal spending, as all of those benefits would go off the federal budget, and be financed through the private sector instead. Because of the much higher long-term market investment returns, those personal accounts would provide working families with higher benefits, rather than lower benefits. The accounts would contribute further to booming economic growth with ultimately trillions in new savings and investment for the economy.
For Medicaid, that means block granting the program back to the states as was done in 1996 with the old Aid to Families with Dependent Children (AFDC) program, with astounding success. The states could then provide the poor with vouchers for the purchase of private health insurance. That would greatly benefit the poor with the same health care as the middle class, as they would enjoy the same health insurance as the middle class.
About the Author
Peter Ferrara is Director of Entitlement and Budget Policy at the Heartland Institute, General Counsel of the American Civil Rights Union, Senior Fellow at the National Center for Policy Analysis, and Senior Policy Advisor on Entitlements and Budget Policy at the National Tax Limitation Foundation. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.
Letter to the Editor View all comments (24) | Leave a comment
More Articles by Peter Ferrara
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Bill Hussein O'Stalin| 3.9.11 @ 6:34AM
It's obvious now that Obama may be Osama's secret weapon in the United States. Essentially, Osama Bin Ladin is clever enough to see he need do no more.
Obama and his fifth column are marching across the economy hiding behind the progressive agenda, and all the while stomping the Constitution, and you, and the economy into the ground.
Mitch Angoop| 3.9.11 @ 2:06PM
Unfortunately, I have two important topics to bring up. The first topic will inflame every left/lib moron in our Country. Why? Here's why: American Blacks are either the stupidest group of people in the world, or they are willing to destroy their own lives to protect the vile dictator 'wannabee' in the White House simply because he's allegedly Black. (He's not, but they don't seem to care.)
My second issue is very upsetting and requires this preface:
WARNING!
I do not want to be alarmist, but I have been wrestling with the worst virus/worm I have EVER encountered. It apparently got in through a ‘hole’ in an ADOBE FLASH update message. It will come up as a warning that your computer has been infected by a virus and appear to be scanning your hard drive. DO NOT OPEN IT OR EVEN CLICK ON IT! If you do not know what to do, try to get into SAFE MODE and call an expert. Microsoft has issued more than a dozen security definitions and attempted patches in the last week and it keeps getting back in. This is very serious! I may be paranoid, but it looks like it could be a coordinated attack on our internet. I hope I’m wrong.
You may now return to Mitch's regularly scheduled ranting and raving.
Bill Hussein O'Stalin| 3.9.11 @ 2:35PM
Download Avast Free Edition or for a few bucks the upgrade. It will scan your computer then do a reboot and you will have to place everything in the "chest" then delete it later.
Mitch Angoop| 3.9.11 @ 3:50PM
I've had success with Microsoft Security Essentials, but, at the end of it all, even after encapsulating it and removing, I still had to do a System Restore just to be certain.
Have you had any experience with Microsoft Security Essentials, and does it compare with Avast?
Thanks very much for the help!
Bill Hussein O'Stalin| 3.9.11 @ 3:57PM
Avast works and prevents further infections.
Mitch Angoop| 3.9.11 @ 5:27PM
Bill,
Thanks very much. I'll just add this to your long list of intelligent suggestions! Thanks again.
Alan Brooks| 3.9.11 @ 8:55PM
even if everything you all write is fact, it is such a relief the dynastician from Kennebunkport-cum-Crawford is gone. Hallelujah
TennesseeVolunteer| 3.9.11 @ 7:44AM
Peter, we continue to hang on here in flyover country. Your plan is a good one but we have to defeat Obama! Everything else after that can work itself out.
His defeat signifies a rejection of liberalism, a lack of common sense and, dare I say, a return to a Christian nation!
Alan Brooks| 3.9.11 @ 8:57PM
" a return to a Christian nation!"
America is a satanic nation, that is why it got to the top of the heap. Christianity is the veneer, the necessary covering.
335blues| 3.9.11 @ 9:40AM
The "bush tax cuts" did not rescue the marxist obama. Do you think that we have forgotten what happened already? Are you rewriting history? It was the republican leadership that rescued obama by letting him off the hook when we had him down. It is just like what is happening right now with the budget. The republican leadership is prepared to capitulate. The republican leadership can do the right thing and (1) not raise the deficit limit and (2) shut the government down until the marxist democrats agree to REAL cuts. But they won't because they spineless wimps that are more worried about re-election than saving the country.
russel| 3.9.11 @ 10:32AM
You're right . I didn't waste time on this article when I saw it was yet another doomsayer and his woe is us . Forget any ' solutions ' to anything if this boob is re-elected . The only solution presenting itself is revolution . How's that for prophesy ? . I prefer the much rosier outlook that America is dead tired of this depression and will kick zero in the ass so hard his hair will hurt . Remember too , we have a year and a half left in his FIRST term and that's an eternity in political time . Plenty for him to finish screwing up what he statrted .
Alan Brooks| 3.9.11 @ 9:01PM
"I prefer the much rosier outlook that America is dead tired of this depression and will kick zero in the ass so hard his hair will hurt ."
So then you can elect another empty-suit GOP president?
ExCdn4FT| 3.9.11 @ 9:42AM
As usual, another insightful article with real solutions to the many financial issues facing this country. Defeating Obama and the progressives in 2012 is essential.
I would very much appreciate Peter's perspective on the FairTax and it's place in the puzzle. Eliminating the IRS is almost as important as getting rid of Obama.
richard ryan| 3.9.11 @ 11:13AM
Great ideas, sir. I especially like the voucher system for government elderly and poor. Medicare and Medicaid spend more money precisely because they reimburse doctors poorly. Sounds counter intuitive but it is definately true.
chriser| 3.9.11 @ 11:31AM
Now we just need to find a Republican presidential candidate who can support and articulate these policies. Are any of the current bunch capable?
LiveFreeOrDie| 3.9.11 @ 1:22PM
"And despite President Obama's occasional rhetoric, no new nuclear power plant construction is anywhere in sight in the U.S., though 60 new reactors are being built around the world, from Brazil, to Argentina, to Lithuania, to India, even Sri Lanka, with 20 being built in China alone."
The arms race with the soviet union has become the energy race with China. Leftist policies ensure we will lose this race by vigorously pursuing the exact opposite. Less supply, more demand and higher prices. The Bush tax cuts will be drops in the bucket when energy prices, "Necessarily skyrocket". Nobody will be thinking about taxes when they can't afford to gas-up their cars, heat their homes or operate their businesses.
Clint| 3.9.11 @ 1:26PM
Sen. Jim DeMint (R-S.C) said U.S. dependence on foreign credit and oil has brought the country to its knees.
"Today America is literally on its knees to China and other countries for the credit we need to run our economy," DeMint said in a floor speech Tuesday afternoon. "We are also on our knees to the Middle East, which is very unstable right now, for the oil we need to run our economy, to even take our food to market, the essentials here at home."
"We have a Congress that, instead of addressing the issue of a trillion-and-a-half dollars [the current estimate of the deficit], is debating between $61 billion and $6 billion,” said DeMint. “These are fractional. You cannot even see the line here of what is being proposed by our Democratic colleagues."
Obama Is Beatable.
The Tea Party Rebellion Escalates.
Carpe Diem.
Who Knows?| 3.9.11 @ 1:52PM
Therefore, how can anyone be very hopeful about any changes that can be made, to stop the bleeding, in time to keep it from getting worse?
I’m (TOO!) old enough to remember that the doomsayers have almost forever been warning of the coming wreck that social security, medicare and medicaid are, and here we are! Still TALKING about them, and even more wasteful VESTED INTEREST programs.
There is actually a piquant, and biting way to stifle the people who support programs like Obamacare---
Use jujitsu, and agree with them, and one up them, by saying we should go all the way, and force people to buy their food from GOVERNMENT stores.
Even ask them how we could destroy the EVIL private business we currently shop at.
So, find out where they purchased their last meals, either restaurants or food stores, and tell them you want to nuke them.
Yes, let’s expand all the military PX’s!
It’s just not FAIR that they get to choose where to FREELY purchase stuff, when so many people have less than they do!
I want ONLY government gas stations, etc!
Who Knows?| 3.9.11 @ 1:53PM
Oops--- I failed to copy the first paragraph of this comment---
"Never forget that vested interest RULES, and any attempt to change the status quo MUST defeat the inevitable resistance it presents."
Dee See| 3.9.11 @ 11:26PM
----Continuity of agenda ALERT!
Seems Janet Napolitano, in Mexico last
Nov 30th signed in a certain 'Trusted Traveller'
agreement which put into place a MASSIVE
'green card' open border ID card.
80 MILLION Mexicans, specifically the young,
are being bio-metrically scanned, fingerprinted
and enrolled. It enables them to come and go
into the US and Canada with TOTAL, unchallengable access
---all with an ATM
sweep of the card. TRUE!!!!!!!
TRUE! TRUE! TRUE!
The Bush--Clinton--Bush--------OBAMA
Globalist-EUGENICS front steams on.
CHECK OUT Alex Jones/Jerome Corsi
latest INFOwars postings on Youtube.
AGAIN!
------HUAC meets NUREMBERG ------NOW!!!
Bennet Cecil| 3.12.11 @ 12:56AM
Hopefully American voters have had enough of Marxist politics and will give president Obama the same vote of confidence that they gave Jimmie Carter. We should replace him with Michelle Bachman and restore our Republic to greatness. Vouchers for our schoolchildren instead of monopolist will advance education. Rep ace Obamacare and Medicaid with block grants to states. Open the federal employees health plan to taxpayers. Reduce corporate income tax to ten percent to encourage job growth. Sell Sally, Freddie, Fannie, GM, AIG etc in the market. We need reform and downsizing of the federal government.
Creative Recreation | 8.11.11 @ 2:04AM
is good