Feb 21

Obama’s Economic Deceptions and Mendacity

The article below is a scathing commentary on the unfettered deception that Obama and the media have continued to foist on a not so unwitting American public. Claims of the recession ending several quarters ago and an economy that is improving to plan is abject prevarication.

True unemployment continues to increase, now assessed by non-government officials at a whopping 10% with underemployment (which the government so conveniently avoids) is averaging nearly 20% nationally. That is 1 in 5 Americans.

We have experienced the longest period of time where unemployment is above 9% since the Great Depression. One in seven Americans are behind in their mortgage while 27% of all houses have negative equity.

Our national debt is reaching bankrupting levels while “president” Obama continues reckless and unsustainable deficit spending. And the Fed keeps printing money.

Meanwhile, Obama and Michelle continue to party at the White House like Nero fiddling while Rome burned. They have also cost the taxpayers tens of millions of dollars on their multitude of vacations while millions of Americans are just trying to keep a roof over their heads and food on the table.

It would be best for America and the rest of the civilized world if the contemptuous, incompetent, racist, narcissistic, hedonistic and radical Obama were removed from office before the next election.

A little Cairo action by the majority of Americans would surely be welcomed…

Obama's Economics of Deception
Steve McCann   February 18, 2011

Barack Obama, perhaps the most dishonest president in modern history, has, in a cynical abdication of leadership, not only proposed a budget that, if adopted, is guaranteed to destroy the financial future of the country, but he has done so while lying about a supposed economic recovery underway.  His proclivity to do or say anything to enhance his image or achieve his ends was amply on display at a press conference held on the 16th of February.

There is a recovery underway for those in the federal government and those that have signed on to the Obama version of crony capitalism in the boardrooms of certain major corporations and Wall Street.  But for those in "flyover country" who pay the taxes and create the jobs the facts are starkly different.

In the bubble that is Washington D.C. there has not been a recession as incomes continue to soar. Wealth has also increased as property values in the fourth quarter of 2010 grew over 7.5% (as compared to the previous year) while the national average showed a further decrease of 2.0%.  The currentunemployment rate in the metro Washington D.C. market is 5.6%  as compared to Gallup's latest estimate of a national unemployment rate of 10.0% and an underemployment rate that has now hit 19.6%.

Some may point to the soaring stock market as an indicator of economic growth.  In reality the stock market is a reflection of the need to find a home for the massive amount of new dollars essentially printed by the Federal Reserve.  As a result there is the beginning of a bubble emerging in the stock markets, particularly in various internet stocks.  Gold has topped out and virtually all commodities are at their all time highs.  Municipal Bonds have become a very high risk with so many States and municipalities in dire financial trouble now facing the very real possibility of a downgrade in ratings thus making the bonds an even greater risk.  Meanwhile the interest return on CDs and IRAs is averaging around 1.0% or less thanks to the Fed monetary policy.

However, the markets do reflect a reality that the Obama administration and their sycophants in the mainstream media will not acknowledge, as their primary and only interest is the re-election of Barack Obama.  The American people can no longer trust or look to the current governing class for honesty or integrity, but should instead rely on what the financial markets are saying, whether it is the impending state and municipal debt crisis, inflation or global political upheavals.

The major worldwide concern is, at present, inflation -- something the Federal Reserve and the Administration refuse to acknowledge.  However, since August investors have been switching to inflation-linked debt instruments in the United States and other European countries.  These index-linked bonds, the traditional way investors protect themselves against rising prices, have become a favored asset class for many fund managers. In the U.S., the world's biggest market for these securities, the issuance of these instruments will set a record this year.

Consumer prices have jumped more than 4% in the United Kingdom, in China over 5%, and in Germany by the fastest rate in over two years. And the estimates are that these rates will continue to rise.  In January, the cost of living in the U.S. climbed more than forecast, led by higher prices for food and fuel.  The consumer price index increased 0.4% for a second month (annualized at 4.8%).  By contrast the real average hourly earnings have increased only .4% over the past year (January 2010 to January 2011).

Many companies that have, over the past year, absorbed the higher cost of manufacturing, will be forced into raising prices, which will further exacerbate the rise of the consumer price index.  This action could also precipitate a drop in sales volume which will impact any decision to hire new employees on a permanent basis.

Within the international marketplace there is now open discussion of replacing the dollar as the world's reserve currency with SDRs (Special Drawing Rights or a basket of international currencies in conjunction with the IMF).  The purpose is to have a reserve asset for central banks that better reflects the global economy since the dollar is vulnerable to swings in the domestic economy and changes in U.S. policy.  In other words Washington D.C. has made a hash of the domestic economy and the entire world is also paying for it.

In other news:  Applications for jobless benefits increased yet another 25,000 in the week ending February 12 again surprising the so-called experts.  There is a record share of U.S. mortgages in foreclosure.  The combined share of foreclosures and loans with overdue payments hit a record 14% of loans in the country (one out every seven mortgages in the U.S.)  At the end of 2010 16 million housing units or 27% in the country had a negative equity in the property.  The projections are that housing values will continue to decrease and foreclosures increase as job creation and income will not be growing.

With this as backdrop the leadership of the United States, in the comfortable bubble that is Washington D.C., proceeds to flounder, obfuscate and play games with the American people.

The Federal Reserve in its latest FOMC meeting minutes "continues to express disappointment in both the pace and unevenness of the improvements to the job market" and conceded it would take five to six years to return to historical rates of growth and job creation.  However, they claim that the second round of quantitative easing (essentially printing money) was so far a success.

The Fed expects the GDP to grow even faster than their last projection (they have been wrong for 8 straight quarters so far).  Even more surprisingly they don't expect the recent increases in commodity prices to filter into broader inflation permanently.  Their preferred price index (which inexplicably does not include food and energy costs) is projected to rise only 1.3% in the twelve months of 2011.  Yet the consumer price index in January, which does include food and energy, rose 0.4% on one month alone.  No mention was made of any anticipated growth in average hourly earnings.

At the White House, whose motto is: "The end justifies the means," its primary occupant, Barack Obama is perfectly comfortable saying whatever he wants knowing the mainstream media will report his spin with straight faces.  As befitting high school juveniles, the Administration, the Democrats, and the media can portray the goings on at each end of Pennsylvania Avenue as game of gotcha, while the country sinks under a mountain of debt.

The only place that the American people can turn to for the truth is themselves and the international financial markets that do not have a vested interest in this irresponsibility.


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Feb 16

Jobs and Revolution and the Vote

The following is a chatty, light but very educational exposure of the real “labor” statistics, the causations and what we as Americans can do about this situation. This comparison of both the employment level and the labor force over time lucidly explains what is going on right now (or not going on!) and is something that you won’t read or hear through most forms of news media, that is, those leaning Left.

We do have recourses, however. A further supporting of the Tea Parties and conservative values and the vote in November 2012.

Jobs and Revolution
Christopher Chantrill     February 12, 2011

Since I know nothing about Egypt beyond what I read in the papers, I won't comment on the Egyptian revolution.  All I can say is that I agree with the pundits.  When you have an autocratic regime then you get rigidities in the economy and society that strain and stress it until something breaks.  The only thing these thug dictators understand is spoils for their supporters and thuggery for the rest.  Freedom? Schmeedom.

So instead of solving Egypt's problems let's talk about America's jobs problem.  No doubt you've heard the mainstream media anguish about the mixed job numbers released on Friday.  Here they are in chart form, direct from the Bureau of Labor Statistics' Household Survey website.  First of all, let's look at the employment situation.

Not good.  If there ever was a jobless recovery, of the kind that Nancy Pelosi used to rage about back in 2003, this is it.  Eight million jobs lost since the peak in 2006, and no net jobs for the last year, in spite of a trillion or so in "stimulus."  But the really shocking numbers are in the labor force, the total of people actually working or actively looking for work.

The labor force has been flat for three years.  Notice that even in Nancy Pelosi's nightmare years, the Bush jobless recovery in 2002-2003, the labor force was increasing smartly as people entered the labor force looking for work.  Not now, not with the mixed economic news of the Obama jobless recovery.

Of course, the sluggishness in the labor market is hardly surprising.  The Obama administration and its willing accomplices in the Congress just spent two years rewarding their supporters with new economic rigidities like ObamaCare, stimulus spending for government workers, new environmental penalties like the EPA effort to regulate carbon dioxide, slowdowns and outright bans on energy production, meddling in the housing market, and billions in subsidies to its supporters in the crony capitalist green energy business.  It seems that the only thing our politicians know is to reward their supporters and send their thugs out to beat the economy into submission.

Pretty soon the voters will be ready to throw the bums out and vote for hope and change.  After all, there are millions of jobless out there, and sooner or later they are going to get desperate.  But let me make it clear.  The situation in the US is nothing like the situation in Egypt.  For instance, we don't have millions of people in the streets.

We do?  You are saying that the American people the Tea Party movement have been in the streets peacefully protesting ever since the winter of 2009?  Well, I suppose you have a point.  And based on his State of the Union speech, the President still thinks that the answer to our problems is more government, a program described by the divine Sarah as "a bullet train to bankruptcy."

Anyway, violence never solved anything.  War is not the answer. That is what those nice silver-haired liberal ladies tell us from the bumpers of their Toyota Priuses.

Excuse me, lady.  What do you think that the individual mandate is all about?  It says: go get health insurance or else.  What do you think that universal compulsory education is all about?  It says: send your kid to school or government may take her away.  What do you think that taxation is all about?  Pay your taxes or go to jail.  So you see that it's not just thug dictators that believe in force and violence; nice educated liberal ladies of a certain age believe in force too.

We conservatives are different.  We believe in dialing down the level of force in society, starting with government force.  We believe that the way to get America back to work is not with crony capitalist green energy and bullet trains to bankruptcy.  We believe it starts with lower tax rates and lower government spending.  We believe, with Deirdre McCloskey, in the great middle class, a bourgeoisie dignified and free: free to innovate and free to experiment.

In that city on a hill, where you and I have a rendezvous with destiny, there is a slow, steady evolution every day as new ideas in the economy drive out old ideas, as a few people every day lose their jobs and a few people find new jobs, so there is never a need to take to the streets.  In the culmination of this incandescent vision, the last best hope of mankind on earth, government is limited and greedy bankers don't take home the big bucks.

It's not asking much.  Limited government, a middle class that's innovative and free, jobs, jobs, jobs, and everyone trying to make the world immediately around them a better place for them and their children.  Call it American exceptionalism, the middle class alternative to bloody revolution in the streets of Cairo.


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Feb 10

The Apparent “Reduction” In the Unemployment Rate Is Intentionally Misleading, Inaccurate and Fraudulent

There was something incongruous with the almost non-existent increase in the number of jobs in January while at the same time, the unemployment dropped significantly down to 9.0%. Furthermore, the marketplace and sentiment of individuals didn't seem to bear this out.

Why is this?

Because the data is specious at best but in reality, is fraudulent. The news media was complicit in this disingenuous report in addition to the government which, of course, was not unexpected.

The reality is that there actually was a substantial increase in "unemployment" which was manipulated with some legerdemain to give the false impression that Obama was making some economic progress rather than the continuation of disappointment due to his failed policies and irresponsible, profligate spending.

We are witnessing a  inexcusable pattern of major lies, deceptions and sophistry perpetrated by the government that aim to support liberal policies thus giving its announced data little credibility.

Lies, Damn Lies, and Unemployment Statistics
Dick Morris And Eileen McGann February 08, 2011

The drop in unemployment the Obama Administration reported for January is totally phony. Real, unweighted data showed an increase from 9.1% to 9.8% in joblessness rather than a cut in the highly weighted figure from 9.4% to 9.0%.

Put those weighted numbers on a diet!

Economist Jim Fitzgibbon, head of the Highlander Fund, calls the report “worthless” noting that “the entire report is seasonally adjusted to be positive while the non-seasonally adjusted data is just awful.”

While the seasonally adjusted jobless rate dropped from 9.8% in November to 9.0% now, the non-adjusted data went from 9.1% in November to 9.8% now – the exact reverse!

Go to the Bureau of Labor Statistics for the real data:

Fitzgibbon calls the entire report a “statistical mirage.”

And, of course, Obama “achieved” the drop in the unemployment rate not by reducing the numerator (the number of jobless) but by cutting the denominator (the total workforce). 500,000 Americans despaired of ever getting a job and left the workforce, bringing the jobless rate down.

Fitzgibbon reports that the net loss of jobs continues to this day with 8,750,000 eliminated rather than the 8,363,000 the Administration reports. “Without aggressively positive seasonal adjustments for January, 2011 the +39,000 payroll increase would have been closer to a loss of -52,000.”

Obama has had two raging successes in his term:

1. He has slashed unemployment by persuading millions to give up hope and leave the labor force; and
2. He has cut illegal immigration by casting the United States into a permanent job shortage.

Some achievements!


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Dec 28

To Be Internationally Competitive Economically, We Must Reduce Our Corporate Tax Rates

The United States used to be the paragon of free enterprise, industriousness, ingenuity and productivity. We were the unchallenged, indisputable leader for a long time.

Then things changed. The government started to grow larger at an accelerated pace, became more intrusive, meddlesome and omnipotent.

It began to see itself as the solution or answer for all types of issues. Consequentially, it began spending more and more from new or ever increasing fees and taxes.

This, in a nutshell, takes us to where we are today: a bloated, wasteful, profligate and imperious government that is sucking out money from the private sector and from industrious, productive individuals on whom the economy depends.

Our corporate tax rates are the second highest in the world, soon to be number one.

Not a statistic to be proud of.

The federal government’s reckless and irresponsible spending addiction is wreaking havoc on our economy, industries and tax rates and is a prime cause of the extraordinarily high unemployment rate. Virtually everyone is needlessly experiencing the pain.

This situation MUST be reversed. Government must be downsized, spending radically slashed and taxes significantly decreased. People should keep more of what they earn.

Taxes are not the government’s money – it is money from hard working Americans which they have been forced to part with.

The liberal/Progressive destructive demagoguery and failed policies and ideologies of the Democratic Party and news media must be resolutely ignored.

For us to be more globally competitive economically, this also means that the corporate tax rates need to be drastically reduced.


Our Refusal To Cut Corporate Tax Rates Places U.S. Economic Leadership At Risk
Rep. Michele Bachman 12/22/2010

The United States has been a world leader in many of the best ways possible. Our devotion to freedom and our tireless ingenuity have kept America in the vanguard of the global community.

But unless we change our tax code, the U.S. is about to take the lead in a very unfortunate category. With Japan's Prime Minister Naoto Kan announcing that his nation will lower its corporate tax rate by 5% in 2011, the U.S. will have the unenviable distinction of holding the world's highest corporate tax rate. When state corporate taxes are added to the federal burden, our country's average corporate tax rate is almost 40%.

The Japanese prime minister told reporters, "By daring to go with a 5% reduction, we will spur companies to invest domestically, expand employment and raise wages. That will stimulate the domestic economy, support growth and shake off deflation."

The U.S. must remain competitive. As an industrialized nation and leader on the world stage, we must be out front in the race for jobs and a robust economy. It is time to sink or swim and, as a former federal tax attorney, I know that if we allow our businesses to face the highest existing corporate tax rate, we will certainly sink.

I recently introduced the End Tax Uncertainty Act of 2010 to effectively ease the tax burden on America's families, individuals and businesses. One of the key provisions in my bill would cut the federal corporate tax rate to 25%. I plan to put that reduction back on the agenda when the 112th Congress reconvenes in January.

The Center for Data Analysis predicts that lowering the corporate tax rate to 25% will increase the number of jobs annually by 581,000 on average from 2011 to 2020. Our GDP will rise by an average of $132 billion, and a typical family of four will see its after-tax annual income rise by almost $2,500.

I have heard from families across the Minnesota district that I serve who would greatly benefit from more job opportunities, not to mention an extra two grand in their pocket each year. In our battered economy, we need to see these positive benefits occur right away.

Minnesota is privileged to boast 21 Fortune 500 companies within its borders. It would be devastating if any of these companies relocated overseas. I hate to imagine the far-reaching and harmful effects that would have on communities. But the fact is that our corporate tax rate is putting an unnecessary burden on the nation's private sector, not to mention costs that are passed along to consumers.

I believe in the American Dream, but many Americans aren't so sure it still exists. The national unemployment rate is at a heartbreaking 9.8%. It has been at or above 9.4% for 19 consecutive months. That's why now is the time for our federal government to do more to give certainty to corporations.

By lowering the corporate tax rate, Congress can take an important step in restoring confidence for the job creators that make up our country's business community.

As a foster mom of 23, and biological mother of five, my strongest desire is to see America succeed for future generations. The era of bailouts, takeovers and failed "stimulus" spending must not continue into the future. Congress can put a stop to it immediately in January.

Then we can work to bring down our $13.8 trillion national debt, much of which is owned by China and Japan, and take on the enormous problem of unfunded liabilities. When you account for benefits promised by the United Sates government and adjust for inflation, those unfunded liabilities soar past $100 trillion.

The United States should not fall behind other nations. Instead, it is our time to lead. Let's focus on cutting taxes, growing our economy and leading in technology, education and industry. If we reverse course from the agenda Nancy Pelosi, Harry Reid and Barack Obama have put us on, then our nation can truly succeed well into the future.

• Bachmann represents Minnesota's 6th congressional district and is a member of the House Financial Services Committee.


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Dec 6

Read Obama’s Lip: Fewer and Fewer Jobs


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Nov 16

Temporarily Freeze The Salaries of Federal Employees Then Cut Them At Least 20%

Federal workers are reaping unconscionable salaries which with benefits can exceed those of similar jobs in the private sector by 60 – 80% or more and which are paid for with our tax dollars. Furthermore, while over 7.6 million individuals have become unemployed during this Recession, the federal payrolls have swelled by more than 150,000 - an abject outrage.

Adding insult to injury, these same workers have averaged an annual salary increase of 3% per year increase since 2005 whereas of those private sector workers who have been fortunate to retain their jobs, many have had to suffer pay cuts of in excess of 25% in addition to reductions in their hours worked.

For our economy to burgeon and prosper, this situation should be reversed. One suggestion that was made by Rep. Jason Chaffetz (R-Utah), as noted below, is to freeze federal salaries then subsequently cut them by 10%.

This is a great start and should be implemented ASAP. We feel that given the excessive overcompensation of federal employees to the tune of 60 – 80%, their reduction in salaries should be at least 20% and no COLAs.

Federal pay hike? Let's start with a freeze, then cut 10 percent
Washington Examiner Editorial      November 10, 2010

Rep. Jason Chaffetz, R-Utah, calls a federal pay freeze a minimum first step toward what eventually should be a 10 percent cut across the board. (Douglas C. Pizac/AP file)

Record numbers of Americans are out of work, struggling to avoid foreclosure, and watching their retirement savings evaporate.

Meanwhile, 2.1 million federal civil service workers have never had it so good. The number of these government workers making more than $150,000 per year has more than doubled since President Obama took office, and it has increased tenfold since 2005, according to USA Today. In 2005, the Defense Department had nine civilian employees making more than $170,000. When Obama took office, the number had risen to 214. The number is now 994 -- an 11,000 percent increase in five years.

Obama has exacerbated the problem by creating 141,000 new federal jobs since he took office -- and that total doesn't count temporary census workers, the postal service or the uniformed military. Democrats are already talking about using the upcoming lame-duck legislation to grant the federal work force yet another pay increase, this time of 1.4 percent. Never mind that federal pay has increased 3 percent annually since 2005.

Never mind that inflation has been nonexistent during that period, or that total compensation for federal bureaucrats has increased nearly four times faster than in the private sector.

National Treasury Employees Union President Colleen Kelley told USA Today that the pay increase "is a modest amount and should be implemented" so the federal work force can stay competitive in the job market. But in many occupational categories, average federal compensation is double that of the private sector. Moreover, federal union representatives have some nerve demanding pay increases to "stay competitive" when unemployment stands at 9.6 percent. As for being "competitive," the government is the nation's largest employer.

Rep. Jason Chaffetz, R-Utah, calls a federal pay freeze a minimum first step toward what eventually should be a 10 percent cut across the board. If the GOP's historic landslide victory in the 2010 election was about letting Washington know it's time to rein in runaway government growth and put Main Street's needs before those at either end of Pennsylvania Avenue, Chaffetz's proposal is the least that can be done. It is also the right time to do it, when the public is genuinely fed up with the status quo. Given the nation's economic woes, we would love to see the Washington establishment defend the idea that taxpayers should continue to subsidize government salaries inside the Beltway.

Cutting the salaries of more than 2 million federal workers may not do much to erase our $14 trillion debt. But it will put Washington on notice that Americans mean business -- and give Republicans the credibility they need to make the really tough cuts that will be needed down the road.


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Nov 7

Obama’s Apocryphal Claims On His Economic Prowess

Obama, the apotheosis of narcissism, elitism and arrogance, continues to sing praises of his accomplishments. You would think that we were in the midst of a relatively healthy growing economy.

Is he still smoking pot? Or is it permanent brain damage resulting from it?

Unfortunately, the data and tens of millions of Americans irrefutably contradict his apocryphal claims. In fact, as noted below, the 14 straight months of the jobless rate exceeding 9.5% is the longest stretch since the Great Depression – and there is no good news yet in site...

That is, except for the House of Representatives soon to be firmly under Republican control.

We need to add more to the House and elect many more Republicans to the Senate in 2012 to as well as the White House. Only then do we have a great chance for unleashing the growth potential of a capitalistic system.

President Obama's Hollow Jobs Boast
Investor’s Business Daily     11/02/2010

Economy: A closer look at federal data shows that the employment picture is grimmer than the president paints it. In fact, private-sector job growth, despite his claims, is trending in the wrong direction.

In a last-minute attempt to polish Democrats' resume going into the midterm election, Obama boasted that they had "stabilized" the economy. "An economy that was shrinking is now growing," he said on Jon Stewart's show. "We've got nine months of consecutive private-sector job growth."

While true, private-sector job gains are tiny when compared with past recoveries, which churned out millions of new jobs. More worrisome, private job growth peaked at 241,000 in April and has rolled over precipitously. Gains in private payrolls plunged 31% to 64,000 in September from 93,000 in August, when they fell 21% from the previous month, according to the Bureau of Labor Statistics. September's gain, in fact, was the weakest since June.

Obama can no longer blame the Bush recession. After the steepest drop in private payrolls on record, the private sector stopped shedding jobs in January. On Obama's watch, however, the trend is turning south again. Companies are churning out fewer and fewer new jobs, and the trend line is threatening to return to negative territory.

The deceleration in private-sector job growth is tarnishing the one minor bright spot for the economy that Obama can point to. "We're making progress, step by step, inch by inch, day by day," Obama reassured voters on Stewart's show. Correction: We were making progress.

Job scarcity is putting more pressure on the housing market. The number of homeowners missing payments and falling into foreclosure has risen along with unemployment. More than 2.3 million homes have been repossessed by lenders since the recession began in December 2007. Analysts say that number could climb as high as 10 million over the next three years if the jobs picture doesn't improve.

The jobless rate has topped 9.5% for 14 straight months — the longest stretch since the Great Depression. Most economists expect it to stay there through 2011 and not drop to a historically normal 5.5%-6.0% until at least 2018 — several years later than previously thought.

"Inch by inch" progress is not good enough. Economic growth would have to average at least 5% for a whole year to lower the unemployment rate by 1 percentage point. Yet growth in the Obama recovery is averaging less than 2% — not nearly enough to create new jobs at a pace that will lower the jobless rate and curb foreclosures.

Normally housing leads the way out of recession. Now it may be leading the way back down. And more foreclosures mean fewer future homebuyers, since foreclosures stay on credit reports for several years.

Thanks to Obama's policies, the jobs market is a basket case. If Friday's jobs report confirms the downtrend in private-sector jobs, it will be a validation of Tuesday's election results and a repudiation of Obama's economic agenda.


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Nov 6

The New Jobs That Obama Directly Created


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Nov 4

The Grim News: Obama’s Policies Killed Millions of Jobs


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Nov 1

Voters Need To Remember That Congressional Democrats Failed To Address and Extend The Bush Tax Cuts

If there is no extension or a repeal of the expiration of the tax cuts by Congressional Democrats, all socioeconomic levels of Americans will be significantly and adversely affected. The massive amount of money that will be sucked out of the private sector will likely cause our already sick economy to plunge back into (effectively, it is still not out of the recession for most people) a deep recession with a concomitant escalation of the already high unemployment rate.

These arrogant, power addicted elitists must be removed from office on Nov. 2nd.

Let’s make sure that it happens!

Ready For Pay Cut?
Investor’s Business Daily       10/27/2010

D-Day: It's one thing when the wonks tell you to get ready for a tax hike that may or may not come. It's another when your employer tells you he's getting ready to cut your take-home pay and give it to the tax man.

That's what's happening right now, and those who still have jobs should take notice. If Congress fails to extend the Bush-era tax cuts due to expire Dec. 31, Americans at just about every income level will see their taxes rise — in some cases dramatically.

A story by Bloomberg News notes that it takes weeks for the IRS to prepare new withholding schedules. Normally, the tables are issued in mid-November to give employers time to prepare. But this year Congress left open the possibility it would do something about the expiring cuts, and employers have been left wondering what to do.

"I've been doing payroll for probably close to 30 years now, and never have we seen something like this where it gets that down to the wire," Dennis Danilewicz, the payroll manager at New York University's Langone Medical Center, told Bloomberg.

The Democrat-controlled Congress didn't address the issue before recessing for the midterm elections. So companies are preparing for the worst. A Bloomberg headline Wednesday said it all: "Employers in U.S. Start Bracing for Higher Tax Withholding."

The impact could be significant. Professor Michael Graetz of Columbia University recently estimated in the Wall Street Journal that letting the tax cuts expire will cost the U.S. economy $10 billion a month in added withholding from paychecks.

Goldman Sachs economist Alec Phillips estimates letting the Bush cuts expire could slash "nearly 10 percentage points" from disposable income growth in the first quarter of next year, and nearly two percentage points from GDP in the first half.

With GDP now at a tad above $14 trillion, the impact could be $280 billion or more in the first six months alone.

In short, the higher taxes could very well push us back into recession — at a time when the economy is struggling under 9.6% unemployment with little if any private-sector job growth.

What's most worrisome is what it will do to the working taxpayer. His or her take-home pay is about to fall, leaving noticeably less to spend and save.

A married couple without children and an annual income of $80,000 would have an added $221 taken from their paycheck every two weeks, the Bloomberg report says, quoting the H&R Block Tax Institute. That jumps to $558 for couples bringing in $240,000.

Data from the Tax Policy Center show even those with modest family incomes would take a hit. For example, a couple with income of $60,000 and four children can expect to pay $130 more every two weeks to Uncle Sam. It doesn't get much better for those who make just $40,000. They'll find about $108 more withheld every other week.

This will have a serious impact on our struggling economy at a time when we can least afford it. It may be a big reason why, in poll after poll, Americans have expressed increased disgust with the Democrat-led Congress.

Our own polling shows that 80% of Americans want the tax cuts made permanent or extended at least until the economy recovers. And this includes 74% of Democrats.

Congressional Democrats, however, seem incapable of grasping the damage they've done with their trillions in new spending and debt in the name of "stimulus," while refusing to halt what amounts to the largest tax hike in history.

Fortuitously, the names of most of them will appear on Tuesday's ballots.


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