Bloomberg/GOP say "Tax Cuts Are Working"

[papau]

http://quote.bloomberg.com/apps/news?pid=10000039&cid=baum&sid=aVjUJX3VJoo0
Bloomberg/GOP say "Tax Cuts Are Working"
Caroline Baum -March 5 (Bloomberg)

1. The U.S. economy just recorded the strongest two-quarter growth in 20 years, with real gross domestic product rising 6.2 percent in the second half of 2003.(Consumer spending/ business investment rose)

2. "There is just no precedent for consumers not spending a tax reduction," says Susan Sterne, president of Economic Analysis Associates in Greenwich, Connecticut.

3. Yesterday, the Bureau of Labor Statistics reported that hourly compensation rose an annualized 1.8 percent in the fourth quarter...broder measure of wages and salaries was also revised up to show a 2.6 percent annualized increase in the fourth quarter

4. Wilshire 5000 Index, rose 29.4 percent last year.....the Federal Reserve's measure of household net worth, or assets minus liabilities, rose by more than $2 trillion to a record $44.4 trillion in the fourth quarter (on average Bill Gates and I made more money last year)

%. GDP is up so demand must be up (Real final domestic demand -- GDP minus inventories, with imports added back in and exports subtracted out because they are consumed broad -- rose 4.2 percent in the fourth quarter of last year from a year earlier)

writer of this BS (heavily edited and commented on above): Caroline Baum in New York at [e-mail]. and her editor:Bill Ahearn at [e-mail].

[FloridaPat]

1. Don't forget all the military/defense money that went into

that GDP. And twenty years ago would have been Reagan and his big military splurge.

[jobycom]

2. Well, maybe for Bloomberg's income bracket... nt

nt.

[RobertSeattle]

3. True, to an extent

But giving extra money to already rich people is one of the most exceedingly inefficient ways to stimulate the economy. The best way is public works and tax cuts for lower and middle class people who will spend it immediately.

[orwell]

4. Low Rates

By far the greatest input into rising GDP is credit creation in the low interest rate environment. It dwarfs the tax cut.

In other words, spend now, pay later.

O

[papau]

5. very true - the Feb increase is impressively large, as is the media's

silence about how bad this is.

I guess it not the media's job to say we are about to go over a cliff - or even a bump - due to this.

[orwell]

6. Steady

I like the analogy

We are going over a cliff, under the "steady", "unwavering", piloting of our imperial leader.

We wouldn't want to "waffle" and make a course correction.

Couldn't resist.

O

[54anickel]

7. Here's the sort of crap we can look forward to - get those responses

ready!

http://www.theunionleader.com/articles_showa.html?article=34017

Commentary:
Judging Bush’s economy by the numbers


PRESIDENT BUSH is taking a beating on the economy, partly because he has failed to realize the power of numbers. In his 1996 reelection campaign, Bill Clinton took the numbers from a recovering economy and repeated them until the American public reached the point of statistical saturation and became convinced the nation had achieved economic nirvana. It was a classic case of “talking up” the economy. Lately, Democratic Presidential candidates have done exactly the opposite, making a recovering economy seem a cesspit of misery. If Bush is to save his Presidency, he must push back. He must tout his numbers.

The numbers speak of strong overall economic growth. The gross domestic product — the figure for the total output economy — grew at an 8.2 percent rate in the third quarter of 2003, and at a 4 percent rate in the fourth quarter. The GDP is forecast to grow at a 4.5 percent rate in 2004. As economist J. Edward Carter writes: “For the third consecutive year, the U.S. economy is poised to grow faster than most other industrialized economies. France, Germany and Japan, for instance, are not expected to grow even half as fast as the United States.”

The numbers indicate an economy constantly finding new and better ways to work. Non-farm productivity — a crucial indicator of economic efficiency that corresponds over the long term with higher wages and greater national wealth — grew at a healthy 4.2 percent rate in 2003. During Bush’s first three years in office, productivity has been increasing at a 4.1 percent annual rate, the best start to any Presidential term in roughly 50 years.

The numbers highlight a booming housing market. The rate of home ownership hit 68.6 percent during the past three months of 2003, an all-time high. Sales for new and existing homes were also at all-time highs last year. Housing starts have jumped 26 percent since 2001, and the 30-year fixed mortgage rate has dropped 20 percent, from 7.06 percent to 5.66 percent.

more...

8. It's a sign of 'McMansion Disease'

See my piece

[54anickel]

9. Well your piece answers to a couple of what Shrub can count as

good numbers from the article I posted, namely GDP and the housing boom.

How do we explain these:

Non-farm productivity — a crucial indicator of economic efficiency that corresponds over the long term with higher wages and greater national wealth — grew at a healthy 4.2 percent rate in 2003. During Bush’s first three years in office, productivity has been increasing at a 4.1 percent annual rate, the best start to any Presidential term in roughly 50 years.

More with less? Outsourcing?

Manufacturing production has increased 2.3 percent since January 2003. There was a 10 percent increase in equipment and software spending in the fourth quarter of 2003, the third consecutive quarter of strong growth in such investment.

Any ideas?

In January, retail sales were up a robust 5.8 percent over a year earlier.

Inflation? Higher medical care and insurance costs?

Profits among companies that are part of the Standard & Poor’s 500 stock index increased by 26 percent in the fourth quarter of 2003.

Outsourcing? More with less labor again?

The numbers provide some perspective on Bush’s biggest political liability: lagging job growth. Since reaching a high of 6.3 percent in June 2003, the unemployment rate has dipped to 5.6 percent, lower than the average unemployment rate of the 1970s, 1980s and 1990s.

The numbers even like George Bush more than Bill Clinton. According to J. Edward Carter’s calculation, during the first three years of the Bush administration compared with the first three years of the Clinton administration, the inflation rate is lower (1.9 percent versus 2.6 percent), the unemployment rate is lower (5.5 percent versus 6.2 percent), annual productivity growth is higher (4.1 percent versus 0.5 percent), and the increase in non-farm real compensation per hour is higher (+0.8 percent versus -0.3 percent).

:wtf: How do I make an intelligent argument with my repug B-I-L against this crap? :shrug:

13. I am still trying to find an economist

Who will certify that the non-farm productivity numbers are also boosted by inflated home prices.

That is (simplified)

Productivity = Value/unit labor

But for houses, which are 'assets' and not subject to a deflator, a more expensive new house built with the same labor is evidence of "productivity"

So lets say

House 1 takes x labor and house2 takes x labor-- but house2 is built in a quarter where the avg house price is ten percent higher!

Then it seems to follow, based on the math I have found, that house2 represents a ten percent increase in productivity over house one, minus some screwy deflator which doesn't account for much.

No one has proven or disproven this to me yet.

[seasat]

14. A lot of us have a theory that outsourcing increases productivity.

Papau, myself, and other have mentioned that with outsourcing you have lower costs for portions of production. An example is Ford recently announced that something like 100,000 parts will be manufactured in China. The result is productivity increases while job disappear. It's a negative on the overall economy since productivity by outsourcing will result in lower money for consumers.

15. Will the "Fannie bubble" FART when it collapses?

You are exactly on track.

In such a case where Ford "front-ends" a factory in China, there is increased productivity in a very raw definition for Ford. Productivity is defined as output per unit labor.

But really, it isn't US productivity at all, so how can they possibly say the "US economy is strong"? Yet shrub says that over and over!

Think about it! A factory humming in China, and delivering dollars to a Ford post office box in the US has very little to do with citizens of the US! Yet we hear "big GDP numbers" over and over, even from that b*tch on Bloomberg.

But it isn't just less money for the American who would otherwise be paid. That's because that lost job has a multiplier effect (or divider effect, if you will). Specifically, that means one less person who goes out to eat, buys a home, pays taxes, etc in the US.

We used to talk about a "multiplier effect" related to good high tech jobs in my own Washington State. All gone now.

By the way, this whole outsourcing thing makes the "demand" argument for the home bubble outrageous. They were claiming that immigrants would move to the US to get new jobs and that would support future housing demand!

Flat out -- NOPE!

The housing market is about to go belly up, due to the big "Fannie bubble" (will it make a farting noise?), as well as decay in demand.

Microsofties in Washington State not only don't get options anymore, they now live in India! No one to make a down payment on a McMansion!

Dan
(sorry this is overlapping my other thread discussion)

[seasat]

17. Hey Dan did you see this article?

There's nothing new in it that hasn't been brought up in this forum. However, I think the fact that Forbes published it is significant.

Now that the great refinancing boom is over, it seems odd for a mortgage bank like New Century Financial to be lending more than ever. But this Irvine, Calif. institution doesn't lend to just anyone. Its customers are so buried in bills they have no choice but to tap the value of their homes to pay them off--whether or not rates are rising.
...
One nightmare scenario is what industry insiders call "payments shock," which doesn't require any great drop in home prices. Thanks to all those popular adjustable-rate loans, whose rates typically float after one or two years, homeowners face the possibility their interest payments may rise even if their home values don't. And these borrowers are so strung out that even a one-percentage-point rise in mortgage rates could be enough to make it impossible to meet debt payments, pushing some into default.
...
Richard Eckert of investment bank Roth Capital Partners is a New Century bull, but even he's worried. He says that rising interest rates will eventually take a lot of these borrowers by surprise, leading to foreclosures.


"At some point they won't be able to refinance again, and that will set off a domino effect," he says. "More and more loans will go bad, lenders will pull back, and the consumer won't spend as much."

[swinney]

20. Dan Spillane good good

When Ford produces a $20,000 automobile it is labor and materials plus overhead.

You install an engine (manufactured elsewhere) for a few hours labor but what was cost of labor on the parts in the engine. Did it take two people four hours to install the engine but ten people one hundred hours to make and install the parts inside the engine.

Productivity does not just pop out of the air. Something happens over time.

Fewer workers. More hours per worker? Total productivity or productivity per man hour worked?

[swinney]

19. Clinton first three vs Bush three--Interest rates check them

The second half of first year and part of second year for Clinton were off to running start.

Here comes Republican Greenspan. Wow! We cannot allow a Democratic president to be successful.

7 interest rate hikes in 14 months. 7 in 14. Remember it.

1994 was congressional election year. Take care of my boys says Greenspan.

He cooled the economy. Check 1995.

For Bush he has been everything a Repub would want. Very low interest rates and borrow and spend fiscal policy.

He increased interest rates six times in late 1999 and 2000 an election year.

Why? Take care of my boy. It is true. His record shows it.

[PROGRESSIVE1]

10. This is the Bloomberg News Service, NOT Mike Bloomberg himself!

Mayor Bloomberg never said any of this.

[swinney]

11. PaPau Great questions

It irks me that I cannot locate an economic Think Tank which has addressed why?

Shades of 1984. Twenty years late they cannot explain why the GDP rose so much in that year. Of course. Reaganuts said "tax cuts" tax cuts"

Same question is here today. First tax cut took place in 2001 as did RR in 1981. No growth for 2.5 years. Then, it went very slow. Will that occur in 2004 etc.

Bush tax cuts---First three years--Bottom 60% got 125.7 Billion--Top 1% got 5162.7 Billion.

This was during a 30,000(3 years) Billion GDP.

5288 in 30,000 Will not create a zoom zoom economy.

Borrowing was very heavy. Home mortgage borrowing was very big.

Bloomberg and Federal Reserve will not submit debt growth info unless pushed.

Never overlook that Alan Greenspan is a Republican All The Time.

He increased interest rates 13 times on Clinton when inflation was dormant and gives Bush rock bottom rates.

Watch out when they talk hourly wages. How much per hour? Work 32 versus 35?

I plan to have more exact info soon.

[F.Gordon]

12. I'll try........

Twenty years later they cannot explain why the GDP rose so much in that year

Have you ever read the formula for calculating GDP? I have, and it's filled with "adjustment formulas" that use seasonal data to properly reflect current economic conditions. This "best in 20 years" bullshit I keep hearing is just that, bullshit.

The biggest push in the GDP last (edit: third) quarter was due to inventory depletion. Companies had been milking inventories, cutting employees, etc. Eventually they ran out of inventories. What happens then? You PRODUCE more! And you do so with fewer employees.

It has abso-fucking-lutely nothing to do with "tax cuts".

Of course, that's just my opinion, and I'm a Democrat....and all Democrats want the economy to suffer so they "can win". :crazy:

[mhr]

16. My Letter To Ms. Baum - Tax Cuts Working For Whom?

Ms. Baum,

I recently read you March 5th article "Earth to Planet Corzine -- Tax Cuts Are Working."

I wonder if you truly believe what you write. I say this not to be offensive but simply because your analysis dismisses the real problem of unemployment and the lack of job creation.

I'll use myself as an example: unemployed for 45 months with a BSEE and MBA. I am also a FAA certified commercial pilot and was honorably discharged from the US Navy as an Officer. My interesting work experience is too numerous to list.

To date, I have sent 1,430 resumes out the door. My resume is posted at 105 job boards. I have over networked my remaining friends. The result, I have not heard from a company or headhunter in over TWO YEARS.

So, Ms. Baum, I am curious why the tax cuts are not working for me? Your premise is that all is fine. My counterexample undermines that premise because one exception logically dictates that the the argument is flawed.

Going forward, I suggest that members of the financial press put more time into their research and writing before asserting as truth clear falsehoods.

To prove I am real, you will find an attached photo and resume. I am always open to discussing the unemployment situation and can be reached via phone at XXX-XXX-XXXX.

Sincerely,

MHR

[swinney]

18. Interest Rates--Interest Rates

High rates retard growth low increase growth

Consumer spending and business investment due to low very low interest rates. Tax cuts nominal impact.

Real estate developers went wild building since they could afford to finance a home for a year if it were not sold.

Mortgages refinanced. Increased disposable household income.

Low long term rates is what got President Clinton off to a zoom zoom start.

The bond market believed his effort to cut deficits. They reduced long term interest rates and later Greenspan lowered short term rates.

Interest Rates--will move an economy or slow it.

Tax cuts for well off do not equate to consumer spending.

Greenspan Will not have guts to increase rates during election year with Repub president and Congress.

Other members of the Fed may force it on him. He would contemplate resigning.

[swinney]

21. Greenspan on Productivity

www.google.com pull up "productivity" and go to page 4 today

good. bunch of if's.