Obama’s Not-So-Happy New Year
1. The “fiscal cliff” is looming larger and as intractable as ever. However, it’s just the first of several cliffs to fall off of. Amidst the talk of unity and compromise, the old partisan positions remain as entrenched as ever. Read Bob Woodward’s book The Price of Politics if you want to become more depressed about those prospects. Obama wants to tax the rich, which will cover all of eight of the 365 days to come. Unfortunately, the remainder of the “cliff” remains. No mention of meaningful spending cuts is evident.
Republicans are anxious about taxes, since they know the precarious nature of the economy and job creation. Thus, they talk about the leverage from the second round of the debt ceiling fight. But I’m not sure that leverage is good for much, except starting another avalanche of unpleasant events.
2. The debt ceiling — $16,394,000,000,000 — will be reached in late December 2012. It is amazing what the number looks like when it isn’t modified by the word “trillion.” There are no new solutions being offered, and even the olds ones have changed. The promise of “revenue” by Republicans, in response to Obama’s post election strong-arming is a rerun — John Boehner was ready to push $800 billion with the unhappy House last time. Now Obama says he wants twice as much, and will hang the blame for any less on the GOP House. Obama’s grand solution — taxing the rich — won’t deliver enough revenue, not even close, to dent the monumental deficit (or alter the debt ceiling increases needed). That’s even after the GOP abandon’s Grover Norquist’s “no new taxes” pledge.
3. The Bush tax rates must be renewed, except for the rich earning over $250,000, says the president, flexing his election mandate muscles. When defined by the “dependency coalition” who reelected Obama, $250,000 does sound pretty rich, when compared to record numbers of welfare recipients, people whose 99-week extended unemployment is running out, everyone losing their 2 percent payroll tax holiday, and the astronomical numbers on food stamps, disability, and so on.
Of course, many of these “rich people” own small companies, employ others, have mortgages (still underwater?), kids in college (or one graduated who can’t find work) and a wedding or two pending (at $20,000 or more each!). They don’t feel so rich! And they will do everything they can do to avoid those taxes — including shrinking their income below the $250,000 line and cutting back on their businesses (and employees)!
4. Then there’s the low or no growth and too few jobs scenario. I wrote recently about the spreading 30-hour week so employers can avoid Obamacare. This creates more jobs numerically, but no more wages, and doesn’t really solve help the economy. It hurts the middle class who Obama promised to help. And, it does what detractors have been claiming Obamacare would do — cripples the economy.
5. An ominous sign is that forecasters have lowered growth predictions for 2013 to the two percent range. This is not enough growth to absorb new workforce entrants, which would mean growing at three percent. Since wages are down, after the Christmas splurge (now is +4% vs. +5% LY) is over, and the bills come in, shell-shocked consumers will “hunker down” again, and slow spending!
6. A final cliff that faces president Obama’s new year is that half of the 40 highest spending publicly traded companies have announced plans to cut capital spending in 2013. Ouch! Even the only good news that propped up September’s 9.9 percent jump in durable goods orders was one product, from one company — Boeing — which sold 143 planes in September compared to just one in August. And now the Apple iPhone and iPad Mini launches are over, too.
I hope there’s a silver lining behind all of these dark clouds. The newly elected president has a mess on his hands and this time he inherited it from … himself! He’s got an economy with a $16 trillion debt, and a first term annual deficit run rate of $1.25 trillion per year. As impressive as his campaign rhetoric sounded, he’s in for a tough New Year in 2013.
We’re not even considering his many foreign affairs issues: Benghazi/Libya, Syria, Hamas/Israel, Egypt, and a mostly new cabinet coming up. Enjoy Christmas, Mr. President. A not so happy New Year is facing you and your fellow Americans!
- With US Ecomomy at Risk Obama Rolls the Dice on Republicans Giving-In [OPINION] (forextv.com)
- Middle Class Net Worth Collapses to 1969 Levels (breitbart.com)
- Report: Obama’s “fiscal cliff” offer to Republicans calls for $1.6 trillion in new taxes and end of debt ceiling in exchange for … nothing, basically (hotair.com)
- ‘Cliff’ talks: Geithner invites GOP counteroffer (cnsnews.com)
- Obama takes fiscal plan to Philadelphia (bigpondnews.com)