Economy Continues To Slow – 6.3% Decrease Reported

Economy dips at slightly faster 6.3 percent pace

WASHINGTON – The economy shrank at a 6.3 percent pace at the end of 2008, the worst showing in a quarter-century, and probably isn’t doing much better now.

The Commerce Department on Thursday reported that the economy was sinking a bit faster than the 6.2 percent annualized drop for the October-December quarter estimated a month ago.

And the pain has persisted in the current quarter. New claims for unemployment benefits last week rose to a seasonally adjusted 652,000 from the previous week’s revised figure of 644,000, the Labor Department said Thursday. The total number of people claiming benefits jumped to 5.56 million, higher than economists’ projections of 5.48 million, and a ninth straight record-high. [SEE: Unemployment claims rise to 40-year high; retail sales drop – http://www.lowellsun.com/business/ci_11904696 ]

The figures indicate the labor market remains weak even as some other economic indicators come in better than expected.

Consumers are cutting back under the weight of rising unemployment, falling home values and shrinking investment portfolios. Those factors have forced companies to slash production and jobs. All the negative forces are feeding on each other in a vicious cycle that has deepened the recession, now in its second year.

Economists were bracing for an even sharper 6.5 percent annualized decline in the government’s third and final estimate of gross domestic product for the fourth quarter.

Still, the results were dismal. The economy started off 2008 on feeble footing, picked up a bit of speed in the spring and then contracted at an annualized rate of 0.5 percent in the third quarter.

The faster downhill slide in the final quarter came as the financial crisis — the worst since the 1930s — intensified.

The main culprit behind the GDP downgrade was that businesses’ cut inventories more deeply than estimated a month ago. That shaved 0.11 percentage points off fourth-quarter GDP, rather than adding 0.16 percentage points in the previous report.

Builders also cut spending on commercial construction more deeply through previously thought.

Many analysts believe the economy will keep shrinking at least through the first six months of this year.

http://news.yahoo.com/s/ap/20090326/ap_on_bi_go_ec_fi/economy

This last comment is the key. The recession may now be in it’s 16th month. History teaches us that the “recovery cycle” will begin in the next 3 to 6 months – without any Government intervention or the incredible spending presently scheduled by the Government. The inevitable increase in taxes, to pay for the spending, and the equally inevitable increase in interest rates associated with massive Government borrowing are, or should be, the real worry. Higher taxes and higher interest rates may act to stall or reverse the normal recovery “cycle”.  

The earliest of  the Government’s “scheduled” spending will not  be infused into the economy for 36 to 48 months. Most of  the “scheduled” spending won’t even take place for 36 to 48 months. 

03/25/09   –  A $34.0 billion auction of five-year Treasury notes drew lighter demand than recent offerings, and may have jogged concerns that foreign buyers could lose their appetite for purchasing U.S. debt.  http://www.forbes.com/2009/03/25/briefing-americas-afternoon-markets-economy-treasury.html?partner=yahootix

Obama’s Middle Class Tax Increase – Data from The Wall Street Journal

WE HAVE ALL HEARD ABOUT THE 95% OF AMERICA WHO WILL GET A TAX CUT (A DISHONEST CLAIM AS THE BOTTOM 40% DOESN’T PAY TAXES). THE REAL QUESTION WHO WILL ACTUALLY PAY FOR THESE PROGRAMS –

THE WALL STREET JOURNAL

  • OCTOBER 22, 2008
  • Obama and the Tax Tipping Point

    How long before taxpayers are pushed too far?

    What happens when the voter in the exact middle of the earnings spectrum receives more in benefits from Washington than he pays in taxes? Economists Allan Meltzer and Scott Richard posed this question 27 years ago. We may soon enough know the answer.

    Barack Obama is offering voters strong incentives to support higher taxes and bigger government. This could be the magic income-redistribution formula Democrats have long sought.

    Sen. Obama is promising $500 and $1,000 gift-wrapped packets of money in the form of refundable tax credits. These will shift the tax demographics to the tipping point where half of all voters will receive a cash windfall from Washington and an overwhelming majority will gain from tax hikes and more government spending.

    In 2006, the latest year for which we have Census data, 220 million Americans were eligible to vote and 89 million — 40% — paid no income taxes. According to the Tax Policy Center (a joint venture of the Brookings Institution and the Urban Institute), this will jump to 49% when Mr. Obama’s cash credits remove 18 million more voters from the tax rolls. What’s more, there are an additional 24 million taxpayers (11% of the electorate) who will pay a minimal amount of income taxes — less than 5% of their income and less than $1,000 annually.

    In all, three out of every five voters will pay little or nothing in income taxes under Mr. Obama’s plans and gain when taxes rise on the 40% that already pays 95% of income tax revenues.

    The plunder that the Democrats plan to extract from the “very rich” — the 5% that earn more than $250,000 and who already pay 60% of the federal income tax bill — will never stretch to cover the expansive programs Mr. Obama promises.

    What next? A core group of Obama enthusiasts — those educated professionals who applaud the “fairness” of their candidate’s tax plans — will soon see their $100,000-$150,000 incomes targeted. As entitlements expand and a self-interested majority votes, the higher tax brackets will kick in at lower levels down the ladder, all the way to households with a $75,000 income.

    Other nations have tried the ideology of fairness in the place of incentives and found that reward without work is a recipe for decline. In the late 1970s and throughout the 1980s, Margaret Thatcher took on the unions and slashed taxes to restore growth and jobs in Great Britain. In Germany a few years ago, Social Democrat Gerhard Schroeder defied his party’s dogma and loosened labor’s grip on the economy to end stagnation. And more recently in France, Nicolas Sarkozy was swept to power on a platform of restoring flexibility to the economy.

    The sequence is always the same. High-tax, big-spending policies force the economy to lose momentum. Then growth in government spending outstrips revenues. Fiscal and trade deficits soar. Public debt, excessive taxation and unemployment follow. The central bank tries to solve the problem by printing money. International competitiveness is lost and the currency depreciates. The system stagnates. And then a frightened electorate returns conservatives to power.

    MCAULEYSWORLDWEBLOG NOTE: Look to the State of Michigan as an example – Governor Granholm  implemented an Obama style Tax policy 6 years ago – minus any middle class tax cut -the promises of middle class tax cuts evaporated as revenues flew out of the state and State spending escalated. For more on the Michigan example: https://mcauleysworld.wordpress.com/2008/09/08/michigans-dem-governor-granholm-appoves-of-obama-tax-policy-matches-her-policies-of-last-6-yrs/   

    The economic tides will not stand still while Washington experiments with European-type social democracy, even though the dollar’s role as the global reserve currency will buy some time. Our trademark competitive advantage will be lost, and once lost, it will be hard to regain. There are too many emerging economies focused on prosperity and not redistribution for the U.S. to easily recapture its role of global economic leader.

    Tomorrow’s children may come to question why their parents sold their birthright for a mess of “fairness” — whatever that will signify when jobs are scarce and American opportunity is no longer the envy of the world.

    http://online.wsj.com/article/SB122463231048556587.html

    OBAMA’S POLICIES WILL NOT MOVE PEOPLE AHEAD – THEY ARE POLICIES THAT WILL PULL PEOPLE BACK – EVEN THOSE HE INTENDS TO HELP.

    Obama’s Plan For Your Family Income – The Real Story Behind Joe The Plumber

    By now, “Joe the Plumber” is a household name and has become a symbol of Barack Obama‘s plan to “spread the wealth around.” During a recent campaign event in Toledo , Ohio , “Joe the Plumber” asked a simple question and got a surprising answer from the Democratic nominee. When he asked why Barack Obama‘s tax plan was going to punish him for working hard and living the American Dream, Barack Obama responded, “When you spread the wealth around, it’s good for everybody.”

    In that brief exchange, the American people got to see what this campaign is all about … a choice between honoring the hard work of everyday Americans like “Joe the Plumber” and increasing taxes to “spread the wealth.”

    That is exactly what the Democrats were trying to do when they caused the current financial crisis – spread “home ownership around” . Trust us … it would be good for everyone …….. LIAR and NINJA Loans, Mortagages without jobs, income verification or even documentation of citizenship. I don’t want anymore of my income “spread around” and I know that is what is good for my family.

    Yes, Palin Did Stop That Bridge – Obama & Palin – A Comparison of records

    Yes, Palin Did Stop That Bridge

    By JIM DEMINT
    WALL STREET JOURNAL   September 10, 2008; Page A15

    “But, you know, when you’ve been taking all these earmarks when it’s convenient, and then suddenly you’re the champion anti-earmark person, that’s not change. Come on! I mean, words mean something, you can’t just make stuff up.” — Barack Obama, Sept. 6, 2008

    In politics, words are cheap. What really counts are actions. Democrats and Republicans have talked about fiscal responsibility for years. In reality, both parties have a shameful record of wasting hundreds of billions of tax dollars on pork-barrel projects.

    My Senate colleague Barack Obama is now attacking Gov. Sarah Palin over earmarks. Having worked with both John McCain and Mr. Obama on earmarks, and as a recovering earmarker myself, I can tell you that Mrs. Palin’s leadership and record of reform stands well above that of Mr. Obama.

    Let’s compare.

    Mrs. Palin used her veto pen to slash more local projects than any other governor in the state’s history. She cut nearly 10% of Alaska’s budget this year, saving state residents $268 million. This included vetoing a $30,000 van for Campfire USA and $200,000 for a tennis court irrigation system. She succinctly justified these cuts by saying they were “not a state responsibility.”

    Meanwhile in Washington, Mr. Obama voted for numerous wasteful earmarks last year, including: $12 million for bicycle paths, $450,000 for the International Peace Museum, $500,000 for a baseball stadium and $392,000 for a visitor’s center in Louisiana.

    Mrs. Palin cut Alaska’s federal earmark requests in half last year, one of the strongest moves against earmarks by any governor. It took real leadership to buck Alaska’s decades-long earmark addiction.

    Mr. Obama delivered over $100 million in earmarks to Illinois last year and has requested nearly a billion dollars in pet projects since 2005. His running mate, Joe Biden, is still indulging in earmarks, securing over $90 million worth this year.

    Mrs. Palin also killed the infamous Bridge to Nowhere in her own state. Yes, she once supported the project: But after witnessing the problems created by earmarks for her state and for the nation’s budget, she did what others like me have done: She changed her position and saved taxpayers millions. Even the Alaska Democratic Party credits her with killing the bridge.

    When the Senate had its chance to stop the Bridge to Nowhere and transfer the money to Katrina rebuilding, Messrs. Obama and Biden voted for the $223 million earmark, siding with the old boys’ club in the Senate. And to date, they still have not publicly renounced their support for the infamous earmark.

    Mrs. Palin has proven courageous by taking on big spenders in her own party. In March of this year, the Anchorage Daily News reported that, “Alaska Sen. Ted Stevens is aggravated about what he sees as Gov. Sarah Palin’s antagonism toward the earmarks he uses to steer federal money to the state.”

    Mr. Obama had a chance to take on his party when Senate Majority Leader Harry Reid offered a sham ethics bill, which was widely criticized by watchdog groups such as Citizens Against Government Waste for shielding earmarks from public scrutiny. But instead of standing with taxpayers, Mr. Obama voted for the bill. Today, he claims he helped write the bill that failed to clean up Washington.

    Mr. Obama has shown little restraint on earmarks until this year, when he decided to co-sponsor an earmark moratorium authored by Mr. McCain and myself. Mr. Obama is vulnerable on this issue, and he knows it. That is why he is lashing out at Mrs. Palin and trying to hide his own record.

    Mrs. Palin is one of the strongest antiearmark governors in America. If more governors around the country would do what she has done, we would be much closer to fixing our nation’s fiscal problems than we are.

    Mrs. Palin’s record here is solid and inspiring. She will help Mr. McCain shut down the congressional favor factory, and she has a record to prove it. Actions mean something. You can’t just make stuff up.

    Mr. DeMint, a Republican, is a U.S. senator from South Carolina.

    http://online.wsj.com/article/SB122100927525717663.html

    Lies and Damn Lies / The Bridge to Nowhere revisited – CAGW & PORK IN 2008

    THE BRIDGE TO NOWHERE REVISITED 

    The Bridge to Nowhere became famous as an example of wasteful “Pork Barrel” Spending. The first Citizens Group to “blow the whistle” on the project was the Citizens Against Government Waste.

    The Group, Citizens Against Government Waste (CAGW) has just released its “report card” for 2008.  http://www.cagw.org/site/PageServer?pagename=reports_pigbook2008

    The Group identified 11,610 “pork barrel projects” which cost US taxpayers $17.2 Billion Dollars.

    The CAGW noted that Candidate Obama proposed 53 “Pork Projects” with a net cost of $97.4 Million dollars. Not to be out done, Senator Biden proposed 70 of his own “Pork Projects” to the tune of $117.9 Million Dollars.

    The CAGW also noted that Senator John McCain proposed zero “Pork Projects” – which, obviously cost the Country nothing.

    As Governor Palin does not serve in Washington, or in the Alaska Legislature, she does not have the opportunity to intiate “Pork Barrel” spending. Governor Palin “vetoed” or eliminated $500 Million Dollars in “Pork Projects” from Alaska’s $11 Billion Dollar budget.

    The CAGW gave the candidates the following scores or grades:                                                    McCain 100% , Obama 10% and Biden 0%.   

    http://www.cagw.org/site/PageServer?pagename=reports_pigbook2008

    Revisiting the Bridge to Nowhere – This is what ABC News had to say in September 2007.  

    The End of the Bridge to Nowhere

    September 21, 2007 1:43 PM

    Lindsey Ellerson

    –>ABC News’ John Cochran reports: The Bridge to Nowhere is gone.  Not the victim of aging frames, bolts and joints.  No, this bridge has collapsed, even before it was built, after an onslaught of angry editorials, furious anti-pork citizens groups, and caustic jokes on late night TV.

    First, that name.   It was not accurate.   If built, the bridge would have gone somewhere.   It would have replaced the ferry that takes residents of Ketchikan, Alaska (population 8,000) to the local airport on Gravina Island.  In 2005, Congress approved $223 million for construction.

    In Washington, groups such as Taxpayers for Common Sense and Citizens Against Government Waste, rallied their troops to try to block the money.   They said the island was home to far more deer than people (50). 

    The bridge’s main sponsor in the Senate, Alaska Republican Ted Stevens, was outraged by any attempt to prevent his state from getting federal funds.  In 2004, with the help of Stevens, his state got special projects worth $645 million.  That was $984 for every Alaskan.   By contrast, Congress handed out less than $3 to every Texan.  And a Texan was, and still is, the President. 

    But the barrage of publicity was too much for his fellow Republicans.  Senator John McCain, R.-Ariz., cited the Bridge to Nowhere as a perfect example of wasteful spending.  Senator Tom Coburn R-Okla., a longtime foe of pork spending, tried to shift the money to rebuild an interstate highway damaged by Hurricane Katrina. 

    Senator Stevens grew even more outraged: “I don’t kid people.  If the Senate decides to discriminate against our state…I will resign.”  He did not resign.

    An uneasy compromise was reached.  Congress took away the money for the Gravina Island bridge and another Alaskan bridge which was almost as controversial.  Instead, Congress gave the money to the state with the understanding that it was not required to use the funds specifically for bridges.

    Friday, the state of Alaska officially sank the Bridge to Nowhere.  Governor Sarah Palin, also a Republican, said “Ketchikan desires a better way to reach the airport.”  “But,” she said, the bridge “is not the answer.”  Palin has told state transportation officials to look for the most “fiscally responsible” alternative.

    A spokesman for Senator Stevens was not immediately available for comment.

    http://blogs.abcnews.com/politicalradar/2007/09/the-end-of-the-.html

     

    Senate Earmark Reform Pledge: http://councilfor.cagw.org/site/DocServer/Earmark_Reform_Pledge_Senate_FINAL_10-31-07.pdf?docID=2782

    House earmark Reform Pledge: http://councilfor.cagw.org/site/DocServer/Earmark_Reform_Pledge_House_FINAL_10-31-07.pdf?docID=2781

    Michigan’s Dem Governor Granholm appoves of Obama Tax Policy – matches her policies of last 6 yrs

    Barack Obama’s economic plan for the country doesn’t represent change. His plan isn’t new. It has been tried before, many times. President Jimmy Carter tried the same programs in the late 1970’s with disastrous results.  

    Michigan’s Governor, Jennifer Granholm, has supplied us with a real life example of what happens when you put Obama’s proposed tax and spend programs in place.  Granholm’s destruction of the Michigan economy is a real life illustration of what is to be expected with an Obama victory in November.

    Note that both Granholm and Obama learned their economic theory at Harvard Law School, even though Harvard Law doesn’t really teach economic theory. The theory adopted by Granholm and Obama is not the sole theory taught at that prestigious school. Why did these politicians adopt the particular theory they believe in? It might be due to the fact that neither spent their formative years in the US. (Obama in Indonesia, Granholm in Canada). They favor a more Socialist Europen Economic Model of the world. (Europe is presently in a recession and relative to the US, is in a more negative position) or it may just be that the Liberal wing of the Democratic Party has always favored this type of “progressive” tax and spend model. The conservative wing of the Democratic Party (Clinton White House) does not favor this “tax and spend philosophy”.

    THE MICHIGAN MODEL

    What has happened

    Granholm, Michigan’s intensely unpopular Governor, took office in 2003. The Michigan economy had begun to slow in 2002, the year prior to her coming into office. The state unemployment rate was 6.2%, the national average was 5.7%. By the end of 2003 the jobless rate had grown to 7.2 percent, the national rate was 5.7%. There was a job loss of 35,000, however, the unemployment numbers only reflected an additional 4,000 out of work because 31,000 people left the state. 

    At the end of 2004 Michigan’s jobless rate was 7.3 percent, the National jobless average 5.5%. The state lost an additional 35,000 residents and thousands of additional jobs.     

    At the end of 2005 the jobless rate dipped to 6.1% while the National rate dipped to 4.2%. The State continued both its job loss and population flight.

    At the end of 2006 Michigan’s jobless rate jumped to 7.2%, the National average was 5.0, one third lower than in Michigan. The State lost a net 90,000 jobs and over a hundred and fifty thousand residents.

    At the end of 2007  Michigan’s jobless rate was 7.6%, the National rate was 4.9%. The state lost 120,000 jobs. 

    Between 2003 and 2008 two people fled Michigan for every person coming into the state. The total  job loss (the unadjusted number of jobs eliminated from the State) totaled almost 2 million, the net job loss number is lower because auto or industrial jobs were replaced by service industry jobs.

    Warning before the storm

    When Granholm first took office in 2003 she announce a long list of liberal social experiments she described as “investment opportunities” to improve Michigan’s economy. Of course she wouldn’t increase the taxes of the “working classes”, just taxes on businesses and the “rich” to fund these “investments” in “infrastructure”.

    The first warnings came in 2003. Numerous publications (Wall Street Journal, Detroit News, Free Press, NYT, etc) and scholars from around the country and world warned that increasing taxes in a slow or stalled economy was a risky proposition. The advise was not heeded.  

    http://www.opinionjournal.com/editorial/feature.html?id=110006960

    http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/02-07-2007/0004522529&EDATE

    www.mackinac.org/archives/2007/bhi report.pdf

    http://bryanritchie.blogspot.com/2007/02/open-letter-to-governor-granholm.html

    http://www.youtube.com/watch?v=tXYlRhfsR_Q

    The first of the tax increases took place in 2003.

    http://www.andersoneconomicgroup.com/modules.php?name=Content&pa=display_aeg&doc_ID=2073

    http://www.tednugent.com/hunting/shootback/tax.aspx

    http://www.annarborchamber.org/business/chamberpositions/Taxes_and_Millages/sbt_2005.html

    The Governor was warned that this would start a vicious cycle – increased taxes make the products or services produced in your state more expensive and less attractive – those products and services are less attractive to buyers – they buy fewer of the goods and services – delivering less tax money -meaning another tax increase is necessary and so on and so on ….. This is exactly the type of death spiral Michigan is in at this time.

    http://online.wsj.com/article/SB121192942396124327.html?mod=opinion_main_review_and_outlooks

    www.mackinac.org/archives/2007/bhi report.pdf

    How many tax increases?

    The first property tax increases were made in 2003. The have continued annually. Property taxes continue to escalate out of control.

    http://www.macombdaily.com/stories/050807/loc_granholm001.shtml

    http://www.mitaxpayers.org/blog/2007/10/recall-update.html

    http://search.yahoo.com/search?p=governor+granholm+taxes&ei=UTF-8&fr=att-portal-s&xargs=0&pstart=1&b=31&xa=dL_W83AXwxibGe44IaO82Q–,1221054250

    The Michigan foreclosure crisis is not fueled by adjustable rate mortgages, it is being fueled by job loss, population flight and citizens being taxed out of their homes.

    Michigan currently has 1.2 million more dwellings than families to fill the dwellings. One of the darker jokes about Michigan is that the only thing slowing the population flight is the fact that home sales are so slow.

    Home values and home ownership

    The middle class working families of Michigan had a long history of multiple home ownership. Tens of thousands of Michigan residents had summer homes or cottages in Michigan’s “north country”. Higher property tax rates and the elimination of decades old property tax credits forced the sale of thousands of these “summer homes”, previously held by some families for generations.  

    The average home price in Michigan is approximately $200,000. A home valued at $200,000 in 2003,  is now valued at $150,000. In 2003 the property tax on the $200,000 house was $3,000. The tax today on the $150,000 home is $7,000.      

    The Michigan sales tax increased from 4% to 6%.

    Business and personal income taxes have been increased repeatedly. Michigan’s Single Business Tax was replaced, to create a better business climate and “lower taxes”. The replacement, the Michigan Business Tax,  was not only, dollar for dollar, identical to the prior tax, but the rates have been substantially increased.

    As the Michigan economy continued a downward spiral the warnings continued throughout 2004, 2005 & 2006. Pundits and professors warned – STOP THE TAX INCREASES. The warnings were not heeded.

    http://online.wsj.com/article/SB121192942396124327.html?mod=opinion_main_review_and_outlooks

    Taxes have continued to increase year after year.

    In November 2007 a huge additional tax increase was passed. Business taxes went up 22% and  other taxes on the residents of Michigan by 13%. The tax increase was intended to raise over 1 Billion dollars – the money would be used for additional “investments”. The Governor promised the new tax would solve the problems of the State and “bring prosperity to all”. The Billion plus dollar tax increase was passed despite the continued warnings that it would further slow the economy and would never generate the promised revenue.

    In May 2008 the State announced that additional tax increases will be necessary to prevent a suspension of services. Last years 1 Billion increase is generating $500 million less than expected, creating yet another budget shortfall and the need for additional taxes. The improved economy promised by all these increases is no where in sight.

    Michigan’s 2008 budget is $44.8 Billion dollars.  In 2003 the budget was $38 Billion. The State has lost 2,000,000 jobs while increasing taxes by $6 Billion dollars. The people of Michigan are now the 5th most taxed in the nation. 

    Michigan government employees have not felt the pinch or belt tightening of the average Michigan resident.   According to the Mackinaw Center for Public Policy the average salary and benefits package of a state employee is $75,000 a year, private sector workers have an average salary and benefit package of $58,000 – this number is still substantially above the national average of $48,200. Rarely will you see such a gap between state employees and those they serve.    

    Michigan’s median income continues to drop. Poverty is on the increase. Detroit’s poverty level is 33%, the highest poverty level of any major city in the Country. Flint and Kalamazoo are tried for 5th in the nation (cities with a population between 65K & 250K) with a poverty rate of 35.5%.

    There appears to be no end in sight.

    THIS PROBLEM DID NOT ORIGINATE IN WASHINGTON, THIS PROBLEM IS HOME GROWN IN MICHIGAN.

    Michigan led the Nation into the recession, how can following Michigan’s economic policies lead the nation out?

    THE ROAD TO RECOVERY

    Michigan has at least two, major, stumbling blocks to recovery.

    The first is education. The state ranks 39th out of 50, The state needs better educated workers, better educated to complete for world class jobs. Educated well enough to stop electing officials who continue to tax the state to ruin.

    The second stumbling block to reversing this cycle is tax reductions, Michigan must drastically reduce the tax burden it imposes if it wants to attract businesses and the jobs they bring.

    Compare what Granholm has done to Michigan with what Democratic Governor Strickland is doing in Ohio.

    FALSE CLAIM OF LOSING JOBS OVER SEAS

    Michigan’s auto jobs are not moving over seas. The are moving from Michigan to other States where the economic environment made auto production more competitive. The BIG THREE – renamed the Detroit Three – by Nancy Pelosi, the Democratic Speaker of the House – are losing sales volume – even in Michigan. In Michigan Toyota car sales are up 36% while US auto sales are declining. The Toyota’s are being built in the US, just not being built in Michigan.

    Barack Obama’s suggested economic change is not new … its a return to the past, to the policies of Jimmy Carter. To see his economic principles in practice just look to the economic success of Michigan. The Country cannot afford to be this successful.

    Ohio’s Dem Governor says “No” to Obama tax plan, says Obama’s view of Ohio is wrong

    The following article was published in the Wall Street Journal, September 6, 2008. The article was authored by Mr. Strickland , the current Democratic Governor of Ohio. Mr Fisher is the Democratic Lieutenant Governor of that same state. 

    The authors are correct – we should not believe all the gloom and doom about Ohio – Ohio has adopted progressive policies that are working and provide a brighter future for the people of that state. The gloom and doom recently described by the Obama/Biden ticket on their way accross Ohio is false.

    A dark cloud on the horizon – the proposed tax policy of the Obama/Biden ticket, which would double taxes on dividends and capital gains and increase marginal tax rates to 60%, could undo all of the ground work put in place in Ohio.

    You’ll note a stark contrast between the competitive tax policies adopted in Ohio and the policy proposed by the Obama/Biden ticket. If, after you read this article, you are interested in another real life comparison – take a glance at my post “Why Obama is wrong on economics – Look to Michigan”.

    The policies proposed by Obama/Biden will cause business contraction and job loss.

     

    CROSS COUNTRY

     Don’t Believe the Doomsayers – Ohio’s Economy is doing Fine.

    By TED STRICKLAND and LEE FISHER
    September 6, 2008; Page A9

    Ohio is going to be a hard fought-over state in this presidential election. And consequently, the economy of this bellwether state has become highly scrutinized.

    But much of this scrutiny has focused only on the admittedly tragic loss of manufacturing jobs, while overlooking major investments in tax reform, technology and higher education. Things in Ohio are not as the news coverage has made them appear.

    [Cross Country]
    AP
    Dana Corporation’s automotive parts manufacturing plant in Lima, Ohio.

    There’s no question we face serious economic challenges, and that the national economy’s decline has hit citizens hard in the wallet.

    But the state has too many strengths, too many successes, and too noble a history to be portrayed as a poster child for the country’s economic woes. Look under Ohio’s hood. Its engine is being redesigned and retooled in ways that offer important lesson on how to make an economy more competitive in a global marketplace.

    The biggest shift is in taxes. Ohio business leaders told us that our tax structure was outdated and made the state uncompetitive. So, in a bipartisan manner, we restructured our tax laws to lower the burden for business.

    By 2010, Ohio will be one of only two states without a general tax on corporation profits or a property tax on business machinery, equipment and inventories. This year is the last for Ohio’s business property tax; next year is the last for the corporation profits tax. And Ohio’s personal income tax rates are falling by 21% across the board.

    Between 2005 and 2007, Ohio’s per capita state tax burden has already fallen to 38th in the nation, from 27th, according to the Federation for Tax Administrators. When the new tax cuts are phased in, Ohio’s business taxes will be the lowest in the Midwest.

    Exports, meanwhile, are booming. In 2007, Buckeye State exports totaled more than $42 billion, up 11.1% from 2006, making Ohio the only state in which exports have increased each year since 1998.

    The labor force has experienced a dramatic shift in recent decades. There has been a loss of 254,000 manufacturing jobs over the decade ending in 2007. But there has also been an increase of 262,700 professional, health and education jobs over the same period.

    Consider just one example. The Ohio State University Medical Center created 3,742 new jobs between 2001 and 2007 by targeting research grants related to cancer studies. Industry models show that $100 in research expenditures creates $222 in wealth in the local economy.

    Research-generated jobs, however, require different skills than many in our manufacturing workforce have to offer. So we are investing the money needed to help workers gain the skills they need.

    We’ve combined higher education and economic development funds to create a $150 million Ohio Research Scholars program, which will bring 26 world-class scholars to state campuses, individuals whose research specialties align with our economic development priorities. This investment builds on many others. The state has created a $1.6 billion Ohio Third Frontier program that invests in high-tech, advanced materials, bioscience, advanced energy and aerospace industries. The state is spending $250 million in a higher education internship program, and freezing tuition for two years for undergraduates so that more students can afford to stay in college. We’re also spending $100 million in scholarships for students studying science, technology, engineering and math.

    Ohio recently passed a bipartisan $1.57 billion jobs stimulus plan that will invest strategically in our infrastructure, future work force and growth industries such as biosciences and renewable energy. Our new Advanced Energy Portfolio Standard requires at least 25% of electricity sold in Ohio to be generated from new and advanced technologies by 2025. This will create vast new opportunities for green energy businesses in Ohio.

    Already, Ohio has more alternative energy-related projects under way than any other state. The state’s extensive manufacturing supply chain provides thousands of products to the alternative energy industry. And Ohio is home to the largest fuel cell supply chain in the country. Our welders, machinists, electricians, iron and steel workers are retooling and transferring their skills to retrofitting buildings, building mass transit, installing wind and solar power, and manufacturing energy-efficient cars and trucks.

    Ohio now leads the Midwest in the growth of venture capital investments in the biosciences; we rank first nationally in per capita clinical trials and operate the largest center for stem cell and regenerative medicine between the coasts. In the U.S. News & World Report rankings, Ohio leads the nation with four of the country’s top 15 children’s hospitals. The Cleveland Clinic meanwhile has spun off two dozen start-up companies in the past decade, and averages 200 inventions each year.

    Companies are responding to our business-friendly environment. Ohio ranked number one in both 2006 and 2007 in major new and existing business facilities expansion, according to Site Selection magazine.

    Despite the portrait some paint of Ohio, we believe our greatest opportunities for economic growth still lie before us. And in our future, from tires to polymers, from auto glass to solar panels, from steel bars to wind turbines, Ohio will show that it reinvented itself.

    Mr. Strickland, a Democrat, is governor of Ohio. Mr. Fisher, a Democrat, is lieutenant governor of Ohio.

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