Live by the economic news ...
Remember a couple of years ago, when people were feeling bad about the economy although the numbers were superficially good? Republicans were upset back then that they weren't getting the political credit. Now that the unemployment rate is shooting up, the Dow is tanking, and oil is at $138 a barrel, I somehow don't expect Republicans to be similarly taking responsibility for the economy. Hm ...
Labels: economics
posted by honestpartisan | 9:24 PM
11 Comments:
Odd how only 2 years after we ellected a Democrat majority... the economy tanks. Hm.
What specific legislation has this Congress passed that you feel has had an adverse effect on today's economy?
What have they done to help it? Offer up a policy of raising taxes and regulation...
Hm. DIdn't think you'd cite anything specific. Thanks for the response
Dynamite ham,
Are you arguing that Congress is not responsibility for the nations economics? That is an arguable point, but is in opposition to this post.
As for a specific issue that this congress has addressed, and Democrats have been in opposition to, I could point to domestic oil production, ranging from ANWAR to Coastal Drilling to Shale Oil in Colorado, Utah and Wyoming. If you don't like high priced oil, it seems benefiticial to facilitate more production of it.
Another issue might be the minimum wage increase. Many expressed concerns before the hike that raising the minimum rate of compensation would increase unemployment, as low productivity workers would not be economically viable at higher prices.
As for the DOW, one factor that might cause it to be lower is the prospect of higher Capital Gains taxes in the future. Higher Capital Gains makes owning stock less profitable and therefore less valuable. I personally know of one person who has reduced his ownership in stock recently due to this factor.
I wouldn't claim that these factors are the primary motivator for the weak economic performance of the nation. I don't believe that government is the prime factor in economic performance. However each of these acts have probably contributed to the situation being worse then it has to be.
Are you arguing that Congress is not responsibility for the nations economics?
On the contrary, I would argue that the six years of veto-free legislation from 2001 - 2007 have a lot more to do with today's economy than the past 16 months of a veto/filibuster-prone Congress.
What specific veto-free legislation passed that you feel has had an adverse effect on today's economy?
The war in Iraq and the tax cut.
As for a specific issue that this congress has addressed, and Democrats have been in opposition to, I could point to domestic oil production, ranging from ANWAR to Coastal Drilling to Shale Oil in Colorado, Utah and Wyoming. If you don't like high priced oil, it seems benefiticial to facilitate more production of it.
ANWR would provide about a six-month supply of oil, not available for several years. To the extent that there has been a policy failure with regard to oil, it's the refusal to recognize that oil is of limited utility to our economy in the long-term. While I think that Republicans have been in the wrong about this, the current price of oil has little to do with the policies of either party.
Another issue might be the minimum wage increase. Many expressed concerns before the hike that raising the minimum rate of compensation would increase unemployment, as low productivity workers would not be economically viable at higher prices.
If the "low=productivity" workers you talk about are less of a factor than a surplus of job-seekers who will bid wages down to a level well below the productivity an employer gets out of them, then an increase in the minimum wage won't cost jobs. Whether this is the case or not is not a question of economic theory but empirical evidence, which disputes the argument against the minimum wage. I also think you neglect the demand-side benefits of higher wages at the lower end.
Anyway, before the most recent increase, the inflation-adjusted value of the minimum wage was at its lowest point since 1955, so I think your observation that this doesn't have a big impact on the broader economy is probably accurate. Thus the real point of the post, which is that Republicans trying to take credit for economic growth in 2006 didn't strike me as credible. Economic growth is the normal state of affairs, and the business cycle still exists.
...one factor that might cause it to be lower is the prospect of higher Capital Gains taxes in the future. Higher Capital Gains makes owning stock less profitable and therefore less valuable. I personally know of one person who has reduced his ownership in stock recently due to this factor.
To me this is a good argument against a preferential rate for capital gain income. Stock prices should be based upon an expectation of the dividends that the corporation will pay, not a preferential tax rate that amounts to a subsidy.
HP,
You brought up the high price of oil as a negative economic indicator. You can't then claim that oil is of limited economic utility as a counter in looking at factors that have caused it's increase. Secondly, ANWR is only one of three examples I gave, although I will certainly admit that of those three examples it is the smallest one.
As for the minimum wage, I will freely agree that in a low unemployment environment, it is unlikely that a modest minimum wage increase will have much effect. Of course 5.5%, what it has 'shoot up' to, is still very low unemployment.
There is some support though for the concept that a good portion of the recent increase in unemployment is directly related to the minimum wage.
As for capital gains, I think I'll just comment in your other post. I will say though that the social utility of dividends vs. capital gains is irrelevant to the question of whether or not a change in the tax code (and at the end of this year both capital gains and dividend taxes will increase) has a negative effect on the DOW.
You brought up the high price of oil as a negative economic indicator. You can't then claim that oil is of limited economic utility as a counter in looking at factors that have caused it's increase.
I think you misconstrued what I meant. I said that oil is of limited utility to our economy in the long term, meaning that rising demand and limited supply means that we're not going to be able to consume the level of oil that we historically have. That means that it's better to wind down our oil consumption sooner, when it would lead to a soft landing, rather than later, which would mean a hard landing (which is what's happening now).
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