Examiner Editorial: Think the economy is bad? Worse is coming

Economic prospects continue to grow gloomier as the Commerce Department on Friday revised the second-quarter growth rate substantially downward from the initial estimate of 2.4 percent to a mere 1.6 percent. Just to stay on an even keel in terms of job creation, the growth rate needs to be at least 3 percent. It has averaged only 2.9 percent for the past four quarters. Virtually every key economic indicator is pointing in either the wrong direction or is barely leaning to the positive side. Unemployment remains officially at 9.5 percent and is likely to head upward in the near future. If you are counting people who are either underemployed or have given up looking, the unemployment number nears a Great Depression level of 20 percent.

The really bad news, however, is that things are going to get worse before they get better unless President Obama and the Democratic Congress reverse course and abandon their plan to impose a huge tax increase on Jan. 1, 2011. That's the day the 2001 and 2003 Bush tax cuts are scheduled to expire. Tax rates on all five income brackets, not just those paid by “the rich,” will increase by 2 to 4 percentage points, thereby blowing a $921 billion hole in the nation's ailing economy. Obama, Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi have sent federal spending skyrocketing, from 20 percent of the gross domestic product to 25 percent. The coming tax increase will drive the cost of government even further into the stratosphere, which will deprive the private sector of nearly a trillion dollars that could have gone to job creation.

Obama and the Democrats argue that extending the Bush tax rates would “cost” the government revenue needed to cut the federal deficit. But the deficit is primarily their doing and is projected to average in excess of $1 trillion annually for the next decade. The way to reduce deficits is to cut federal spending and leave the Bush tax rates in place to generate additional government revenue. As Heritage Foundation economist J.D. Foster points out, when they were implemented, the Bush tax cuts increased government revenues by sparking new growth in the economy. “The 2008-2009 recession reduced tax receipts dramatically once again, yet Obama administration figures indicate that even absent any tax increases federal receipts would reach $3.7 trillion by 2016, more than a trillion dollars above their previous highs,” Foster said.

As detailed in this space on Friday, Obama and congressional Democrats are also moving to enact onerous new tax increases on the energy industry. Those increases will come on top of the job-killing Gulf of Mexico drilling moratorium they've already imposed on the industry, which is projected to cost another 23,000 energy jobs.

So, hold on to your hats, folks, because it looks like Great Recession, Round Two is headed this way.

Just Posted

Climate strike organizers say SFUSD blocked student participation

The organizers behind Friday’s Climate Strike in San Francisco are accusing the… Continue reading

City puts closure of long-term mental health beds on hold

In response to public outrage over a proposal to suspend 41 permanent… Continue reading

Here we go again – new dog rules in Golden Gate National Recreation Area

The GGNRA released a 2019 Superintendent’s Compendium that makes significant changes that appear to implement parts of the ill-fated Dog Management Plan.

Thousands take to San Francisco streets in Climate Strike

The protesters are calling for urgent action on climate change, including putting pressure on local elected leaders to support more drastic steps.

Good Day Sept. 22-24, 2019

Mark Morris Dance Group, Presidio Theatre Open House, PUSHFest, Community Music Center Sunday, Making Faces-Portraits by John Kascht, WWE Monday Night Raw, Margaret Atwood, George Takei, Durand Jones, Kurt Ribak, Incubus

Most Read