Manufacturing Slows In July, Stoking Slowdown Fears

Another round of economic statistics raises questions about the health of the economy.

More evidence that the economy remains stubbornly stagnant, if not in danger of falling into a recession:

Although the pace of growth in the U.S. manufacturing sector slowed more than expected in July, contruction spending hit a six-month high in June, according to reports released Monday.

The Institute for Supply Management said its index of national factory activity fell to 50.9 from 55.3 the month before. The reading was shy of expectations of 54.9, according to a Reuters poll of economists.

A reading below 50 indicates contraction in the manufacturing sector, while a number above 50 means expansion.

New orders fell to 49.2 from 51.6. Prices paid was down at 59 from 68. The employment index fell to 53.5 from 59.9. U.S. construction spending unexpectedly rose in June to touch a six-month high as an increase in private outlays offset a drop to a four-year low in public spending, a government report showed on Monday.

Construction spending advanced 0.2 percent to an annual rate of $772.32 billion, the Commerce Department said. May’s construction spending was revised to a 0.3 percent increase rather than the previously reported 0.6 percent decline.

Economists polled by Reuters had expected construction spending to be flat in June.

Overall construction spending fell 4.7 percent from a year ago.

After initially opening higher in reaction to the apparent resolution of the debt ceiling debate in Washington, all of the major stock indexes turned lower on the news, giving up all their initial games before drifting into negative territory.

Along with last week’s GDP numbers, and the employment figures that have come out over the past several weeks, this is yet further evidence of the extent to which the economy has slowed over the past several months. As an initial matter, this probably suggests that Friday’s unemployment numbers are likely to be disappointment. Perhaps not as bad as the June numbers, but certainly nothing to write home about either.

More broadly, news like this raises questions about what we can expect for economic growth for the rest of the year and going into 2012. The hope, of course, is that robust economic growth is just around the corner, but there just doesn’t seem to be any evidence of that right now. Yes, corporations are sitting on a lot of cash but there’s also plenty of uncertainty out there that makes it unlikely that they’ll invest that cash in ways that are going to stimulate hiring and, ultimately, economic growth. Instead, I think we’re likely to see continued stagnation, with perhaps some minor improvements, and unemployment staying stubbornly above 8% through the end of 2012.

Getting to a deal ceiling deal and avoiding the economic consequences that would result if the United States Government were suddenly unable to pay its bills was a good thing, however its far from being a cure-all and it seems rather obvious that there will continue to be tough economic times ahead.

FILED UNDER: Economics and Business, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. hey norm says:

    It’s OK…Congress is slashing spending, and thus jobs, which will more than make up for the lack of demand that is weakening the manufacturing sector. Oh wait…er…never mind…

    “…there’s also plenty of uncertainty out there that makes it unlikely that they’ll invest…”

    Someday we’ll do away with the foolish uncertainty canard. Uncertainty is not holding back investment…a lack of demand is holding back investment. And FYI…slashing Government spending is not going to increase demand.

  2. Ron Beasley says:

    What no one is willing to admit is that we are in new territory here. With oil between $90 and $100 bbl growth will be anemic. Between 100 and 110 it will be stagnant and above 110 it will be negative. The world economy is going to be reinvented whether we like it or not.

  3. markm says:

    It’s OK…Congress is slashing spending

    Fa rillz????????. Got link???.

    http://www.youtube.com/watch?v=XHE5BIP2-D8

    ..wait…now I see.

  4. Drew says:

    Uncertainty is not holding back investment…a lack of demand is holding back investment.
    That’s funny, the attached sales report would indicate – well, there’s just no other way to say it – that’s just flat damned wrong. But why let facts get in the way of hero worship, eh?

    http://www.bloomberg.com/news/2011-07-27/second-quarter-of-11-s-p-500-sales-summary-table-.html

    What’s happening is that things are petering out over fears of the drag of more and unchecked govt spending and taxing, and uncertainty over global growth. Its wait and see. And who can blame business when they observe that the most erudite business analysis Washington seems to be able to come up with is that the Republicans want to throw grandma in the snow, and poison our childrens air and water……………..so let’s tax the rich.

  5. JKB says:

    @hey norm: Uncertainty is not holding back investment…a lack of demand is holding back investment.

    I don’t think those words mean what you think they do. Investment is “laying out money or capital in an enterprise with the expectation of profit.” Expectation is “The prospect of the future.” Now, when you lay out money or capital on the prospect of future profit, the entire enterprise hinges upon your certainty of those profits materializing. Hence, the uncertainty,

    Now there are many “uncertainties” in investing in new facilities, expanding your workforce, etc., such as over demand for your product, over regulatory changes, over taxation, over cost of providing healthcare to employees subsequent to a major change in federal law governing healthcare provision to employees, over energy cost, raw material costs, or access to markets.

    I will grant to you, though, that if there is enough demand, the risks of the other elements which are particularly impacted by decisions by unaccountable bureaucrats can decrease due to the overwhelming potential for profit from the demand. But even that is risky when the President has a policy of “you’ve made enough profit” and little desire to see individuals succeed on their own investment.

  6. Liberty60 says:

    @Drew:

    What’s happening is that things are petering out over fears of the drag of more and unchecked govt spending and taxing, and uncertainty over global growth

    I keep hearing this theory- that businesses are slowing down due to “uncertainty”.

    How does that work, really?

    If a business is uncertain about the future, does that mean that their customers stop buying stuff?

    Or do customers continue to buy stuff, but businesses stop selling, due to uncertainty?

    How did the uncertainty fairy cause the Wall Street crash? Or the bursting of the housing bubble?

    Can somebody actually document a business that is slowing down due to “uncertainty” about as-yet-unknown future regulation/ taxation?

  7. Gerry W. says:

    Bush had his roaring 20’s, and with that, a depression follows. We have no demand, all the stimulus is used up, and there are no jobs.

    You cannot have economic growth if you are sending jobs overseas. And along with a housing market in the dumper. It is 2 billion cheap laborers taking our jobs, automation taking jobs, lean principles taking our jobs, and mergers and consolidation taking our jobs. Globalization and the phenomenon of too few jobs is the issue. Almost everyone in Washington is a globalist and they fail to see the results.
    http://news.xinhuanet.com/english2010/china/2011-07/30/c_131018764.htm

  8. JKB says:

    @Liberty60:
    HEAR AN EXASPERATED ALABAMA BUSINESSMAN TELL THE FEDS – ‘I’M JUST QUITTING’

    Bending The Hiring Curve Down – Investors.com

    He notes that July’s U.S. Chamber of Commerce Small Business Outlook Survey found 33% of business owners consider ObamaCare to be “either their greatest or second-greatest obstacle to new hiring.”

    He also points to Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, who reports that prominent among the hurdles to hiring “is the lack of clarity about the cost implications of” ObamaCare.

    “We’ve frequently heard strong comments to the effect of ‘my company won’t hire a single additional worker until we know what health insurance costs are going to be,'” said Lockhart.

  9. jan says:

    @Drew:

    What’s happening is that things are petering out over fears of the drag of more and unchecked govt spending and taxing, and uncertainty over global growth. Its wait and see. And who can blame business when they observe that the most erudite business analysis Washington seems to be able to come up with is that the Republicans want to throw grandma in the snow, and poison our childrens air and water……………..so let’s tax the rich.

    This ‘lack of confidence’ started at the beginning of Obama’s term. Business seem to wait with baited breath to see who would win — the more liberal, anti-busines dems or the more conservative business-friendly republicans. The former won, and the UE rate went up .5% points from November ’08 to when Obama took office. I know a DC insider who was in contact with businessmen, who started to fiscally contract as soon as that election was determined.

    And, Obama didn’t disappoint, as he immediately started with his keynesian ideology of bail-outs and throwing money at the fiscal crisis originating under Bush. But, it didn’t work. However, there are those of you who reason, with the mind of a Paul Krugman, that it “wasn’t enough!” And, if still more money were taken by one class of people and thrown into the system, with nothing happening, there would be those of you who would say…”MORE!”

    That is insanity!

    Perhaps with the debt box now opened and under more public scrutiny, we will leave some of the elite punditry to mumble amongst themselves, and the people will be more inclined to to do their own critical thinking about what will make this situation better or not. What has not worked, though, is Obama’s remedies.

  10. jan says:

    @JKB:

    I might add that while most business people have to wait and see what their health cost might be under Obama’s health care, approximately 1400 businesses and unions have been given waivers from Obama, so they need not worry for now.

    If it’s such a great plan, why all the waivers???????

    It is such a bad private sector business climate at the moment…..and, one isn’t inclined to set sail when the weather is apt to plow you down. Instead, people are battening down the hatches, and not expanding under these conditions. And, the longer we have such a perceived hostile business environment, the more the paradigm will change in this country as to how and where we do business — much of it fleeing to other countries who, with open arms, love the hard edge Obama is trying to give ‘the rich’ producers these days.

  11. Gerry W. says:

    @jan:

    So, let’s blame Obama on what I saw in 2004. That’s right 2004. Bush comes to my state and said “free trade is good” and we watched the factories close. Some 57,000 factories and 6 million jobs lost over a decade. Makes you want to think that all that borrowed money for tax cuts really worked. And the Tea Party is doing more of the same. The jobs are gone, the stimulus is ineffective, and there are no jobs. And even if we get jobs, they will pay less, less hours, no healthcare, and no pensions. Now, is anyone in Washington adding up 2 billion cheap laborers and seeing what effect it does on the middle class?

    And as far as stimulus. The democrats have not spent in the right areas, the republicans want more tax cuts on top of the Bush tax cuts, the fed is printing more money for low interest rates and a low dollar for more exports with 1/3 less manufacturing, and the states wants casinos for jobs. Yeah, all that stimulating by everyone is not doing the job.

  12. sam says:

    @jan:

    If it’s such a great plan, why all the waivers???????

    The waivers are short-term (all will expire in 2014) and are given to organizations which need the time to bring their plans into compliance with the ACA. Moreover, the waiver program is ending. See, Program Offering Waivers for Health Law Is Ending:

    The Obama administration said Friday that it was shutting down a program that had provided exemptions from the new health care law for many employers and labor unions offering bare-bones insurance coverage to workers.

    No more applications will be accepted after Sept. 22, federal health officials said.

    Steven B. Larsen, director of the federal Center for Consumer Information and Insurance Oversight, said employers and labor unions had until that date to seek exemptions or request the extension of waivers already granted.

    The new health care law generally requires employers to provide at least $750,000 in coverage to each person in their health insurance plans this year. Many restaurants, retailers and small businesses do not meet the standard. Some provide “mini-med” coverage with annual limits that may be as low as $10,000.

    “Mini-med plans do not provide comprehensive health coverage, but unfortunately they are the only insurance options some consumers have today,” Mr. Larsen said.

    The minimum amount of coverage will increase. Federal rules require health plans to provide at least $1.25 million in coverage next year and $2 million in 2013. In 2014, annual limits for new health plans will be banned. In that year, individuals and small businesses will be able to buy comprehensive coverage through state-supervised insurance exchanges.

    Waivers granted or renewed in the next three months will run through 2013. To date, the administration has granted waivers to 1,433 health plans covering 3.2 million people.

    As I said, the waivers were granted to allow these folks to get into compliance with the ACA.

  13. sam says:

    @jan:

    It is such a bad private sector business climate at the moment…..and, one isn’t inclined to set sail when the weather is apt to plow you down.

    Let me ask a question I posed before: Are you of the opinion, then, that it is wise to pull money of a weak and weakening economy by cutting back on government spending?

  14. hey norm says:

    “…I know a DC insider, who was in contact with businessmen, who…”

    and that’s all you need to know about Jan’s thought process.

  15. Liberty60 says:

    @JKB:
    Ok, first off, your link is to The Blaze, Glenn Beck’s website. Not terrific for credibility.
    But lets go with it.

    One guy bitching about the gummint? Really? Thats your big “evidence”?
    I know a guy who “is FED UP” with the private sector ripping people off. Maybe my one guy ranting can balance out your one guy ranting.

    But it gets better. The guy ranting in your link?

    He’s a COAL MINE OWNER, bitching about people who complain about him POISONING THEIR WATER!

    Wow, that evil gummint, insisting that coal mine companies stop poisoning people’s water supply!

    Oh, this is my favorite part- “Bryant pointed to less stringent environmental regulations in countries such as China…

    Yes- that in a nutshell captures the current conservative crowd- lets emulate the dictatorship of Communist China who allow their air and water to be poisoned by anyone willing to add to the State coffers.

  16. Liberty60 says:

    But back to my point of this “uncertainty” business.

    I think the conservatives have it backward- they seem to think that if a business suddenly had no taxes to pay, and no regulations or restrictions on what they can do, they would suddenly hire a bunch more people.

    Which is absurd- what would they have their new employees do, or make? Who would they sell the product to?
    Don’t most sane businesses hire only after they sense new demand? And if they can sell their product at a price that covers overhead like taxes, don’t they still make money?

    Thats how it works in my business- I am a middle manager who recommends whether we hire or lay off- and I don’t recommend hiring until I see projects come in the door, taxes or no taxes.

  17. hey norm says:

    @ JKB
    Consumption and construction drive recoveries. Consumption of durable and non-durable goods as well as services were all down relative to the same quarter last year. Construction was down 4.7% from June of last year. There is no demand. Hence a weak recovery.
    Taxes, regulatory changes, cost of healthcare, energy costs, and material costs are always subject to uncertainty. They always have been. Forever. It’s called risk…as in risk and reward. No one is going to take a risk until there is demand, or a percieved demand, to do so. It’s demand…as in supply and demand. All those other items are considerations, but minor compared to demand.
    And oh-by-the-way Bush cut taxes…jobs grew at an aenemic 20,000 a month over his Presidency. The facts aren’t matching your ideology.

  18. Racehorse says:

    Stimulate the economy: cut taxes on small businesses, eliminate the capital gains tax.
    Watch investments and demand grow

  19. hey norm says:

    Racehorse…taxes are at historic lows. Have been for years…almost a decade. When does your theory kick in?
    Supply-side economics have been shown not to work. End of story.

  20. jan says:

    @Liberty60:

    I think the conservatives have it backward- they seem to think that if a business suddenly had no taxes to pay, and no regulations or restrictions on what they can do, they would suddenly hire a bunch more people.

    Which is absurd-

    I agree, that is absurb to say business is asking to pay no taxes or have no regulations to monitor their actions. It is over taxation and regulation which dampens business’s motivation to take additional investment risks.

    Business that sees the climate as becoming more fesible in which to operate tends to create and generate goods and services, even if there is no immediate profit. They will hire people to fill positions in such an expansion. These new employees will start to make money and consequently spend some of what they make, which slowly starts to move the engine of our economy forward.

    The operative word, though, is slowly. It’s not going to happen all at once. But, it will signify a trend upwards, which will then generate more ‘confidence’ for others to start their business ventures — even if it’s small at-home cottage industries.

    However, let’s say someone breaks out of the pack, risking a personal investment to expand more in these dreary times If their efforts are rewarded by the government slapping more taxes on any fledging profit their productivity might generate, as well as more revenue-producing business regulations for the government, why even do it.?

    Where I live, business licenses cost more, fines have been upped by the building department for nothing kind of offenses. Our local government has become a pit bull, just looking to catch someone for any kind of infraction, so they can punitively collect more money. Consequently, we have building contractors that refuse to work here; small cafes, a deli and other businesses have not been able to open their doors for a year or more. This is how government puts their thumb down on entrepreneurial enthusiasm/dreams. Business people are literally popping Tums when they go into city hall, in their more-often-than-not frustrating attempts to get beyond all the red tape.

  21. jan says:

    @Racehorse:

    If the capital gains tax were simply lower it would entice the sale of more assets, which, in turn would create more revenue.

    Another anecdotal story: A friend who has a glass business needs to move because of his land being taken over by government eminent domain. He was going to buy a piece of property across town to relocate his business. However, when the property owners did the math on what it would cost them in their capital gains tax to sell, they refused, deciding to sit on a dormant parcel, producing nothing but weeds, rather than be subjected to a huge tax.. And, our friend still hasn’t found another acceptable place to move his business into.

    Stagnation, brought to you by the government.

  22. Racehorse says:

    @jan: Your anecdote tells it straight about how the government affects the economy with over taxation, regulation and arbitrary rules, and over control.

  23. hey norm says:

    Jan, Racehorse, et al…
    This is a low tax nation…WTF are y’all talking about? Do you have any idea at all? Seriously. Nothing you say comports with reality. Do you think that may be a problem? Or are you OK with that?

  24. hey norm says:

    @ Jan, Racehorse, et al…Continued…
    The total tax burden on Americans, as a percentage of gross domestic product, stood at 24 per cent in 2009 – lower than it was in 1965. That compares to 31 per cent in Canada, 34 per cent in Britain, 42 per cent in France, 37 per cent in Germany and 44 per cent in Italy. The Japanese, Australians and South Koreans all pay significantly more.
    The United States is the only major country without a national value-added tax and its sales taxes are lowest in the OECD. Likewise, U.S. fuel and sin taxes are at the bottom among rich countries.
    Please…just a little friggin’ reality would be nice…

  25. WR says:

    @jan: And you know why business licences and all those other costs have been rising? Because morons in the Tea Party have won office and slashed all the taxes, while doing nothing about costs. So cities and states are in desperate need of revenue, and the only place they can get them is things like this.

  26. JKB says:

    @Liberty60:

    Did you read the second link, the one with the quoted text? The one from Investors Business Daily? The one quoting the Atlanta FED official?

    @Liberty60: Well, if you are in the project business but if you want to sell something this Christmas, you’ve got to already be in production. But you also, have to balance the potential cost of those employees when more regulations go into effect, especially with an administration that wants to go European and keep businesses from divesting of redundant employees.

    @WR: Where on earth have the Tea Party slashed all the taxes? In your state of Delusion?

  27. Drew says:

    Liberty60 –

    JKB pretty much nailed the basic concept. I’m a private equity investor. The name of the game is assesiing the probability, under uncertainty, that the investment will turn a monetary investment into sales and earnings, into an acceptable financial return over time. The big mistake that the Obama apologists make right now is claiming “lack of demand” is the problem (See: resident mindless troll hey norm). See also: my eference to Fortune 500 sles. Ooopsey for norm.

    What they don’t understand is that you don’t build a plant expected to make a return over the next 5-15 years when all you hear is about the looming budget problems, lefty politicians telling you they want to tax your arse off if that plant makes profits, the uncertainty of the cost to employ because of the inherent cost to employ with ObamaCare or SS matching etc. The left believes businessmen will just be lead like sheeps to slaughter, and invest.

    Well, they won’t. The leftists have no clue. None. Hence the investment and unemployment problem. Would you invest if the game was “heads you lose, tails I win?”

  28. Drew says:

    jan –

    Pay no attention to “hey norm.” He is one of the current resident lefty trolls, and brings almost nothing to the debate.

  29. Drew says:

    “The waivers are short-term (all will expire in 2014) and are given to organizations which need the time to bring their plans into compliance with the ACA. Moreover, the waiver program is ending.”

    And I’ve got a bridge in Brooklyn………

  30. Drew says:

    “Are you of the opinion, then, that it is wise to pull money of a weak and weakening economy by cutting back on government spending?”

    Of course, because no one with an IQ north of 80 believes government a) is the best use of resources and b) cannot pare back its spending by at least 15%.

    Hence, what would you do – go to the Indianapolis 500 and put your resources behind a ’61 Edsel………..or my 911? Just askin’

  31. Drew says:

    hey norm says:

    “The total tax burden on Americans, as a percentage of gross domestic product, stood at 24 per cent in 2009 – lower than it was in 1965.”

    Yes, but gross domestic product, the denominator in the ratio, has been financed with debt. That is, it is artificial. Hence the ratio is artificial. The real measure should be the ratio of taxes to an income measure. Last time I looked people couldn’t spend GDP, just income. And as we are all seeing, across the globe, artificially financing GDP is bankrupting us, and has run its course as a policy option.

    I’m taking bets. I bet stormin’ norman can’t even comprehend what I just wrote……..

  32. jan says:

    @Drew:

    Drew, What I’m starting to figure out is that many of the posters are professors, lawyers, writers, liberal elite types who get their paycheck, have their 401K’s, perhaps a pension with a defined plan, where they are guaranteed a retirement income, even if the country is nuked. In other words, their life is guaranteed by their benefits, entitlements, and so they hypothesize what they think should happen to the country according to economic theories, stats etc. But, there is little experiential knowledge, of getting into the private sector trenches, without a financial safety net to catch them, making everything better should they fail.

    For those of us who are self-employed, work in the private sector, there are no such guarantees. We pay for our own health plans, have to provide for our own retirement (SS will be a myth for many), have to worry about making good decisions for the people we employ. It’s just another way of living, for those of us who are primarily self-reliant and don’t look to the government as an extended parent, feeding us, taking care of our health needs, providing us with housing….basically cradle to grave subsidies.

    Also, if people wait for ‘demand’ to pick up there will be no economic advancement. New business creates the demand. For instance, Apple first has to create a new version of the ipad, which then prods people to want it. It’s not the other way around, which means that Apple first has to put up the capital, for R & D, and hopefully will profit if the public bites on this new product. Apparently they have profited, as they have more money than the US government,.

    The same thing for the drug companies. There is a tremendous financial outlay for every new drug, which then has to go thru years of clinical trials, which may prove to be a complete financial boondoggle at the end. Other countries, who don’t have the money to spend on such research wait until they can copy the drug and create their far less expensive generic versions. But, if it weren’t for the USA, about 75% of the new drugs would never have come on the market.

  33. Drew says:

    jan –

    “What I’m starting to figure out is that many of the posters are professors, lawyers, writers, liberal elite types who get their paycheck, have their 401K’s, perhaps a pension with a defined plan, where they are guaranteed…..”

    Yes, and the adolescent, and, heh, not so adolescent trolls. But if you were a professor dependent on government subsidy for your income…………’nuff said.

  34. Gerry W. says:

    @jan:

    After WW2 we supplied the world with our products. We had an upward movement for the middle class and we had unions as a support for the middle class. What we have not recognized over the past two or three decades was the fall of communism and the addition of two billion cheap laborers, add to that automation and more loss of jobs, lean principles and more loss of jobs, and mergers and consolidation and more loss of jobs. In my town, four major factories have closed down or in the process of closing down. I suspect the unemployment rate could be anywhere from 20% to 40% or more. You talk of small business, but how do you have a small business in my town with factories closed? You need employed clientele to keep your business going.

    Now, what I see is the democrats are spending in the wrong areas to stimulate the economy, the republicans want more tax cuts on top of the Bush tax cuts to stimulate the economy, the fed printing money for low interest rates and a low dollar to export more with 1/3 less manufacturing, and states wanting casinos for jobs. So, it looks like everyone is doing more damage by trying to stimulate in the wrong areas and creating more long term problems. Yes, some had unions, some had healthcare and defined benefit plans, others preferred to go it alone. But it all worked together, creating an upward movement and a middle class. If one business closed down, you could work for another. That does not happen today.

    Through the years we lost that upward movement. Through the years the democrats spent more and the republicans went with failed ideologies and ignored the rest of the world.

    And if you speak of Apple, it used to be that we could spend in the economy. We cannot do that today as half the products are foreign made. So, the dynamics have changed. Even if someone, like Apple, creates a new product, we cannot have a guarantee that that product will be made here.

    The Chinese workers who took our jobs are now going to be replaced by robots. So, clearly, our biggest problem is globalization. Our country risks a depression as we have no jobs. We do not have the private sector. Even Roosevelt was confronted with this situation. If the private sector is not there, then what do you do? You have to create a demand to prevent or get out of a depression. There is simply not enough jobs to go around for so many people. Every industry is trying to out do each other in making the products in the cheapest way, and that leaves out employees.

    I think if you cut all the regulation and cut all the taxes, you could not create all the jobs needed. It may help, but then you create other problems in protecting employees and the environment. So, we are trapped in a corner and the only way out is for our country to have a Marshall plan. You need to invest in the country, in the people, and in the future. We have not done that in two or three decades and it will take that long to get out of this mess. There is no demand, all the stimulus is used up, and there are no jobs to stimulate. 57,000 factories closed over a decade and no one has said what is going to fill those factories.

    I really watched with amazement as I really had thought that republicans understood economics. But what I saw from Bush was flabbergasting. I watched our jobs leave the country, our money go to Iraq, and our infrastructure in neglect. Now, I don’t of any household or any business or any country can do that and survive. It made no sense. So, Bush had his roaring 20’s and now, as before, we face a depression. And I have come to the conclusion that democrats may be dumb, but republicans are a bunch of nuts.

  35. Gerry W. says:

    @jan:

    And talking about drug companies. The NIH and the FDA also has facilities and works closely with the drug companies and with the universities to get those drugs out. Here again, part of the Marshall plan is to have more federal research grants for preliminary research.

    A case in point in government cooperation is that the FDA had a sample of a drug on a shelf as a company called Biocryst had the drug on the shelf and was not going to put the dollars into the drug. The FDA experimented more on the drug and found an indication and advised Biocryst to start working on the drug. They are still working on the drug call Peramivir and it is their hope that it will be an antiviral for the swine flu. These are the private/public partnerships we need.

  36. jan says:

    @Gerry W.:

    Gary, I commend you for your astute comments. However, I don’t have even half the answers to the dilemma presented in your post.

    For one thing Bush was not a good money manager. He was a centrist who tried to be a compassionate conservative,spending tons of money on failed social programs, and a proactive defender of this country. Although his outlay of money was not nearly as bad as Obama, he still racked up criticism from his own constituency dealing with various economic policies.

    Our country has gone through different eras, from agrarian, industrial, to technological (dot.com), and now global based business economies. In each stage and phase there were adjustments to be made, along with transitions to be experienced. I think that is what is currently happening now.

    Our jobs are being out-sourced to countries offering cheaper labor. Our technology is advancing and replacing assembly line and other rote-type labor. As a country we are going to have to develop new financial incentives to entice manufacturing back to this country. Labor unions will have to be dealt with so they become less of the power house and obstruction course to be dealt with as they are today. Pension plans should not be of the defined type, so that they are in line with what is economically transpiring, instead of draining company resources when times are bad, causing said company to oftentimes fail. Retraining, new educational goals, the whole nine yards of rethinking how to rework our country, so it can be updated to where we are now, should be on the minds and at the top of every politicians “to do ” list.

    I think what is distracting productive changes to occur, though, is the political demagoguery going on between both parties, the brinkmanship being played out, and the concrete thinking that our current entitlement programs must stand, at all cost — never to be revised or reformed.

    IMO, everything should be on the table in this country, from tax reform to the duplicity of bureaucracies and fraud in all departments. Lots of money is made in this country. But, it is not being funneled and utilized properly or to it’s maximum potential. And, creating class warfare, racial tensions, and the like, to gin up political support, is leeching out good will and common sense, both needed in order to create a new workable and sustainable plan for the future.

    Getting late, and running out of mental juice…..

  37. Hey Norm says:

    @ Drew
    Effective tax rates as a percentage of income are at historic lows.
    But stick to personal attacks and ideology.

  38. Ben Wolf says:

    @Jan @Drew,

    How much lower do taxes need to be? At what rate do income and capital gains taxes need to be set for either of you to hire more people? How long after those rates become effective will you begin hiring? How low do those rates need to be for you to offer health coverage?

    Here’s your chance to sway someone’s opinion, so be specific.

  39. Hey Norm says:

    @ Jan…
    “…Although his outlay of money was not nearly as bad as Obama…”
    Document this please.

  40. Gerry W. says:

    @jan:

    I think enticing corporations back to our country are for fools. I think lowering regulation and taxes sounds good, but it does not come close to the amount of cheap labor in the workforce. At the end of the day, no matter what we do, we added an additional 2 billion cheap laborers and they need jobs just as much as we do. You cannot ignore the 2 billion cheap laborers, automation, lean principles, and mergers and consolidation. They are with us for us forever and we are going to have to look for new opportunities instead of the same old talking points. And until we do, people will be in denial.

  41. jan says:

    @Hey Norm:

    Gladly..

    When Bush signed his first appropriations bill for FY 2002, the nation had accumulated a debt of $6.2 trillion. In 2009, the last year under a budget signed by Bush, the national debt was $11.9 trillion, or an increase of $5.7 trillion, of which $1.8 trillion, or nearly a third of the increase, occurred in 2009, during Obama’s presidency but under a Bush appropriations bill. If we look at the OMB numbers for Bush’s deficits, we see that during from 2002-2009, receipts were $17.2 trillion vs. outlays of $20.8 trillion, a deficit of $3.5 trillion. The difference between $5.7 and $3.5 trillion lies in accounting gimmicks that separate “Debt Held by Federal Government Accounts” (the so-called Social Security Trust Fund, et. al) and various on-budget and off-budget categories. Bush’s record was not good, but to attribute $7 trillion to Bush is simply false.

    Similarly, Obama policies have added far more than $1.4 trillion. National debt has risen from $11.9 trillion in 2009 to $14.2 trillion (July 2011), an increase of $2.3 trillion in two and a half years. The really scary number is the CBO estimate for 2016: a debt of $20.8 trillion, assuming that Obama is reelected.

    Obama’s idiotic infographic

  42. jan says:

    @Gerry W.:

    I still think that finding incentives to lure manufacturing and capital back into this country is a way to boost our economy. Lowering our country’s corporate tax rate and unwinding cumbersome red tape regulations would help to do this.

    However, it is not the only pancea needed.

    A big hill to climb is that the business paradigm is changing, as we speak. Businesses, thru this recession, are finding new ways to reduce their overhead while maintaining their profit margins via using more technology, patching in workers from abroad, etc. Therefore, different types of jobs and services are going to have to be created to supply our work force with work. Futuristic models, for instance, in my husband’s business classes saw a lot more home-based businesses springing up in the future, along with a greater use of flex time in conventional employment workplaces. However, as much as the problems are there for many to see, solutions are much harder to come by.

  43. Gerry W. says:

    Another business closing in town. Cannot have a business if the factories are closing.

    http://reviewtimes.com/Issues/2011/Aug/02/ar_news_080211_story4.asp?d=080211_story4,2011,Aug,02&c=n

  44. Hey Norm says:

    Jan…The American Thinker is what you base your opinions on? That column is so easily debunked it’s ridiculous. Please broaden your horizons. It would be good for you, and as I assume you are a citizen, the country.

  45. hey norm says:
  46. hey norm says:

    The American Thinker – “frequently qouted by Rush Limbaugh”…now there’s an endorsement worth bragging about.
    Blogging for the Ditto-Head.
    Who actually wants to be called a Ditto-Head?

  47. Drew says:

    jan –

    You are a piece of work, and can hold your own on the merits. Please stick around this site.

    BTW – if you want to see how the trolls work see Ben Wolf. “How much do taxes have to go down?” rather than addressing the uncertainty issue: “can we have some surety if I invest or hire you won’t tax it away or increase my cost of employment?” They attempt to throw it back at you without an ounce of understanding or constructive policy prescription.

    or troll hey norm:

    “Effective tax rates as a percentage of income are at historic lows.
    But stick to personal attacks and ideology.”

    Notice the talking point dodge – “effective tax rates” vs absolute dollar taxes as a percentage of income? Which is of course the only thing that matters.

    The good news is they are intellectually light and easily defeated. The question becomes “do you want to spend the time?” But at times its a sick pastime – like pulling wings off flies.

  48. Hey Norm says:

    Drew…
    OK…percentage of GDP and effective rates both prove you dead wrong…so now you want some other measurement..but don’t provide any actual information.
    That’s all anyone needs to know about you.

  49. Ben Wolf says:

    @Drew: Now the radical right (i.e. Drew, whom I now suspect to be a clerk), becomes indignant when you ask a question. You’re weak, and probably poor too.

  50. Ben Wolf says:

    @Jan the Business Owner

    I’d like an answer to the questions I posed earlier. Drew surrendered, but I’m betting you’re made of sterner stuff and can handle it.

  51. jan says:

    @Drew:

    The question becomes “do you want to spend the time?”

    You’re reading my mind, Drew.

    I don’t mind responding the best I can, and even engaging in a back and forth debate. But, for the most part, changing minds is not the goal of posting here. For me, it’s mainly a forum in which to exchange ideas and opinions.

    Sometimes opinions, like Op-Ed pieces are just that, formed by tidbits gleaned here and there, anecdotal stories (both my own and others), conversations with business contacts, friends. Such gleanings have no footnotes, internet links, but are formed from a hybrid of extraneous sources, interactions and personal epiphanies.

    And, even when an article or study is read and notated, more often than not, it is discredited because of not deemed credible enough by someone opposing what I’m saying. For instance, The informative American Thinker piece, was trashed, and then snidely linked to Limbaugh, who I neither like nor listen to. But, false assumptions seems to be a gimmick people often use to augment their perspectives and egos, making themselves I guess feel superior to others.

    Also, I have no quick income tax bracket figures to give Ben Wolfe, mainly because I think the whole tax code should be revised. It’s too big and cumbersome, much like the government entities who write these two thousand page bills which no one reads or understands. However, if I really wanted to immerse myself in this subject I would research the various reforms that have floated around, including the flat tax, weighing the pros and cons of each.

    This penchant, though, that we have for dividing the tax liability up so that 42-47% of the people pay no income tax whatsoever seems wrong to me. I think everyone should at least pay a nominal federal income tax, that would be impacted accordingly, every time the government wants to raise or lower taxes. After all, it’s so easy to support tax raises on others. Just like it’s easy to support a war when you don’t have a loved one being deployed. Basically, though, the more skin you have in the game, the more one tends to seriously weigh the options and merit of decisions to be made and/or legislation voted in or out. I also would do away with capital gains and estate taxes altogether, the latter simply being double taxation.

  52. hey norm says:

    “… that 42-47% of the people pay no income tax whatsoever seems wrong to me…”

    You realize that’s because they are f’ing poor – right? Estimates by the Urban-Brookings Tax Policy Center project that for tax year 2011, 46.4 percent of households won’t have any income tax liability. However, of this number, 28.3 percent will pay payroll taxes, the center projects. Of the remaining 18.1 percent with neither income nor payroll tax liability, 10.3 percent are elderly and 6.9 percent are not elderly but have incomes lower than $20,000. In other words, all but a tiny sliver of Americans without either income tax or payroll tax liability are either elderly or poor.
    You seem to not be able to comprehend the fact that this is a low tax nation. Learning disability?
    In 2006 — the most recent year for which an OECD comparison is available — taxes accounted for 28 percent of U.S. GDP, up modestly from what it was in 1985. All told, 25 nations had a higher percentage than the U.S., while just four — Mexico, Japan, Korea and Turkey — had a lower percentage.

  53. Ben Wolf says:

    As a business owner let me answer for myself, Drew and Jan: Taxes could be reduced to zero and we wouldn’t hire anyone, because additional employees wouldn’t generate any more revenue in this this economy. Until the consumer can deleverage (which will take decades) or until we have a national debt jubilee (which will happen when an asbestos dog chases a paper cat through hell) there will not be enough spending to justify expanding employment.

  54. jan says:

    @Ben Wolf:

    Ben

    You’re a one-trick pony. It’s all about soliciting a fill-in-the-blank “as to what level of taxation” is satisfactory for increasing hiring.

    Taxation levels are a component, one ingredient of many serving to encourage or discourage business to expand or contract. It’s like baking bread and using only flour as the single measurement of whether the bread is going to be eatable or not. Also, each business has inherently different variables and profit margins to work off of in deciding to hang tight, risk more investment, or simply fold up their tent and move out of state or out of the country. It’s not a one answer fits all like you seem to demand.

    Tunnel vision is a problem with you, Ben.

    However, a rule of thumb generalization is that the lower the tax rate, in other words the less the government takes from a business, the more that business has to reinvest and keep his venture alive. That’s the simple math in your question. Also with tax reform, where various deductions would be eliminated, one could cite a significantly lower tax percentage which would still generate healthy revenues.

    Obviously, demand for a product or service is part of an equation in the creation of a more prospering economy. However, demand is but a fraction, part of an ensemble of reasons and players, in a circular sequence of events, whereby greater employment opportunities is achieved as the end result. Government ‘friendliness,’ stability in business regulations, lending and credit willingness, reasonable union demands versus unreasonable ones, leads to more ‘confidence,’ loosening up money that can be used for capital investment in start-up or expansion projects, creating more jobs, money in the marketplace for consumer spending and revenues for the government to oftentimes foolishly spend.

  55. jan says:

    @hey norm:

    Norm

    Most people pay taxes in some shape or form, whether it be sales, property, payroll, local, state or federal income tax. However, what is usually in contention with progressive and fiscally conservative perspectives/principles are federal income tax brackets, and the percentages each one should be expected to pay.

    Now if basically half the population pays no, nada, zero federal taxes, why should they care whether federal taxes go up or down? All this population angst is focused on that how and where the government finds the money to pay for what they have come to expect from government. The ‘whom’ is of little mind, because they know it’s not going to be them!

    However, if everyone had to pay at least a nominal or token amount, even $20 a year, it would be a symbolic and mindful practice. And, should taxes be raised, and their portion goes to $25 (while ‘rich’ people may have to pay more in the tens of thousands) they will tend to notice the ratios of more government spending to their own minor increases. And, this is not going to take food out of the mouths of babes, either!

    I did a public health nursing rotation where I had to go out to poor neighborhoods to assess medical needs. I remember young single mothers, pregnant with another child, calculating their welfare payments ahead of time by adding a dependent, because they wanted a bigger TV set. That was one of those moments of seeing the cause and effect of what our welfare system was creating. There were equally deserving families and heartfelt instances of assisting those who needed and didn’t abuse the help being given. But, the number who manipulated the system, and seeing first hand a bureaucracy who just ignored blatant fraud, was a life lesson for me.

    In this same rotation I had a mother of 10 who wanted to get off public assistance by going to school, becoming an LVN. I was told by my superiors to ignore this woman’s requests, and simply encourage her to stay on welfare — it was better for her, and simpler for them. I didn’t listen to these bureaucrats, and got my client into an educational program, found transportation and childcare for her kids, worked a myriad of other details out, and went to her graduation years later, as her guest. It was a moment of great satisfaction for both of us.

    People do like and feel good about themselves when they can contribute to a larger good — even in dire poverty circumstances — more than you think, Norm. It’s a matter of believing in themselves, becoming a solution oriented person in their own life. Progressive philosophy, though, takes all that away from them. It drains the dreams, putting them into the chains of dependence with the mantra, “You can’t make it without our help.”

    Pity and pandering are not positive gestures to truly help another, IMO.

  56. hey norm says:

    Jan…you just shovel so much BS I don’t know what to say. It’s like reading morality tales. Or the bible. Pure fiction – but I’m sure it makes you feel good.

  57. jan says:

    @hey norm:

    So what do you add, Norm, but a lot of bah humbug!

  58. An Interested Party says:

    You’re a one-trick pony.

    Pot, meet kettle…so sorry if that is too bah humbug for anyone…however, it is the truth…