From the ArcaMax Publishing, Lawrence Kudlow Newsletter:
http://www.arcamax.com/news/lawrencekudlow/s-642824-204334
Against the backdrop of high unemployment and a public revolt against
a Democratic health-care bill -- which would significantly increase
taxes, slash Medicare spending, and massively raise health-care
spending elsewhere in a government takeover of our leading growth
sector -- the Republicans swept the Virginia and New Jersey
gubernatorial races.
It's interesting that early signs of economic recovery are not helping
the Obama Democrats. This is largely because of the 9.8 percent
unemployment rate, which is expected to move higher. Even the crazy
jobs-saved-or-created campaign is having no discernable impact while
the Obamacons try to fight the unemployment rate.
If you go to recovery.gov, the official stimulus website, you'll find
that there has been $207 billion in stimulus spending through Oct. 30,
2009 -- including $84 billion in tax benefits, $52 billion in contract
grants and loans, and $71 billion in entitlements. So even if we give
my friend Jared Bernstein his highly flawed "1 million jobs saved or
created," that's $207,000 per job in an economy where the average wage
is about $46,000. Not good. Wasteful and ineffectual spending. (In
reality, tax credits are spending. For incentivizing, you need
marginal tax-rate cuts.)
Mike Flynn of Breitbart's biggovernment.com notes that the government
pumped $170 billion into the third-quarter economy. But gross domestic
product grew by only $150 billion. As I said, ineffectual spending.
That doesn't meant the economy isn't rebounding. It is. Glitches and
all, third-quarter GDP popped up 3.5 percent at an annual rate after
inflation. Statistically, the recession is over. That's good. And it
corroborates the big stock market rally over the past seven months.
This is going to be a business-led recovery as self-correcting firms
build profits on top of huge cash flows.
Yesterday's ISM manufacturing report for October also confirms the
growth trend with a recovery reading of 55.7, the strongest since
April 2006. And this morning's factory orders for September also show
a stronger-than-expected gain. Even car sales are expected to rise in
October by more than 10 million, at least 1 million better than
September. Ford, which refused to take TARP bailout money, reported a
surprise increase in profits.
But the depreciating dollar remains a storm cloud over recovery. So
are scheduled tax-rate increases and health care legislation that will
slam individuals and firms with higher tax burdens and higher tax
costs for job creation.
And then there's the Federal Reserve. With gold up another $25 --
setting a new nominal record of $1,079 -- the Fed released a policy
statement Wednesday that continues a program of massive money-pumping
and a zero interest rate.
This whole Obama policy mix of huge government spending and a
depreciating greenback is all wrong. It's pro-inflation, not
pro-growth. For a true economic recovery, we need a stable King Dollar
and lower marginal tax rates to incentivize job creation.
Jimmy Pethokoukis and others have noted that the first recovery
quarter under Ronald Reagan was better than 8 percent, not 3.5
percent. In fact, the average real GDP growth rate for the first
quarter of the 10 postwar recoveries is 7.3 percent.
So the economic-recovery story, and even the stock market rally, won't
bail out the Obamacons today, although it remains to be seen whether a
free-market, anti-tax-and-spend message will emerge from the election
sweep by the GOP. If so, it could doom the so-called health care
reform that has become a symbol of the leftward-tilting,
big-government, economic-control policies emanating from Washington.
========
To find out more about Lawrence Kudlow and read features by other
Creators Syndicate writers and cartoonists, visit the Creators
Syndicate web page at www.creators.com.