U.S. stocks closed lower on Monday, with the Dow index falling 0.2%.

No major U.S. economic data are due to be released today.

Continue reading U.S. Stock Futures Higher as Obama Agrees to Extend Tax Cuts

U.S. Stock Futures Higher as Obama Agrees to Extend Tax Cuts originally appeared on BloggingStocks on Tue, 07 Dec 2010 08:30:00 EST. Please see our terms for use of feeds.

As the economy continues to sputter, President Obama is trying to find new ways to get things back on track. While still in the early stages, it looks like his plan will include key tax breaks, which could amount to as much as $200 billion over the next couple years.

First, the plan will allow companies to write off 100% of new investment in capital and factories. Of course, all companies can deduct such purchases -- through depreciation. But it can take as much as 30 years. But the new plan would greatly accelerate the process to one year.

Continue reading Who Benefits From the Obama Tax Plan?

Who Benefits From the Obama Tax Plan? originally appeared on BloggingStocks on Tue, 07 Sep 2010 11:00:00 EST. Please see our terms for use of feeds.

According to estimates by the Tax Policy Center, nearly half of households -- 47%, or 71 million -- will pay no federal tax. Why is number so high? The answer lies in the myriad refundable tax breaks. And the number has risen since the enactment of the recent $787 billion stimulus package.

The great majority of households making under $30,000 fall into this category. Here is a breakdown by income:

Continue reading Half of Households Will Pay No Federal Income Tax

Half of Households Will Pay No Federal Income Tax originally appeared on BloggingStocks on Fri, 05 Mar 2010 12:00:00 EST. Please see our terms for use of feeds.

In the 1960s, President Lyndon Johnson's economic/social policy, the Great Society, came up against a counterforce and competing claim few in public policy circles at that time had expected: Lyndon Johnson himself.

Johnson, in a decision that would alter U.S. society and the cultural landscape, chose to escalate U.S. involvement in the Vietnam War, and vastly increased government defense spending. The spending, when combined with spending for the Great Society, posed the question: "Could the U.S. economy tolerate increased government spending for defense and for social programs without an increase in inflation?" This is known in economics circles as the "guns and butter" question.

Continue reading Guns and butter: Can the U.S. have both at the same time?

Guns and butter: Can the U.S. have both at the same time? originally appeared on BloggingStocks on Mon, 14 Dec 2009 13:20:00 EST. Please see our terms for use of feeds.

Underneath the official numbers that we lost 216,000 jobs in August and our unemployment stands at 9.7%, are some nasty, negative data.

Look at these numbers:

• Some 26 million Americans can't find full time work.
• The average work week has been cut to 33.1 hours.
• The number of discouraged workers jumped to 16.8% from 16.3% in July.
• Part-time workers increased by 278,000 to 9.1 million.
• Teenage unemployment is at 25.5%.

Continue reading Unemployment numbers suggest we need a job stimulus program

Unemployment numbers suggest we need a job stimulus program originally appeared on BloggingStocks on Sun, 06 Sep 2009 17:10:00 EST. Please see our terms for use of feeds.

Something like $275 billion of the proposed $900 billion stimulus plan is reserved for tax cuts. But the tax cuts will just add to the $1.2 trillion dollar deficit with little effect on consumer spending. The reason? Consumers generally save most of the money they get from tax cuts. But the latest savings rate statistics suggest that consumers are now saving on steroids. So I say, scrap the tax cuts.

Things have really changed in the last few years when it comes to savings. In 2007, consumers were spending more than they were making -- just as they did in 1929. To be specific, the savings rate was negative at -0.7% in 2007. Those were the days that consumers could get by on their stagnant incomes by borrowing to buy those flat screen TVs and snowmobiles.

Continue reading Since consumers are saving, scrap the tax cut

Since consumers are saving, scrap the tax cut originally appeared on BloggingStocks on Mon, 02 Feb 2009 12:48:00 EST. Please see our terms for use of feeds.

President-elect Barack Obama has said his $700 billion stimulus package will add three million jobs to the economy. Skeptics don't think this is possible because the recession has grown stronger at a speed most economists did not anticipate.

Now, Obama's people think he can do ever better. According to the AP, "President-elect Barack Obama countered critics with an analysis Saturday by his economic team showing that a program of tax cuts and spending like he's proposed would create up to 4.1 million jobs." That math is hard to defend.

The economy lost 540,000 jobs in December. Some experts say it could stay on that pace for the first half of this year. If so, the economy will drop another three million jobs. Certainly looking at the full year, the three million number is certainly reasonable.

Much of the Obama plan is based on building out infrastructure for the energy grid, medical IT, and public works. Programs of that magnitude could take several quarters to get in place. They will involve complex logistics and new agencies to supervise them. By the time most of that is up and running, it could be near to the close of the year.

The reasons that adding four million jobs in America is unlikely is that the economy will shed jobs faster than a stimulus package can ad them, certainly during the period when the economy may be taking its hardest hit. Obama can't fill in that hole fast enough, let alone build a mountain on top of it.

Douglas A. McIntyre is a editor at 247wallst.com.

Can Obama plan add four million jobs? originally appeared on BloggingStocks on Sun, 11 Jan 2009 10:40:00 EST. Please see our terms for use of feeds.

My definition would be that the plan creates three million new jobs and gets GDP to grow again in the next few years - but also jump-starts economic activity so we don't need to keep borrowing and spending to keep the economy going.

By that standard my guess is that the plan has a 50% chance of succeeding. It will get economic activity going in the short-term but I am not sure if it's enough to revive economic activity in the longer-term. In my view, the plan has the following pros and cons:

• Positives. In general the idea of fixing roads and bridges is good and there are about $323 billion in plans prepared by the states that need funding. I think having broadband in schools is also a good investment in the future education of American students, and that spending on health care information technology could boost its efficiency. Finally, alternative energy is crucial if we hope to free ourselves from dependence on oil and gas from people who don't like us very much.
• Improvement opportunities. However, the problems of this plan are significant. First, getting involved with significant tax cuts to satisfy the Republicans in Congress will slow down the process of getting the legislation passed and it will ultimately bring the U.S. to annual budget deficits that could top $2 trillion.

Continue reading Economic stimulus plan has 50% chance of working

Economic stimulus plan has 50% chance of working originally appeared on BloggingStocks on Thu, 08 Jan 2009 13:51:00 EST. Please see our terms for use of feeds.

Continue reading Obama's $300 billion in tax cuts seen attracting Republican votes to stimulus package

Obama's $300 billion in tax cuts seen attracting Republican votes to stimulus package originally appeared on BloggingStocks on Tue, 06 Jan 2009 13:45:00 EST. Please see our terms for use of feeds.

The Obama administration and Democrats in Congress figured that there $750 billion stimulus program would add three million jobs to the economy. That should be enough to pull the US out of a recession. It would also rebuild much of America's infrastructure.

It has stated to dawn on the architects of a recover package that the plan will not do enough for the economy short-term. The destruction of jobs and lack of access to credit are getting worse by the say.

What's the answer? Combine $350 million in business and consumer tax cuts with the plan to increase jobs. So, according to The Wall Street Journal, "The size of the proposed tax cuts -- which would account for about 40% of a stimulus package that could reach $775 billion over two years -- is greater than many on both sides of the aisle in Congress had anticipated."

Tax cuts would probably get money into the economy faster than a jobs creation program, but what will people and companies do with the money? It may not make it into the economy in the form of new spending.

The Bush tax rebate happened before the recession started to bite. Many people were willing to spend the money the government sent them. But, in much less than a year, sentiment has changed tremendously. Business and individuals are showing that any money they bring in goes to pay debt or increase savings. It is not clear how that helps the economy quickly. As a matter of fact, given the overall reluctance to spend, it may not help the economy at all.

Douglas A. McIntyre is an editor at 247wallst.com.

As economic problems pile up, Obama looks at tax cut originally appeared on BloggingStocks on Mon, 05 Jan 2009 04:07:00 EST. Please see our terms for use of feeds.

The New York Times reports that some in Washington are using the latest economic catastrophe to push Congress to make tax breaks permanent. What these folks don't recognize is that the tax cuts are a big reason why the economy is in such bad shape to begin with. With unemployment spiking to 5.5%, the worst since 1986, and oil prices up a record $11 yesterday to $138 a barrel, it won't be long before you're paying $5 a gallon for gasoline.

And since oil is traded in dollars, its 70% decline since January 2001 from 92 cents to the Euro to its current $1.56 -- has been accompanied by a 475% rise in the price of oil. The $1.3 trillion worth of tax cuts -- 36% of which went to the top 1% -- are contributing to record deficits. In 2008, we'll have a $410 billion deficit and the 2009 figure looks to top $500 billion. And thanks to $3 trillion worth of wars, the U.S. is borrowing $9.4 trillion -- almost double where we were in 2000.

Thanks to these deficits, the U.S. is borrowing 66% of its $14.2 trillion GDP -- and any country borrowing more than 60% is seen by international investors as a credit risk. You'll hear people trying to convince you that deficits don't matter. But deficits are at the core of all the economic problems we face. Republicans used to be seen as the party of fiscal conservatism. But what they've actually done would terrify a prudent banker.

Continue reading Why tax cuts ruin the economy

Why tax cuts ruin the economy originally appeared on BloggingStocks on Sat, 07 Jun 2008 08:20:00 EST. Please see our terms for use of feeds.

The members of the G7 admit that the global economy is in real trouble. Now they are asking themselves whether they can do anything about it.

Officials at the G7 summit did say that interest rates will have to come down. An official from the European Union said that taxes could be cut further. Many in the private sector don't think this can offset problems in the credit markets. "The problems are going right through all parts of the financial markets and there's not much the G-7 can do about this,'' said Gilles Moec, an economist at Bank of America Corp. (NYSE: BAC), quoted by Bloomberg.

To say that large governments cannot dampen the downturn is cynical. Whether they will act quickly is a very fair question to raise. A sharp cut in personal and corporate tax rates and more drops in interest rates are likely to cause a pick-up in economic activity. It is also almost certain to cause inflation, but that may be the price that must be paid to keep a severe recession at bay.

The slowness of governments is the enemy now. If the G7 countries can't get tax and rate stimulation packages in place during the current quarter, it will almost certainly be too late.

Douglas A. McIntyre is an editor at 247wallst.com.

G7 countries look at interest rate and tax cuts originally appeared on BloggingStocks on Sun, 10 Feb 2008 13:10:00 EST. Please see our terms for use of feeds.

When Ben Bernanke testifies before the House Budget Committee today, he's expected to announce his support for a short-term economic stimulus package, as long as it's based on measures that are quick and temporary, according to the New York Times this morning. He's told lawmakers he won't comment on proposals to link a stimulus package to the permanent extension of President Bush's tax cuts.

Finally some political sanity. I wish Alan Greenspan had taken that stance as President Bush continued to cut taxes during a war. If Greenspan had we wouldn't have added so much to U.S. debt and this country would be in much better shape fiscally to get us through the current credit storm.

Bernanke's support for the short-term fix is critical to getting many lawmakers to accept a stimulus package even if it means adding to the U.S. deficit. Without it, Congress probably could not pass a veto-proof economic stimulus package. President Bush would likely veto anything that doesn't include a permanent extension of his tax cuts to try to bully the Congress into continuing his economic folly - paying for a war on future debt. Our children certainly will hate us for a long time if we continue to ignore the burden we're putting on them.

Continue reading Bernanke expected to announce support for short-term economic stimulus package

Bernanke expected to announce support for short-term economic stimulus package originally appeared on BloggingStocks on Thu, 17 Jan 2008 07:30:00 EST. Please see our terms for use of feeds.