What was that phrase? "Suspend disbelief?"

Read between the lines, consumerist.

Can take steps to prevent inflation when Recovery is "more firmly rooted".

Later: "any such steps will be far off in the future."

I admit, I laughed at the caption.

Are we still in the phase in which companies are frightened kittens, not wanting to press the big red button on rehiring and restaffing and actually employing people? I was lucky to find a job as soon as I did after my lay off, but I know others who aren't as lucky and who are still looking. It's just that people are hesitent to start investing money in salaries. You've got the skills, they have need of them...but they're very, very scared. It might be that they think in half a year, they might need the $40,000 they're about to pay to you, or they may get into trouble if they can't justify lower profits but are hiring. Or it's pressure from the bosses to do more with less.

Where are all of the cries of a "jobless recovery" that we heard so often in Bush's first term?

/sarc

That being aside, I still have a hunch that things aren't going to be rosy for a good year or two. We're going to break 10% unemployment and the government is wanting to raise taxes on corporate America... where the majority of Americans look for a job. Add to that a tax on the "rich" that make more than $350k - that hits most small businesses, where rest of Americans look for employment... unless you want to expand the government employment...

@pecan 3.14159265: Hiring and staffing is always a trailing indicator by at least 6 months. It's so aggrevating to me that people view the unemployment rate as a simplified view of the macroeconomy.

Companies are afraid to hire, because they are waiting for the next shoe to drop. So they're going to run their current staff until they absolutely can't avoid bringing on extra people.

Historically, unemployment lags recovery - that's a fact. Whether or not we're in recovery is another story...

@Tux the Penguin:
So, your suggestion is that we drop the taxes for the corporates and the top 5% of the population.

Brilliant idea! Why did no one think of it earlier? Actually, we would never have gotten into this mess if we had followed your advice for the past 20 years!

It's all George Bush's fault anyway... It's not like the only constant between the last administration and this one are the members of Congress.

Hold on, someone's knocking on my doo

@Tux the Penguin: You make a great point that gets overlooked while the Obama administration plays class warfare.

The "taxes on the rich", which is defined as people making more than $250k, will directly impact S-Corps [en.wikipedia.org] who run their incomes through their owner's personal taxes.

In many cases, a company making $500k a year will only yield a salary of $40-$50k (or less) for the owner, but now the government will tax his/her company more heavily, cutting into the owner's income, or requiring them to cut benefits or lay off people.

Let's not stand for the class warfare lies. There's nothing evil about these small business owners, and make no mistake - they make up the majority of the folks that will be affected by proposed tax increases, and provide millions of jobs to our nation.

@Tux the Penguin: Why is rich in quotes? If you make above $350K a year you are rich. If you're having trouble paying your bills, putting your kids through college, etc on that kind of money you aren't smart enough to be making it in the first place.

Well owners of the Federal Reserve (banks) are doing well now.

"Recent stabilization of household spending" There probably is a little stabilization prior to cuts in food and basic necessities.

That's going to go over really well for the constituents. Is this the "Change We Can Believe In"? Is this what happens when we share the wealth (to Chase, AIG, GM, and a wide variety of special interests)?

I got an idea. Instead of the government taking my money to bail out their buddies, how about letting me keep it so I can bail out local retailers and stuff? You know, the ones that support the local jobs and local economy where I work?

But that's the year the world is supposed to end!

You know, using monetary policy to stimulate the economy is always always always a slow process. It took years to build the mess, and it will take years to unwind it. The Government cannot force people to spend money in a certain way, nor can they force people to adhere to specific prices or practices. The only thing the Government can do is make the price of money cheap and, occasionally, fund major infrastructure efforts. The effects of those things take a long time.

You know how in those movies or commercials where someone puts a piece of bubble gum on the crack in the concrete dam to hold in the little tiny water leak and then the gum falls off and the river busts through the wall? Well, the government thinks they "fixed it". Why is the crack in the wall still growing?

@Travishamockery: Indeed we should not stand for lies, which is why you should stop implying that a company that is worth 250K or has 250K in profit is somehow affected by the tax increases Obama proposes.

Only those that actually take home 250K will be directly affected. Business expenses will remain tax deductible . . just like always. A company you own can be worth millions, but you still only get taxed on what you actually put in your pocket.

@qwickone: thank you for saying it before i did.

@pecan 3.14159265: The frightened kittens are avoiding the basics of research and development, advertising, and business combinations...they can't think of restaffing if they have no positive outlook.

In other news, we're still at war with Eastasia. We've always been at war with Eastasia.

@SacraBos:

Er...well I don't know about you, but my taxes went WAY down at the start of the year. I had like an extra $40 in each paycheck. Now, I know they will probably double or triple in the coming years, but Obama's 1 trillion bailout *pales* in comparison to G.W.'s MASSIVE spending (hell just the Iraq War cost 3 trillion, and the American taxpayer got jack squat out of that). That doesn't even include all the other deficit spending Bush did.

@ilovemom: Because 350k a year, for a married couple, is not necessarily "rich". Take a look at [www.bestplaces.net]

A family making 350k in San Francisco would be like someone making $160k in Houston. Yet the San Francisco couple is now paying extra taxes since they are "rich" but the Houston people are not. Or, to put it another way... by the time the Houston couple earns enough to hit that 350k, that San Francisco couple would be earning the equivalent of $764k. They're paying an additional $20k or so in the proposed new "surtax". The Houston couple pays nothing.

But back to the whole idea of cutting taxes on corporations... MostlyHarmless, when a corporation earns money, it pays taxes (of course). When it then turns around and gives it back to the owners in dividends, you pay taxes as well. Remember, you're paying 15% (well, 90% of Americans) on those dividends on the 65% of the cash it originally earned (max 35% tax rate). That's the equivalent of a 44% tax rate to get one dollar earned in profit by the company to your pocket as a stockholder. Nice, huh?

Now, did you know that the US one of the highest corporate tax rates in the world? Oh, but there's something that's a big kicker - you pay that tax no matter where you earn it around the world. We are exclusive with that nice kicker.

Imagine what would happen if we dropped the tax rate down to 25%. Or 15%. Those companies would suddenly "find" money that was previously shipped to the government. While at first they would probably keep the extra cash, that would be extra cash in the bank. Don't our banks need new capital? And eventually when they use that cash (because no corporation would just sit on mountains and mountains of cash for all eternity) that would either go to expanding the company, which means new jobs, or distribute it to the owners, which means dividends back to the general public.

Yes, I know a corporation or hedge fund can own stock, but those will also either expand or pay dividends... eventually it ends up back with a person. How is that a bad thing to have more money?

@exconsumer9: That simply isn't true. Read the Wikipedia link. Shareholders of S-Corps owe taxes on their pro-rata share of business income, which is not just profit or take-home pay.

Here's another link for your review: [www.heritage.org]

@Saboth: *sigh* you do know that the costs of the Iraq and Afghanistan wars are not included in the deficits and normal operating budget of the US, right? Those are hidden deficits... but that's another beef with "governmental accounting" (which is an oxymoron).

You're comparing $3 trillion over 6 years (or so) to $1 trillion in 6 months. That's comparing $500 billion a year to $2 trillion a year. Considering last year, the world deficit Bush faced, was $450 or so billion, Obama still has him trumped.

Add in Health Care costs, dear Lord...

@ilovemom:

[www.heritage.org]

I would love to make $350k per year, but let's be accurate. The threshold is $250k per year, and Obama's 30 minute campaign infomercial actually said $200k per year. Ever seen the cost of living in a big city?

Also, read up on the S-Corp links. Huge numbers of small businesses will be directly affected by the proposed tax increases.

The administration is counting on attitudes like yours, people who scoff at the ivory-tower dwelling, $250k making "rich", providing blind support without acknowledging the realities of who the program affects.

@Saboth: The Iraq War actually cost $845b directly. The "$3T" number is an estimate of economic costs, which is a lot more nebulous. Arguably, the stimulus' true cost isn't a trillion bucks, either.

The economy won't improve until people have the ability to increase their wages- and this won't happen until we have health care reform, so that people aren't stuck in their jobs due to health care.

@Travishamockery: Can you provide a more reliable link? CBO, news agency (excluding Fox or MSNBC), etc.? I don't know that the Heritage Foundation is the best place to get tax information.

Didn't we try tax cuts for the last 8ish years? How did that go? Not very well from what I understand. We basically, went into debt to fuel an artifical boom that collapsed on us. We're trying it again, with the hopes of being able to maintain the growth.

Employment is going to be a lagging indicator. If things go as planned unemployment claims will slowly level off and then increase in the next year or two. I think people want instant results when there are none.

@pecan 3.14159265: I think we're in a phase where macro institutions are experimenting with a new "economy" wherein nothing is actually produced, but huge piles of money are shuffled about in a kick-the-can manner, and well-placed small groups and individuals periodically grab fistfulls of loose bills for themselves. You can see this in banking, and in insurance and medical, where docs are pushing credit cards so they can inflate fees and add unnecessary services. Banks invest and hoard money; they don't loan it. For the past 30 or so years, the economy has been putting the squeeze on workers, and finally it has found a way to eliminate labor and production altogether.

@Dmitri: I agree- that's just the way macro economics works. Employment rates are a lagging indicator, but one of the easiest to measure. That also means that a lot of people still had jobs even though the economy was already in the sh_ter.

Maybe you guys should stick to fighting against corporations instead of economic analysis. Or at least hold off until someone from Consumerist takes an econ class at the junior college.

@ARP: Unfortunately for this line of thinking, the tax cuts were not the problem. The problem was that government didn't cut their costs to line up with the tax cuts that they were providing. We were, and most likely still are, borrowing money to continue to provide the same level of services at a federal level. Tax cuts are beneficial, you just can't borrow to maintain your level of government and expect it to be a success.

@ARP: Heritage is a conservative website like DailyKos, rawstory, etc. Not exactly the most supportive.

The "artifical" boom wasn't caused by tax cuts. Did it provide a multiplier? Probably, after all, when you don't pay much taxes on each dollar you earn, you have a stronger incentive to earn more money (marginal benefit/marginal cost, classic economics). What caused the collapse was... well, a failure of pretty much every regulator and self-regulator. Whoever thought it was a good idea to provide hundreds of thousands of dollars in loans to people with little or no income documentation, based on some score generated by a third party that you cannot "confirm" yourself... but that's another day.

You mean the economy will be "recover" just in time for the 2012 election?

@JGKojak: "Health care reform." Ah, I love the mis-branding of this debate. We aren't trying to reform health care, we're trying to reform health INSURANCE. There is no "health care problem" in the US. You need health care, you can get it. What we have is a "health care cost problem" either in the form of direct costs or health insurance premiums. Lets start calling it the right thing.

@Tux the Penguin:

... trying to takeover health INSURANCE>"

@exconsumer9: Completely WRONG. The government is making this problem worse by making the price of money cheap. Actually, I like the way you've put it. The gub'ment is lowering the price of money. That $20 in your wallet AIN'T what it used to be.

@pecan 3.14159265: Even companies that are doing relatively well in the current economy can't hire, because they aren't being paid on time! My dad's tiny company has been having several good months, but he's got to pay his suppliers even though his customers aren't paying their bills on time. It doesn't help that a large portion of his customers get state contracts, and Illinois hasn't passed a budget yet (again). It's really frustrating to look at the amount of business he's doing and at the amount of money coming in. With credit so tight, there's just no room to hire.

@Travishamockery: Again, that's incorrect. In fact, the whole point of Incorporation is to separate the personal from the business entity. From your link on S-Corporations:

"In general, S Corporations do not pay any income taxes. Instead, the corporation's income or losses are divided among and passed through to its shareholders. The shareholders must then report the income or loss on their own individual income tax returns."

You don't get taxed unless you actually bring 250K home, and very few businesses that anyone would consider 'small' actually afford their owner or employees that kind of opportunity.

[www.politifact.com]

"In an effort to focus more effectively on small business owners, the Tax Policy Center did an additional analysis where they looked at people who reported business income that accounted for at least 50 percent of their income. This means people who derive a significant living off their business income.

In 2007, about 2 percent of those tax filers would have made enough money to see a tax increase under Obama's plans."

Your concerns are contrary to fact.

@RenRen: You have a valid point. But I think Obama is finally started to get some of the blame.

We'll see how this plays out but I doubt congress or Obamas plans will work at all. I see Jimmy Carter double digit unemployment, inflation, and interest rates in our near future.

@cmdrsass: Yes, I read today Congress is going to pass the Perpetual Suspension of Belief Act...and the President will indeed sign it.

@Saboth: And don't forget knee cap and tax (aka cap and trade) where not only your costs will go up, but so will businesses, having to buy credits, and therefore pretty much just shut down the economy.

Also Obamas budgets and deficits is way above and beyond Bush.

You will BEG for Bush's spending before this mans 4 years are up.

@Tux the Penguin: You act like the rich can leave this country. First off in case you forgot the previous president put into place the inability to leave this country with boat loads of cash.

Secondly where would they go where they're not taxed to hell? This is the only country where they're safe even with the tax increase.

@cmdrsass:

It takes a long time to pull the country out of the toilet, hell bush had 8 years to put us in there.

@Tux the Penguin: plus war time generally stimulates economy. I just wish we had a better war time strategy and stuck to simply going after Afgan terrorists and not Iraqi.

@ChuckECheese: banks don't loan money? most of our current problems ar edue to the fact that banks lent money to anyone with a pulse, you can't blame them for trying to shore up their balance sheets now.

@JGKojak: You don't know what your talking about. The rich will get a tax increase to pay for the health insurance, which will stifle job creation.

I know some of you people don't believe in trickle down economics but if you continue your educated ways you will most certainly believe in trickle up poverty.

@Bladefist: uneducated ways. Worst place for a typo.

@t-r0y: I'd be happier with just some new laws out lining what insurance companies do. like: cannot charge more than X amount. Hospitals can't bill more than X amount and nobody can ever be denied coverage; all operations that are on whatever list they feel like creating must be covered and never denied under say 2 doctors recommendations.

that would be like a 10 page document without the government providing health care just regulating it. Which is more inline with what a government should do.

Personally I'd rather see government take over Utility companies than health insurance. That is a huge problem.

@Skankingmike: War does stimulate the economy, but how. It mostly because the spends massive amounts of money on equipment, labor, etc. often at a huge deficit. It's very similar to what Obama is proposing, but without all the death and destruction and actually using the money to build bridges and schools and things.