New York City mayor Mike Bloomberg, in a radio interview on Friday, warned that high unemployment could lead to widespread rioting. That’s right. He actually said that. At a time when European cities have suffered massively from hooliganism, and at a time when U.S. towns like Philadelphia and Kansas City have suffered huge human and commercial tolls from so-called flash riots.
For Bloomberg to come out with this statement is irresponsible and incendiary. But you know what? He’s got a personal agenda. This is a desperate talking point to sell Obama’s jobs plan, which Bloomberg favors as a solution to high unemployment and zero growth.
There’s a whole history here of liberals threatening riots if they don’t get their way. WABC radio host Mark Simone reminded me that back in 1994, Matilda Cuomo warned there would be race riots in New York if her husband Mario weren’t reelected governor in his race against George Pataki.
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So now the liberal Mike Bloomberg is trying to go to bat for his pal Obama. And he’s doing so in a very clumsy and inappropriate way.
In fact, Bloomberg is pitching for the whole Obama jobs package — the $450 billion stimulus plan and the $470 billion tax hike. The package is totally unpopular. A recent Bloomberg poll (how ironic) showed that voters disapprove of more Obama stimulus by 51 to 40 percent, and that 56 percent of independents oppose it. Other polls show that more than 60 percent of Americans disapprove of Obama’s handling of the economy.
Memories are long. The $800 billion stimulus package nearly three years ago didn’t work. So why do it again? Large dollops of government spending combined with temporary tax cuts do not promote investment or entrepreneurship, which are the true job-creators. Tax-rate incentives must be permanent in order to grow the economy. Digging holes for infrastructure may be necessary, but it’s no job-creator for the private sector.
And that $470 billion tax-hike bill, due in 2013, comes on top of other scheduled tax hikes, such as higher personal tax rates on successful earners and small businesses and the Obamacare payroll-tax increases that encompass investors.
The Wall Street Journal’s Steve Moore calls this a steep tax cliff. It’s exactly what the economy doesn’t need for the simple reason that business people today have at least a three-to-five-year time horizon when it comes to making decisions to invest and employ. They know a temporary-tax-cut red herring when they see one.
As a formerly successful entrepreneur, Mike Bloomberg should know this. But he supports Obama’s tax increases along with the rest of the futile stimulus package. And he has taken to the radio airwaves to support these policies in an incendiary and self-defeating fashion.
Some political insiders I spoke to believe Bloomberg desperately wants Obama to win a second term. They say the New York City mayor wants to be Obama’s new treasury secretary. Therefore, Bloomberg is hammering Republicans today and absolving Obama from taking any blame or ownership of the current economic mess, which has placed the nation on the front end of yet another recession.
Riots are not the answer to our economic problems. Promoting private-sector investment is. As Bloomberg well knows from his own experience, businesses create the jobs that provide incomes for families and consumers. And businesses require capital investment. But if we keep raising taxes on investment, we will get less of it.
The American economy will continue to stall until we get a right-thinking new administration.
Kudlow doesn't usually takes shots at people like this - which makes it look all the worse. Bloomberg should be hooked up to a lie detector test and asked if he actually believes we need another Obama stimulus package.
I think he's put the idea in many people's minds that our leaders think it's ok to riot in order to demand wealth re-distribution.
And I think we will see riots over this, and thanks to Bloomberg a crisis will occur and it will not be put to waste.
I think we'll see even bigger riots when the system collapses under it's own weight, but those will be short lived, as the amount of carnage and destruction from those will burn out quickly, leaving only scavenging former slaves to government to find food amongst the rubble.
Bloomberg is exhibiting a mixture of several emotions: Guilt (for being uber-rich), holier-than-thou (typical of rich liberals) and the desire to be in charge of something of importance
(like a rich guy who buys a sports team). He had the opportunity and connections to make money-he thinks that translates to other avenues, it does not.
Bloomberg is just trying to say ahead of the curve. A 'Day of Rage' on the Street is scheduled for Saturday by the usual suspects--SEIU, ACORN--apparently from a variety of sources.
Yes, the "Day of Rage" riot strategy pulled from the Palestinian Intifada handbook. We're seeing a lot of the techniques for twisting information and intimidation by raging used by the Palestinians for decades popping up on the American Left politics.
During most of the Reagan Presidency, the highest marginal tax rate was 50% or higher.
Today, the highest marginal tax rate is 33%.
Perhaps Mr. Kudlow can explain why the economy isn't BOOMING compared to the Reagan years.
The fact is, conservative rhetoric regarding the importance of marginal tax rates simply do not match the facts. Cutting taxes on so-called job creators will not create jobs.
And you know who the real job creators are? Consumers. All business is ultimately built on providing supply for demand.
No business, no matter how low taxes are or how little regulation exists is going to expand if there isn't sufficient demand to justify such expansion.
The tax reform act of 1986 didn't go into effect until 1987. It laid the foundation for the golden Clinton years.
As I recall, whenever there is a GOP president, the liberals talk about high unemployment and the homeless, even when the problem is miniscule. If you couldn't find work in 1988, you are part of the "lumpen proletariat", unemployable at any time.
"And you know who the real job creators are? Consumers. All business is ultimately built on providing supply for demand.
No business, no matter how low taxes are or how little regulation exists is going to expand if there isn't sufficient demand to justify such expansion."
Failed economics did you?
Look, it is simple. Businesses are in it to make money. If the marginal cost to produce an item is greater than the price that can be charged for that item the item will not be produced. Part of the cost of producing the item is regulatory costs. Another part is tax load. Those stifle supply by increasing costs.
Demand is ultimately infinite. People WANT. The reason we are able to live in what in every historical sense the lap of luxury in the US is because of supply. Most people would love to live the life of the rich but cannot; not because there is no demand but because the products they wish cannot are too expensive. Anything that lowers production costs increases wealth. As a simple example imaginge Joe Widget maker. His widgets are very popular but most people cannot afford them at 5 bucks a pop. Two dollars of that cost is regulation and tax driven. If Joe was able to eliminate those costs a lot more people could afford his wonderful widgets. Poof, instant demand.
You talk about "want" but don't get into what "want" is.
If I can't afford surgery for my kid, I don't "want" your flat screen TV -- no matter how low the marginal cost of production.
On the flip side, some people "want" an XBox really badly and buy it -- and then they need surgery for their kid and conservatives are all over them for not being smart enough, prescient enough, responsible enough, whatever.
Wealth is sort of a vague way to express the difference between what people want and what they have. If you think wealth is some kind of absolute measurement of the quantity of desired stuff, then everyone with a car and indoor plumbing needs to stop complaining like a bunch of spoiled brats.
The fact that the industrial revolution raised everyone's standard of living immeasurably doesn't mean we're wealthier than our ancestors -- it just changed the "what" of what we want. We're all boating on the same sea, and sea level's simply risen several feet since way back when.
What people want is what they want in the here and now. To most sane adults, making plans for tomorrow's here and now has at least some impact on today's purchase calculus. No mystery there. The proper term for that isn't "wealth", it's called "maturity".
Relative wealth and power will always be a source of social and political friction, regardless of the underlying level of material prosperity of any society. Conservatives accept that as an immutable fact of life and most of us go about our day to day business without giving it much thought. As our government becomes more and more the giver of the goods, either by redistributionist schemes that buy votes through the stoking of class hatreds, or by picking market winners and losers based upon the policy choices of politicians, bureaucrats and judges, the price signals that producers give to consumers become more weighed down with unnecessary costs, entreprenuerial initiative is stifled by red tape and the ever more certain prospect of long term political and economic uncertainty; and everyone ends up with fewer choices and lesser products at higher prices.
Demand is not "ultimately" infinite. Demand is defined as the ABILITY and WILLINGNESS to buy.
People who have severe balance sheet problems caused by the financial crisis and the collapse of housing prices lack the ability to spend as much as they used to.
For most businesses, taxes and regulatory costs are a small fraction of their expenses. Even if these costs were zero, they would have little incentive to spend, since consumers trying to get their financial life in order are in little position and even less mood to spend.
I think ABILITY and WILLINGNESS to buy is the key to demand, but with another factor added to the mix. Beginning in the late 80's and all through the tech and dot-com booms, people saw their salaries rise, and along with it their taste for luxury. Lots of cool stuff was invented, and became more easily accessible to more people because, along with their pay, their CREDIT was increased. Many people became accustomed to more pampered life( think hair and nails, pedicures and waxing, expensive gym memberships and plastic surgery)that in the very recent past, would have marked you as a member of the leisure class.In other words, people felt rich even when they weren't. Now after losing their jobs,or getting their hours cut, people have less money to spend on such luxuries, especially now that their credit cards are maxed out, and they can't get their credit extended( gone are the days when pre-approved credit cards arrived in the mail unsolicited.) I suspect many people have the WILLINGNESS to buy, but lack the ABILITY to pay simply because they're still paying for what they were all too willing to buy a few short years ago.
Regulation & taxes end up depleting over 50% of corporate profits, leaving less for retained earnings that lead to expansion & hiring. You left that part out of your equation.
On top of that, we are competing against other countries with much lower tax rates. Is it any wonder that US companies are sending production abroad?
Have you ever seen a demand curve? The steep upward slope of demand when price nears zero? Where do you think that curve is heading? Infinity.
The cost of regulation are a small fraction of their expenses? What country are you living in. The SBA estimates the cost of Federal regulation at 1.75T. Just around 12% of GDP. And that does not include Federal corporate taxes, State regulations or State taxes. Do you really thing that demand is resistant to price changes?
A decrease of regulatory costs and tax burden would lead to a decrease in price. Decreases in price lead to increases in demand. Produces will produce, and hire, as long as the marginal cost is less than the price they can receive. Lower the marginal cost, increase demand and production. This really is not too difficult.
Why should Kudlow explain what is - or certainly should be common knowledge? During the Reagan years, there was a larger taxpayer base, but more importantly the number of allowable deductions greatly offset the higher tax rate.
"During most of the Reagan Presidency, the highest marginal tax rate was 50% or higher."
Say what?
You are too witty, by half. Your statement would be correct, but for one word... "most". In fact, Reagan reduced the highest marginal rate from 70% to 28% shortly after entering office. He reduced the lower marginal rates 25%, making the lowest rate 15%.
Following is a good source, if you are interested in the facts: External Link
During most of the Reagan Presidency, the highest marginal tax rate was 50% or higher.
Today, the highest marginal tax rate is 33%"
Perhaps you should check your own facts. As a matter of fact, Reagan lowered the top marginal rate from 70% to 28% shortly after entering office. Before Reagan lowered these rates, the wealthiest 1% paid just under 18% of total federal income taxes, while 30 years later, they pay over 40%.
Good source material, if you're interested in the facts: External Link
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