Are wreaking havoc on the timetable to get the US deficit under control;
Aided by surging tax receipts, President Bush may make good on his pledge to cut the deficit in half in 2006 — three years early.
Tax revenues are running $176 billion, or 12.9%, over last year, the Treasury Department said Monday. The Congressional Budget Office said receipts have risen faster over the first eight months of fiscal ’06 than in any other such period over the past 25 years — except for last year’s 15.5% jump.
The 2006 deficit through May was $227 billion, down from $273 billion at this time last year. Spending is up $130 billion, or 7.9%.
The CBO forecast in May that the 2006 deficit could fall as low as $300 billion. Michael Englund, chief economist of Action Economics, has long expected a deficit of about $270 billion this year. Now he thinks there’s a chance the “remarkable strength in receipts” will push the deficit even lower.
With the economy topping $13 trillion this year, a $270 billion deficit would equal less than 2.1% of GDP, easily beating the president’s 2.25% goal. Bush made his vow when the White House had a dour 2004 deficit forecast of 4.5% of GDP, or $521 billion. The actual ’04 deficit came in at $412 billion, or 3.5% of GDP, before falling to $318 billion, or 2.6% of GDP, in 2005.
Typically, the only economic news we’re receiving from the mainstream press is “market jitters … threat of inflation … interest rate hike”. Canadian political pundits are particularly misinformed – commentary on US politics nearly always assumes;
When you hear a professional opinion shaper introduce one or more of those “facts” into their commentary, it ought to tell you how seriously to consider what follows. Not only are those common media assumptions false, all are easily researchable. For example;
On to the consequences of those crippling Bush tax cuts;
A CBO analysis last week noted that withheld individual income and payroll taxes are up 7.6% from a year ago, with the gains picking up in recent months.
“Those gains suggest solid growth in wages and salaries in the national economy,” CBO said.
And lest we forget! The rich are getting richer while the poor get poorer!;
While gains are broad, those at higher-income levels are enjoying bigger salary hikes. Because they pay higher rates, federal tax revenues soar when they do well.
Those making over $200,000 now pay 46.6% of total income taxes, presidential adviser Karl Rove recently said. That’s up from 40.5% — despite Bush’s tax cuts.
h/t Instapundit
Let’s not pat W on the shoulder too fast.
Even half as bad still ain’t good. They shouldn’t have a deficit at all. They should have a surplus. They don’t.
Coulter had one hell of a line when asked what she would ask Bush if she met him. She replied “I’d ask him if he was planning on re-joining the conservative movement.”
Conservatives don’t run deficits.
I’m certainly not saying the tax cuts were bad. It’s the spending that’s bad. Spending is still way out-of-control in the US. The swine’s carcass of spending is monumentally large. Even with revenue surging, they’re still way in the red. Cut spending. Huge.
Doh! Leave it Kate to beat me to the punch. The Coulter interview is linked a few stories down…
And my quote (from memory) was not surprisingly wrong. It s/b:
“I would ask him if he’d given any thought to re-joining the conservative movement.”
I got the jisk right though…
Excellent post Kate! I work in Capital Markets of a major FI in the US, a canadian ex-pat. Most Canadians are deluded that Canada’s economic performance is stellar when in fact the standard of living is much lower than the US. The sniping elites with the incredible Aunty American bias are loath to admit their dependency on Trade with the US and how fragile it is. The minute Ontario can’t ship its cars across the border, Ontario’s economy will be on its knees in 60 days, the rest of the country [save Alberta] will feel the pinch thereafter, the dollar will head to .65 USD and even the Moaists in the Annex in Toronto will be ready to capitulate to whatever the US Congress wants. The last Liberal who had a good idea, vis-a-vis the US, was Laurier who argued for reciprocity and lost.
Canadians are deluded into a lot of things by our own MSM: We have a stronger economy than the USA, we are battling the Taliban virtually by ourselves; our overall crime rates are tiny compared to overall American crime rates; we are nicer; we are smarter; and more Liberal.
Anytime one reads any definitive in the MSM, your BS meter should go way up.
Congress critters almost never cut spending.
There are now something like 21 federal departments most of which no one can even name.
The goofs at the NDP and the Libs go on and on about evil capitalists (I expect them to hijack this thread at any moment).
The NDP would be more informative and entertaining if they would just sing Springsteen songs circa 1980, “They’re closing down the factories boys and they ain’t coming back”.
While this may be true in some cases the largest portion of the USA economy is services.
Teachers, doctors, construction workers, sales people etc. are the largest part of the economy.
And that is why IMO ignoring low productivity in Canada and relying mainly on a commodity and manufacturing based economy does NOT pay off as much as it could if more thought and effort and money were also given to improve the low productivity.
Yes, tax cuts work. The kicker is that Bush is one of the biggest-spending presidents in US history — even AFTER you consider military spending. By all measures, Bush is a big-spending liberal.
http://www.cato.org/pubs/tbb/tbb-0510-26.pdf
Dang! Those inconvenient facts keep getting in the way of a good story…
Reminds me of the people who laughed at the “Laffer Curve”, which said lower tax rates would result in higher tax revenues. History repeats itself.
Without trying to put too fine a point on things, the MSM’s affect is so pervasive [think the ROB in the Globe and mail] that even most of the financial services middle manager’s are deluded too. These are the financial planners, the bank managers, the bank, brokerage, mutual fund marketing managers I am talking about. They collaborate with the Business MSM which starts the virtuous circle of crap news about “how well” Canada is doing. The fact that the Canadians fork over most of their income to a government that manages to run a surplus with this wealth ought not to be something to crow about. In fact, as kate’s post references, by giving American’s more of their income to spend on services, they continue to grow their GDP, increase their productivity. Milton Friedman, the great scholar/economist at the U of chicago doesn’t worry a bit about the Trade Deificits since the US economy is so robust, so large it doesn’t need to be overly concerned with Trade Deficits. Oh, and i just waiting for the BCL to weigh in with a bunch of factoids from his pea sized brain.
Well that chart just highlights the fact that the USA is involved in a lot of wars.
….on behalf of Robert McLelland
What’s wrong with a 65 cent dollar? As little as three years ago, visits back to the homeland were a lot more fun.
Cnd Ex-Pat.
JRB good post. You are so right about the Bay St types. I was shocked as I figured out how Liberal they were. I concluded that a decade ago , they loved deficits because they could underwrite no brainier government bonds, take their skim and buy million dollar cottages in the Muskokas. But the deficit is gone. Now the investment bankers must simply love their Liberal/cabal of buddies and closed knit group of influencers .. who knows .. I can’t make sense of it.
There are some Conservatives I should add, just not as many as one would assume a capitalist ghetto like Bay St would have.
Oh .. agree trade deficits are totally irrelevant.
Bush really is a liberal in rightist clothes. He’s been hoodwinking the theo-republicans all along with his bow your heads and pray schtick.
That smirk of his is pure snake oil salesman. When heads are bent in prayer it’s hands in the pockets and ballots in the box.
Looks good on those theological hypocrites.
Go W. Go.
Sorry to interrupt the celebration but..
Forget about cutting the deficit in half. The deficit should be 0.
There is NO excuse for the US to be running a deficit right now. They’re spending money on stupid programs all over the place. Running a deficit of $200+ billion in good economic times is ridiculous. At this rate, they might as well have Bob Rae or Pierre Trudeau running things down there.
George Bush = Fiscal Liberal. Spend away, George.
Jim Bakker – I wish Bush were more of a fiscal conservative. Lot’s of Republicans do. The pork spending slobs in congress are worse. But, the most important thing that he got right, drew a line in the sand, and hasn’t reneged on is the WOT. Keep this thought in mind, protecting, as best we can, ourselves from another major terrorist attack is critical to the economy. How many 9/11’s could we sustain economically?
“theological hypocrites”……?????
Well that chart just highlights the fact that the USA is involved in a lot of wars.
Yep, poor clueless Robert McLelland, like most lame and history challenged moonbats, would have a problem with the Revolutionary War, the Civil War, WWI, WWII, Korea and the Gulf Wars. Not a bad record for a 400 year history. An even better record when one considers the historic issues and the nature of enemy.
JRB: Great post. It drives me nuts to listen to Canadian lefties on how wonderful Canada is doing VS the U.S. I travel the U.S. a fair bit and have some ownership of a business in the U.S. I get to see first hand just how wide the gap is and how blind Canadians are to just how far we lag behind. When one gets to keep as much as U.S. wage earners do its no wonder the economy continues to roll.
I will never understand why the left claim moral superiority over the U.S. by employing the pathological behavior of dragging those with initiative down and shouting look how equal we are.
I am surprised no one mentioned the elephant in the room…the debt.
America has spent 8 Trillion dollars more than it can afford. It is living beyond its means.
That 8 trillion will have to be paid back sometime.
Two trillion is owed to other countries like China, Japan and Saudi Arabia.
six trillion is borrowed more directly from future Americans in the way of borrowing from social security and medicare funds. Those paying in to these funds will want their payback too.
So while its good that the deficit is coming down the debt is going up. By 2008 America’s future will be mortgaged to the tune of 10 trillion dollars.
It is also interesting to note that the rich are getting richer very quickly. When you focus tax cuts on the rich and their taxes keep going up simply means they are making ever greater sums of money.
If you thought they were taking home obscene amounts before the tax cuts then if they are paying 6% more than before those cuts indicates an increasingly obscene transfers of wealth to the rich. Just what they needed more money.
The rich are paying almost half of all taxes. That is one huge pile of money going to one very small group. When do we start calling them the Aristocracy?
Ignore the Troll Steve D.
Well said, Albertaman!
And KevinB, thanks for reminding us about the Laffer Curve: Tax RATE cuts, combined with increased investment credits and accelerated depreciation credits, are almost guaranteed to increase total tax REVENUES.
If people, PARTICULARLY the MSM “journalists” and lefty politicians pouring economic nonsense into Canadian ears had a basic grasp of elementary economics, they’d understand this: Give people and business much greater incentives to create much more capital…and they will do so. And “a rising tide lifts all boats”.
So what if the rich get richer quicker. Jealous?
It is what you socialists don’t get. Lower taxes allow individuals to keep more money and they have to do something with it. They spend on consumer items (employs other people in service, manufacturing), they invest (employs people in service, manufacturing) or put it in the bank(employs people in service(which allows people to buy stuff(which employs people in service and manufacturing)).
It is not a zero sum game. The pie grows.
Stev, you and your sort wish to be the aristocracy without doing anything. Not creating wealth, but siphoning it off of others.
enough
Albertaman
Did you get a promotion to trollpolice? Wow.
enough
I make my income the way most of the rich do. I work hard hahaha
The rich dont work, their money works. they invest, buy and sell. I guess it is something. I does feel a little like siphoning but thats just me. Most don’t really want to talk about it.
Steve,
You really are clueless. Most of the “rich” work very hard. There are a few rich people who do not work, most of whom we refer to as the “retired.” The rest are things like business owners, professionals, union workers… Everyone who makes more than 55k/yr are who the gov considers “rich.”
I would bet that less than 1% of the “rich” are idle and not of retirement age.
The now-defunct “high income surtax” kicked in at 56k a year here in Canada just so you know what your fellow commies include as “rich.”
What exactly is wrong with investing and making a return for doing so? I’m counting on my savings to grow enough to allow me to retire at some point. It would be nice not to be working at 90. If I’m not making money on that investment I won’t be retiring.
Stocks are widely held now. There is no oligarchy of pinstripe suit-wearing monopoly men holding all the cards to park place and boardwalk. The largest shareholders in Canada are OMERS and the Teacher’s pension. In other words, union employees own the means of production. A capitalist way for the workers to own the means of production that doesn’t lead to gulags, death camps and mass starvation. Imagine that!! Marx was wrong! You don’t actually have to exterminate 130 million people to have a “fair society”
As for the US debt, Canada has a debt of close to 1 Trillion if you include the provinces. More if you include the crown corps and unfunded liability in the CPP and government union pension plans. We have 1/10th the people. Do the math.
As for the “obscene” amount of money being made by the rich, why do you think you are entitled to what doesn’t belong to you, you didn’t earn, and have no claim on? You said yourself, the “rich” pay half the taxes. The half you refer to is paid by about 2% of the population. I’d say they’re paying far more to deadbeat creeps like you than they get back from society… What have you created? Contrast that to Bill Gates. Bill employs a few hundred thousand people and has made millionaires out of at least 3 thousand of them. What have you contributed to society? You are a net drag aren’t you? The rich are rich because they and/or their families took risks and created that wealth.
I don’t understand how you see someone else who has more than you and you feel hard-done by. You want what they have? Earn it. Go invent something. Take a risk. Start a business and if you work hard, have the drive, smarts and luck to succeed you may have what you want. No one owes you jack. You have no rights or claim on what other people have. Lefties believe in Darwin. You have the right to have Darwin sort your lazy ass out if you don’t produce. You have the right to starve to death in squalor if you don’t go to school, educate yourself, develop a healthy work ethic, get a job and be productive. Wealth is stored production. If you don’t produce more than you consume, you don’t get paid.
Last but not least, if you lower taxes, you are not giving anything to anyone. You are taking less. The money is the taxpayer’s money, not the government’s . It belongs to them – not you, not the government. You need to give up your over bloated sense of entitlement to things that don’t belong to you.
The rich dont work, their money works. they invest, buy and sell.
Well, just how did those unemployed feckless indolent rich amass their working money?
Lucky lottery wins?? Hello???
And are investing, buying and selling decisions in a manner that doesn’t lose your capital not work and smarts?
steve – could you try harder to upgrade your mosquito status here?
The US Debt being held in the hands of China, Japan, Saudi Arabia proves one thing, that the US economy is the most stable, the best investment bet available to these nations. They don’t but US Bonds because they have a soft spot for W! And guess who holds the Canadian Debt, which, as a percentage of GDP, is manageable much like the US debt. It’s the same nationstates. Like the Candian left gives a damn anyway, anyhow.
About all the information in the post, I have this to say to the left:
Put that in your bong and smoke it.
“Did you get a promotion to trollpolice? Wow.”
I deputized him.
Living just north of the CDN/American border, (central B.C.), back in the mid- seventies- I spent more of my spare time in the U.S. than here, ( I found the small-town Americans to be friendlier).
My average yearly income was twice what my counterparts in the U.S. earned- and yet, their ‘standard of living’ was higher than mine !?! Their rent, property costs, vehicle costs, food, clothing, booze, etc. were all cheaper than what I paid for the same things!
Howcomeizzat?
(Could it be- that they were not led by dipwads from Quebec?)
In the end, these commies are spittin’in the wind, pissin’ against a flat rock.
If they’re still following the Marxist model, communism would only come to fruition after the entire world had gone through its capitalistic phase and then ended up in a communist paradigm sometime after Star Trek, The Next Generation.
However, he said that the process could be hastened through a workers’ revolution.
In other words, the only way that communism could come about would be through Force. They would force all the rest of us through armed insurrection to adopt the communist model whether we liked it or not.
That just ain’t gonna happen. For the benefit of our commie friends, I’ll mention that American men (and Canadian too) spent a lot of time militarily fighting in communist staging areas all over the world. (I was one of them.)
They ain’t gonna make us do nothin’.
Thanks Kate:I’ll wear your deputy badge with honor.
Well said Warwick: Somewhere along the line people like SteveD and the rest of the left high jacked the true meaning of the charter of RIGHTS AND FREEDOMS. It somehow got turned in into the Charter of ENTITLEMENTS AND FREEDOMS WITHOUT RESPONSIBILITY.
In other words the true meaning of a “right” is that Steve has the right to pursue an education or possess wealth legally without interference or bias. His “right” doesn’t mean it guarantees anything nor does it mean others have to pay for it. I have a sneaky suspicion the left would be horrified if the true meaning was officially clarified.
“Reminds me of the people who laughed at the “Laffer Curve”, which said lower tax rates would result in higher tax revenues. ”
Bush has been cranking out horrible budgets for years, and remains in a deficit position. Coming potentially in ahead of one’s own self-set deadline isn’t an accomplishment.
Are you people still thinking that the Laffer Curve is all about lowering taxes to get more revenue? The only thing it is about is essentially price elasticity. The theory also states that lowering taxes can produce lower revenues. It’s all in the economic circumstances.
If we are on the right side of the curve, then lowering taxes increases revenue. If we are on the left side of the curve, lowring taxes lowers revenue. Laffer himself would tell you that.
(Laffer attributes the curve to the work of John Maynard Keynes)
If we are in the middle of the curve, we want to do nothing.
It’s a decent enough principle, but is in practice very hard to use as pinpointing where we are on the curve is difficult, if not impossible. THat’s the true critique of the curve: It’s great theory, but is a static model offering no true answers as to how to accurately detect the point of most efficient taxation.
Also, running a deficit can also stimulate the economy (it’s proven true: Keynesian demand stimulation), so it’s hard to pinpoint whether tax cuts are helping the US economy, or deficit spending, or both, or neither.
As for the major points raised above:
1 Canada’s higher economic growth rate
2 Canada’s higher standard of living
3 a ballooning US deficit
4 an extremely expensive campaign in Iraq
#1 varies with whatever time period chosen, so it’s a hard claim to support or refute.
#2 Standard of living if measured how? By average income, we’re always lower than the US. By better measures such as comparison of poverty and economic security and health, we’re the same or better. The gap between rich and poor in America has been getting quite bad when you look at from a wealth-ownership perspective.
#3 The US deficit may or may not be balooning any more, but it had been. Also, there’s lots of accounting fun: Bush doesn’t count all the money borrowed every year from the social security fund as a liability.
#4 Of course the Iraq war is extremely expensive. Comparing it to other wars is irrelevant (not mention the terrible apple to oranges issue: Iraq vs WWII?). It’s certainly way over-budget, and didn’t generate the business its boosters claimed. And the price tag continues to grow.
Finally, the American dollar is deflating, on purpose, which does cause the spectre of inflation to rear it’s head. Add in increased energy costs, and the worry becomes greater.
Personals savings in the US (and Canada) is at a terrible rate — it’s an overall negative rate, I do believe. So even given increased wages, what we see in the end is greater debt.
Good news? Nope.
Here’s more from Investor’s business daily, which seems to be the same material Kate is quoting from above. Since she places such weight on the opening of the piece, can I suppose such weight should be also placed on the rest of it?
FROM http://www.investors.com/editorial/IBDArticles.asp?artsec=5&issue=20060612
—
While economic growth is producing impressive tax revenue gains, budget experts say they won’t be enough to wipe out deficits, especially as baby boomers retire. Englund thinks the deficit could hit $150 billion if the expansion lasts two or three more years. “When we go into a downturn, the numbers reverse,” he said.
Long-term growth in Social Security, Medicare and Medicaid “threaten to force either European-style tax increases, unprecedented spending cuts or unprecedented debt,” said Heritage Foundation budget expert Brian Riedl. “There’s no growing out of the long-term budget problems.”
Heritage sees an $800 billion deficit in 2016, assuming tax cuts are extended and spending stays on its present course. If the economy and tax receipts continue to outperform, the deficit would still be at least $600 billion, Riedl said.
He noted Congress has been more disciplined about discretionary spending lately. But that saves a mere $10 billion a year, he said.
Late last week, House and Senate negotiators reached a deal to hold a supplemental spending bill for Iraq, Afghanistan and hurricane relief to under $94.5 billion.
The Senate had tacked on another $14 billion, but Bush vowed to veto any bill above $94.5 billion.
—
Yup! Everything’s looking rosy!
I love it when us whac-job, right wing, war mongers, win a debate! People like steve d. are completely out to lunch. Good job Warwick!!!! And the guy who posted, “howcommiezzat, because they aren’t being led by a bunch of dipwads from Quebec” Amen to that, and that’s exactley why Harper is going to be the best P.M. we’ve had in a long time.
While slamming Bush for big spending and big deficits is fun, everyone should remember that it is Congress that votes for or against the budget. The President proposes and Congress votes.
Save some slamming for the Congressmen from both parties who are voting to spend, spend, spend.
Warwick
I will give you about 10% out of 100. That is about what you got correct in your diatribe.
Did you ever wonder and project and think that if the rich are paying more and more tax what does that say about their income? You don’t seem to understand that it is unhealthy to have most of your taxes paid by a few.
I am sure in pre-revolutionary France that the rich were quite busy. But it didn’t seem to save them in the end. What I am saying is that when most of the wealth is concentrated as is happening now, this is dangerous for a society.
I personally could care less if the few paid 90% of the tax. What would bother me is that the rich would have to create a Fascist or despotic state so that social control would be possible.
Maybe we are beginning to move in that direction as I noticed violent crime statistics have increased for the first time since 1991 in the US.
I just don’t want things to deteriorate. Concentration of wealth and power is a warning sign thats all. All this of course is impossible right? I hope.
I think it would be instructive for the Right to keep lowering taxes. I am like a lot of people on the Right. What’s that slogan again? Oh yea, “I’m alright,Jack! I got mine.” So, please, dismantle the social programs, the government, and anything else that costs money. I can hardly wait!
Steve,
Just please tell me you aren’t a teacher. I’d hate to think you had influence on the young.
Pre-revolutionary France was 1)France, and 2)an monarchy where the people had no basic freedoms. It was feudalism. The Gini coefficients of no nations on earth were good at that time but I’d be willing to be that the US scored better than any country in Europe. This is the reason that millions of lower class Europeans left for the “new world.”
The dispersion of wealth is wide and broad in the US. The largest group of people are the middle class. The filthy rich are a small group. The very poor also a small group. There is an overly generous welfare system for the poor, even in the US. No one is poor in absolute terms here, there or any other western democracy as even drunken crack-whores are given free money even though they are non-productive citizens who earn and deserve nothing.
No Fascist state is necessary or desirable. No social control is necessary. The reason for this is that even though the rich are getting richer, the poor and middle class are also getting richer. Even if the rich are getting richer faster this is of no concern to the poor and middle class who are more concerned with improving their own lives and not in worrying about other people’s lives. Most people mind their own damn business and don’t think everyone else owes them anything.
The increase in wealth over time is because the rich and middle classes are increasing productivity by inventing stuff, investing in technology and machinery, being entrepreneurial and generally contributing to society. This earns them money. The rich get more because they earn more and are more productive.
The reason that the US has very rich people is that the country is very rich. This costs the poor nothing. This is because the rich are not stealing from anyone, they are earning and creating. The poor are people who do not do this – thus, they have nothing and there is therefore nothing for the rich to steal. If you are going to steal, it would be far smarter to steal from the rich as they have something to steal. This is why the masses vote demagogic politicians in from time to time that promise to give them “free” stuff and make the “rich” pay for it. Then the people realize the rich haven’t hired any more employees and in fact are firing people so that they can pay the government to provide the greedy deadbeats “free” stuff they don’t deserve and didn’t earn. When the people realize that the economy is in the toilet because of jackasses like Bob Rea, they kick them out and hire a conservative to fix the mess they made. The economy then prospers and people get to be productive again. There is no “free lunch.”
The poor, even in the US, are given free money from the rich and the middle classes that they didn’t earn. This welfare in earlier (more sane) periods was referred to as “charity” and the US is the great grandaddy of charity giving far more to charity than any other country on earth.
It is the rich that create jobs, improves the standard of living of the entire society, produces the goods and services and make things happen.
No job in the history of the world was created by the government without killing at least one other job of more productive worth. No job in history has been created by unions. The companies that unions extort create jobs. They are owned by the rich and the middle class (often the same people who work there.)
Whether lowering taxes is a good thing depends on the current level of taxes. If you live in a country with very low taxes, lowering taxes will not increase economic activity and will result in lower total tax receipts. If you live in a country with very high taxes, these taxes are a drag on the economy and thus lowering taxes will result in an expansion of the economy and thus higher total tax receipts through higher national income. It depends on your starting point. In Canada, taxes are too high. In the Cayman Islands, tax cuts are useless. Clearly taxes in the US were too high before W’s tax cuts as the economy is now bigger and the total taxes paid to the government is at record highs. The deficit in the US is because the cheap-ass politicians in the US won’t stop spending money like drunken sailors.
The whole question of tax rates versus total taxes generated is one of efficiencies (a term you know nothing about being economically illiterate.) It’s similar to the concept of economies of scale turning into dis-economies of scale when you pass the efficient point.
warwick
I think you should check to see just how much money the rich(particularly the top 1%) have and how fast they are accumulating it. Check to see how much the other classes are getting increases. You will be surprised.
You can also check to see how few are unionized. See how many working poor there are.
See how many jobs have gone to third world countries putting downward pressure on American wages. See how low the minimum wage is and how long it has been at this low level.
When you know the numbers you will see things as they really are. It is not the best of times for the average worker. That is why when they are polled the majority say they are not happy with the way the government is handling the economy. They are not happy because they are not benefitting from all the great business numbers.
Be careful when you talk about US trade. They aren’t a trading nation; imports (think oil, mostly from AB) and exports are in the low teens as a percntage of GDP. Compare with Canada with numbers in excess of 40 per cent.
They run a trade deficit largely because of oil (again think AB, where the tar sands now produce more oil than Texas).
US standard of living is higher than ours largely because of greater productivity. This generaly means they invest more in capital goods (nifty new machines) than we do. Anyone who can figure out how we can address this should step up. It’s more than not re-electing the NDP in SK.
That being said, the US is the biggest and most reliable economy in the world (they pay their bills and anyone who orders stuff on-line can reasonably expect to get their stuff). But when they slow down, we all slow down. When they get active, we all get active. But, when they’re kind of sitting on the couch waiting for something to happen (like right now), we all just wait. And worry. Anyone own US or Canadian stocks?
Andy
I understand how tied Canada is to the US.
The Fed just bumped interest rates up, and since the Fed notoriously overreacts, we will probably see more interest rate hikes. A general rule of thumb down here is that when interest rates approach 8%, people bail out of the markkets and stick their money in CDs. (If you can get 8% without risk…?)
We’re not at that point yet. My view is that we’re at that point in the business cycle when there will be a lot of gains for people who select the right areas of the market to target. We’re going to have a lot of talk about corrections. However, my view is that infaltion has not caught up with us, and there are still gains to be made in the market.
Be that as it may, why should Canadians have to suffer if things go bad down here?
My suggestion is to think about shorting the US market. If you believe the time has come and you don’t know about the intricacies of puts and calls, then just buy a mutual fund that shorts the US market. Rydex has a mutual fund that shorts the S&P 500. (It may be called Rydex Ursa.)
There are also funds that short small capitalization stocks, and you know the bottom’s going to collapse for them as soon as the market turns.
However, if you are a long-term investor, my suggestion is just to start thinking about switching from growth to value, and make sure you have bonds in your portfolio to cushion a downturn.
So if some of you Canadians think we’re going to go thru the crapper, well hell, you might as well make a buck off of it. You can smile at our calamity all the way down.
steve d., I’ve got to go to bed here, but I’m just curious about something.
I’m not trying to be insulting here. I’m really asking.
What on earth do you believe you are going to accomplish in respect to changing the United States’ policy by yelling at a bunch of Canadians?
You do realize the intricacies of getting new measure passed through our House and Senate, the process of conference committees, grassroots lobbying efforts, on and on… Do you honestly think that managing to get a couple of Canadians to agree with you is going to have any effect on anything?
And by the way, on an earlier thread you accused me of knowing nothing about the Left.
When I got back from VietNam, half of my friends were members of SDS. My best friend at the time was the roommate of a certain student body president and member of the Weathermen Underground, who helped break Timothy Leary out of prison so that he could escape to Algeria to live with Eldridge Cleaver (who later became a Reagn Republican). I was friends with a university professor going with a black militant who was buying guns from Canada (yes, Canada) to help start “the revolution”. This resulted in prison time for her and a violent and bloody confrontation with police that left all these black militants dead.
I knew a guy that was always host when Mario Salvio from the Berkeley Free Speech Movement came to town. He taught Marx and Engels through various communist cell groups. The FBI used to occasionally machine-gun his car.
I was a subscriber to Ramparts magazine. You should read the editor’s autobiography, Radical Son, by David Horowitz.
We can get into Marx, but it’s really pointless. You’ve got to remember that a huge number of conservatives today are people who were university students in the 1960s and cut their teeth on Rules for Radicals. (Ask Kathy Shaidle.)
These days I prefer Milton Friedman.
Hey Greg,
You just caused a flash-back! Ramparts!! We used to get it in Canada in a plain brown envelope (I kid you not) to ensure it wouldn’t be repressed (or censored!!) by the establsishment. Free Huey!!
Andy
Clinton had a surplus.
Clinton didn’t have to deal with, among other things, 9/11 or Katrina.
Ask the 40 million or so Usians without health care if their standard of living is higher (healthcare being the #1 cause of bankruptcy in America)? Ask the millions of de facto slave laborers about their standard of living. Ask all of those who do the labor who have seen their real wages fall about their standard of living. Ask the ever shrinking middle class about their standard of living and the look at the grotesque behaviors of the captains of industry like Ken Lay.
The real success of the neo-cons has been to convince the ordinary Joe to make do with less…all the while telling them that maybe someday they can be that 1% of the 1%.
And by the way, you people ain’t it.
Steve D says:
“I think you should check to see just how much money the rich(particularly the top 1%) have and how fast they are accumulating it. Check to see how much the other classes are getting increases. You will be surprised.”
What is your point, exactly? The wealthy are getting wealthier and that is bad for me why?
“See how many jobs have gone to third world countries putting downward pressure on American wages. See how low the minimum wage is and how long it has been at this low level.”
I’ll take this as read (even though the actual facts show very healthy wage growth in the United States). Who benefits from this equation? Consumers do, through lower prices for goods and services. But you know who else? Workers in developing countries! Should we slap a tax on outsourcing and let those workers freeze in the dark? What about those mexicans who have the best jobs they have ever known in GM plants?
“It is not the best of times for the average worker. ”
That’s just false. I don’t know what else to say other than it’s simply not true. The average working poor family has a dishwasher, a big screen TV, a cell phone and satellite dish. How is this not the greatest standard of living for working people we have ever known in human history? Or was it a little better in the 60’s or 70’s. Be specific. Let me know exactly when you think things were better for us working folk?
And as for the low rate of unionization, I think we all know why that is happening. I don’t think I am alone in knowing many people in their 30s who would NEVER work in a unionized environment — regardless of the pay. Others will do so but complain about it…and protest by never having dealings with the union other than the obedient payment of dues.
Am I wrong?
Did you know that 35 per cent of those americans without insurance earn more than $50,000 per year. 67 per cent of them make more than $25,000.
You can actually choose to not have insurance. That choice thing is some crazy!
http://onthefencefilms.com/commentary/stuart/healthcareliesandvideotape.html
Steve thats what makes everything look good, all the money being spent rebuilding, plus all the arms factories are going good.
But remember NAFTA and WTO CATT are just starting to kick in, whats its cost to defend a Supreme court ruling?
In the first 11 years the US had 11 either completed or still pending at a cost of 30 million thats just to defend. 35 million was paid in compensation.
Sucks when you can’t make laws to protect your livinghood, water, air, labour, what didn’t we sign away?
Whats it gonna be like after the war when the jobs have moved over seas?
The deficit rose every single year during the Clinton administration. Hopefully, Bush can change that, what with Congress spending money like drunken liberals.
You seem to have a great affinity for personal electronics:
” a big screen TV, a cell phone and satellite dish. How is this not the greatest standard of living for working people we have ever known in human history?”
This is not a high standard of living because they are all disgustingly fat from sitting around all day doing what Bill O’Reilly tells them to do. Canada is headed down the same path unfotunately. Take a look around – people are getting huge.
High standard of living? Check out Switzerland. They are number one this year (again) and I’m sure it has nothing to do with what kind of bloody TV they have.
Steve D has done what he always does; Run and hide from the ass whupping he just received.
enough
Neutralism:
Lefties and their chicken little voodoo economics. The sky was falling was textiles tariffs were eliminated in the late 70’s the world was again falling when NAFTA was signed.(even the NDP later admitted that NAFTA was a good thing) Yes the retraining and reshaping of economies is painful but it is also necessary and ultimately leads to a higher standard of living for those open to free trade as goods are produced by those that are the best at it and prices fall. The left is ultimately the oppressors of developing nations as protectionist unions fight to impose tariffs on goods that come from places like China and India. Sadly the chances of finding a leftist that understand economics 101 would be like finding Micheal Moore at a Anne Coulter book reading.
Enough
No, I dont run and hide. Why would I do that?
I do enjoy the particularly nice weather we have and so I was out in it. And I do enjoy a good soccer game. This is world cup time. Finally, there is so much to address here I hardly know where to start.
What will happen to the American debt? It is over 8 trillion and will be at 10 trillion when Bush leaves office.It is projected to go up continually. At some point it will hit a wall. People will stop underwriting this fabulous financial system. What does Milton Freidman think will happen in the future? What do the Conservative economic geniuses do about it? Ignore it? Pretend it isn’t there, like they do now? Remember, they are still spending more than they are taking in. There is no way to even balance the budget anytime soon. Interest rates are still going up and will continue to because America needs so much just to pay the interest on their debt. I am sure there is a simple answer but I just haven’t found one yet.
greg outside of dallas
You don’t realise what an impact America has on the world, especially Canada. If America goes belly up the world goes into a depression. When America has economic problems so does Canada. We are joined at the economic hip. 85% of our trade goes to America. If the trade stops Canada’s economy stops. In a sense then it is more important to watch the American economy than it is the Canadian.
I am not trying to change anything by the way. I am not naive enough to believe I can. Nor do I wish to. I do like to read other opinions, especially opposing ones. I also like to give my opinions, but I guess you noticed that.