The new old hacks..

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Here is something from the new advisers of Donald Trump. We have a question, can you find the research this is based on?

Neither can we..

Obama Is Suffocating Business Investment and the Economy


By Larry Kudlow
Saturday, 30 Apr 2016 12:19 PM
More Posts by Larry Kudlow

By Larry Kudlow and Stephen Moore

GDP for the first quarter of 2016 came in at a paltry one-half of one-percent. That sorry showing follows growth of 1.4 percent and 2 percent in the previous two quarters. If such a thing is possible, the already anemic economy is actually getting worse.

But even worse than that, the latest GDP numbers reveal a collapse in business investment, the real driver of the economy.

When businesses don’t spend and invest, they don’t hire and cannot offer better-paying jobs. Business investment and wages are two sides of the same mirror. If a company purchases five trucks rather than ten, there are five fewer trucking jobs. If employers don’t invest in more computers, there are fewer programming jobs. If businesses don’t purchase more jackhammers and cranes, fewer construction workers are hired.

Business investment hasn’t grown for two years. Over the past two quarters, total business fixed investment has fallen by an annualized average of 4 percent. Business equipment and software has dropped by more than 5 percent. Non-residential structures — like commercial office space, shopping malls, factories, and hotels — have dropped by nearly 8 percent.

But let’s go further back. For the entire 32-quarter economic recovery, business fixed investment has averaged just 1.1 percent at an annual rate. Since 1960, however, business fixed investment has averaged 4.4 percent at an annual rate. So the present expansion in business investment is roughly one-quarter of the 55-year average.

Why? One key factor is tax policy, especially business tax policy.
At 40 percent for combined federal and state business tax rates, the U.S. has the largest corporate tax burden in the developed world. We double-tax corporate profits earned overseas, as virtually no other country does. Our depreciation rates for investment tax expensing are among the worst in the world. And despite all the talk about corporate tax reform, nothing gets done — even under a Republican Congress.

What’s more, the Obama administration has raised tax rates on capital gains, dividends, and income (paid by small-business pass-throughs). So, as the tax cost of capital has gone up, business investment has come down.
Arthur Laffer has taught us that “if you tax something, you get less of it.” That’s why firms are moving offshore in droves. It’s not about being unpatriotic. It’s that it doesn’t pay, after-tax, to invest in the United States.

A second key reason for the business-investment slump is monetary policy. While this may not be the right time for rate hikes, ultra-low interest rates have led to financial engineering rather than the deployment of excess corporate cash for productivity-enhancing investment.

Rather than invest in job-creation and higher wages, firms are buying back stocks to boost price-earnings ratios. In many cases, they are even borrowing money they don’t need to buy back stocks.

A third key reason for the business-investment collapse is over-regulation. Obamacare rules and mandates are job-killers. Dodd-Frank red-tape costs have held back lending to such an extent that business start-ups have practically come to a halt. And community banks have drastically pulled back loans to existing small businesses.

Then we have the Obama EPA’s new rules, which amount to a war on fossil fuel. The president pushes for climate-change regulations instead of a massive build-out of energy infrastructure, including pipelines, liquid-natural-gas terminals, and new refineries.

Want more manufacturing? The energy business, and the potential for North American energy independence, is the key. Hillary Clinton, and her promise to end oil and gas fracking, will pull us further in the wrong direction.

Many people do not to understand that business investment is a critical prosperity-booster, leading to more jobs, higher wages, and stronger family income. Put another way, rising tax and regulatory burdens that penalize investors and businesses also punish middle-income wage earners.

And it’s these wage earners who would benefit most from business tax reforms, such as a 15 percent corporate rate for large C-corps and small S-corps. This should be accompanied by immediate tax-deduction expensing for new investment and a territorial tax regime that would stop double-taxing profits earned abroad.

Study after study shows that corporate tax reform is a middle-class tax cut, not a tax cut for the rich. You see, corporations don’t really pay taxes. They simply collect them and pass the cost along in the form of lower wages and benefits, higher consumer prices, and reduced shareholder value.

The overarching theme of this election is an angry revolt by the middle class over the fact that jobs and wages have barely increased in the past decade. They blame Washington, China, immigration, power elites, and almost everything else. So be it. There is a lot of work to be done on all these fronts. But without radical tax, regulatory, and currency reform, business investment will never fully recover.
And neither will the economy.

Read more: Kudlow & Moore: Blame Collapse in Business Investment for Dismal Growth
Important: Can you afford to Retire?

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Some comments:

At 40 percent for combined federal and state business tax rates, the U.S. has the largest corporate tax burden in the developed world.

Now the facts:

There’s no doubt that corporate income tax revenues have been falling as a percentage of GDP, as this chart from FRED shows:

A second key reason for the business-investment slump is monetary policy. While this may not be the right time for rate hikes, ultra-low interest rates have led to financial engineering rather than the deployment of excess corporate cash for productivity-enhancing investment.

Why on earth would low interest rates lead to a decline in investment?? Even more curious, why would low interest rates be a barrier to the deployment of excess corporate cash??

And if US corporations are taxed with the "largest tax burden in the developed world," how come they can accumulate such excess corporate cash in the first place?

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Obamacare rules and mandates are job-killers.

• Kudlow has argued this before in greater detail, here.
  
• There is a comprehensive rebuttal which you can find here.
  
• Needless to say it's mostly complete nonsense.
  
• You might also want to know what Stephen Moore wrote about Obamacare, it's here.
  
• And that too has been thoroughly debunked, here (Jonathan Chait) and here (Paul Krugman)
  

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Then we have the Obama EPA’s new rules, which amount to a war on fossil fuel. The president pushes for climate-change regulations instead of a massive build-out of energy infrastructure, including pipelines, liquid-natural-gas terminals, and new refineries.

Want more manufacturing? The energy business, and the potential for North American energy independence, is the key. Hillary Clinton, and her promise to end oil and gas fracking, will pull us further in the wrong direction.

Kudlow & Moore: Blame Collapse in Business Investment for Dismal Growth

Yes, we really shouldn't worry about climate change, or the dangers of fine particle pollution..

Two types of air pollution dominate in the U.S.: ozone and particle pollution.1 These two pollutants threaten the health and the lives of millions of Americans. Thanks to the Clean Air Act, the U.S. has far less of both pollutants now than in the past. Still, more than 166 million people live in counties where monitors show unhealthy levels of one or both—meaning the air a family breathes could shorten life or cause lung cancer.

Health Effects of Ozone and Particle Pollution | American Lung Association

So thanks to regulation fine particle pollution is down, but hey, we should deregulate everything as that's a job killer, right? Before we get to that, you should realize what a killer fine particle pollution really is:

Another long-term study of six U.S. cities tracked from 1974 to 2009 added more evidence of the benefits. Their findings suggest that cleaning up particle pollution had almost immediate health benefits. They estimated that the U.S. could prevent approximately 34,000 premature deaths a year if the nation could lower annual levels of particle pollution by 1 µg/m3.12

Particle Pollution | American Lung Association

A reduction of 1ug/m3 is next to nothing, by the way, there are cities with over 100 (and indeed over 200Ug/m3), and these are averages..

Fine particulate matter is associated with a broad spectrum of acute and chronic illness, such as lung cancer, chronic obstructive pulmonary disease (COPD) and cardiovascular diseases. Worldwide, it is estimated to cause about 16% of lung cancer deaths, 11% of COPD deaths, and more than 20% of ischaemic heart disease and stroke. Particulate matter pollution is an environmental health problem that affects people worldwide, but low- and middle-income countries disproportionately experience this burden.

WHO | Ambient air pollution

According to the UN, there are now 3.3 million premature deaths every year from air pollution, about three-quarters of which are from strokes and heart attacks. With nearly 1.4 million deaths a year, China has the most air pollution fatalities, followed by India with 645,000 and Pakistan with 110,000.

Shock figures to reveal deadly toll of global air pollution | Environment | The Guardian

But it's not just a problem for the likes of India and China:

A new report from the EU’s European Environment Agency (EEA) says pollution is now also the single largest environmental health risk in Europe, responsible for more than 430,000 premature deaths. “It shortens people’s lifespan and contributes to serious illnesses such as heart disease, respiratory problems and cancer. It also has considerable economic impacts, increasing medical costs and reducing productivity,” said the EEA director Hans Bruyninckx.

Shock figures to reveal deadly toll of global air pollution | Environment | The Guardian

The latest scientific research, published in the journal Nature, suggests that air pollution now kills more people a year than malaria and HIV combined, and in many countries accounts for roughly 10 times more deaths than road accidents.

Shock figures to reveal deadly toll of global air pollution | Environment | The Guardian

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Want more manufacturing? The energy business, and the potential for North American energy independence, is the key. Hillary Clinton, and her promise to end oil and gas fracking, will pull us further in the wrong direction.

We might also point out that alternative energy, like solar, provides an increasing number of jobs:

The six annual National Solar Jobs Census shows that the U.S. solar industry today employs 208,859 people, having added 35,052 in 2015 alone. This is a 20 percent increase in job growth compared to the overall national employment growth of 1.7 percent. “Employment in solar has grown an extraordinary 123 percent since 2010, adding approximately 115,000 well-paying jobs.

Solar Jobs Continue to Outpace US Economy - Renewable Energy World

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And of course you can find more funny stuff from Kudlow and Moore in another thread here (and downwoards)

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Perhaps business investment is down because of this:




Let's see:

• Profits are close to record high
  
• Companies are bulking in cash
  
• Interest rates are at century lows
  

But Kudlow argues that taxes is killing investment..

Is that guy kidding? Companies have plenty of money to invest and even if they hadn't, they could borrow at record low interest rates (which they do, but to buy back their own shares). 

Wage stagnation is a much more plausible reason for the lack of investment..

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"Obama is suffocating business investment," according to Larry Kudlow (see the top of this thread)

Well, how's this for suffocating:

   

One might also remind Kudlow about what he wrote about Obamacare:

The economics of Obamacare are very bad. The law is inflicting broad damage on job creation and new business formation. It ruins job incentives by making it pay more not to work, thereby intensifying a labor shortage that is holding back growth and in turn lowering incomes and spending.

Worse Than the Supremes: Obamacare Economics | RealClearPolitics

That article was effectively rubbished point for point here.

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Going through some of these old Kudlow posts is like having a field day..

The Fed's Phillips curve model isn't working anyway. The unemployment rate has come down to 5 percent and the inflation rate is near zero. According the Fed, inflation ought to be 4 or 5 percent. It's not. The dollar is up. Oil and commodities are down. There is no global rise of inflation. And there's a strong worldwide demand for greenbacks. This is good, not bad, according to veteran free-market economist Alan Reynolds. He's right. What causes inflation? Bad money. Excess money. Too much money chasing too few goods. How do we measure this? We use market-price indicators, such as commodities, the dollar exchange rate, and Treasury inflation expectations.

The Fed Should Let Middle-Class Workers Prosper | RealClearPolitics

Kudlow says, inflation is zero, and inflation is caused by bad money. So he's saying Yellen is doing an excellent job! Yet the title argues that she's "not letting middle-class workers prosper"

How's that?!

Then, he argues that the Fed wants inflation to be 4%-5%, but the article warns the Fed not to hike rates:

The Fed should wise up and stick to price stability rather than slamming workers.

The Fed Should Let Middle-Class Workers Prosper | RealClearPolitics

They actually are sticking to price stability, and raising rates would reinforce that! 

Is this guy confused or what?

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Will supply side work? Did it ever?

Since 1980, U.S. investment as a percentage of GDP was sliced in half, from nearly 24 percent to 12 percent, leaving the United States 174th in the world. The result was a dearth of real value added products and productivity.

There Has Not Been Any Supply-Side Revolution | Seeking Alpha

Cutting taxes for the rich and corporations, will that work in a world where:

• Corporate profits are at record highs
  
• Corporate cash is at record highs
  
• Interest rates are at all-time lows
  
• Corporate tax receipts are just over 2% of GDP
  

Companies are swimming in money, another tax cut won't make them invest more, it's likely to do the exact opposite as it shifts income from those that spend most, if not all, to those that save a much larger proportion of their income (mostly in offshore accounts to evade further taxes), which will reduce spending, and provide disincentives to expand production capacity.