[quote]NateN wrote:
So what’s the rule of 72?
Garrett W. wrote:
If you asked them what the rule of 72 was they’d look at you like you were insane.
[/quote]
Duh. Take your return on investment divide it into 72 and thats how many years it’ll take to double.
Great editorial from the WSJ today – there’s a graph attached that won’t come through, but it plots jobless claims against time, and demonstrates how hiring cratered just prior to the enactment of the Bush tax cuts, and has been steadily increasing ever since.
I sure do hope they make all those cuts permanent. Next step: reforming the corporate-tax system by completely eliminating the dividend tax and reducing cap gains again. Then maybe the flat tax… One can hope anyway…
Wall Street Journal Editorial
The Great American Jobs Machine
August 8, 2005; Page A10
We would like to take a moment to pause and marvel at the U.S. economy. Friday’s Labor Department report of more than 200,000 new jobs in July, and two million over the past year, provides the latest bullish details. But the larger story of American job creation, and its causes, is even more impressive.
First, more Americans have jobs today than at any other time in history. Second, over the past two decades or so, the U.S. has created more than 40 million jobs – twice as many as Europe and Japan combined. And third, the U.S. has one of the lowest jobless rates of all developed nations.
It was only a year ago that John Kerry was blasting the “jobless recovery.” Lou Dobbs was flogging “outsourcing” every night on CNN as a sign of peril for the American workforce. That criticism now looks wildly off base. The 5% jobless rate today is almost a percentage point below what it was during the same stage of the business cycle during the vaunted “Clinton expansion.”
In the past 24 months 3.5 million more Americans have found work, which is the equivalent of a new job for every worker in the entire state of Indiana. Every single job that was lost during the bursting of the technology bubble and stock market collapse of 2000-01 has been matched by a new job, often in a new industry. As the nearby chart shows, the bottom of the jobs recession hit in mid-2003 – and the recovery began at the very point that the Bush marginal-rate tax cuts were enacted into law.
But just when it seemed there was reason to celebrate, a new study by the Federal Reserve Bank of Boston warns that the low U.S. unemployment rate is a “false signal” of prosperity. Why? Because American workers are allegedly becoming discouraged in their quest to find work, and this surge in drop-out workers brings the real jobless rate to between 6% and 8%. The evidence for a surge in discouraged workers is that the percentage of working age Americans in the labor force has fallen from an all-time high of 67.3% to 66.0% today. If this seems worrisome, it isn’t. The average labor force participation rate for the post-World War II period is 63% – well below today’s rate.
Labor economist Diana Furchtgott-Roth of the Hudson Institute has thoroughly refuted the Boston Fed study. She finds that “most non-participants are out of the labor force by choice – in school, parenting their children, or retired early.” Since one’s future wages and employment opportunities are highly correlated with years of education, this trend toward kids staying in school longer augurs well, not poorly, for the next generation of workers.
Ms. Furchtgott-Roth also discovered that the decline in labor force participation for women is mostly a reflection of good economic times and rising incomes. With median family income now above $52,000 a year, more families can maintain a comfortable lifestyle with one spouse working rather than two. Ironically, for years critics of the U.S. economy have complained that Americans are “overworked” and that “it now takes two incomes to produce the living standard that once required just a working father.” To the U.S. bashers, it is a sign of decline if more people are working, and it is just as bad if fewer people are working.
Workers do get discouraged from finding a job when they are unemployed for a long stretch of time. But the percentage of “long-term unemployed” workers is about two percentage points lower than it was in the same stage of the Clinton expansion. In Japan and France the share of long-term unemployed workers is three times higher than in the U.S. Germany’s rate is four times higher. If America’s unemployed are “discouraged,” French and German workers must be feeling absolutely suicidal.
None of this is meant to ignore the reality that the rapidly evolving American economy has created turmoil for many workers. In particular, older Americans in declining blue collar occupations are feeling the sting of global competition. We are undeniably losing some manufacturing jobs over time (although manufacturing output has risen as a result of new technology and productivity gains).
But those positions are being rapidly replaced with information, technology and service jobs – most of which pay more than factory work and are less physically grueling. For a quarter century the U.S. has demonstrated an unrivaled capacity to transition into the information age with record numbers of jobs gained, not lost. And we have done so while absorbing millions of baby boomers, women, and immigrants into our workforce with no increase in unemployment.
Part of the explanation for this success is that, especially compared to Europe, the U.S. has imposed fewer taxes and regulations (even though we have plenty) that make it onerous for employers to hire and fire workers. A unique feature of the U.S. economy is that Americans move in and out of jobs – usually to rise up the income elevator – at a rapid and persistent pace. This is the key to the Great American Jobs Machine, and it explains why Europe and Japan should be more like us, and not the other way around.
Tax Collections Hit Record Level for July
August 10, 2005 1:36 PM EDT
WASHINGTON - A record amount of tax revenue flowed into federal coffers in July, helping to keep the government on track to significantly lower the budget deficit this year.
The Treasury Department reported Wednesday that revenue collections jumped 5.7 percent last month from a year ago, pushing total receipts to $142.09 billion, the largest amount ever collected by the federal government in the month of July.
The Bush administration last month significantly lowered its estimate for this year’s budget deficit - to $332.65 billion, down 22 percent from its February estimate that the deficit this year would total $427 billion.
The reason for the sharp improvement has been a flood of additional revenues this year as an improving economy has pumped up personal and corporate income collections.
Revenues through July are up are 13.8 percent over the same 10 months of the 2004 budget year, totaling $1.746 trillion. That outpaced the 6.1 percent increase in government spending which totaled $1.534 trillion for the same period.
The forecasts of private economists are generally in line with the administration’s expectations for a significant improvement in the deficit for the current budget year, which ends on Sept. 30.
For July, government spending totaled $194.88 billion. The deficit for the month totaled $52.79 billion, down 23.7 percent from an imbalance of $69.2 billion in July 2004.
The deficit for the past 10 months totals $302.59 billion, down 23.6 percent from the $396.32 billion in red ink run up during the same period in 2004.
In 2001, the year Bush took office, the government recorded a surplus of $127 billion. It was the fourth consecutive annual surplus, a string that had not been matched since 1930.
However, the bursting of the stock market bubble and the 2001 recession cut into tax collections while the global war on terrorism that was launched after the Sept. 11, 2001 terrorist attacks pushed spending higher.
Additionally, Bush got Congress to approve major tax cuts in 2001 and 2003 which reduced revenue collections in an effort to jump-start the stalled economy. Last year’s deficit set a record in dollar terms of $412.8 billion.
Bush, meeting with his economic team on Tuesday at his Crawford, Texas, ranch, attributed the improvement in this year’s deficit performance to spending restraint and his tax cuts, which he said “got our economy going.”
On the Net:
Treasury’s monthly budget statement: http://www.fms.treas.gov/
How can this be?
Bush lowered taxes and yet tax revenue is the highest ever?
Please take notice, tax cuts work.
Just to reiterate this point: Tax cuts work.
The treasury department released this graph today showing tax receipts since 2003 – coincidence? I think not.
A good thing to keep in mind as you listen to Democrats try to demogog the tax cuts issue, which they were doing yesterday when the House passed an extension of the cap gains and dividend tax cuts, and which they will do again when the House and Senate get together to forge their compromise bill.
Tax cuts are probably the best idea in monetary policy. Look at Africa and South America and their rate of business tax. Also look at their level of development. Our businesses are extrememly competitive in the global economy because of this.