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Economy Truth

Studies: The Shutdown Is NOT Lives Vs. Dollars, It’s Lives Vs. Lives

Rod Thomson

“If you’d like to die for the sake of the economy you go right ahead and do that. I, on the other hand, have no intention of sacrificing myself or any of my family or friends for the economy.”

This common sentiment, expressed on Facebook, is the wrong formulation. It is the false equation of money or lives. It’s not only wrong, it’s deadly.

Here’s how: Unemployment increases the death rate. This is a known truism among economists — who are not much en vogue right now but economics really needs to be. It turns out, this correlation has been studied extensively since at least the 1970s. Maybe earlier. That it is true is not in doubt. The only question is how much does it increase deaths. What’s the ratio?

According to one meta-analysis of 42 studies involving 20 million people — I told you there are a lot — the risk of death increases 63 percent when you lose your job. Please note, not 63 percentage points, but 63 percent from a fairly small percentage. However, when applied to raw numbers the totals become surprising, as we will get to shortly.

From the meta-analysis from National Center for Biotechnology Information abstract: “We extracted 235 mortality risk estimates from 42 studies, providing data on more than 20 million persons. The mean hazard ratio (HR) for mortality was 1.63 among HRs adjusted for age and additional covariates. The mean effect was higher for men than for women. Unemployment was associated with an increased mortality risk for those in their early and middle careers, but less for those in their late-career.” 

A controlled study at the University of Helsinki concluded: “In a recent study, an excess mortality of 47 percent was observed among men unemployed or working part-time for reasons other than illness after adjustment for age, geographic region, social class, cigarette smoking, alcohol consumption, weight and known pre-existing disease.” So this study backed out as many factors as possible to isolate the impact of just being unemployed.

There are mountains of these studies. It’s astounding that apparently none of our intrepid media members have ventured to search this out and report on it.

So what are the actual numbers? Well that’s a lot trickier. The range I’ve found in this research goes from a few thousand up to 37,000 deaths for every one percent increase in the unemployment rate. 

And it’s dicey because even the unemployment rate is iffy being dependent on the labor participation rate — the total number of people employed divided by the total size of the labor force. When people get discouraged and stop looking for work, they are no longer counted as unemployed because they are no longer in the labor force. Those non-workers who are not labeled unemployed anymore would probably also have some increase in the death rate, but I can find no studies of that segment, perhaps because it is so malleable.

The high end number of estimated deaths comes from a 2011 textbook called “The American Economy: How It Works And How It Doesn’t,” by Wade L. Thomas and Robert B. Carson. Citing Bluestone, Harrison and Baker’s book, “The Causes and Consequences of Economic Dislocation,” they conclude that for every one percentage point increase in the unemployment rate, there are 37,000 deaths — the largest single source coming from heart attacks, presumably from stress, but another 1,000 from suicides and another 650 from homicides. The rest are not categorized, likely due to a lack of underlying data.

On the lower end, if you take data from the Great Recession, you find that the unemployment rate in 2015 had returned to its level before the financial crisis and downturn in 2009. (Remember, this lowered unemployment rate was with a greatly diminished labor participation rate, which is why it did not “feel” like a strong economy.) In those seven years, inclusive, there was an increase of 195,000 deaths in total, which means an average of 27,900 deaths per year. The unemployment was different each year, so we cannot say how much correlates to a percentage point, but clearly much less than 37,000. But this is back-of-the-napkin figuring and the actual studies are more reliable.

What all these studies conclude, to varying degrees, is that this economic shutdown will, absolutely, kill Americans just as COVID-19 is killing Americans. The rate of death due to forced unemployment is unknown, and maybe cannot be known, although I hope it will be researched a lot more after this unique event so we can understand the trade-offs next time.

Economists such as Larry Kudlow use a rule of thumb of 10,000 deaths for every one percentage point increase in the unemployment rate. That doesn’t seem unreasonable given the study ranges. The U.S. unemployment rate may surpass 30% in the second quarter of 2020 due to the broad shutdown. That’s higher than the Great Depression.

So if we apply the 10,000 rule just for ease of estimating, and start with a 3 percent unemployment rate, we can estimate that the 27 percentage point increase in unemployment could cost 270,000 lives over the course of a year. That is now much higher than the estimates of COVID-19’s death toll.

Few people think we will be shut down at this level for a year, but what will be the rate of increase once we re-start? That will not be overnight. We can see how, right now, almost assuredly the shutdown itself is taking American lives and will take thousands more.

Unfortunately Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said that we cannot start to “relax” social distancing until there are “no new cases, no deaths.” This is a horrific formulation — the syndrome that arises from someone who is only looking at one side of an equation and who’s held the same job since 1984.

Fauci’s formulation would keep us either in a lockdown or social distancing that includes closed restaurants and public areas, for many months or even years, which would undoubtedly mean multiple times more deaths from the cure than from the disease. 

So the proper formulation is not to suggest we are trading money for lives. Everyone can feel quite righteous about that — particularly if they are not living paycheck to paycheck. But clearly the idea that we would be “dying for the economy” is just ignorant.

The proper formulation is that we are trading lives for lives. We are trying to save lives from COVID-19, but we are costing lives from unemployment. How many is unknown, but as death estimates from the coronavirus in the U.S. continue to fall, it makes the correct formulation, with perhaps better numbers than I have gleaned, all the more critical. 

The question our leaders need to ask and get an answer for is: What do the death toll estimates and unemployment numbers look like if we transition to practicing social distancing, no handshaking, no major events, but otherwise everyone younger than, say, 65 returns to work — including restaurants and retail — while those over 65 or with preexisting conditions remain self-quarantined until we have very effect treatments or a vaccine?

At some point, we will be killing more people by closing the economy than we are saving by closing the economy — if we are not already there.

Rod Thomson is an author, past Salem radio host, ABC TV commentator, former journalist and is Founder of The Revolutionary Act. 


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Economy Stimulus Truth

The Stimulus Package That Will Not Stimulate

Rod Thomson

President Trump just announced a $1 trillion stimulus package. Democrats will greatly lard it up in Congress. I have severe reservations.

Given everything we have ever known about how Congress and D.C. works, a “stimulus” package that would chuck $1 trillion at industries and people over the next month or so sounds like a perfect disaster. Remember, all of it, like the obscene overspending we’ve been happily skipping along with, comes from our children’s pockets. That’s immoral.

First, a reminder for Congress and the White House that money doesn’t grow on trees and we’ve already been spending like drunken sailors for 20 years. Sure, this is a highly unusual situation, but because of the corrupt and obscene spending that is part of life in Washington, we just can’t throw money at things. We’re not financially sound enough.

Second, stimulate what? We’re not supposed to be out there “consuming.” 

Stimulus packages, if you are a Keynesian, which I am not and last I knew most conservatives were not, operates on the principle that the economy can be goosed by the government injecting money into it. That is an unproven theory at best as it seems that FDR’s endless spending and federal programs in the 1930s prolonged the Great Depression. Obama’s stimulus package in 2009 after the last panic set the stage for the worst economic recovery in the history of recorded economic recoveries. But also, we’ve all but pushed pause on the economy, so there is about zilch to stimulate.

This is a bailout. And guaranteed that once it gets to Congress, it will be larded up further. (Maybe Democrats can take another run a getting publicly funded abortions like they did a week ago. Really disgusting.) Expect the final product to be well north of $1 trillion.

But then what? Seriously. What do we do in May? Will we chuck another truckful of our grandchildren’s money at this? And June and August? We’re not going to just jump up from this like nothing happened.

The pain from completely shutting down the economy will not be gone in a month or two. Even if we are struggling back to normalcy by summer, the impacts will be much longer. Everyone’s running for re-election at that time. The money spigot will just keep gushing.

I get it. I lost one client yesterday until we are past this, and could lose more. A lot of people will be hurt financially. But throwing money that we don’t have at it — which is, quite literally, taking money from our children and grandchildren for our needs and wants of this moment exactly as we have been for too long — is a terrible and immoral idea.

Alas, in our soft and history-ignorant culture, it is probably good politics.

My gut tells me that President Trump’s gut is uncomfortable with this. But everyone in D.C. is telling him this is the way to go. Even Democrats are on his side for once in shoveling our children’s money at the problem. 

Rod Thomson is an author, past Salem radio host, ABC TV commentator, former journalist and is Founder of The Revolutionary Act. 


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Economy Trump Truth

The Trump Stealth Engine Fueling The Economic Boom

Rod Thomson

Deregulation is about the most wonky, least click-baity topic there is. It also may be the single biggest reason for the ongoing economic successes of the Trump administration — probably even more than the tax reform package, valuable as that was.

But almost nobody knows about this stealth economic engine and only a few of us continually mention it when referring to the economic powerhouse. Everything else, everything else gets coverage in the Trump administration whether it should or not. But not deregulation. It’s both boring and effective — which combine to make it totally un-newsy.

Which is a shame, because this is an area that Trump can take total credit for and is good for virtually every American — from homeowner, to middle class working stiff to small business owner to exporter. Everyone benefits from a lighter boot on the throat.

In the big picture, regulatory costs either force businesses to pass the costs on to consumers in the form of higher prices or, if the business is an exporter, to squeeze down wages to stay competitive. It also sucks money out of innovation possibilities, costing an unknown and unknowable amount in new products and higher qualities of life.

Generally, environmentalists and environmental journalists around the country (who are basically as much activists as the environmental activists they cover) portray every regulatory rollback as destroying the environment, polluting the air and water and causing the extinction of wildlife. And, of course, the great unknown boogeyman, climate change. Further, they also impugn the motive as giving in to lobbyists.

The White House’s Council of Economic Advisers recently studied 20 regulations that were either repealed by the administration, or are opposed and may be repealed. These generally dealt with labor rules and internet access and were piled on by the Obama administration.

In a straightforward (sort of) cost-benefit analysis, the study concluded that these 20 regulations came to a net cost to the economy of $235 billion — or just more than 1 percent of the national GDP. When impacts can be seen in the gigantic national GDP number, even in a small way, then we have something meaningful.

The report also found that if all 20 regulations are dumped, the average annual gains per American household five years out would be about $3,100.

Now, a major caveat. Any study like this necessarily needs to make some assumptions, and those assumptions are going to drive the final numbers. When assumptions are made by politically motivated players in Washington, D.C., it is not unreasonable for critics to question them. And they do.

Not much, because of course there has been virtually no coverage of this report.

But probably most telling is that the critics — generally people from the Obama administration — do not deny there are net beneficial numbers for the national economy and for individual wage-earners. They just question these specific numbers.

Fair enough. But let’s recall one point. These are only 20 regulations. Presumably these are impact regulations, but the Trump administration bounced 124 “significant” regulations off the books in its first two years, while adding 17. There were hundreds more that are not considered “significant” but can add up. This report measured just 20.

The impacts on the economy, wages and consumer prices is very difficult to estimate, but they are undoubtedly substantial and playing a huge role in 224,000 new jobs created in June, more than 10 years into a now-record recovery, increasing wages, keeping inflation low and maintaining an absolutely rocking economy.

Just don’t expect to read much about this huge stealth effect in the media. 

Rod Thomson is an author, past Salem radio host, ABC TV commentator, former journalist and is Founder of The Revolutionary Act. 


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Climate Change Conservatism Economy Judges Justice Supreme Court Truth

Breakdown: The World Is Measurably Better Since January 2017

Rod Thomson

The largely unreported and to some ironic reality of the past two years is that the world overall is a better, safer, more prosperous place since the swearing in of Donald Trump as President of the United States in 2016. Better than it was under Barack Obama and better than it was under George W. Bush.

Despite the nonstop onslaught of negative reporting on Trump — 90 percent according to the Media Research Center (there’s been 10 percent positive?) — and the breathless reporting on the government shutdown, the latest Robert Mueller leak or arrest, the Kavanaugh hearing fiasco, fake news such as BuzzFeed’s flat wrong non-story on Trump telling Michael Cohen to lie, the disgusting anti-Christian bigotry associated with the MAG-hat Covington Catholic High School students and so on ad infinitum — Trump’s approval ratings remain right in the range they were when he took office, and ticking upward.

That suggests that the relentlessly anti-Trump, Democratic partisan media is washed out by what his actual policies have so clearly accomplished.

But it also suggests that a lot of Americans — probably more than are reflected in polls, and at least some who support Trump — simply do not feel safe saying to anyone that they realize how much better off the country and the world are. It wasn’t supposed to happen. But the media not reporting something does not mean it didn’t happen.

So here are some of the major areas where the world is demonstrably better off since January 2016:

→ First, the economy, duh! 304,000 jobs in January, blowing out all of the predictions. Manufacturing has burst back in the U.S. when President Obama said those jobs would never return. (Man, that guy was wrong a lot.) GDP growth 50 percent higher than it had been under Obama, even though the recovery is now long in the tooth. This has led to a growing consensus among non-political economists that what has driven the economic renaissance has been tax cuts, massive deregulation, stronger trade policy, tax breaks to lure back offshore capital, and a dramatic rise in oil and natural gas production.

→ The entire federal court system will be far more conservative and constitutional for a generation as Trump’s judicial nominees have been uniformly originalists and conservative…and young. This means that there should be fewer overtly political rulings in which the law and constitution are bent to judges’ political views like a reed in the wind, and more solid rules for governing and living.

→ The dishonest and duplicitous media has been unmasked for the partisans they are. This was unintended, of course, but Americans are better off knowing this (something I have known for many, many years as a former member of the mainstream media.) The media’s vicious partisanship has been widely self-exposed for Americans to see, although many members of the media themselves seem to remain in denial. The vast majority of Americans do not.

China’s systemic cheating on trade agreements and thieving of intellectual properties has been called out and responded to forcefully. Since Trump’s inauguration, an accepted consensus has emerged that China’s actions pose a commercial threat to world trade, to its geographic neighbors and to the security of the United States. Ultimately, we will end up with better, more fair trade that will absolutely benefit American companies and workers, but also will benefit most of the rest of the world, which will be more empowered to demand better, more fair agreements for their companies and workers.

→ Pulling out of the terrorist-enabling Iran nuclear agreement did not result in the end of the world, In fact, the world basically yawned past the regular hyperbolic media coverage. Further, most of the sanctions have been reinstated, including by our European friends, when the media Democrats assured us they could not be. Iran is feeling the pinch. Leashing up the murderous Mullah’s financially makes the world that much safer.

→Similarly, when the U.S. walked away from the essentially worthless, symbolic Paris Climate Accords, the world did not warm and seas did not rise. Actually, the U.S. continues to be a leader in reduction of carbon emissions, largely through the voluntary, innovative private sector.

→ The U.S. showed its promise-keeping resolve for the first time when Trump directed the U.S. embassy in Israel to be moved from Tel Aviv to Jerusalem — just like Obama, Bush and Bill Clinton had promised to do before him, but never did. The hyperventilating over lighting the Middle East tinderbox never materialized. The normal amount of Muslim terrorism and Israeli military response ensued afterwards as before.

Black Americans are enjoying an employment resurgence like that not seen since before the disastrous implementing of the Great Society. While overall U.S. unemployment hit a 50-year low in Trump’s second year, joblessness among black Americans has set a modern record as well. Black employment has risen about 1.3 million under Trump to hit a record 19.3 million in October. Now this clearly started before Trump, but that it accelerated this long into a recovery is fairly remarkable.

Russian aggression against Ukraine and other small neighbors has been held in check as the U.S. has sent arms and supplies to the Ukraine and stiffened the response to Russian belligerence. The tough talk had already been backed by missile attacks against Russian mercenaries in Syria and Russian-backed Syrian allies. Using the big stick once or twice means carrying it around becomes a deterrent — not a joke as with the previous president. The crossing of any red line is obviously not going to be acceptable and Russia knows that.

→ Trump’s forceful efforts to denuclearize North Korea resulted in a one-one-one summit with President Kim, and second one coming up. It started with tough talk, followed by the movement of U.S. naval and air power off the coast. It’s ended so far with the self-destruction of some of North Korea’s nuclear facilities and no more of the missile tests that had become common under Obama.

→ Most of our European allies in NATO have been weak and sometimes duplicitous on defense, refusing to live up to their promise on minimal military expenditures to help defend themselves from Russia. Trump again talked tough. Considering he had pulled out of the Paris climate accords and the Iran agreement, European leaders worry he could follow through on NATO threats. They have accordingly increased their defense spending by a combined $100 billion now so far — strengthening free countries against tyranny.

ISIS decapitated.

There are plenty more. But this hits the highlights. By all the evidence, it is unarguable, even by the Orange Man Bad crowd, that the world is better off now than two years ago.

Rod Thomson is an author, host of Tampa Bay Business with Rod Thomson on the Salem Radio Network, TV commentator and former journalist, and is Founder of The Revolutionary Act. Rod also is co-host of Right Talk America With Julio and Rod on the Salem Radio Network.


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Economics Economy Truth

Economic Impact Of Super Bowl Dwarfs That Of Government Shutdown

Rod Thomson

It does sometimes feel as though many Americans actually think the success of the American economy is due to the behemoth in Washington, D.C., rather than in spite of it.

When Friday’s job’s numbers came out, they gobsmacked the media and economic experts, who were expecting 170,000 at the top end and were greeted with 304,000. But those figures were considerably less surprising to those of us who view the government as a hindrance to private enterprise and economic well-being — not an indispensable necessity.

Now an additional data point comes courtesy of Americans’ spending on last night’s Super Bowl — unarguably one of the most boring in history.

“American adults say they will spend an average $81.30 for a total of $14.8 billion as they watch the New England Patriots and the Los Angeles Rams meet up in the Super Bowl,” according to the annual survey by the National Retail Federation and Prosper Insights & Analytics conducted before Sunday’s game.

Meanwhile, the partial government shutdown cost the economy $11 billion, according to a new analysis from the Congressional Budget Office. The CBO says that is due to lost output from federal workers, delayed government spending and reduced demand resulting from those first two. But the CBO goes on to say it is really nowhere near that high.

“Although most of the damage to the economy will be reversed as federal workers return to their jobs, the CBO estimated $3 billion in economic activity is permanently lost after a quarter of the government was closed for nearly 35 days,” CNBC reported, desperately trying to make it seem as though there was economic significance to the shutdown. Media use the big number in the headlines and leads, but it is irrelevant. Only the net number is what counts: $3 billion.

Even the CBO report’s narrative made clear that, despite hyperbolic media attention, the government shutdown was a big snoozer when it came to economic impact.

“Among those who experienced the largest and most direct negative effects are federal workers who faced delayed compensation and private-sector entities that lost business,” the report said. “Some of those private-sector entities will never recoup that lost income.”

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So to get this straight. Four hours of football and an entertainment halftime show created nearly five times as much economic activity as was lost due to the month-long partial government shutdown.

It’s almost as if hundreds of thousands of bureaucrats not showing up in big drab government buildings to push papers, regulate small businesses and grind things slowly for a month didn’t hurt the economy. In fact, based on the job numbers Friday, the bureaucrats’ absence may actually have boosted things.

One downside to note: About 17 million people are expected to call in sick today, the day after the Super Bowl, with the pigskin pox. I’m going to suggest a lot of that is hangover related. That, along with all of the conversations about the game during work hours, could hurt economic output by $4 billion.

The 17 million calling in sick sounds pretty solid. But the $4 billion in economic impact seems a bit squishy considering they are trying to quantify the economic impact of five minutes here and there on the game — when there is no AB comparison given that people engage in water cooler talk year-round.

Rod Thomson is an author, host of Tampa Bay Business with Rod Thomson on the Salem Radio Network, TV commentator and former journalist, and is Founder of The Revolutionary Act. Rod also is co-host of Right Talk America With Julio and Rod on the Salem Radio Network.


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Economy Truth

Market Fluctuations Are A Media Sideshow, The Reality Is The Amazing Economy

By Julio Gonzalez, M.D., J.D.

October is traditionally a scary month on Wall Street, and this October is no exception as the markets took a tumble to the tune of more than 1,000 points last week, or about 4%. More specifically, the Dow dropped from 26,340.57 on Oct. 9 to 25,025.07 on Oct. 11 with Friday seeing a small increase in the close, yet Monday another small drop.

Now, the question is what will the Dow do next? It is a question made to be of great import, not only for investors, but also for political observers who mull the implications of the market’s performance on the midterm elections.  

The issue is resonating even with President Donald Trump as he took to the airwaves to question the wisdom of the actions of the Federal Reserve. For Trump, the market sell-off was a direct result of an excessively aggressive increase in interest rates by the Feds. As an investor and businessman, Trump has always been a market watcher.

But the stock market’s fluctuations are not really point. While walking out to board Marine One, the media shouted questions at President Ronald Reagan about the stock market declining that day or week. Reagan’s timeless reply: “Markets go up and markets go down.” Yes. But the economy was only going up.

In point of fact, and despite the media’s recent obsession with the sell off, last week’s events do not likely represent the beginning of a massive downturn in the market. For one, the salutary effects of the Republicans’ tax reduction have been too great and will be ongoing. That dynamic remains in place.

Further, economic growth is 3% versus one year ago, and the unemployment rate is at a 49-year low of 3.7%. In the meantime, inflation is 2%, a relatively healthy position and wages, even at the bottom end, are finally moving upward. So what affects Americans the most is that the economy is very strong and everyone is benefitting.

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All sorts of developments may steer the market southward. The Asian markets are taking a beating, particularly, China’s, which is down 30% from February. Moreover, America’s economic growth could stop — although that appears unlikely barring a catastrophic event. Inflation could spiral up under the effects of America’s tariffs and the competitiveness of our labor markets. And of course, any unforeseen development in the world stage could throw everything off.

But in reality the American economy is in about as strong a position as it could be at this point in our history.  

A clue to how the market will go, will come this week when 55 major companies will be releasing their earning reports. By far, the most significant day of the week is tomorrow when, among others, Netflix will be reporting. If anything, these reports may provide some insight as to the personality of the final quarter of 2018.  

Either way, the worst thing an investor or political observer can do at this point is read too much into last week’s events — or the short-term ups and downs of the market. The wisest approach here, as is the case in so many other circumstances, is to stay the course and keep a watchful eye, and be thankful for leadership that has put the economy on such a strong footing.

Dr. Julio Gonzalez is an orthopaedic surgeon and lawyer living in Venice, Florida. He is the author of The Federalist Pages and cohost of Right Talk America With Julio and Rod. Dr. Gonzalez is presently serving in the Florida House of Representatives. He can be reached through www.thefederalistpages.com to arrange a lecture or book signing.


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Economy Taxes Trump Truth

The Unreported Story Of America’s Booming Small Businesses

Rod Thomson

The untold story — the story the media refuses to tell — is that American small businesses are just banging it under the tax reform package the GOP Congress passed, every Democrat voted against, and Trump signed into law.

American economic strength as measured by unemployment, employment growth, GDP growth and other common measures is perhaps as hot as it has ever been. Even without knowing the exact numbers, Americans recognize this reality and that explains part of the reason President Trump’s approval ratings continue to rise and the generic Congressional ballot continues to narrow.

At the same time, and acting in tandem, small business confidence has hit an all-time high. This matters because businesses make investment, expansion and hiring decisions based on their confidence in the economy going forward, all of which suggests that the economic growth we are seeing has real, lasting legs — barring an unforeseen catastrophic event.

Small businesses are the heart and soul of the American economy. They always have been, and they always will be if the American economy is to retain is global leadership and strength. Apple, Google, Exxon-Mobil, Microsoft, General Motors, may be great companies. But huge companies are not what built and sustain the American economy. Small businesses that blanket every community are that.

And the Trump GOP tax cuts, along with ongoing deregulation, are playing a major role infusing them.

John Horne is a small businessman on the Gulf Coast of Florida and his story is exemplar of hundreds of thousands of small businesses. He owns four restaurants in Manatee County, just south of Tampa, and employs 333 people — 300 of whom are hourly employees with an annual payroll of $2.5 million; 33 are managers who earned $1.5 million in salary and bonuses in the past year.

He recently wrote in SRQ magazine how the tax cuts are affecting his business.

“I met with my CPA after tax season this year when he brought me my returns. What he explained to me was one of the parts of the new Tax Cut and Jobs Act where I get a 20 percent Business Income Deduction this year. He showed me what my taxes were in ’17 and if the new code were in effect what they would have been. I’ve already planned 2018, plugging my adjusted gross income for this year with the 20-percent deduction. We’ve been very consistent in our stores over the last 10 years as far as bottom lines go.”

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Like most small businesses — and unlike the caricature created by Democrats and the media — Horne saw a great opportunity arising from the 20-percent reduction that the Trump GOP tax cuts gave him. He is taking that money and reinvesting most of it in his company and people, just like most American small businesses will:

“There are so many options, one I’ve already taken. Back in April after I met with my accountant, I bonused $60,000 to some of my staff. I purchased two new two-sided LED signs at $20,000 each for two of my locations to attract new customers. I heard my accountant say we’d probably realize $100,000 in savings/benefits from the new plan.”

Horne is in the restaurant business, which too many people deride is minimum wage. But that’s not really true. Of his 300 hourly staff members, no one is paid minimum wage; 113 earn $10 and $12.50 per hour; 39 earn between $12.50 and $15; 40 between $15 and $20; and 64 over $20. And about 47 percent of the hourly staff earn more than $15 dollars per hour.

Expect those wages to move up. The suddenly strong economy undergirded by the tax cuts and deregulation is now driving wage growth at small businesses. “The low unemployment rate is contributing to steady increases in wage growth,” according to Martin Mucci, president and CEO of Paychex. That means Horne and everyone else will have to pay more to keep and get employees.

Further, the CBO now reports that the tax cuts may pay for themselves, eliminating the “scary” $1.5 trillion deficit issue. That’s because of the economic growth roaring through the economy based on thousands of reinvestment decisions such as Horne’s.

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Last June, the CBO said GDP growth for 2018 would be just 2 percent. Now it estimates growth will be a robust 3.3% — a significant boost. It also cranked up its forecast for 2019 from a paltry 1.5 percent to 2.4 percent. The CBO now expects GDP to be $6.1 trillion bigger by 2027 than it did before the tax cuts.

All of those trillions in GDP will be taxed and that will go a long way toward erasing the deficit — unless Congress continues to spend like drunken sailors, which unfortunately is a safe bet.

Horne’s small business is a down-to-earth illustration of this, also. In the last 12 months, FICA payments at his four stores were $552,544. Matched with the employees’ payments, that means his small business contributed more than $1.1 million in taxes just to support Social Security.

All of this is the undeniable reality of lifting high tax and regulatory burdens off small businesses. When the weight of government on the backs of small businesses is lessened, those businesses take off.

Unfortunately, that is a story most Americans are not being told.

Rod Thomson is an author, TV talking head and former journalist, and is Founder of The Revolutionary Act. Rod is co-host of Right Talk America With Julio and Rod on the Salem Radio Network.

 

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Democrats Economy Republicans Taxes Truth

Why Democrats Aren’t Running Against “Evil” Tax Cuts

Rod Thomson

Back in December and January, Democrats and their fellow-travelers in the media were ebullient over the idea of running against the “tax cuts for the wealthiest 1 percent” tax reform package Congress had passed on a straight party-line vote, and President Trump subsequently signed into law.

It’s worth a quick and entertaining look back at the now commonplace hysterical response from the American Left (Democrat/Media/Culture/Education establishment), this time at basic tax cuts.

House Democratic leader, Nancy Pelosi, a constant well-spring of poppycock, called the legislation “the end of the world” and “the worst bill in the history of the United States Congress.” (Ahem…Fugitive Slave Act?) She predicted the tax cut would create “a permanent plutocracy in our country that does violence to the vision of our Founders.” California Gov. Jerry Brown called tax cuts “evil in the extreme.”

The Washington Post felt compelled to run a column predicting the Great Depression II, including unemployment at 25 percent. Former Treasury Secretary Larry Summers said the bill’s health provisions would kill 10,000 people annually. And economic historian Bruce Bartlett said that tax cuts are “akin to rape.”

Veteran Atlantic political reporter Ron Brownstein argued that “President Trump and congressional Republicans have just taken the same leap of faith that Democrats did when they passed the Affordable Care Act.” The Huffington Post anxiously ran a story headlined “ObamaCare Plagued Democrats In 2010. The GOP Just Voted For A Bill Even Less Popular.”

And what’s a media nonsense roundup without Paul Krugman, who wrote a column, “Republicans’ Tax Lies Show the Rot Spreads Wide and Runs Deep.”

Well, something was running wide and deep.

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But now that the big blue wave midterms are approaching, Democrats actually are not running against the end of the world, against 25 percent unemployment, against rot, against evil. You’d think those would be winning issues with the American people. Perhaps the end-of-the-world bombast was just empty drivel like so much that has been upchucked into the media since November 2016.

Remember how Republicans ran loud and hard (and for some, lied) about repealing Obamacare as soon as they had the chance. It was proving unpopular and hitting Americans negatively. We are seeing an almost complete absence of that now in both Democratic primaries, and where the general elections are set, in regards to the tax reform package that was the end of the world.

It’s not just by observation we are seeing this step away from tax cut repeal. Democratic leadership is admitting it. Washington Post political reporter David Weigel asked Democratic leaders about it at their recent strategy retreat, and tweeted their response:

“Asked Dems at retreat presser if they’ll run in 2018 on repealing the Tax Cuts and Jobs Act. Answer: Not really. (They’ll “restore balance.”) Weigel tweeted the full text of his questions and their answers. By balance, they presumably and without elucidation, mean balancing the budget, which they did such a bangup job of doing when they were in control.

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Why the big flip for Democrats? It’s more than the dawning realization that the slogan, “Vote for me and I’ll raise your taxes!” is probably not going to resonate with voters.

First, there are the actual facts involved with the tax reform package. The politically liberal Tax Policy Center ran the numbers and figured the tax cuts would benefit 80 percent of American families, while raising taxes for just 5 percent. Those tax hikes would fall disproportionately on the wealthiest 1 percent. The average family would save $1,610.

More facts. The Congressional Budget Office has sharply increased its forecast for GDP growth in 2018 from 2 percent to robust 3.3 percent as a direct result of the tax cuts. The CBO predicts GDP growth next year at 2.4%, up from the expected 1.5% before the tax cuts. Further, the CBO says that this level of growth in the economy could eliminate most of the so-called tax-cut deficit that Democrats are suddenly so concerned about. Unfortunately but to no one’s shock, the media largely ignored that report.

Second, the tax cut package still remains popular. The “Republican” or “GOP” tax cuts, not so much. Recent polls showing a decline in support for the GOP tax cuts have elated Democrats and the media. But they’re quite misleading. The tax cuts themselves, broken down by almost every element within the bill, are overwhelmingly popular.

Investors Business Daily broke those down here. Americans’ support is absurdly high for most elements of the tax cuts. But most polls label the tax cuts as Republican or GOP, and when that happens, the support drops significantly.

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A couple of things are at work here. One is the ongoing demonization of Republicans in the media. This has been a long-running train. The other is the conflation of budget deficit with the tax cuts. This of course has two elements, one of which is continued runaway spending, which congressional Republicans caved on like they always do. (Remember, they are caving to Democrats who actively pursue the runaway spending.) Saying that the taxes alone caused the projected $1.5 trillion deficit — over 10 years, because that is the only way to make it look bad — ignores half of the equation but clearly can influence news consumers.

Third, an April Gallup Poll found that Americans think the tax code is more fair today than it was before the GOP tax cuts took effect. Last year, 51 percent of Americans said middle income families pay too much income taxes. That is now down to 42%. And amazingly, given the media coverage, 26 percent say upper-income families pay their fair share, up slightly from 24 percent last year. And the big corporate fat cat giveaway? Well, 24 percent now say that corporations pay their fair share, up sharply from 19% a year ago when corporate tax rates were much higher.

It’s hard to run on a lie when the truth keeps showing up in bi-weekly dollars in the wallet, when you can see how strong the economy around you is. High GDP growth is tangible, just like anemic GDP growth was under Obama.

Americans realize that the tax reform package was a net positive for their pocketbooks, for the economy, for jobs and for the deficit — the absolute opposite of how they rightly viewed Obamacare. That Democrats aren’t clawing to run against it means they still have a modicum of political sense left.

Rod Thomson is an author, TV talking head and former journalist, and is Founder of The Revolutionary Act. Rod is co-host of Right Talk America With Julio and Rod on the Salem Radio Network.

 

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Categories
Economy Foreign affairs Foreign policy Iran Israel Politics Taxes Trump Truth

Trump Presidency Proving It Is A One-Time Only Paradigm Shift

Rod Thomson

Enjoy it while you can. Or weather it, depending on your Trumpian disposition.

The undeniable reality is that President Donald Trump is doing what no other politician could do. Indeed, the very reality of some of his most off-putting, “unpresidential,” unconventional methods are exactly what are making him so effective.

And what probably makes him unrepeatable.

Long-time Republican strategist turned Libertarian in 2016, Mary Matalin is one of the few establishment-type folks who has come around and actually gets what’s happening.

“I think he’s stunning; he’s a paradigmatic shift…I don’t think anybody else can do it because everybody else who thinks they know about politics impedes their own forward motion by saying it can’t be done. He doesn’t have that gene — everything can be done,” Matalin recently said in a speech.

She’s exactly right. And that is the engine for the paradigm shift.

“I am looking for a lot of men who have an infinite capacity to not know what can’t be done.”

– Henry Ford, Founder of Ford Motor Company

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The U.S. Embassy move to Jerusalem is the latest example. Bill Clinton, George W. Bush and Barack Obama all promised on the campaign trail to make that move, as stipulated by Congress in 1995. But none of them followed through because they listened to the advice of the careerist diplomats in the State Department that it would be inflammatory and dangerous and so on. It just cannot be done reasonably.

But Trump thumbs his nose at the conventional thinking constantly, and followed through with his promise — besting all three of those presidents both in honesty and courage in doing the right thing. This is one element of the Trump presidency that is changing the dynamic in the always-volatile and violent Middle East.

“Safety first has been the motto of the human race for half a million years; but it has never been the motto of leaders. A leader must face danger. He must take the risk and the blame, and the brunt of the storm.”

– Herbert N. Casson, author

North Korea is another example of Trump doing what absolutely no one else was willing or capable of doing — in a way no one expected and that terrified the careerists in the establishment. Responding to Kim Jong-Un’s jibes at Trump being old, any other President would have been very presidential and not replied. Trump tweets back that Kim is short and fat and nicknames him rocketman. That’s about as unconventional as it gets.

No one knows what to do with that. The media had fits, but they are clueless about Trump. The tweeting is coupled with Trump having sent two aircraft carrier groups to the Korean Peninsula and Kim having seen Trump attack Russian-backed Syrians multiple times, even killing some Russians. This generated another paradigm shift. If Trump is willing to kill Russians, why would he shy away from North Koreans? Kim is now negotiating and talking about total nuclear disarmament. We’ll see what happens, but this is an immense step everyone thought impossible.

“Diplomacy is the art of saying ‘Nice doggie’ until you can find a rock.”

— Will Rogers

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The Iran deal is another area where the conventional paradigm is altered. Despite most of the Republicans in the 2016 primary declaring they would rip up the Iran deal, one suspects that they probably would not have once the State Department careerists, other Washington establishmentarians and European allies pressured them not to. Too dangerous!

But Trump is Trump. He kept that campaign promise, too and is helping forge an alliance between Saudi Arabia, Egypt, Jordan and…Israel! In one sense, this is merely an alliance of a common and deadly enemy, Iran. But it still is rather amazing to consider. And while it has its own impetus among those nations, the fact that America can be counted on (at least until 2020) to support this alliance against Iran’s violent expansionism is undoubtedly critical. Because of Syria and North Korea, the Iranian Mullahs must realize and calculate that they are dealing with a very different and more serious President than the previous one.

“Diplomacy is not an end in itself if it does not advance U.S. interests.”

— John Bolton, now National Security Advisor

China trade and tariffs is a very squishy area for doctrinaire conservatives. Free markets are a bulwark of modern conservatism. But Trump’s enactment of a series of tariffs, and more recently sanctions on Chinese telecom giant ZTE, have moved the dial. The Chinese sound willing to renegotiate the lopsided trade deals of previous administrations and stop or slow down immense amounts of cheating and blackmailing on behalf of Chinese companies.

According to the genuinely clueless media, Trump is now “flip-flopping” on the ZTE sanctions and talking about Chinese jobs instead of American jobs. But what has happened is that the Chinese are willing to stop their threatened retaliatory tariffs that were in response to the U.S. tariffs, just to stop the ZTE sanctions. Meanwhile, U.S. tariffs remain in place, revealing that the U.S. has — and always has had — the superior position of strength in negotiating. We just finally have a president who sees this and is willing to buck all of the establishment thinking and use the superior position for the good of the American people. In doing so, he’s created a new paradigm.

This is most certainly something no one else in the Republican field would have done. (Full disclosure, this writer supported Sen. Ted Cruz in the primaries. But it is virtually impossible to see even Cruz doing this.)

“New opinions are always suspected, and usually opposed, without any other reason but because they are not already common.”

John Locke

All of this is just on the foreign stage. Domestically, the tax reform package was something that Republicans had been wanting for decades. And while it was a GOP bill, it was in conjunction with Trump and clearly driven by his support for it. That reform has literally given most Americans a pay raise, and a new paradigm.

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De-regulation is shockingly underreported, but it has been a major factor in unleashing the American economy since his election. The Trump Administration has eliminated 22 regulations for every one new one it has implemented. American businesses are being unshackled and it shows. In addition to GDP and job growth, wages are increasing and will begin increasing faster as the economy continues to be strong.

Deregulation is something most Republican presidents would not touch because they are always wet-fingering the politics of it with environmental groups and other special interests ready to pounce. Caution and reelection remain preeminent. But Trump just does it because he is unlike any other modern president, or any other options out there. And the paradigm of ever more regulations stifling Americans is cracked.

Matalin again:

“He’s given people back hope, I mean people really, small-business people or young families or retiring people, in our DNA is always the potential to be better, to strive for something,” she said. “You couldn’t strive for anything. You’re being bushwhacked at every corner. He has shifted the collective psyche from horribly cynical to helpfully skeptical. So I think he is doing great.”

Rod Thomson is an author, TV talking head and former journalist, and is Founder of The Revolutionary Act. Rod is co-host of Right Talk America With Julio and Rod on the Salem Radio Network.


Today’s news moves at a faster pace than ever, and a lot of sources are not trustworthy. Whatfinger.com  is my go-to source for keeping up with all the latest events in real time from good sources.


 

Categories
Economics Economy Taxes Trump Truth

Leading Economist Now Says Trump Policies Are Restoring America’s Economy

Rod Thomson

Sean Snaith is not a household name but he is one of the nation’s top economists and highly regarded in economic circles for the depth and accuracy of his projections.

So much so that he is on multiple national economic forecasting panels, including The Wall Street Journal’s Economic Forecasting Survey, the Associated Press’ Economy Survey, CNNMoney.com’s Survey of Leading Economists, USA Today’s Survey of Top Economists, the Federal Reserve Bank of Philadelphia’s Survey of Professional Forecasters, Bloomberg and Reuters.

All this is stated upfront because what he says rightly carries weight in a lot of influential circles, and probably should outside those circles. And he is now supremely optimistic about the American economy going forward.

He made projections last year he said were based on the assumption of a Hillary Clinton victory and her policies being instituted — because that is what all of the political pundits told him. When Trump won, he says, he had to re-think things. He went back to the drawing board and began a new set of calculations which he is constantly updating. The differences are dramatically better for the American economy and the American worker.

In fact, to hear Snaith speak recently to a large Florida economic development group, its almost jarring how much of a MAGA Trumper he sounds like — well, on economic policies anyway. And the projections he announced were almost goose-bumpy good.

Snaith said the tax cuts and deregulatory efforts will generate a 3.5 percent national GDP this year — much higher than at any point since before the Great Recession — and will remain very strong at least through 2020. He said this is more where the American economy should be and will be (barring any major, unforeseen disruptions.)

That has positive implications for American workers. The jobless rate is hovering at about 4 percent right now, but he predicted that as policies really start generating economic activity, the unemployment rate will fall to 3.4 percent by late 2020 — and that is even as the labor participation rate increases. So even as more Americans re-enter the job market after giving up for the past six years or more, they will all be absorbed into new jobs, plus some.

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This tight labor market means there will be competitive market pressures driving wages and salaries specifically at the lower ends to begin with. In fact, that is already beginning to happen.

“Markets are magical and will solve the labor problem” by increasing wages to attract workers, he said. “The lowest end jobs are seeing the fasted income growth rate right now.”

Snaith, director of the University of Central Florida’s Institute for Economic Competitiveness, said there are two driving policies at work here. The Tax Cut and Jobs Act and the ongoing regulatory relief.

The key elements of the tax reform package boosting the economy include: lower income tax rates; higher standard deductions; expansion of the child tax credit; reducing the highest corporate tax rate in the developed world from 35 percent to 21 percent; tax breaks for small businesses; and a one-time tax break to 15.5 percent to repatriate American companies’ offshore profits — which Apple already announced they will take advantage of to the tune of $252 billion.

The tax package will increase take-home pay for American workers — something that has not happened since President Bush was in office — and will generate more consumer spending, stimulating the economy and GDP growth. American companies will be more apt to keep their profits at home and reinvest a portion of them — several have already announced their intentions with plant expansions and sharp increases in employee pay.

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But Snaith sees deregulation as every bit as important because of the tremendous drag that excess regulation places on companies and the economy. “Deregulation is the special sauce that will juice the economy,” Snaith said.

The Code of Federal Regulations exploded from 140,000 pages in 2005 to 185,000 today, he said. Those endless rules strangled the economy by trillions of dollars as companies spend so many resources on compliance rather than innovation, expansion and employee pay. Last year, the Trump administration took 22 deregulatory actions for every one new regulation, saving about $8 billion in regulatory compliance costs alone.

Interestingly, Snaith is not worried about a trade war undercutting his economic projections because he does not think there will be one.

“Are we going to have a trade war? My answer is no. Everybody knows that no one wins in a trade war,” he said. However, he thinks that some of the nation’s trade deals do need renegotiating because they were unbalanced, and China was cheating on them.

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“If you are a manufacturer, you are not on an even playing field with China,” he said.

Snaith is about as mainstream as you can get in the economics field. And his projections record is stellar. His optimism is worth paying attention to.

Rod Thomson is an author, TV talking head and former journalist, and is Founder of The Revolutionary Act. Rod is co-host of Right Talk America With Julio and Rod on the Salem Radio Network.


Today’s news moves at a faster pace than ever, and a lot of sources are not trustworthy. Whatfinger.com  is my go-to source for keeping up with all the latest events in real time from good sources.