Tag Archives: economy

The GOP’s Alternative Budget

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Under the president’s plan, spending will top $4 trillion this year alone, and consume 28.5% of our nation’s economy. His plan would mean a $1 trillion increase to the already unsustainable spending growth of our nation’s entitlement programs — including a “down payment” toward government-controlled health care and education; a $1.5 trillion tax increase to further shackle the small businesses and investors we rely on to create jobs; a massive increase in energy costs for families via cap and trade. Moreover, the Obama plan would result in an exploding deficit, a doubling of the nation’s debt in five years, and an increase of that debt to more than 82% of our nation’s GDP by the last year of the budget. This approach will ultimately debase our currency and reduce the living standards of the American people.

Instead of doubling the debt in five years, and tripling it in 10, the Republican budget curbs the explosion in spending called for by the president and his party. Our plan halts the borrow-and-spend philosophy that brought about today’s economic problems, and puts a stop to heaping ever-growing debt on future generations — and it does so by controlling spending, not by raising taxes. The greatest difference lies in the size of government our budgets achieve over time (see nearby chart).

Continue to read on The Wall Street Journal Opinion Article

This article is written by Mr. Paul Ryan, from Wisconsin, who is the ranking Republican on the House Budget Committee. It talks about the Republican’s alternative plan to Obama’s “European-style big government” that “works to accomplish four main goals: 1) fulfill the mission of health and retirement security; 2) control our nation’s debts; 3) put the economy on a path of growth and leadership in the global economy; and 4) preserve the American legacy of leaving the next generation better off.”

Inside the Mind of a Democrat

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This sums up my economic beliefs very well:

When will people come to understand that a president is not like some wizard pulling levers and producing a great economy? I can recall President Clinton acting as if the Paula and Monica scandals were somehow preventing him from keeping the American economy on track. Folks, it ain’t like that. The economy represents the creation of value and productivity of efforts by American citizens in a system of relatively free exchange. The government is not doing the work.

Can the government facilitate? Yes. Can it occasionally make a very good and well-supported public works investment? Clearly. But the influence the government has is all at the margins. Not at the core. If you want the jobs and the economy you deserve, then find the people who are innovating, find the people who are generating value. Join them and forget politics, which is all too often a parasitical activity in an era of big government.

Go here to read the rest of it.

Are We a Nation of Financial Illiterates?

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The Freakonomics economists ask that question. There is also a little quiz about financial literacy. I got all three questions correct. How’d you do? Overall, I feel that all or most of the recent financial/housing troubles are solely because of people buying things that they just can’t afford. I heard multiple stories of people getting approved for a $200,000 mortgage but being unable to be approved for even a secured credit card!

We’re not in a recession, we’re in a slowdown.

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President George W. Bush may turn out to be the top economic forecaster in the country.

About a month ago he told reporters, “We’re not in a recession, we’re in a slowdown.” At a White House news conference a few weeks later, despite the fact that reporters pressed him to use the “R” word, Mr. Bush refused. And on Friday, after the most recent jobs report — which produced a much-smaller-than-expected decline in corporate payrolls, a huge 362,000 increase in the more entrepreneurial household survey (the best gain in five months), and a historically low 5 percent unemployment rate (4.95 percent, to be precise) — the president told reporters: “This economy is going to come on. I’m confident it will.”

We’re in the midst of the most widely predicted and heralded recession in history. Problem is, so far it’s a non-recession recession. Score one for President Bush. In an election year, it could be a big one.

First-quarter GDP growth came in at 0.6 percent. It wasn’t the widely predicted decline, and economists expect that number to be revised up. GDP growth for the fourth quarter of 2007 was also up slightly, while the prior two quarters averaged over 4 percent growth.

Continue reading: Bush’s ‘R’ Is for ‘Right’

And, here’s a quote from Lawrence Kudlow’s blog,

Economic Resilience. When you think about it, look at what we had to deal with in the first quarter. You had the credit market seizeup; you had Bear go out; you had Lehman close to going out—not because it should have, but because the financial markets were driving it that way; you had extraordinary moves by the Fed; you had continued collapse in homebuilding, and we still grew at 0.6 percent. That says to me if the economy was going to collapse, it would have collapsed then. It’s going to get better from here. Slowly, gradually, saucer-shaped, but it’s going to get better from here.

-Jim Awad, chairman of WP Stewart Asset Management

The Great Fall of China

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Here’s an interesting article regarding recently updated GDP calculations:

China, it turns out, isn’t a $10-trillion economy on the brink of catching up with the United States. It is a $6-trillion economy, less than half our size. For the foreseeable future, China will have far less money to spend on its military and will face much deeper social and economic problems at home than experts previously believed.

What happened to $4 trillion in Chinese gross domestic product?

Statistics. When economists calculate a country’s gross domestic product, they add up the prices of the goods and services its economy produces and get a total — in dollars for the United States, euros for such countries as Germany and France and yuan for China. To compare countries’ GDP, they typically convert each country’s product into dollars.

The simplest way to do this is to use exchange rates. In 2006, the World Bank calculated that China produced 21 trillion yuan worth of goods and services. Using the market exchange rate of 7.8 yuan to the dollar, the bank pegged China’s GDP at $2.7 trillion.

That number is too low. For one thing, like many countries, China artificially manipulates the value of its currency. For another, many goods in less developed economies such as China and Mexico are much cheaper than they are in countries such as the United States.

To take these factors into account, economists compare prices from one economy to another and compute an adjusted GDP figure based on “purchasing-power parity.” The idea is that a country’s GDP adjusted for purchasing-power parity provides a more realistic measure of relative economic strength and of living standards than the unadjusted GDP numbers.

Unfortunately, comparing hundreds and even thousands of prices in almost 150 economies all over the world is a difficult thing to do. Concerned that its purchasing-power-parity numbers were out of whack, the World Bank went back to the drawing board and, with help from such countries as India and China, reviewed the data behind its GDP adjustments.

It learned that there is less difference between China’s domestic prices and those in such countries as the United States than previously thought. So the new purchasing-power-parity adjustment is smaller than the old one — and $4 trillion in Chinese GDP melts into air.

Continue reading: “The great fall of China”