Lap dog Obama says he's interested in exploring with Republicans the extending of some of the measures that were part of their tax-cut package, "to make sure that we get this recovery up and running in a robust way." (Yeah, right.)
Accordingly, the White House is "mulling' a temporary cut in the payroll taxes that businesses pay on wages. (BFD, as Joe Biden likes to say.) White House advisers figure this may appeal to Republican lawmakers who have been discussing the same idea. It would, in essence, match the 2% reduction in employee contributions to payroll taxes this year, enacted as part of the deal to extend the Bush tax cuts.
Other ideas under consideration at the White House include -- get a load of this -- a corporate tax cut, accompanied by the closing of a few corporate tax loopholes.
Can't we please get real for a moment ?!
Businesses don't need more financial incentives! They're already sitting on a vast cash horde estimated at $2 trillion. Besides, large and middle-sized companies are having no difficulty getting loans at bargain-basement rates, courtesy of the Fed.
In consequence, businesses are already spending as much as they can justify economically. Almost two-thirds of the measly growth in the economy so far this year has come from businesses rebuilding their inventories. But without more consumer spending, businesses won't spend more. A robust economy cannot be built on just inventory replacements!
So, the problem isn't on the supply side. It's on the demand side: Businesses are reluctant to spend more and create more jobs because there aren't enough consumers out there able and willing to buy what businesses have to sell!
And the simple reason consumers aren't buying is because consumers' paychecks are dropping, adjusted for inflation. Plus, job losses are mounting. The 83,000 new private-sector jobs created in May represent a net loss. Why? Because 125,000 jobs are needed merely to keep up with an expanding labor force. Not surprisingly then, the number of Americans filing new claims for unemployment benefits edged higher last week. At the same time, many Americans are falling behind in their mortgage payments. As a result, housing prices continue to drop -- making homeowners feel ever poorer. So where's the "recovery' the Obama administration says is upon us?
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