Best recipe for fueling economy is to end the uncertainty
December 02, 2012 12:00 AM | 1194 views | 1 1 comments | 6 6 recommendations | email to a friend | print
Glad tidings were few and far between at Tuesday’s economic forecast breakfast at the Cobb Performing Arts Centre at the Galleria.

The 20th annual such breakfast sponsored by the Bank of North Georgia featured, as usual, economist Albert W. Niemi Jr., dean of the Edwin L. Cox School of Business at Southern Methodist University in Dallas. And his forecast was as gloomy as the skies outside that morning.

“The news is not great,” he said. “It is unprecedented how sluggish this recovery has been.”

Niemi projects that growth in the country’s Gross Domestic Product will slip from 2 to 1.9 percent next year. That’s far below the 4 percent where it should be at this point of the recovery, based on historical trends.

And though he thinks the unemployment rate will edge down from the 8 percent area where it is now, he added that the true unemployment rate, accounting for the unemployed who have stopped seeking work, is just under 15 percent. So much for Obama’s so-called “stimulus” program.

Moreover, joblessness will grow if Obama and Democrats in Congress succeed in ending the “Bush tax cuts.” Doing so would be “a job killer” and would “hammer the middle class,” Niemi warned.

“The biggest thing holding this economy back is uncertainty,” Niemi added.

Businesses are uncertain which tax rates might change and by how much, making it difficult to plan. And the sweeping Obamacare health law, which will not be fully implemented until 2014 and beyond, isn’t doing anything to help, he noted.

“A lot of businesses are holding back until they know the costs,” said the former University of Georgia professor.

He offered a faint ray of optimism, saying most of what growth the country will see in the next few years will come in Sun Belt states like Georgia and that the metro Atlanta area has the advantages of accessibility and quality of life.

Niemi pointed out that the United States’ economic position has eroded due to the shift in our economy from manufacturing toward hospitality. And he said that Georgia was one of the states most affected by that change.

“No state in the nation’s manufacturing was more tied to the residential housing market than Georgia,” he said.

And although new housing starts are finally ticking back upward, the overall number of homes being built is far, far below the level seen every year in this country between 1945 and the start of the recession.

Niemi’s warning should come as a warning to those who keep pushing for higher taxes and increased government spending as ways out of the economic morass. They didn’t work for FDR in the 1930s and they won’t work now, either. The better approach is to cut taxes, downsize government and end the uncertainty that has sidelined so much of this country’s business and industry.

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moliere
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December 02, 2012
"Niemi pointed out that the United States’ economic position has eroded due to the shift in our economy from manufacturing toward hospitality. And he said that Georgia was one of the states most affected by that change.

“No state in the nation’s manufacturing was more tied to the residential housing market than Georgia,” he said."

So in the midst of all the partisan malarkey, the fellow finally says something that is actually true.

"The better approach is to cut taxes, downsize government ..."

Excellent idea in theory. Except that the GOP never downsized government either. They cut taxes but increased spending. They did so under Reagan, under Gingrich, and under both Bushes. The GOP only cuts taxes, and then blames the Democrats for failing to make the politically painful cuts to popular programs that the GOP themselves won't touch.

Incidentally, what this guy is proposing would have worked much better in the older economy when there were A) far more two parent families supported by a single wage earner with a blue collar job and B) there were much more manufacturing jobs that actually give high earners a chance to create domestic jobs with their investments. Because of the huge decline in A) and B), cutting taxes are far more likely do generate jobs in Latin America, India, China and South Korea - where our manufacturing jobs have gone, and where a lot more innovation and basic research that America used to do is now headed - than in America. Because of the changes in our economy, the government is going to have to take a larger role just like it did in the post World War II era when the government went on a gigantic infrastructure binge that included the interstate highway system, Amtrack, tons of roads/bridges/dams as well as projects to extend electricity and telephone service to rural areas. That is what it is going to take, not tax cuts so that the revenue will go into hedge funds that support Latin American and Asian factory construction. Because of globalization, tax cuts helps the economies of the competition more than it helps our own. But you will never hear that from the neocons who nominated a guy that was an expert in sending jobs overseas, Mitt Romney. Not that I fault Romney at Bain Capital one bit ... he was just doing his job. But the people who run our government need to do theirs.
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