“Cash for Clunkers”, revisited: New home sales plunge to lowest level on record

The Associated Press reports that another major chunk of the façade known as the “economic recovery” has crumbled:

Sales of new homes collapsed in May, sinking 33 percent to the lowest level on record as potential buyers stopped shopping for homes once they could no longer receive government tax credits.

The bleak report from the Commerce Department is the first sign of how the expiration of federal tax credits could affect the nation's housing market.

The credits expired April 30. That's when a new-home buyer would have had to sign a contract to qualify.

"We fear that the appetite to buy a home has disappeared alongside the tax credit," Paul Dales, U.S. economist with Capital Economics," wrote in a note. "After all, unemployment remains high, job security is low and credit conditions are tight."

Sound familiar?  Last summer, the “Cash for Clunkers” program created an artificially high demand for automobiles, almost certainly spurring purchases by people who otherwise wouldn’t have (or shouldn’t have) done so.  Once the C4C program ended, auto sales dropped through the floor.

Here we go again.  The federal tax credits for new home purchases is gone, and sales have dropped to a level never before seen in the 47 years that the government has been tracking this statistic. 

Just like we saw with C4C, it is likely that many who bought a home in recent months should not have done so.  How many of them will be in foreclosure in just a few short years?

Remember these examples each time you are told that we’re in the midst of an economic recovery.

Given the fresh storm clouds gathering on the horizon, now may not be the best time to buy a home, with or without a tax credit incentive.

If corporate earnings appear to be improving right now…

…it may very well be that businesses are shifting as much income and production as possible to this year.  Arthur Laffer writes in the Wall Street Journal June 6:

On or about Jan. 1, 2011, federal, state and local tax rates are scheduled to rise quite sharply. President George W. Bush's tax cuts expire on that date, meaning that the highest federal personal income tax rate will go 39.6% from 35%, the highest federal dividend tax rate pops up to 39.6% from 15%, the capital gains tax rate to 20% from 15%, and the estate tax rate to 55% from zero. Lots and lots of other changes will also occur as a result of the sunset provision in the Bush tax cuts.

Tax rates have been and will be raised on income earned from off-shore investments. Payroll taxes are already scheduled to rise in 2013 and the Alternative Minimum Tax (AMT) will be digging deeper and deeper into middle-income taxpayers. And there's always the celebrated tax increase on Cadillac health care plans. State and local tax rates are also going up in 2011 as they did in 2010. Tax rate increases next year are everywhere.

Now, if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income will be lower than it otherwise should be.

Laffer believes that allowing the tax cuts to expire will result in an economic collapse next year that will dwarf what we’ve seen so far.  To be sure, a sudden, massive tax increase in the middle of a weak economy will not end well.

The Global Debt Crisis Explained, sort of

I had not heard of Clarke and Dawe before, but I love the way they “explain” the impossibly tangled web of debt that may bring down one economy after another.

Various countries in Europe are the first to falter, but the US appears to be heading for the precipice as well.  Bloomberg, June 4:

U.S.’s $13 Trillion Debt Poised to Overtake GDP

President Barack Obama is poised to increase the U.S. debt to a level that exceeds the value of the nation’s annual economic output, a step toward what Bill Gross called a “debt super cycle.”

The CHART OF THE DAY tracks U.S. gross domestic product and the government’s total debt, which rose past $13 trillion for the first time this month. The amount owed will surpass GDP in 2012, based on forecasts by the International Monetary Fund. The lower panel shows U.S. annual GDP growth as tracked by the IMF, which projects the world’s largest economy to expand at a slower pace than the 3.2 percent average during the past five decades.

“Over the long term, interest rates on government debt will likely have to rise to attract investors,” said Hiroki Shimazu, a market economist in Tokyo at Nikko Cordial Securities Inc., a unit of Japan’s third-largest publicly traded bank. “That will be a big burden on the government and the people.”

Click on the “Graphic” tab at the above link to view the chart.

Do boycotters secretly hate Arizona hispanics?

With the announcement of each new boycott of Arizona companies (such as the one just approved by L.A. County), I wonder if the Legion of the Outraged has thought this through completely.

If, somehow, these boycotts manage to have an actual economic impact on Arizona businesses, just who do they think will lose their jobs first?  Wouldn't it be the lower-income employees?

Even if the middle- and upper-class somehow got hit first, their ensuing decrease in economic activity would affect... who?

I cannot escape the conclusion that those who purport to champion the cause of Hispanics in Arizona secretly hate them.

Government-authored spyware – what a great idea!

No, it’s not happening yet (that I know of), but the RIAA and MPAA are pushing hard to establish the legal precedent of government surveillance of average citizens’ private in-home activities.

Tom’s Guide reports:

Big Brother is watching you. Actually, it's the RIAA and the MPAA, especially if you're parked on a BitTorrent client. The Electronic Frontier Foundation reports that both organizations--along with a few others--want to take the file-monitoring process a huge step further by infiltrating consumer PCs and deleting the infringing content off their hard drives. How? Through "anti-infringement" spyware developed and enforced by the government.

This is no joke.

"There are several technologies and methods that can be used by network administrators and providers...these include [consumer] tools for managing copyright infringement from the home (based on tools used to protect consumers from viruses and malware)," reads a caption in a joint comment (pdf) filed by the MPAA and RIAA.

The joint comment goes on to suggest other means of copyright enforcement including a mandatory scan on all internet connections to interdict transfers of illegal content, physical searches at all borders of personal media players, laptops, and USB sticks. There's even an indication that the parties want to enforce international bullying to force other countries to put similar policies in place.

A couple of observations are in order.

First, the only reason  the RIAA and MPAA could even dream of getting the federal government to do something like this is that they know the fedgov recognizes no meaningful limits on its power.  Industries take advantage of this fact all of the time – using the government as a bludgeon against one’s competitors has become a time-honored tradition in this country – but the RIAA/MPAA proposal goes beyond what we normally see. 

Many people who will complain that this is an unconstitutional invasion of privacy and a denial of due process will, the next day, demand that the government provide health care, jobless benefits, welfare, etc.  We can’t have it both ways.  Either the federal government is bound by the U.S. Constitution, or it isn’t.

Second, is there any real difference between government-authored spyware on our computers and government-installed surveillance cameras in our homes?  Both would have the same official purpose – crime prevention.  I wonder if RIAA and MPAA executives would consent to government video surveillance of their mansions, “just in case” they decided to do something illegal.

Unions could indeed be the strongest force for good government, if it wasn’t for the fact that they are unions

Today’s email update from CNSNews had this ironic juxtaposition of headlines:

Rep. Grayson Calls Labor Unions Strongest Force for ‘Good Government’

Unions Making Postal Service Unsustainable, GAO Says

Way to court the conservative base, Mitt

Mitt Romney’s opposition to ObamaCare appears to be based on technical objections – in other words, Romney thinks he would have done a better job of expanding his Mass-Care miracle to the national level.  NY Times, April 9:

The Democratic National Committee has posted a video compilation of Mr. Romney’s comments praising the Massachusetts health insurance mandate. Twice last week, Mr. Obama pointedly observed that Mr. Romney seemed to be lambasting a federal plan that was derivative of his own Massachusetts model.

“I keep on scratching my head,” Mr. Obama said at a fund-raising reception in Boston. “I say, ‘Boy, this Massachusetts thing, who designed that?’ ”

In response, Mr. Romney is reminding audiences that Mr. Obama has cast the Republicans as the “party of no,” devoid of ideas. “And yet,” Mr. Romney said in Bedford, “he’s saying that I was the guy that came up with the idea for what he did. He can’t have it both ways.”

He added, “If ever again somewhere down the road I would be debating him, I would be happy to take credit for his accomplishment.”

Yes, he’s bragging about the fact that ObamaCare got its inspiration from Romney’s Mass-Care, which some insist will end up bankrupting the state of Massachusetts.

Remember, Mitt: the GOP’s conservative base dominates the primary voting.  If you want to trick enough of them into thinking you’re a conservative, you need to stop showing your true colors.

(Source: Creators)

Via: Rich Lowry, NRO

Vanity, thy name is Barack Obama

What rankles, though, is Obama's habit of putting down America while praising himself. The laughable assertion that Obama has taken 'historic steps to improve our own democracy' shows not humility but an extreme vanity. A truly humble president would occasionally evince some doubt as to whether he is worthy to lead America. Obama seems to doubt whether America is worthy of being led by him.

-- James Taranto, Best of the Web (WSJ), April 12

Two Americas: Tax consumers close to outnumbering tax payers for the first time

AP reported last week that nearly half of US households will have no income tax liability whatsoever this year:

About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center, a Washington research organization.

The untaxed 47%, once they realize the power of their position, will gladly vote for politicians who promise to raise taxes on someone else, while the remaining 53% can be divided and conquered on other issues.
“A government that robs Peter to pay Paul can always depend on the support of Paul.” – George Bernard Shaw

(Source: Chip Bok)

Timing of Stevens retirement announcement belies Obama administration concerns about November elections

US Supreme Court Justice John Paul Stevens had already telegraphed his intention to retire while Obama is president, so it was only a matter of when.

The WaPo reports today that he has now informed the president that he will retire at the end of the Court’s current term.  Why now?  On the surface, the timing seems pretty routine:

Stevens said he was announcing now so that the president would have time to make a nomination and the Senate to confirm in time for the start of the court's new term next October.

But why this year?  Stevens has been quite clear that he didn’t want a Republican to name his successor, so in theory his retirement could have, for example, waited until next year.

Then again, the Obama White House senses an ill wind blowing among the electorate, a wind that might sweep some or all of the Democrat majority out of the Senate in November. 

Even if the Dems retain their majority,  the loss of just a few seats would force Obama to choose a nominee that is far less radical than he would like.   Hence, given the uncertainties of November, there is no better time than now for Obama to get a justice more to his liking.

Is there any serious doubt that Stevens is deferring to the political calculations of the administration? 

Yes, yes, I know, it happens with Republican presidents too. 

The notion of an independent judiciary is long dead – yet another symptom of the twilight years of the American republic.

Conservatives shouldn’t play the identity politics game either

Phylllis Schlafly makes her case for the type of person who should be nominated to replace John Paul Stevens, should he be the next to retire:

For as long as we can remember, the U.S. Supreme Court has included at least one military veteran. Recent examples include Republican-appointed Chief Justice William Rehnquist, who died in 2005, and Justice John Paul Stevens, who is expected to resign this year.

The Democrats have not placed a veteran on the Supreme Court in nearly half a century. When President Obama fills Stevens' seat, will the High Court be left without anyone who has military experience?

Veterans in the U.S. Senate should make sure that such an embarrassment does not occur. Cases concerning the military appear every year before the Supreme Court, and our nation will not be well-served by a court lacking in military experience.

With all due respect, Mrs. Schlafly, we shouldn’t be concerning ourselves with whether or not this group or that group is respresented among The Nine.

For my part, the only special interest I want to see represented in the Supreme Court is The Constitution of the United States.

Yeah, I know, I know. But I can dream, can’t I?

Conservatives shouldn’t play the identity politics game either

Phylllis Schlafly makes her case for the type of person who should be nominated to replace John Paul Stevens, should he be the next to retire:

For as long as we can remember, the U.S. Supreme Court has included at least one military veteran. Recent examples include Republican-appointed Chief Justice William Rehnquist, who died in 2005, and Justice John Paul Stevens, who is expected to resign this year.

The Democrats have not placed a veteran on the Supreme Court in nearly half a century. When President Obama fills Stevens' seat, will the High Court be left without anyone who has military experience?

Veterans in the U.S. Senate should make sure that such an embarrassment does not occur. Cases concerning the military appear every year before the Supreme Court, and our nation will not be well-served by a court lacking in military experience.

With all due respect, Mrs. Schlafly, we shouldn’t be concerning ourselves with whether or not this group or that group is respresented among The Nine.

For my part, the only special interest I want to see represented in the Supreme Court is The Constitution of the United States.

Yeah, I know, I know.  But I can dream, can’t I?

Quick Quote: Milton Friedman on why business is none of the government’s business

“The economic miracle that has been the United States was not produced by socialized enterprises, by government-union-industry cartels or by centralized economic planning. It was produced by private enterprises in a profit-and-loss system. And losses were at least as important in weeding out failures as profits in fostering successes. Let government succor failures, and we shall be headed for stagnation and decline.”

-- Milton Friedman

Is the GOP already losing its will to fight ObamaCare?

Jeffrey Anderson at National Review Online (emphasis added):

Less than three days after the passage of Obamacare, many Republicans are already losing their stomach for the fight. As Ezra Klein gleefully — but aptly — observes over at the Washington Post, “In about 12 hours, the GOP's position has gone from ‘repeal this socialist monstrosity that will destroy our final freedoms’ to ‘there are some things we don't like about this legislation and would like to repeal, and there are some things we support and would like to keep.’ . . . At this rate, they'll be running on expanding the bill come November.”

Sen. Jon Kyl said, “I would guess probably more realistically would be a potential repeal of pieces of the bill.” It lights the fire in the belly, doesn’t it? Sens. Mike Enzi and John Cornyn followed suit.

On MSNBC, Rudy Giuliani, said, “You just laid out how the Republicans should run the campaign, when we get a month, two months out of this — not repeal health care.” With all due respect to Mayor Giuliani, this is the sort of thinking that led to his Florida Strategy.

Sometimes, one has to wonder at Republicans’ tin ear. If they were writing Patrick Henry’s famous 1775 address, would they have advised, “Well, full liberty might be a bit much to ask for. And I’m not sure if we really want death. How about, 'Give me a little more liberty, or make me ill'?”

“Repeal, and then real reform” — that’s the right message, and the one that reflects the American people’s views. “Partial repeal” actually legitimizes Obamacare and helps to sell it by suggesting that the GOP doesn’t really think it’s all that bad.

You can read the WaPo article here.

Be sure to vote in our C-Poll some time in the next 7 days!

C-Poll: Have the Republicans grown a spine, and for the right reason?

A new poll has been posted at the top of the page:

The united House Republican stand against the just-passed health care 'reform' bill can best be attributed to…

If you wish to comment, feel free to do so here.

UPDATE:  Is the GOP already losing its will to fight ObamaCare?

UPDATE, April 2: Here are the poll results (click for larger image):

Unsurprisingly, constitutional concerns (i.e. “A newfound respect for the constitutional limits on federal power”) did not score well, although an amazing 10% thought that the bulk of the GOP congressfolks were thus motivated.  Sorry, dear reader, but that’s crazy talk.

The winner at 37% was the second choice: “A sense that the changes this law would bring about would be bad for our country.”  Well, okay, this happened to coincide with the constitutionally correct vote, but it won’t always.

Political calculation came in second, as embodied in the fourth and ninth choices (combining for 35%): “Unalloyed political opportunism” and “Two words: Election Year”.

For the record, I inclined toward one of the political calculation choices, given that many of the same folks expressing outrage at Obamacare voted for the Medicare prescription drug entitlement a few years ago.