Wintery Knight

…integrating Christian faith and knowledge in the public square

Should young Americans feel confident about their economic prospects?

Wages of Young Americans (Source: The Atlantic)

Wages of Young Americans (Source: The Atlantic)

Graph: Young People’s Wages Have Fallen Across Industries Between 2007 and 2013.

Young Americans are taking longer to graduate and graduating with more debt, but that’s not all – they aren’t find jobs, and the jobs they do find typically don’t allow them to pay back their loans.

Here’s an article from The Atlantic, which leans left.

Excerpt:

American families are grappling with stagnant wage growth, as the costs of health care, education, and housing continue to climb. But for many of America’s younger workers, “stagnant” wages shouldn’t sound so bad. In fact, they might sound like a massive raise.

Since the Great Recession struck in 2007, the median wage for people between the ages of 25 and 34, adjusted for inflation, has fallen in every major industry except for health care.

These numbers come from an analysis of the Census Current Population Surveyby Konrad Mugglestone, an economist with Young Invincibles.

In retail, wholesale, leisure, and hospitality—which together employ more than one quarter of this age group—real wages have fallen more than 10 percent since 2007. To be clear, this doesn’t mean that most of this cohort are seeing their pay slashed, year after year. Instead it suggests that wage growth is failing to keep up with inflation, and that, as twentysomethings pass into their thirties, they are earning less than their older peers did before the recession.

The picture isn’t much better for the youngest group of workers between 18 and 24. Besides health care, the industries employing the vast majority of part-time students and recent graduates are also watching wages fall behind inflation. (40 percent of this group is enrolled in college.)

It’s not just that – the Democrats are doing a pretty good job of wrecking other parts of the economy, from energy development to health care to entitlement programs to college tuition, which rises higher as government throws more money into the system. They are doing everything they can to wreck the economy with higher taxes and burdensome regulations.

As a result of our headlong rush towards socialism, the U.S. economy has now fallen to number 2 in the worldbehind China.

Look:

We’re no longer No. 1. Today, we’re No. 2. Yes, it’s official. The Chinese economy just overtook the United States economy to become the largest in the world. For the first time since Ulysses S. Grant was president, America is not the leading economic power on the planet.

It just happened — and almost nobody noticed.

The International Monetary Fund recently released the latest numbers for the world economy. And when you measure national economic output in “real” terms of goods and services, China will this year produce $17.6 trillion — compared with $17.4 trillion for the U.S.A.

As recently as 2000, we produced nearly three times as much as the Chinese.

To put the numbers slightly differently, China now accounts for 16.5% of the global economy when measured in real purchasing-power terms, compared with 16.3% for the U.S.

This latest economic earthquake follows the development last year when China surpassed the U.S. for the first time in terms of global trade.

So things are bad for young people, and it’s going to get worse.

It’s important to check what major you are studying to make sure you get a return on your investment, and don’t be scared to study something you hate if it means that you can make your career work. Your education and career choices are not about fulfillment and thrills. You have to make hard choices in order to make ends meet so that you have freedom to do the things you ought to do, especially if you want to get married and start a family. Those marriage and family plans start the day you step into high school, in my opinion.

UPDATE: 17.7% Teen Unemployment in America – Still Above Rate of 6 Years Ago and Labor Force Participation Remains at 36-Year Low.

Filed under: News, , , , , , , , , , , , , ,

White House threatens veto of bipartisan small businesses tax cut bill

It’s actually for research and experimentation, and small businesses.

Investors Business Daily reports on the story.

Excerpt:

The White House move this week to torpedo a deal between House Republicans and Senate Democrats to extend dozens of expiring tax breaks suggests that the executive action legalizing 5 million unauthorized immigrants may have been no fluke: Compromise appears to be near the bottom of President Obama’s agenda for his last two years in office.

Despite — or perhaps because of — the Republican wave election that capsized Democrats’ Senate majority, Obama is tugging his party further left, which could make it harder for the GOP to govern effectively. A shift away from the center might seem counterintuitive, but it’s consistent with the Democrats’ post-mortem election analysis that put the blame on the party’s failure to focus enough on its economic agenda.

The White House’s veto threat, which apparently surprised dealmakers, was “really pretty stunning” considering that soon-to-be-demoted Majority Leader Harry Reid was its quarterback, said Chris Krueger, political analyst at Guggenheim Partners’ Washington Research Group.

In blowing apart the deal, estimated to cost $440 billion over 10 years, the White House lined up behind liberal Massachusetts Sen. Elizabeth Warren, who attacked it as “a massive handout to big corporations” that asks “working families to pick up the tab.”

The Obama administration used the same justification in explaining its threat to veto the bill if it reached the president’s desk: “It would provide permanent tax breaks to help well-connected corporations while neglecting working families.”

The centerpiece of the deal is a $160 billion provision to make permanent and expand a research and experimentation tax credit, an idea that the administration has supported. The next two biggest pieces, both about $73 billion over 10 years, would make permanent the American Opportunity tuition tax credit and an allowance for small businesses to write off capital investments permanently.

Individuals would be able permanently to deduct sales taxes instead of income taxes, important for residents of states like Florida and Texas, at a cost of $34 billion. Controversial wind production taxes would be extended but phased out over two years, costing $20 billion.

Other smaller pieces include extending a financial-crisis related provision to shield the value of written-down mortgage principal from taxation; making permanent an expanded deduction for users of mass transit; and making permanent tax-free charitable contributions from tax-protected retirement accounts.

That last point about being able to give away your retirement plan tax-free is huge for me, because that’s what I planned to do with my 401K when I retire, since it doesn’t look like I am going to ever get married. If that tax break on charitable deductions from retirement accounts is ever revoked, it would be bad news for the apologists and Christian scholars I donate to. But it’s in keeping with the leftist idea that individuals like me are only good for earning money, but it takes a big secular government to know how to spend it. They have other plans for my money, like free abortions, IVF and sex changes. Yay, big government!

Filed under: News, , , , , ,

Supply-side economist Larry Kudlow: marriage is pro-economic-growth

Here’s a Real Clear Politics editorial from one of the biggest supply-side economics boosters out there.

Excerpt:

The greatest economic challenge of our time is how to restore economic growth. Over the past dozen years, average real growth has slowed to 1.8 percent annually, under both Republican and Democratic presidents and congresses. It’s a bipartisan problem.

And it’s a new one. For the past 50 years or so, the American economy grew at just less than 3.5 percent per year. But we’re now experiencing one of the longest slow-growth periods in the past 100 years. Excluding the Great Depression, I bet it is the longest slow-growth period in a century.

There are any number of fiscal and monetary prescriptions for restoring economic growth. As a Reagan supply sider, I would recommend lower marginal tax rates, lighter regulations, limited government and a sound dollar.

But I want to add this to the list: marriage. I have come to believe that marriage is a key element of a stronger economy.

Like any good economist, he’s got the numbers to back it up, too:

Naomi Schaefer Riley writes that “children of married parents are more likely to graduate high school, less likely to go to jail and more likely to delay sexual activity. And of course, children of unmarried parents are more than five times as likely to live in poverty.”

Economic writer Robert Samuelson notes that single-parent families have exploded, that more than 40 percent of births now go to the unwed, and that the flight from marriage “may have subtracted from happiness.” Citing a study from Isabel Sawhill, he notes that some unwed mothers “will have multiple partners and subject their children ‘to a degree of relationship chaos and instability that is hard to grasp.'”

Heritage Foundation economist Stephen Moore writes “that marriage with a devoted husband and wife in the home is a far better social program than food stamps, Medicaid, public housing or even all of the combined.” Moore points to a Heritage study showing how welfare households are much more likely to have no one working at all, with social assistance becoming a substitute for work.

A recent report from the American Enterprise Institute and the Institute for Family Studies, authored by W. Bradford Wilcox and Robert Lerman, reveals that married men have higher average incomes, seem to be more productive at work and work more and earn more. Wilcox and Lerman write that 51 percent of the 1980-2000 decline in male employment is due to the drop in marriage rates, and is highest among unmarried men. They find that “differing employment rates among married and unmarried men aren’t simply due to education levels or race, either.”

They conclude: “Promoting the importance of marriage, looking for ways to reduce marriage penalties in current means-tested welfare programs and engaging leaders at every level to find ways to strengthen marriage in their communities, are other critical steps to take to restore a culture of marriage.”

I’ll only add this, as I did at the Coolidge Foundation dinner: While restoring economic growth may be the great challenge of our time, this goal will never be realized until we restore marriage.

In short, marriage is pro-growth. We can’t do without it.

In case you missed it, there was a nice new study linking marriage to economic growth. It was put out by the American Enterprise Institute, a fiscally conservative think tank. It’s getting to be that fiscal conservatives are more interested in social conservatism than the reverse. Now if only we could get pro-lifers and pro-natural-marriage people to come towards lower taxes, smaller government, less restrictive regulations and a stronger dollar. How about it, social conservatives? Can you you run your family better when government leaves you more money in your pocket? Fiscal conservatism and social conservatism go together like peanut butter and jelly.

By the way, if you’d like to read a remarkable booklet put out by the Heritage Foundation called “Indivisible”, click here. In it, you’ll find well-known social conservatives advocating for fiscal conservatism, and well-known fiscal conservatives advocating for social conservatism. The essays are short and easy to understand. They don’t try to prove everything, just one little point per essay. You’ll find lots of names you recognize in it, like Jennifer Roback Morse, Michele Bachmann, Paul Ryan and Jay Richards.

Filed under: Commentary, , , , , , , , ,

Harvard poll: majority of youth likely voters favor Republicans this election

I’m not sure if I really believe this Harvard Institute of Politics poll because young people seem to be so disinterested in moral issues, economics and national security these days. But I guess even young people know whether they have jobs, whether they like living with their parents and whether they want to have their heads chopped off. Right?

Right:

More than half – 51 percent – of America’s millennials who say they will “definitely be voting” in November prefer a Republican-run Congress, with only 47 percent favoring Democrat control, according to a Harvard Institute of Politics poll.

This marks a significant departure from the institute’s findings before the 2010 midterm elections, when America’s 18-29 year olds who were definitely voting favored Democrats 55 percent to 43 percent.

Institute director Maggie Williams described the youth vote as “politically up for grabs” and a potential “swing vote” for control of Congress in a conference call to announce the results.

“The message to political candidates is clear: Ignore millennial voters at your peril,” Williams said.

What’s more, the poll found that only 43 percent of millennials approve of President Obama’s job performance, while 53 percent disapprove. It is his second-lowest rating in the institute’s polls since he took office. The figures are only slightly worse for Obama among those who will “definitely be voting”: 42 percent approve, 56 percent disapprove.

The results showed a stark divide in presidential approval along racial and ethnic lines. Only three in 10 young whites approve of the president’s performance, while nearly eight in 10 young blacks approve. Hispanic youth approval fell to 49 percent, down from 60 percent just six months ago.

Director of Polling John Della Volpe described youth voters as “a little bit less Democratic” than during Obama’s first term, speaking on the conference call. Factoring in the voting likelihood of all millennials, more 18-29 year olds prefer a Democrat-controlled Congress than a Republican one (50 percent to 43 percent), Della Volpe said – but the age group has become less supportive of the party.

“A lot of it comes down to turnout,” Della Volpe said. “It seems that young Republicans are more likely to participate next week.”

And this, I really like:

The poll also surveyed voters about terrorism threats. More than six in 10 millennials say they are “a great deal” or “somewhat” worried about another terrorist attack, with young women (66 percent) more afraid than men (56 percent).

I guess my naive view of young, unmarried women is that they are all like the ones I see in my gym – watching the Bravo channel or game shows to see people with too much make say mean things to one another. But it turns out that they are actually concerned with the economy and national security, which is a very good thing. Welcome aboard, young ladies! It’s not a shame to have a fear of something if the fear is justified, and if you do something about it to make it go away.

And by the way, the men in the gym are just as bad about not paying attention to politics and the economy. The day of the terrorist attack in Ottawa, the men were all watching ESPN sports. Horrible! Even the muscle bound Christian guy changes the channel from Fox News to ESPN as soon as I leave. The only person who is responsible at all is the gay guy – he at least watches local news.

Filed under: News, , , , , , , ,

Hillary Clinton’s views on the economy, taxes and jobs

The video above explains Hillary Clinton’s views on how jobs get created. She doesn’t think that private companies create jobs.

Here’s the story from economist Stephen Moore writing at Investors Business Daily.

Excerpt:

Hillary Clinton is getting deservedly attacked for her imbecilic statement at a Democratic political gathering in Massachusetts on Friday about business and jobs.

“Don’t let anybody tell you that, ah, you know, it’s corporations and businesses that create jobs,” she preached, to loud applause. “You know that old theory, trickle-down economics. That has been tried, that has failed. It has failed rather spectacularly.”

It may not be too surprising that Hillary can’t connect the dots that it takes an employer to create an employee to create wages and salaries.

That’s how some 150 million Americans get paid every week. Ms. Clinton has made her millions in the cattle futures market, as a government employee and giving speeches for fees of $250,000 a pop. Nice work if you can get it. The rest of us mere mortals need a paycheck.

Hillary’s witless statement might be written off as campaign hyperbole, and some might think the Democratic front-runner for president simply got carried away speaking to her “progressive” base and didn’t really mean it. Sometimes Republicans get into the act, as when Mitt Romney’s GOP rivals attacked him in 2012 for being rich and a successful investor.

But the scary thing is she really DID mean it. Her sophomoric comment, alas, reflects a long-simmering ideologically driven war against business that has become a central platform of the modern-day Democratic party.

Her remarks were simply an extension of President Obama’s “you didn’t build that” statement denigrating businessmen and women who have created companies — large and small.

In the left mindset, economic output and jobs are achieved collectively and thanks to the beneficence of government, not because of the ambition, drive, vision, risk-taking and guts that it takes to start a new enterprise out of nothing.

So who creates jobs then? Well, if it’s not private sector businesses then the only thing left to create jobs is the government. She thinks government creates jobs. And the more government raises taxes, the more money government has to give people jobs.

But is that really how it has worked in the past?

Let’s see.

Consider this article by the Cato Institute, a libertarian think tank, which discusses how the Reagan tax cuts affected the unemployment rate.

Excerpt:

In 1980, President Carter and his supporters in the Congress and news media asked, “how can we afford” presidential candidate Ronald Reagan’s proposed tax cuts?

Mr. Reagan’s critics claimed the tax cuts would lead to more inflation and higher interest rates, while Mr. Reagan said tax cuts would lead to more economic growth and higher living standards. What happened? Inflation fell from 12.5 percent in 1980 to 3.9 percent in 1984, interest rates fell, and economic growth went from minus 0.2 percent in 1980 to plus 7.3 percent in 1984, and Mr. Reagan was re-elected in a landslide.

[…]Despite the fact that federal revenues have varied little (as a percentage of GDP) over the last 40 years, there has been an enormous variation in top tax rates. When Ronald Reagan took office, the top individual tax rate was 70 percent and by 1986 it was down to only 28 percent. All Americans received at least a 30 percent tax rate cut; yet federal tax revenues as a percent of GDP were almost unchanged during the Reagan presidency (from 18.9 percent in 1980 to 18.1 percent in 1988).

What did change, however, was the rate of economic growth, which was more than 50 percent higher for the seven years after the Reagan tax cuts compared with the previous seven years. This increase in economic growth, plus some reductions in tax credits and deductions, almost entirely offset the effect of the rate reductions. Rapid economic growth, unlike government spending programs, proved to be the most effective way to reduce unemployment and poverty, and create opportunity for the disadvantaged.

The Daily Signal describes the effects of the Bush tax cuts.

Excerpt:

President Bush signed the first wave of tax cuts in 2001, cutting rates and providing tax relief for families by, for example, doubling of the child tax credit to $1,000.

At Congress’ insistence, the tax relief was initially phased in over many years, so the economy continued to lose jobs. In 2003, realizing its error, Congress made the earlier tax relief effective immediately. Congress also lowered tax rates on capital gains and dividends to encourage business investment, which had been lagging.

It was the then that the economy turned around. Within months of enactment, job growth shot up, eventually creating 8.1 million jobs through 2007. Tax revenues also increased after the Bush tax cuts, due to economic growth.

In 2003, capital gains tax rates were reduced. Rather than expand by 36% as the Congressional Budget Office projected before the tax cut, capital gains revenues more than doubled to $103 billion.

The CBO incorrectly calculated that the post-March 2003 tax cuts would lower 2006 revenues by $75 billion. Revenues for 2006 came in $47 billion above the pre-tax cut baseline.

Here’s what else happened after the 2003 tax cuts lowered the rates on income, capital gains and dividend taxes:

  • GDP grew at an annual rate of just 1.7% in the six quarters before the 2003 tax cuts. In the six quarters following the tax cuts, the growth rate was 4.1%.
  • The S&P 500 dropped 18% in the six quarters before the 2003 tax cuts but increased by 32% over the next six quarters.
  • The economy lost 267,000 jobs in the six quarters before the 2003 tax cuts. In the next six quarters, it added 307,000 jobs, followed by 5 million jobs in the next seven quarters.

The timing of the lower tax rates coincides almost exactly with the stark acceleration in the economy. Nor was this experience unique. The famous Clinton economic boom began when Congress passed legislation cutting spending and cutting the capital gains tax rate.

So in the past, the trickle-down supply-side tax cuts that Hillary Clinton derided in her speech created lots of jobs. We have to do what is known to work.

Filed under: News, , , , , , , , , ,

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