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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: Peter Dierks who wrote (61921)	1/31/2013 9:59:35 AM
From: LLCF	Read Replies (1) \| Respond to of 71588

It's all moot.... The gig is probably up. Further, if he's gonna knit pick on a quarter by quarter basis then the fastest way to a massive quarterly (& probably annual) contraction is large deficit cuts or immediate balance of the budget. Of course we should have let all this happen in 08... Bothe Bush and Obama, AND we should do it NOW... Instead we wallow along listing starboard taking on water because FED, Dems, AND Reps are afraid to get in the lifeboats and let the hulk go down. Why Reps?? Defense... Just as important as any other expenses AND always has been: in other words both parties got us here:) DAK

To: Peter Dierks who wrote (61921)	2/1/2013 10:11:08 PM
From: greatplains_guy	1 Recommendation Respond to of 71588

The Spending Sequester Will Grow the Private Economy -- Don't Back Off By Larry Kudlow January 31, 2013 Today's report of a 0.1 percent gross domestic product decline for the fourth quarter came as a surprise to most forecasters. But it actually masks considerable strength in the private economy. Namely, housing investment in the fourth quarter jumped 15.3 percent annually, business equipment and software spiked 12.4 percent, and real private final sales rose 2.6 percent. All in all, the domestic private sector of the economy increased 3.4 percent annually -- a very respectable gain. And here's one for the record books: Working ahead of year-end tax hikes, individuals shifted so much money to the fourth quarter at the 35 percent top rate that personal income grew by 7.9 percent annually -- a huge number. And there's more: In order to beat the taxman, dividend income rose 85.2 percent annually. You think tax incentives don't matter? Guess again. Now, all this private-sector strength occurred despite the fact that government spending -- namely, military spending -- dropped 6.6 percent. Inventories also lost ground, and the trade deficit widened. But here's a key point: Military spending has now fallen virtually to its lower sequester-spending-cut baseline. It did so in one quarter by about $40 billion. So the brunt of the impact over the coming years has already been felt. (Normally, as of recent years, military spending has been virtually flat.) Which leads me to another key point: Even with the fourth-quarter contraction, the latest GDP report shows that falling government spending can coexist with rising private economic activity. This is an important point in terms of the upcoming spending sequester. Lower federal spending, limited government and a smaller spending-to-GDP ratio will be good for growth. The military spending plunge will not likely be repeated. But by keeping resources in private hands, rather than transferring them to the inefficient government sector, the spending sequester is actually pro-growth. Big-government Keynesians think big spending provides big growth. They are wrong. This has been a 2 percent recovery -- the worst in modern times -- dating back to 1947. So let's try something different. Let's shrink government. Let's let the private sector breathe and generate entrepreneurship and risk-taking. Spending is the true tax measure of the economy, according to Milton Friedman, Friedrich Hayek and others. Even a modest sequester spending cut of maybe $60 billion in 2013, and perhaps more than $1 trillion over 10 years (most of which will come from a slower spending growth rate, not real reductions), will be the best thing to inspire business and market confidence as well as international credibility. And it maybe even shave a point or two off the spending share of GDP. On March 1, the spending sequester is supposed to kick in by law. If Congress wants to help the U.S. economy, the best thing it can do right now is implement this sequester. Then it can round out an even larger growth package, including large- and small-business tax reform and adjustments to stop entitlements from going bankrupt. Lawrence Kudlow is host of CNBC's The Kudlow Report and co-host of The Call. He is also a former Reagan economic advisor and a syndicated columnist. Visit his blog, Kudlow's Money Politics. realclearpolitics.com