An article in the Wall St. Journal paints a gloomy picture for the future
U.S. companies are scaling back investment plans at the fastest pace since the recession, signaling more trouble for the economic recovery.
Half of the nation's 40 biggest publicly traded corporate spenders have announced plans to curtail capital expenditures this year or next, according to a review by The Wall Street Journal of securities filings and conference calls.
Nationwide, business investment in equipment and software—a measure of economic vitality in the corporate sector—stalled in the third quarter for the first time since early 2009. Corporate investment in new buildings has declined.
At the same time, exports are slowing or falling to such critical markets as China and the euro zone as the global economy downshifts, creating another drag on firms' expansion plans.
Uncertainty
Corporate executives say they are slowing or delaying big projects to protect profits amid easing demand and rising uncertainty. Uncertainty around the U.S. elections and federal budget policies also appear among the factors driving the investment pullback since midyear. It is unclear whether Washington will avert the so-called fiscal cliff, tax increases and spending cuts scheduled to begin Jan. 2.
Nancy Pelosi has stated there will no agreement on the fiscal cliff unless there is a tax increase on the so-called rich.
House Democratic leader Nancy Pelosi says she's hopeful lawmakers can come to a deal to avoid a year-end “fiscal cliff” but any agreement has to include tax rate increases for the wealthy.
She tells ABC's “This Week” that she can't accept a deal that caps deductions and closes some loopholes but does not alter current tax rates for the wealthy.
The California Democrat says “just to close loopholes is far too little money” and other ideas have to be considered. Republicans have suggested they are open House Democratic leader Nancy Pelosi says she's hopeful lawmakers can come to a deal to avoid a year-end “fiscal cliff” but any agreement has to include tax rate increases for the wealthy.
She tells ABC's “This Week” that she can't accept a deal that caps deductions and closes some loopholes but does not alter current tax rates for the wealthy.
The California Democrat says “just to close loopholes is fa
r too little money” and other ideas have to be considered. Republicans have suggested they are open to finding more revenues.
As we've noted previously, increasing taxes on the “wealthy” would net only about $70 billion per year against a deficit of $1.25 trillion.
Additionally, it is estimated that increasing the taxes on the “wealthy” would have a serious and negative effect on the economy:
• Unemployment would rise 0.5 percent, which translates to 710,000 fewer jobs…
• Real after-tax wages would fall by 1.8 percent…
• GDP would fall by 1.3 percent…
• Capital stock and investment would drop by 1.4 percent and 2.4 percent, respectively
Investors are already taking action in anticipation of tax increases.
Business owners and investors are rapidly maneuvering to shield themselves from the prospect of higher taxes next year, a strategy that is sending ripples across Wall Street and broad areas of the economy.
Take Steve Wynn, the casino magnate, who has been a vocal critic of higher tax rates. He and his fellow shareholders in Wynn Resorts, the company announced, will collect a special dividend of $750 million on Tuesday, a payout timed to take advantage of current rates. Experts estimated that taking the payout this year instead of next could save Mr. Wynn, who owns a sizable stake in the company, more than $20 million.
For the wealthy like Mr. Wynn, the overriding goal is to record as much of their future income this year as they can. This includes moves as diverse as sales of businesses, one-time dividends and the sale of stocks that have been big winners.
But the democrat position is not really about revenues. It's about the perception of “fairness.” It's about blood lust. If the economy cannot be repaired, the left wing portion of the population will be satiated when those better off than they suffer more pain, regardless of the effect on the economy. Barack Obama has never done a single thing to create wealth other than his own. He has spent his entire life learning and teaching others how to take wealth from others through envy, hate and division. As Doug Ross pointed out, Obama has assumed the role of deciding who needs what and will take from you anything he feels you don't “need.”
…what I'm not going to do is extend further a tax cut for those who don't need it.”
The only question is, what won't we need next?
DrJohn has been a health care professional for more than 30 years. In addition to clinical practice he has done extensive research and has published widely with over 70 original articles and abstracts in the peer-reviewed literature. DrJohn is well known in his field and has lectured on every continent except for Antarctica. He has been married to the same wonderful lady for over 30 years and has three kids- two sons, both of whom are attorneys and one daughter on her way into the field of education.
DrJohn was brought up with the concept that one can do well if one is prepared to work hard but nothing in life is guaranteed.
Except for liberals being foolish.