Another round-up on government ineptitude.
This time I’m focusing on the payroll tax cut, which replaced the “Making Work Pay” tax credit with a 2% reduction in the employee-side FICA taxes from 6.2% to 4.2%.
Republicans love tax cuts. They love em. They used to love this one, but then Obama supported it. So now they hate it.
I’ll give you the short and sweet reason the Republicans oppose the extension of this tax reduction: removing it will stifle short-run economic performance.
Okay, so the US GDP is worth $13.5 trillion. This tax cut is worth $120 billion, or .88% of the total US Gross Domestic Product.
If Republicans can block the extension of the payroll tax cut, .88% of GDP disappears immediately. This is good news when you want to win an election.
Here’s a chart of GDP growth in the United States:
If Republicans can kill off this tax cut, they can push the United States marginally closer to recession. Recession, of course, is two consecutive quarters of negative GDP growth. This tax cut will not push the US economy into negative territory; however, it does have the power to push us to no growth, or less than 1% growth.
That’s good for a presidential election season!
We have a bunch of morons running this country. This is just one example of the games they play to win elections.
Posts this Week
Good reads all around. I actually had a guest post run at BudgetingIntheFunStuff last week about municipal bonds, and then Crystal turned a comment into a post about dividends. Feeling so loved over there. 😛
- Crystal sold her hair, too. I find it insane what people will buy. But hell, I’d do it too if I could.
- Len Penzo has 100 words on why it’s so hard to beat a homegrown tomato. I love backyard tomatoes.
- Sandy at YesIamCheap wrote about how women flirt for freebies. Made me LOL.
- Evan says no investment strategy is ever perfect. I’m happy inside he found that a few mutual funds have beaten their benchmarks. You don’t have to lose to the market!
- Kevin at Invest it Wisely writes about gold vs. fiat money. Important debate going on right now.
- Find out why Andrea at SoOverDebt just threw up in her mouth a little.
- Ashley at MoneyTalksCoaching wrote about accidental landlords. Interesting thoughts on this one.
- Derek at LifeandMyFinances writes about good debt vs. bad debt. If it feels good, do it! Debt 4 life.
- FinancialUproar counters the point to say debt isn’t evil. I agree.
- Sam discusses how a college degree will set you free. College degrees are a great topic for Mr. Controversy. You don’t even have to go out of your way to start a firestorm in the PF community.
- 101Centavos wrote about welding jobs. A few of my extended family members are welders, and they definitely bring home the bacon relative to the investment required to become a welder.
- Darwin at DarwinsMoney writes about the death of capitalism and why capitalism isn’t doomed. So misunderstood, capitalism is.
Photo by: John Morgan