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0.1% Shrinking US Economy in Fourth Quarter: Will Cutting Taxes Help Recovery?

Fef 2013/01/30 18:29:32
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Tax increases scheduled to go into effect in 2013 may have caused the economy to shrink during October - December 2012. Taxes went up for most Americans despite pledges from President Obama to only raise taxes on the wealthy. Social Security taxes went up about 2%, meaning a family earning $50,000 will have to pay $1,000 more in taxes in 2013.

The Associated Press reported that the shrinking economy may signal bigger problems. The reasons for the shrinking economy may get worse as taxes continue to increase under President Obama and the Democratic agenda. Twice in the article the AP, refers to higher taxes as a threat to economic recovery.

Don't expect a recovery anytime soon, the article says because taxes will affect our spending: "The economy may stay weak at the start of the year because Americans are coming to grips with an increase in Social Security taxes that has left them with less take-home pay." and the article concludes with, "The surprise contraction could raise fears about the economy's ability to handle tax increases that took effect in January and looming spending cuts."

The AP, regarded as a mainstream media source, said that the lower growth may give incentive to the Federal Reserve to add more stimulus spending, which means redistributing taxpayer money.

In August 2009, President Obama clearly stated his position that we shouldn't raise taxes in a recession. Watch the video to see Obama's agreement that tax increases would hurt the economy.


CNBC.COM reports:
The US economy posted a stunning drop of 0.1 percent in the fourth quarter, defying expectations for slow growth and possibly providing incentive for more Fed stimulus.

Read More: http://www.cnbc.com/id/100419252

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Top Opinion

  • Michael 2013/01/30 18:39:02
    Cutting Taxes Helps the Economy
    Michael
    +5
    Stimulus is not the answer either, that means more taxes down the road. People must "trust" the government policy and know what to expect in the long run. Health Insurance, Obama Care, has also caused a damper...businesses don't know what to expect. Now, with the amnesty for illegal aliens on the table, another damper to the labor market and benefits sector...The Democrats want it because it means, ultimately, more votes, but it means more and higher taxes, with the accompanying loss of jobs and unions trying to have them join to raise dues, more votes and and and...

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Opinions

  • thefatguy 2013/02/03 04:20:16
    Cutting Taxes Helps the Economy
    thefatguy
    Yes, cutting taxes to ZERO sounds like a good round number.
  • Giantfan 2013/02/02 03:26:42
    Cutting Taxes Does Not Help the Economy
    Giantfan
    +2
    Actually the shrinking of .1% in GDP was caused mostely by 1.33% reduction in government spending in the 4th quarter. Austerity causes job losses. Hey but 2.17 million jobs created in 2012 is 1.07 million more than in the 8 years of Bush's presidency.
  • MOMMA THOMAS 2013/02/01 23:04:20
    Cutting Taxes Helps the Economy
    MOMMA THOMAS
    OF COURSE...
  • The Aging Yankee Liberal Do... 2013/02/01 05:24:25
    Cutting Taxes Helps the Economy
    The Aging Yankee Liberal Douche
    +2
    cutting taxes for whom though? one class needs a tax cut, the other one doesn't.
  • Andrew 2013/02/01 01:24:32
    Cutting Taxes Helps the Economy
    Andrew
    There's too much taxes, they need to be reduced because it makes it harder on Americans.
  • tff~PWCM~JLA 2013/01/31 11:35:42
    Cutting Taxes Helps the Economy
    tff~PWCM~JLA
    That's what is exactly needed but the commi in the white-house won't let that happen!
  • FredtheRapist 2013/01/31 05:36:45
    Cutting Taxes Helps the Economy
    FredtheRapist
    tax cuts for all, not just the rich! government spending needs cut more than anything though
  • JeffDeWitt 2013/01/31 04:00:24
    Cutting Taxes Helps the Economy
    JeffDeWitt
    Cutting taxes helps, but unless it's done right it's just another sugar high.

    A flatter, fairer tax system and massive deregulation are what we really need to get the economy turned around. But our current leadership isn't smart enough to accept that... Obama and his cadre believe all good comes from the Imperial City of Washington.
  • P. Sturm 2013/01/31 02:58:44
    Cutting Taxes Does Not Help the Economy
    P. Sturm
    +1
    Backing the dollar and eliminating the Fed is the only hope.
  • burning... P. Sturm 2013/01/31 03:22:06
    burningsnowman
    I don't really think backing the dollar would do much good at this point. It might even make things worse if it was tied to something prone to deflation like gold. On the other hand, I agree that getting rid of the Federal Reserve is essential. Although that raises the question of what you would take its place. Do you support free banking/competing currencies? Leaving the issuing of currency entirely to congress? Some other alternative?
  • SickOfBigGov 2013/01/31 02:49:47 (edited)
    Cutting Taxes Helps the Economy
    SickOfBigGov
    +1
    Oh yeah...spending money is the answer...oh wait, we tried that already..didn't work. Well, then let's raise 'revenues', gong..wrong answer..

    Let's try printing more money and spending it....again..should work this time, right? No worries, we'll just blame Fox news if it doesn't....LOL..morons.

    The inheritance tax.
    Accounts Receivable Tax
    Building Permit Tax
    CDL license Tax
    Cigarette Tax
    Corporate Income Tax
    Dog License Tax
    Excise Taxes
    Federal Income Tax
    Federal Unemployment Tax (FUTA)
    Fishing License Tax
    Food License Tax
    Fuel Permit Tax
    Gasoline Tax (currently 44.75 cents per gallon)
    Gross Receipts Tax
    Hunting License Tax
    Inheritance Tax
    Inventory Tax
    IRS Interest Charges IRS Penalties (tax on top of tax)
    Liquor Tax
    Luxury Taxes
    Marriage License Tax
    Medicare Tax
    Personal Property Tax
    Property Tax
    Real Estate Tax
    Service Charge Tax
    Social Security Tax
    Road Usage Tax
    Recreational Vehicle Tax
    Sales Tax
    School Tax
    State Income Tax
    State Unemployment Tax (SUTA)
    Telephone Federal Excise Tax
    Telephone Federal Universal Service Fee Tax
    Telephone Federal, State and Local Surcharge Taxes
    Telephone Minimum Usage Surcharge Tax
    Telephone Recurring and Nonrecurring Charges Tax
    Telephone State and Local Tax
    Telephone Usage Charge Tax
    Utility Taxes
    Vehicle License Registration Tax
    Vehicle Sales Tax
    Watercraft Registration Tax
    Well P...



    &

    Oh yeah...spending money is the answer...oh wait, we tried that already..didn't work. Well, then let's raise 'revenues', gong..wrong answer..

    Let's try printing more money and spending it....again..should work this time, right? No worries, we'll just blame Fox news if it doesn't....LOL..morons.

    The inheritance tax.
    Accounts Receivable Tax
    Building Permit Tax
    CDL license Tax
    Cigarette Tax
    Corporate Income Tax
    Dog License Tax
    Excise Taxes
    Federal Income Tax
    Federal Unemployment Tax (FUTA)
    Fishing License Tax
    Food License Tax
    Fuel Permit Tax
    Gasoline Tax (currently 44.75 cents per gallon)
    Gross Receipts Tax
    Hunting License Tax
    Inheritance Tax
    Inventory Tax
    IRS Interest Charges IRS Penalties (tax on top of tax)
    Liquor Tax
    Luxury Taxes
    Marriage License Tax
    Medicare Tax
    Personal Property Tax
    Property Tax
    Real Estate Tax
    Service Charge Tax
    Social Security Tax
    Road Usage Tax
    Recreational Vehicle Tax
    Sales Tax
    School Tax
    State Income Tax
    State Unemployment Tax (SUTA)
    Telephone Federal Excise Tax
    Telephone Federal Universal Service Fee Tax
    Telephone Federal, State and Local Surcharge Taxes
    Telephone Minimum Usage Surcharge Tax
    Telephone Recurring and Nonrecurring Charges Tax
    Telephone State and Local Tax
    Telephone Usage Charge Tax
    Utility Taxes
    Vehicle License Registration Tax
    Vehicle Sales Tax
    Watercraft Registration Tax
    Well Permit Tax
    Workers Compensation Tax


    Not one of these taxes existed 100 years ago, & our nation was the most prosperous in the world. We had absolutely no national debt, had the largest middle class in the world, and Mom stayed home to raise the kids.

    When are we going to get FED up?
    (more)
  • Tuna 2013/01/31 01:35:44 (edited)
    Cutting Taxes Helps the Economy
    Tuna
    +1
    This is bad news for ALL Americans and certainly not for the RINOs to crow about. bad news
    TEA anyone???????
  • RogerCoppock 2013/01/31 00:18:30 (edited)
    Cutting Taxes Helps the Economy
    RogerCoppock
    +1
    REALLY! Someone actually thinks that they can measure the US economy to an accuracy of 0.001 in a 3 month period. The people behind this article have no background in statistical methods or science.
  • Tuna RogerCo... 2013/01/31 01:41:27
    Tuna
    +1
    Very hard to do without a budget.
  • Lester 2013/01/30 23:09:30
    Cutting Taxes Does Not Help the Economy
    Lester
    +1
    Cutting taxes increase the deficit and hurts the economy.
  • sbtbill Lester 2013/01/31 00:33:35
    sbtbill
    +1
    Not necessarily. It would depend on which taxes. For instance lower income tax cuts usually help. I suspect that cutting sales taxes would help the economy, too.
  • Lester sbtbill 2013/01/31 02:35:03
    Lester
    You're sure right about sales tax. Where I live sales tax is 3 TIMES what it was when I was growing up. So not only has the amount of tax gone up because everything is more expensive, but the rates have totally gone through the roof.
  • Tuna Lester 2013/01/31 01:39:17
    Tuna
    +1
    Spending more than you take in increases the deficit. Cutting taxes has always produced new jobs, more tax payers, more revenues but they never stop spending, both parties.
  • JL 2013/01/30 22:23:13
    Cutting Taxes Helps the Economy
    JL
    DOES ANYONE REMEMBER THE LIES TOLD IN SEPTEMBER, OCTOBER, NOVEMBER...RIGHT BEFORE THE ELECTION...THE ECONOMY IS GAINING GROUND ...DOES ANYONE REMEMBER "OBAMACARE" WOULD REDUCE HEALTHCARE COST...
    THE ECONOMY CONTINUES TO CONTRACT...APPLAUSE TO THE OBAMA VOTERS FOR DOING IT AGAIN....AND YOU !*#*! STILL CONTINUE TO SPEW THE BS!!!
  • AG 2013/01/30 21:06:55
    Cutting Taxes Helps the Economy
    AG
    +1
    Cutting taxes helps the economy grow when it's in such a bad shape as it is now. People have more money to spend when they are taxed less!! CUT SPENDING!
  • sbtbill 2013/01/30 20:48:24
    Cutting Taxes Helps the Economy
    sbtbill
    Depends on the taxes. Restoring the FICA tax holiday in some fashion would help the economy. Cutting the top tax rate would have no effect on the economy. Only a tax cut that increased spending would help.
  • Tuna sbtbill 2013/01/31 01:55:44
    Tuna
    Six of one., half dozen of the other. Cut FICA to reduce deficit but adds to debt. I told you; the Brits did this "tax the rich" crap and killed their economy; the French are doing the same mistake. The corporate tax is highest in the world;killing jobs, reduces the number of tax payers, reduces revenues.
  • Joe Shwingding BN-ZERO 2013/01/30 19:35:48
    Cutting Taxes Does Not Help the Economy
    Joe Shwingding BN-ZERO
    +2
    If cutting taxes helps the economy where was the sustainable growth for the 8 years of Bush trickle down theory?
  • Stix Joe Shw... 2013/01/30 21:53:01
    Stix
    +2
    We had an unemployment rates of 4% to 5 % under Bush (near full employment)...GDP growth averaged of 3.5% to 4.5% per year under Bush (less then 2% under Obama for the past 4 years)...2007 saw the most tax revenue EVER to be collected by the US government...lower taxes worked. Our recovery is at a near stand still BECAUSE of higher taxes and more regulation from Obama...lower taxes work every time. People like you fail to understand that there is the SAME amound of money in the economy...the only difference is who gets to spend it...the folks will always spend their own money smarter then the government...
  • Joe Shw... Stix 2013/01/30 22:25:17
    Joe Shwingding BN-ZERO
    +1
    LMBO!! I'm sorry when I read this I spewed my lunch.
    "People like you fail to understand that there is the SAME amound of money in the economy" .... Bwahahaha ....
    FED balance sheet

    GDP, employment had everything to do with an artificial economy under GWB. Which is exactly why it all failed. What people like YOU dont understand is simple economics.
  • Stix Joe Shw... 2013/01/31 00:21:25
    Stix
    ????? Your point is?
  • Joe Shw... Stix 2013/01/31 01:37:53
    Joe Shwingding BN-ZERO
    +1
    You dont know what you are talking about.
  • Tuna Joe Shw... 2013/01/31 02:00:21
    Tuna
    same amount until the Fed begins to pump out more debt notes and devalues the dollar, bonds, securities.
  • Joe Shw... Tuna 2013/01/31 02:04:34 (edited)
    Joe Shwingding BN-ZERO
    The FED doesnt "pump out" debt notes, bonds or securities" ... like your buddy up above - you dont know what you are talking about.
  • Tuna Joe Shw... 2013/01/31 02:09:36
    Tuna
    A wreckless Fed stops the flow of money with its policy. Lower interest should mean more loans which means more money changing hands, that's the ECONOMY !!! That is the private sector's job to get the money flowing. Greenspan stayed out pretty much, Bernanke is interfering.
  • Joe Shw... Tuna 2013/01/31 03:01:32 (edited)
    Joe Shwingding BN-ZERO
    +1
    Yet we have had historic low interest rates under both Bernanke and Greeny. Both have kept interest rates at or below 1% for excessive amounts of time. This policy is beyond the historic "more loans","more money changing hands",and "more investment". The FED has stepped way out from its mandate and even redefined what money is. They should be incarcerated.

    Greenspan stayed out? LOL ... every crises Greeny met he lowered interest rates ... he was a serial rate cutter
  • Tuna Joe Shw... 2013/01/31 03:08:32
    Tuna
    Kept the money flowing; Bernanke has it stagnant, has foreigners afraid of it, bonds, securities, treasuries.
  • Joe Shw... Tuna 2013/01/31 03:15:41
    Joe Shwingding BN-ZERO
    +1
    First the FED has nothing to do with securities, unless you have some inside information that shows the FED purchasing stocks.
    Foreigners continue to buy Treasuries in record amounts by simple notice that interest rates on long term treasuries are at historic lows.
    Bonds are issued by the USGovt at a rate the market will accept. No demand drives yields up and bond prices down. That is simply not happening.
  • Tuna Joe Shw... 2013/01/31 12:48:24
    Tuna
    The Fed buys mortgage backed securities from banks, issuing a credit to their reserves WHICH creates virtual money for the bank but that virtual money is not backed by anything.
  • Joe Shw... Tuna 2013/01/31 14:44:27
    Joe Shwingding BN-ZERO
    +1
    Actually if you substituted "US Treasuries" in that statement you would be correct. Why? Because UST are supposedly "AAA". When the FED buys MBS it is literally changing the definition of its reserves balance sheet... or if you would prefer, the definition of money. The FED is to hold only the highest rated paper on its books to be counted as reserves.
    Remember MBS are nothing more than a derivative, and these "derivatives" are nothing more than toxic waste. They are ABS, CDO, CDO2, etc. THEY HAD NO MARKET!
    FASB, at the beginning of the crises in April 2009 (or May, cant remember) changed the accounting rules for the banks BECAUSE of these toxic assets. They are worthless and now the FED is taking them off the insolvent banks books and counting them as reserves.
    F'n amazing!
  • Tuna Joe Shw... 2013/01/31 14:56:54
    Tuna
    Worthless because the rest of the intelligent world is looking on with their mouths wide open; Bernanke is either highly incompetent or a damn liar.
  • Joe Shw... Tuna 2013/01/31 18:55:37
    Joe Shwingding BN-ZERO
    "the rest of the intelligent world" .... bought these up because they were rated 'AAA' ... When they found out they were not they all wanted their money back. There is the liquidity crunch! The banks balance sheets cannot cover all the paper crap they created.
  • Tuna Joe Shw... 2013/01/31 19:00:47
    Tuna
    Liquidity crunch with 0% interest rates, uh oh.
  • Tuna Joe Shw... 2013/01/31 02:35:50
    Tuna
    The Fed does not pump out right; it does not own a press. It's all done electronically with buying/selling bonds, securities, treasuries, dollars If the fed wants more money to flow, they buy up bonds, mortgage securities, etc and issue credit to the banks at the reserve; banks have more money, MONEY FLOWS, changes hands. The Fed can reduce that or even stop it as they did in the previous mortgage crisis. Every depression or reccession since 1917 has been triggered by the Fed.
  • Joe Shw... Tuna 2013/01/31 03:06:25
    Joe Shwingding BN-ZERO
    The FED has gotten in its head that there is a liquidity crunch. Nothing could be farther from the truth.

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