When exactly does “Recovery Summer” begin? The administration is telling us things are getting better but they’re not

WASHINGTON, DC—“Recovery Summer” seems to be out of synch with the calendar. According to long held belief, summer is wedged between spring and fall, occurring from June through August. But August is here and the last two months haven’t shown us recovery.

The latest figures out aren’t encouraging or supportive of the administration’s schedule. The Washington Times puts those numbers in perspective:

“From a peak annual growth rate of 5 percent last autumn, the measure of gross domestic product slid to 3.7 percent in the first quarter of 2010 and was down to 2.4 percent by the end of June.”

2.4 percent? That’s anemic at best with a growth rate of 5+ percent needed over at least two to several quarters to pull the United States out of recession. So the administration is doing what it can to fix the problem—the problem of taking responsibility for the recovery summer non-start.

Treasury Secretary Timothy Geithner told Good Morning America’s audience to go back to sleep and wait for the worst to be over, when you wake up in a few months (or years) the economy will be roaring again. Meanwhile his boss blamed the failed policies of the past administration and lambasted republicans for not having any new ideas—that should get the economy back on track.

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Economists predict double dip recession Leading indicators point toward an extended downturn

WASHINGTON, DC—The Associated Press is reporting economic forecasts for 2011, and they are bleak; citing a continuing high unemployment rate, weak GDP growth, lack of consumer spending, and a anemic housing market:

“The U.S. economic recovery will remain slow deep into next year, held back by shoppers reluctant to spend and employers hesitant to hire, according to an Associated Press survey of leading economists.”

Growth predictions are estimated to be 3 percent or less in the first and second quarters of 2011, with the country needing 5+ percent growth—led by consumer spending—over at least two quarters in GDP to lift out of the extended recession. But according to the AP, that spending will be absent:

“Consumers aren't leading this rebound, as they usually do, despite ultra-low borrowing costs. Their spending growth will weaken in the second half of this year and strengthen only slightly next year, a majority of economists said.” 

That lack of consumerism is a drag on consumer confidence and on retailers and small businesses, which make up 70 percent of the economy.

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Obama to raise taxes on small businesses Another campaign pledge goes bust

From Americans for Tax Reform:

• The Obama Administration and Congressional Democrats have said that they want to raise taxes in the top two income tax rates in January 2011.  Under their plan, the 33 percent rate will rise to 36 percent, and the 35 percent rate will rise to 39.6 percent automatically in January.  These rates affect families and small business owners earning at least $200,000 per year

• Unlike corporations, small businesses usually don’t pay their own taxes.  Rather, business profits flow through to the business owner.  The business owner pays taxes on her small business by adding the profits to her income tax form.  Therefore, personal income taxes are the same thing as small business taxes.

• According to the IRS, most small business profits pay taxes in households making more than $200,000 per year.  The IRS keeps track of two types of small business income: sole proprietors, and “pass-through” entities like partnerships and S-corporations.

• All small businesses.  There were 30 million tax returns reporting small business income in 2008.  On net (profits reduced by losses), these owners reported business profits of $981 billion.  A large chunk of this net profit--$488 billion—faced taxation in households making more than $200,000 per year.  A majority of small business profits will face a tax rate hike under the Obama-Pelosi-Reid plan.

• Sole proprietors.  There were 22 million tax returns reporting sole proprietor income in 2008.  On net (profits reduced by losses), these owners reported business profits of $264 billion.  A large chunk of this net profit--$90 billion—faced taxation in households making more than $200,000 per year.  34 percent of sole proprietor profits will face a tax rate hike under the Obama-Pelosi-Reid tax hike plan.

• S-corporations and partnerships.  There were 8 million partners and S-corporation shareholders in 2008.  On net (profits reduced by losses), these owners reported business profits of $717 billion.  A majority of this profit--$398 billion—faced taxation in households making more than $200,000 per year.  55 percent of S-corporation and partnership profits will face a tax rate hike under the Obama-Pelosi-Reid tax hike plan.

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Splitting Apple in two Yet another example of how the media turns the ordinary into a scandal

SAN FRANCISCO, CA—Apple CEO Steve Jobs fired back last week about the reported problem with the iPhone 4 stating, “This is life in the smartphone world; phones aren't perfect. We haven't figured out a way around the laws of physics yet."

  

This so-called “news story” reminds KP contributors of comedian Louis CK’s observation about modern technology and people. In a bit he relates the story of a fellow airline passenger complaining about losing his WiFi signal while in mid fight. Mr. CK’s take is, “How are you not amazed…like, oh my God, I’m flying through the air in a chair.” His reaction was to tell the passenger to take it in stride; after all, “The signal has to go to space” and back.

A couple of months ago it was Toyota that took a media lashing, which led to a congressional tongue lashing, but that story has gone aside for now, BP took its place. Now, the Gulf Oil spill is a legitimate news story and to an extent, so is the iPhone. But at a return rate of a meager 1.7 percent—under the industry average—why so much coverage? One thought: Mr. CK is right, we don’t find technology amazing, even when experiencing the most technological breakthroughs of all time.

-- Killswitch Politick

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