What Barack Obama?
Who is this Barack Obama of whom Rush Limbaugh speaks? Limbaugh on Friday shrieked
a shrunken US private sector will continue to shrink as Obama will hijack it. Obama's already-passed legislation will begin to take even more out of the private sector. When you raise taxes, when you increase regulations, you take money out of the private sector.
This is the Barack Obama the right seems to fear- big spending, business-destroying socialist. However, this Obama, who has proposed in his 2013 cutting $360 billion from Medicare and Medicaid over the next ten years, does not exist.
Corporate moguls have complained that the "uncertainty" of federal regulations and tax policy have stifled job growth. Yet, on April 9 The Wall Street Journal reported
Big U.S. companies have emerged from the deepest recession since World War II more productive, more profitable, flush with cash and less burdened by debt. An analysis by The Wall Street Journal of corporate financial reports finds that cumulative sales, profits and employment last year among members of the Standard & Poor's 500-stock index exceeded the totals of 2007, before the recession and financial crisis.
Deep cost cutting during the downturn and caution during the recovery put the companies on firmer financial footing, helping them to outperform the rest of the economy and gather a greater share of the nation's income.
As the chart below from MJ Perry demonstrates, U.S. corporations set a record by pulling down $1.5 trillion in profits in 2011. Corporate cash holdings had risen to $1.24 trillion, 57% of it held overseas, by the end of the year. And President Obama had added regulations at a slower rate than his predecessor, though many were more expensive, due primarily to inflation. Profit margins were at a higher rate than at any time in the past 65 years.
As of April, 2012, following 27 consecutive months of growth in private sector employment, there were more jobs held there than when Barack Obama took office in January, 2009. ThinkProgress notes that at this point in the Bush (43) administration, private sector employment was down 1.7%. By contrast, while at this point in his reign public sector employment was up 3.7% under the previous president, it is down 2.1% under Obama.
As the Economic Policy Institute notes,
from February 2010 (the month the labor market "bottomed out") to January 2012, the United States experienced a net increase in total nonfarm employment of more than 3.2 million jobs while state and local government employment fell by 438,000. Over this period, every major sector of the economy experienced net growth in jobs except the public sector.
Partly as a result of these factors, the fraction of total growth captured by the top 1% of American society has continued to grow, even- and especially- under the current president. As the chart below (from Emmanuel Saez via Ian Welsh via the Roosevelt Institute's Matt Stoller) indicates, that percentage was 45% during the Clinton expansion of 1993-2000; 57% in the 2001 recession of 2000-2002; 65% during the bush expansion of 2002-2007; 49% during the great recession of 2007-2009; and 93% in the 2009-2010 recovery. In 2010, the top 1% captured 93% of all income gains.
Not only has the overall federal, state, and local tax burden dropped to its lowest level in several decades, the federal tax burden alone is unusually low. U.S. News notes the Urban-Brookings Tax Policy Center (echoing findings of the Congressional Budget Office), found "in 2010 a typical family of four paid 4.6 percent of its income in federal income taxes- the second lowest percentage during the past 50 years." Selena Maranjian reports that in 2011, the average tax rate (according to the CBO), at 14.82%, was the lowest since 1950 while the corporate tax rate (according to the OMB) had fallen to 1.3% from 7.2% in 1945.
Tax rates are down. The private sector is routing the public sector. As worker productivity increases, corporate profits grow and then are shipped overseas. The percentage of wealth held by the 1% and the 10% continues to grow. And the economy stagnates. Coincidence? I think not.