April 16, 2009

‘Going Galt’ Reaxes at PJM, and April’s Coming Indicator

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 4:00 pm

Update, 10:30 p.m. — Well well, John Cole via Andrew Sullivan got it totally wrong, won’t recognize what has happened, and will be among those who will be quiet while the crickets chirp if, as I expect, receipts continue to tumble at a rate faster then the economy as a whole. But they will, of course, continue to claim that incentives and disincentives will have had nothing to do with it. And they will, of course, be wrong — strident as always, but wrong nonetheless.

It’s an honor for that PJM column to be considered dumb by the likes of Cole.

Getting a critique from Cole is as good an indication as any that the PJM piece, like the POR (Pelosi-Obama-Reid) Economy posts that observed what was really happening last summer, will be seen as accurate when the dust settles and the objective history is written.

But thanks for the traffic, ya clowns. :–>

(A bit ago, I missed that a piece elsewhere wasn’t written by him, and regret the error. Exposure to clownishness appears to be rubbing off.)

Update, 11:55 p.m. — Hey John and Andy, put this in your pipe and smoke it. There’s still plenty of time left in April, but tax collections from individuals on April 15 in the “non-withheld” and “individual income taxes” line items amounted to $7.215 billion. Last year, same day (a Thursday instead of a Wednesday): $21.191 billion. That’s roughly a 66% drop. I wonder why? I would suggest that many of the most productive among us who pay their taxes directly have decided not to work so hard. I would say the arrows are pointing to me being right, and you being wrong. See you on May 1.

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(begin original post)

A few commenters at my PJM column are trying to claim that the “going Galt” phenomenon is fiction.

Part of the problem is the headline (beyond my ultimate control, though I could have influenced it and perhaps erroneously decided not to), which would seem to imply that Americans en masse are deliberately slacking off because the rewards for effort aren’t there.

That’s not what I’m claiming. I’m claiming that “quite a few ordinarily industrious people ‘went Galt‘ months before the tea party movement even came into existence.” If I had known what the headline would be, I would have suggested “most industrious” to be crystal clear.

It doesn’t take many among the most industrious to cause the government a significant money problem. For example, Mayor Bloomberg of New York has noted that about 50,000 people — in a city of maybe 4 million adults and probably a couple million more net incoming commuters — “pay so much in tax that they essentially support the city.” If even 5,000 or 10,000 of them decide to go fishing for the rest of their lives (and most can more than likely afford to), Gotham has a big problem.

Analogously, if no more than a million or so of the top taxpayers nationwide decided to do the same thing, the results would be fiscally disastrous for Uncle Sam.

The evidence that some of these key people are deciding to pull back on the intensity began to develop back in June of last year. As I observed at the time, entrepreneurs, investors, and businessmen began, as a result of the initiation of the POR (Pelosi-Obama-Reid) Economy, “battening down the hatches and preparing for the worst.” That’s a BizzyBlogese paraphrase for “going Galt” — not hiring, not expanding, letting people go and not replacing them, making worn-out equipment last longer instead of buying new, etc., etc.

A couple of commenters are taking me to task for citing corporate tax figures. Who do you think owns the hundreds of thousands of regular (as opposed to pass-through) corporations that aren’t publicly-held? Tooth fairies? Corporate receipts have dropped like a rock largely (not entirely, of course) because their owners started seeing less and less sense in investing in them, and have decided to hold the line at best, or scale back, or in some cases sell out.

This PJM commenter nailed it when he/she said that:

What I consider most significant about all the talk of “going Galt” is not the hesitant way most folks are going about it but that there are significant numbers of productive Americans who have begun to speak of such a thing at all. Never before has this happened in U.S. history.

That’s because never in U.S. history has a major political party either ignorantly taken political campaign positions (that’s the charitable version) or deliberately concocted a political strategy (not quite so charitable) designed to take down the economy and suck life and hope out of the citizenry in order to achieve electoral victory. When you say that you’re going to starve the economy of its energy — energy that’s sitting right there, begging to be used — regardless of the consequences, and regardless of whether there’s a viable alternative (which there certainly isn’t yet), you are, deliberately or not, taking down the economy. When you say you’re going to punitively tax the most productive, even with the economy in a relatively fragile situation (which of course has gotten much worse since), you are, deliberately or not, taking down the economy.

Even the most determined political oppositions in the past, at least since World War II, have recognized the potential consequences of their campaign statements and positions on the current economy, and have generally worked to avoid hurting it. That last vestige of statesmanship in the Democratic Party totally went out the window in June 2008. This is why the economy has since then been, and henceforth shall remain, the POR Economy — which has been followed by the POR Recession as Normal People Define It.

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UPDATE: As to how deep the “going Galt” phenomenon is, April will provide an important clue.

Recall that last April’s federal receipts of over $400 billion were an all-time record by far. That result reflected an economy that was in the midst of recovering nicely from a rough 4th quarter of 2007, and relatively decent though cautious outlooks of investors, entrepreneurs and businesspeople.

A stunning $236.5 billion of that $400-billion plus came from “individual income and employment taxes not withheld,” which are largely payments made by the self-employed, partners, and those in S corporations whose incomes flow through to individual tax returns. Many if not most of the top 5% that the Obama administration is targeting for it tax increases are in this contingent.

So far this April, the money Uncle Sam has collected in this category is within striking distance of last year ($23.5 billion through April 14 for the two related line items vs. $24.7 billion at the same time last year), but the next two-plus weeks, when 90% of the receipts will come in, will tell the tale. The fact that some of those affected may have accelerated income and pulled money out of their businesses in 2008 to keep it out of 2009 and 2010 (meaning they ultimately had to pay up yesterday if they did these things) may muddy things a bit, but I still expect a pretty significant, going-Galt drop.

Lucid Links (041609, Morning)

Filed under: Lucid Links — Tom @ 9:49 am

Noteworthy Net-Worthies:

Other impressive Tea Party throngs from yesterday, with a Buckeye State emphasis — Columbus, Dayton, Toledo (HT Maggie Thurber), Cleveland (crowd estimate was 5,000; Kings Rite Site reports that one of its leaders was an Obama voter).

OhioTeaParty.com also reports that events were to take place in Ashtabula, Canton, Chesterfield, Chillicothe, Findlay, Fulton County, Holmes County, Lima, Mansfield, Marietta, New Philadelphia, Tiffin, Youngstown, Zanesville. I count 19 in total (14 here, 4 in previous item, plus Cincinnati). There appear to have been others not on Ohio Tea Party’s list (one example noted here).

Nationally Instapundit’s collections (here, here, and here) show off some pretty impressive crowds in, among many, many places, Atlanta, St. Louis, and San Antonio.

DHS head Janet Napolitano is not backing off from her department’s report: “…. she stands by the report, which lists returning veterans among terrorist risks to the U.S.” Two words to live by, Janet: Jayna Davis. P.S. – That’s okay, I’m sure the one about left-wing and Islamofascist groups upset that Obama didn’t walk away from Iraq and pull all aid to Israel is coming out any day (/sarc). Mini-update: This January report (PDF at BizzyBlog), limited to cyber-attacks, isn’t anything resembling an offset, and engages in the dangerous fantasy that “left-wing extremists prefer economic damage to get their message across.” Tell that to Brian McDonnell’s and Pete Paige’s families. Islamofascists are also notably absent. Pim Fortuyn’s and Theo Van Gogh’s would object to the omission. P.P.S. – Remember the bad old days, like three months ago, when “profiling” was considered a bad thing? P.P.P.S. – Other terrorist risks she stands by: “groups opposed to abortion and immigration,” and those who “reject …. federal authority in favor of state or local authority ….” Three other words to live by: Obama owns this.

Here’s some NY Times translation assistance for the inexperienced. The Times reports (bold is mine) that ” The National Security Agency intercepted private e-mail messages and phone calls of Americans in recent months on a scale that went beyond the broad legal limits established by Congress last year, government officials said in recent interviews.” Since the Times apparently couldn’t write “in late 2008″ accurately, a proper translation of what the Times wrote would be that “The National Security Agency intercepted private e-mail messages and phone calls of Americans in late 2008 and early 2009, including the early months of the Obama administration, on a scale that went beyond the broad legal limits established by Congress last year, government officials said in recent interviews.” See how proper translation enhances the content’s value?

Positivity: Son saves parents from inferno

Filed under: Positivity — Tom @ 5:59 am

From Pretoria, South Africa:

12 April 2009, 10:35

Quick action by a Verulam man helped save his parents’ lives after their home was struck by lightning last week.

Ashley Arumugam, 27, had been watching television in his bedroom when he was alerted to a fire that, ultimately, gutted his home.

“I smelt something burning. I discovered the house was on fire and could not get across to my parent’s bedroom,” Arumugam said.

His parents Sunny Arumugam, 62, and Baby Arumugam, 59, were asleep.

“I covered my head with a blanket and ran out of the house and around to their bedroom window,” Ashley recalled. “I was terrified. There was smoke everywhere, but I knew I had to do something to save my parents,” he said.

Slamming repeatedly on his parents’ bedroom window he was able to wake and alert them to the raging inferno.

He then struggled to pull them through the window, which had no burglar guards.

Sunny and Baby escaped the blaze with minor scratches.

“By the time the Fire Brigade, Verulam Reaction Unit and Metro Police arrived at the scene the house was engulfed in flames.

“We discovered the fire had started in the lounge and spread across the house and within 45 minutes our entire home was reduced to ashes,” Ashley said.

“It was the house my father had lived in for over 50 years and he put a lot of work into it.

“We can replace whatever was lost, but not our lives. Looking at what was left of our home we know that God was watching over us that night,” he said. ….

Go here for the rest of the story.