July 13, 2009

This Is What ‘Going Galt,’ and Obama’s Induced Uncertainty and Fear, Have Led To

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 4:37 pm

July 14: Welcome Instapundit readers. The host seems to have bogged down a bit, but seems to be back (grrr ….). Remember that comments are moderated. I have two somewhat-related posts and a PJM column I’m trying to get through.

Related, from July 12 at BizzyBlog, July 10 at Pajamas Media (in both cases BEFORE the release of the June 2009 Monthly Treasury Statement — “With Obamanomics, We’re Not Even $eeing Green.”

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Summarizing the past quarter’s receipts after the release of today’s Monthly Treasury Statement:

Final2Q09v2Q08

Receipts, which I had estimated would be $230 billion in June, came in at $215.4 billion. O…M…G.

Just to be clear, last year’s $866.7 billion above excludes about $78 billion in stimulus payments, which were treated (incorrectly, in my opinion) as negative receipts. Regardless of their treatment, they had nothing to do with tax collections from economic activity during the quarter. This year’s second-quarter receipts on the valid “economic activity” measurement came in almost 31% lower than last year.

More on this, and the deficit, later tonight.

_________________________________________

UPDATE, 11 p.m. — The AP’s Martin Crutsinger outdid himself in sloppiness and deception in his report on the deficit and his Meltdown 101 Q&A. It’s too much to get to this late at night. We’ll have at it tomorrow.

Just know that the June deficit of $94 billion is a record for the month of June by miles and miles (every June from 2008 back to 1997 shows a surplus) — and, as explained previously, effective in April of this year, retroactive to October 2008, it doesn’t even include all outlays any more.

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32 Comments

  1. If anyone ever doubted that productive individuals, entrepreneurs, and businesses are the engine of the U.S. economy–not government–then watch what happens to our standard of living when these factors are eliminated.

    http://lucidicus.org

    Comment by Jared Rhoads — July 14, 2009 @ 1:04 pm

  2. Why invest when the president and the U.S. government are doing everything they can to hurt your businesses prospects by raising taxes (cap and trade), increasing regulation and nationalizing the banks? This is one of those times to put your money in a hole in the ground and take a nice, long seven year vacation until Obama is out of office. You’ll probably do better “going off the financial grid” than staying on it, at least while we have a communist running things.

    Comment by Concerned Citizen — July 14, 2009 @ 1:07 pm

  3. Yikes. It’s worse than we thought.

    BTW, in your headline “certainly” should be “certainty.” Instapundit has linked, so you’ll want to make things pretty for all the visitors.:)

    Comment by Chris L. — July 14, 2009 @ 1:15 pm

  4. Precisely the same situation will prevail with jobs. Hundreds of thousands of jobs will fail to materialize as small businessfolk hide under their desks and large businessfolk deploy capital abroad. I’ve asked several CEOs what their strategy is in the current political environment. Answer: Wait Obama out.

    Comment by Donny Baseball — July 14, 2009 @ 1:31 pm

  5. Obama: The Tax-Cutter!

    Comment by JohnJ — July 14, 2009 @ 1:49 pm

  6. The immediate dem/left response: “This is just a sign of how badly Bush wrecked the economy!”

    Comment by DensityDuck — July 14, 2009 @ 1:54 pm

  7. [...] which will get Flotation Devices and which will simply be privileged to go down into the drink for the sake of the collective, because he seems unwilling to try to turn things [...]

    Pingback by The Anchoress — A First Things Blog — July 14, 2009 @ 1:57 pm

  8. I had relocated from NYC to FL in 2008 to escape NY’s onerous business taxes, and as important, negative business climate. Sort of like I was the bad guy for employing about 50 people, paying salaries, paying taxes, creating goods people wanted and making a profit. The libs up there won’t have me to kick around anymore. Didn’t sell the company or anything, closed up shop and told my employees (some of whom I was very fond of) good luck; I didn’t feel too bad cuz at least 90% or them kept voting in the libs.

    Anyway, I am too young to be fully retired (49) so I was planning on re-opening my business. That was prior to the GM beatdown of private enterprise. Maybe in 2013 I might consider it again, assuming the Dem’s damage can be undone and the fish aren’t biting.

    Good luck Obama, you won’t have my tax receipts coming in. And now I went from being a giver to a taker. LOL, maybe I’ll vote for him next time around also.

    Comment by King Midas — July 14, 2009 @ 1:59 pm

  9. should be “uncertainty” in the title?

    Comment by Jim,MtnViewCA,USA — July 14, 2009 @ 2:49 pm

  10. [...] a bit more on this here. Categories: Fiscal Irresponsibility, Government Spending, Greed & Corruption, PoliticsTags: [...]

    Pingback by A New Dude » Blog Archive » Sweet, Merciful Heaven — July 14, 2009 @ 3:23 pm

  11. One word: Brutal!

    Comment by Marc Malone — July 14, 2009 @ 3:26 pm

  12. #9 and #3, Thanks. Fixed.

    #8, there’s more of you than they’d like to think. The help these days …..

    Comment by TBlumer — July 14, 2009 @ 3:45 pm

  13. Take a look at the beating corporate income is taking, looks like we are going to have even higher unemployment numbers in the future.

    Comment by Bruce Nims — July 14, 2009 @ 3:48 pm

  14. First, thank you for doing this analysis and thank you instapundit for pointing to it.

    Second, I have in the past created 4 different multimillion dollar businesses. The biggest employed over 80 people.

    Today, I am a single member LLC, with no employees, and NONE planned. I have wiped from my dreams any and ALL business ideas that would require employee #1, much less employee #100. If it cannot be outsourced, or I can and want to do it myself, I will NOT go there.

    Essentially, the cost of having employees has become repulsive to me as a freedom seeking being. I also have no idea what the tax situation will be for capital gains 5 years out, so I’d never start a capitalized business again with a sale as a planned exit. I won’t borrow money to fund a business, either. I won’t own business real estate nor lease an office. Why? Because the risk:reward ratios are trending dramatically negative.

    I can travel for business nearly anywhere in the world with a bit of planning. I can work 8-20 hours a week and have plenty of money for simple pleasures… even paragliding in beautiful places. I used to really truly enjoy co-creating with employees a business we sold for lots of money and everyone benefited. Not my model anymore.

    Anyone who thinks the Creative class doesn’t have options in how to Create a lifestyle that works around excessive taxation and punitive regulations is… well… not in the Creative class.

    Go Go Galt!

    Comment by Freedom Guy — July 14, 2009 @ 4:08 pm

  15. Going Galt is where it’s at. It’s the producer’s version of the Left’s threat to “move to Canada.” The difference is the producers are taking action. I just had the wife retire at 53, and I’m working my one-man business just enough to pay the bills and stay in the low income bracket. We are loving the new simple lifestyle and freedom. We are downsizing and will soon be debt-free. Obama has done us a great favor. The hippies were right, the material world is an illusion. We go to Babylon no more!

    Comment by Meremortal — July 14, 2009 @ 4:27 pm

  16. Never underestimate the stupidity of the masses.

    Comment by Daphne — July 14, 2009 @ 5:26 pm

  17. Why be productive, when the Left is using your own money to fund leftwing orgs that hate you? Its a no-brainer.

    Not only do they want us to be enslaved to a socialist nanny state, the want us to pay for the chains.

    Comment by Fen — July 14, 2009 @ 5:47 pm

  18. The economy nose-dived on the prospect of electing a hard-left populist to president with a leftist congress that’s not so-much a check over the president as it is a blank-check for the president. As it became more and more evident Obama would be elected the people paying attention began to hedge their bets. Everyone yelped a collective ‘sell’… and the markets tanked. It’s not like he didn’t tell us he planned to bankrupt the coal industry; that he would double the capital gains taxes out of ‘fairness’; that he would restore tremendously high tax brackets on the higher earners; that he intended to re-write NAFTA; that he was for Cap and Trade… and the results of such policy promises were totally predictable.

    Then after being elected president it turns out he really believes the populist rhetoric he’s been spouting on the campaign trail and he’s raging full-throttle toward imposing a far left agenda on a society at large that was more or less blind-sided due to the media malfeasance of not reporting Obama for what he was.

    Most people I know who’ve actually been on the producing side of the equation (self included) are now going into hibernation and are waiting it out. Time will tell, I guess, how much damage he can do to society in 4 short years.

    Comment by JimmyNashville — July 14, 2009 @ 6:01 pm

  19. The ‘its all Bush’s fault’ for the economy (and or, free market free for all) is a bogus partisan line. I think we averted the financial crisis and what we were seeing was just a normal recession. One that should be ending by now (not over, but we should have been ticking up rather than still going down)… but Obama’s spending has opened door three. The entitlement crisis. It was on its way but he has moved the doomsday clock far ahead… he didn’t bring it all on, but he brought it on sooner and is making it worse.

    Comment by Thomass — July 14, 2009 @ 7:24 pm

  20. One can always use the left’s words against them. According to them, we had 8 years of a horrible economy under Bush. Think about it.

    Dot Com Bust in 2000, lots of IT jobs lost, also fueled by the outsourcing mania.
    9/11 in 2001, Harsh downward pressure on the economy for years.
    In 2004, Kerry ran a campaign on how bad the economy was under Bush.
    In 2006, the housing market slowed down and the bad loans Obama and Co sued mortgage lenders for came home to roost.
    Remember how Hillary and Obama were always going on about how everyone was living paycheck to paycheck?

    Despite all this, the Dow still went up thousands, unemployment was at 5%, people weren’t having to take less hours and unpaid days, tax revenues were going UP and everyone had a much better standard of living without looking over their shoulders for layoffs every day.

    So really, Obama’s problem is that when dealt the same cards that Bush got, he just can’t handle it as well as Bush did, which is why arrogance is no substitute for experience.

    Comment by Ring — July 14, 2009 @ 10:03 pm

  21. Thomass, does investment banking cease to exist in a “normal recession?” Do credit markets seize in a “normal recession?”

    Wake up, people. Bush oversaw a disaster.

    Comment by Tony B. — July 14, 2009 @ 10:05 pm

  22. #21 and #18, Oh, I see my Designated Obama Licker Tony (i.e., DOLT) is back.

    You’re a caricature of yourself now; the acronym is thus appropriate, and will stick.

    Investment banking never ceased during the Bush administration — or if it is ever proven to have done so, however briefly, it will not be because of anything Bush did or didn’t do.

    But investment banking as we knew it may be a long-gone memory if we have to endure a few more quarters of the POR (Pelosi-Obama-Reid) Economy, now the POR Recession/”Repression” as Normal People Define It.

    Comment by TBlumer — July 15, 2009 @ 12:04 am

  23. They Shoot Horses, Don’t They?…

    This following spreadsheet debacle tote board has earned a lot of Internet ink today. From BizzyBlog:

    There’s a lot of John Galt talk associated with it, including the title of the BizzyBlog blog entry. I don’t care for it. What is understand…

    Trackback by Maggie's Farm — July 15, 2009 @ 12:53 am

  24. The wife and I have gone Galt too. Both of us came from etrnally struggling low income large families and were both the first in our extended families to earn college degrees We benefited from the Reagan freee market policies that have fueled our nation’s prosperity in the last 25 years and now will live up our assets until we are put six feet under. Until last year we were earning $200,000 a year in the bad old days of Bush and paying taxes like hell to the feds and the fools in Sacramento.
    With the arrival of the messiah on the scene in spring 2008 we saw the coming socialist doom and began to prepare by downsizing our income When the stockmarket collapse came we switched all our liquid assets to gold, I retired early, and my wife will do the same in February 2010. We will sell our nmearly paid for high end house where we have resided for 25 years for waht we can get and pack up for a low tax residence overseas and send our son and his kiddies a plane ticket twice a year to come see us. We have no intention of returning to the US to fund even one bit of Chrmn. Zero’s socialist manure about spreading of the wealth to the unproductive, irresponsible, the illegal, and the stupid.
    Because I loved the rush that comes with a successful real estate investment I had intended to keep going with real estate investing until I kicked off for the sake of my son and grandkids but with the democorrupts planning to tax me to insolvency I decided to hell with it!
    Socialist Obumunists what are you going to do to get this evil capitalist? As the song of forty-five years ago from Westside Story said Officer Krupke Buck You!

    Comment by old wanderer — July 15, 2009 @ 1:13 am

  25. This is an interesting group. I, too, am in my mid-50′s and have created and sold several business–help create many jobs–often high paying ones. I travel extensively for business and put in very long hours. I doubt if I will continue to do so past the end of next year. It is my option since I don’t need to work and I have a real problem feeding the beast. Why should I spend so much time away from my wife and kids only to give 50% of my marginal income to support this bunch of Jacobins? The answer is that I won’t.

    Capital is fleeing the States in huge chunks. The resulting volatility will create good opportuniites for those of us who can wait out the next 8 years.

    These guys have probably done me a favor–I need to slow down and live off the fat of the land for a bit…maybe I can harvest some good benefits.

    Comment by Richard from Houston — July 15, 2009 @ 2:22 am

  26. [...] …which means the deficit’s going to be even worse. [...]

    Pingback by Treasury receipts drop almost in half — July 15, 2009 @ 9:07 am

  27. “You ain’t seen nothing yet.” said Barack Obama.
    For each dollar of tax raised, the GDP fall by a factor of 3.
    Good luck with your looting, Mr. Obama.

    Comment by xqqme — July 15, 2009 @ 1:50 pm

  28. I am 46 years old and have retired why struggle when we only have monopoly money. Never thought Communism could come here so easily. Great comments here as I feel exactly as almost every comment here. We all have lost all savings to these criminals that have been put in office.

    Comment by rdtj80 — July 16, 2009 @ 2:23 am

  29. First time here. What a interesting post! I did not see this elsewhere. Why the difference in Employment taxes versus Income taxes? Does it really mean that employment is only down a little but that income is down by almost half? Or is this just reflective of our progressive tax system. Anyway the lack of a larger decline in employment tax is what is surprising.

    Comment by John — July 16, 2009 @ 9:50 am

  30. I’m in my 40′s and I’m going Galt next month. All assets are in physical commodities and I won’t keep money in the bank or as federal researve notes longer than overnight.

    My new career is going to be as a black marketer off the financial grid.

    I used to contribute $100,000 to the “engine of the world”. No more! I am no ones slave.

    May the Sons of Liberty rise again!

    Comment by Random — July 16, 2009 @ 10:42 am

  31. #29, thanks.

    The “employment taxes” are Social Security and Medicare. Best guesstimate, they have gone down very little because:
    - Employment is “only” down about 4%-5%. Everyone else continues to pay those taxes at the same rate as last year. But some of those still working probably got nominal pay increases for 2009, or got them during the latter half of 2008 (so their YTD 2009 employment taxes would be slightly higher than YTD 2008 so far). All of this combined would seem to net out to about -2.0%.
    - People and employers this year have to pay Social Security (6.2% of pay for both employer and employee, or 12.4% for self-employed) on $106,800 of earnings this year instead of about $102,000 last year. So all of the relatively well paid have already paid a combined $595 (12.4% x $4,800) more than they did last year, and Uncle Sam already has it. If there a couple million of them that’s almost $1.2 billion, or about +0.5%.

    Meanwhile, income taxes are down because earnings other than from salaries that go to individuals (self-employment income, pass-through income from Sub-S Corps and LLCs, capital gains that mostly don’t exist because of the market plunge) have gone way, way down — as have earnings in regular corporations that pay corporate income taxes.

    Comment by TBlumer — July 16, 2009 @ 1:15 pm

  32. [...] Federal tax receipts down 31% in Second Quarter [...]

    Pingback by » Financial News Update - 07/16/09 NoisyRoom.net: Where liberty dwells, there is my country… — July 16, 2009 @ 7:50 pm

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