Obama's Socialist Tax Plan Kills Hope Of A Quick Recovery

Market forces May 14,
Mr. Feldstein, chairman of the Council of Economic Advisers under President Reagan, is a professor at Harvard and a member of The Wall Street Journal's board of contributors. Yesterday he said,

"The barrage of tax increases proposed in President Barack Obama's budget could, if enacted by Congress, kill any chance of an early and sustained recovery.
Historians and economists who've studied the 1930s conclude that the tax increases passed during that decade derailed the recovery and slowed the decline in unemployment. That was true of the 1935 tax on corporate earnings and of the 1937 introduction of the payroll tax. Japan did the same destructive thing by raising its value-added tax rate in 1997.
The current outlook for an economic recovery remains precarious. This is no time for tax increases that will reduce spending by households and businesses. And despite the proposed tax increases, the government's new spending and transfer programs would cause the annual budget deficit in 2019 to exceed $1 trillion, or 5.7% of GDP (it is 12.3% this year).
CBO Director Douglas Elmendorf testified before the Senate Finance Committee on May 7 that the cap-and-trade price increases would cost the average household roughly $1,600 a year.
It's not too late for Mr. Obama to put these tax increases on hold. If he doesn't, Congress should protect the recovery and the longer-term health of the U.S. economy by voting down this enormous round of higher taxes."


Market Outlook


Last night's Asian results were negative. China is down 0.9%, Hong Kong down 3.1%, India is down 1.2%, and Japan's market is down 2.65%.

European markets are down in the range of -0.1% to -1% mid way through their day.

US futures indicate the markets will start fractionally lower today.

The foreclosure tsunami caused by well meaning socialist intervention could mean the bear market does not end until next year. The backlog of foreclosures builds up like a huge wave as the socialist try to slow the settlement process. Our advice is now to cherry pick back into the market as the market declines 15% to 30% from recent highs.