Good Economic News Despite Shutdown? Thank low gas prices

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It’s a point I’ve been making for years: Gas Prices have THE MOST direct impact on the economy than any other factor. When gas prices go up, consumers have less money to spend elsewhere. In addition, the costs of production go up, as does the price of shipping those goods to market. So not only do you have less money to spend, but you’re buying fewer products because the prices have all gone up as well. And when companies sell fewer products, they need fewer employees to MAKE those products… starting a vicious cycle. It would be bad enough if the cost of fuel was the only negative impact, but unlike higher prices for DOMESTIC products where at least the money stays in the United States, most “petro dollars” go overseas and stay there rather than be recycled back into the American economy. The Economic Collapse of 2008 (under two Texas oilmen Bush & Cheney who pined for the days of $50/barrel oil during the 70’s “energy crisis”) can be traced straight back to the invasion of Iraq and the resulting skyrocketing price of oil & gas (and you thought “Mission Accomplished” was about the end of war in Iraq. Silly you.) This past week brought a bevy of sorely needed good economic news to the Obama Administration. Unemployment fell to just 7.0 percenta full 1.3 points in just the past 16 months (and NOT because of people dropping out the workforce.) Jobless claims plunged to 298,000 and the number of layoffs declined. Even before these positive jobs numbers, the Stock Market also hit a new record high last month as well. And it all happened at a time when everyone expected BAD economic consequences following the Government Shutdown last October and Republican catcalls over the “job-killing” implementation of “Obamacare”. What’s the reason for all this positive economic news in spite of everything Republicans did to derail the economy? Lower gas prices thanks to positive news on the diplomatic front in the Middle East… first with avoiding war with Syria and then the nuclear deal with Iran. So while everyone else is running around scratching their heads trying to figure out “just what went right” for the economy to improve despite all the attempts to sabotage it by the GOP these last two months, know this: Nothing demonstrates better how closely tied our economy is to Energy, and how developing a Green Energy Industry would promote economic growth.

Remember all the Wingnuts complaining about Obama bowing?

On ABC’s “ThisWeek” yesterday, the chronically incredulous Mary Matalin (wife of James Carville) dismissed the good economic news by saying, “This is the worst economic recovery in seven decades!” I responded on Facebook (where I live-blog the network Sunday Shows each week):

Mary Matalin on #ThisWeek says this is “the worst recovery in 7 decades”. It’s also the most partisan obstructive GOP in 7 decades. Coincidence?

Please note that even President Obama’s worst critics must admit that the economy is in “recovery” and not getting worse. In the third quarter on this year, the economy grew at a rate of 3.6%, well above estimates. The Bush Administration used to “brag” incessantly about “52 months of consecutive private sector job growth” just prior to The Great Recession (a streak the Obama Administration will surpass next May). But the economy was astoundingly weak that entire time (and if this chart is to be believed, the growth rate never broke 0.7% during the entire Bush presidency.) They can’t claim President Obama’s economic policies are making the economy “worse”, and lord knows if it were, they’d be blaming yet-to-have-gone-into-effect “Obamacare”. You KNOW that if this latest jobs report had been bad, Republicans would NOT have blamed their Shutdown of the Federal government in October, no, they would have claimed “Corporations and Small businesses aren’t hiring out of concern over ‘Obamacare’ being implemented on January 1st!” You KNOW they would have said that.

But instead all they can do is scratch their heads and wonder, “Just what do we have to do to stop this guy?”

So now we know the secret on how to grow an economy. And the irony is, it’s not too different from the Republican dogma on how “tax cuts” are supposed to be a panacea for economic growth. Conservatives believe that “cutting taxes leaves more money in people’s pockets so they can go out and buy stuff, sparking the economy.” That’s their entire ideology in a nutshell. The problem with that is that the people paying the most in taxes don’t need more money just to buy stuff. Tax cuts help only a very small percentage of the population. If you’re extremely poor, you’re not paying any taxes anyway. The Wealthy don’t “buy more stuff”, and business expenses like “equipment” and “hiring more employees” are ALREADY tax deductible, so “tax cuts” are a horrible way to promote economic growth. Republicans love to say, “poor people don’t create jobs.” My response has always been, “Really? Ask Wal*Mart if poor people create jobs.” The Walton Family is the wealthiest family in the nation, with SIX family members on the Forbes-400 list of wealthiest people in the world. Trust me, that money didn’t come from selling cheap crap to The Rich. Another sad irony is the fact that plenty of clueless low-income Teanuts probably voted for these Cretins, creating THEIR jobs. But government jobs apparently don’t count.

But lower gas prices affect EVERYBODY, and benefits The Working Class FAR more than “tax cuts” for a fraction of a fraction of the population. Cheap energy is like a “tax cut” for the poor, and a FAR more direct stimulus for the economy. Sen. Rand Paul (Wingnut-KY) was on Fox “news” Sunday yesterday where he proposed “Economic Freedom Zones” (don’tcha just love the Orwellian Double-speak?) in economically depressed cities like Detroit where everybody would pay a FIVE PERCENT FLAT TAX. This is the height of Conservative arrogance and the epitome of Libertarian cluelessness. The idea that wildly plunging the tax rate on corporations and the very wealthy will be offset by raising taxes on the extremely poor. Because what rich person wouldn’t want to move to a slum where the tax rate is just 5-percent? Of course, we know Paul’s thinking is that if the tax rate were just 5-percent, businesses will use that savings to “hire more people”. But as I already pointed out, hiring people is already taxed at ZERO, so this would INCREASE the cost of hiring new employees. And for some inexplicable reason, Republicans just can’t seem to figure out that DEMAND drives hiring. It doesn’t matter how low you cut a company’s taxes, if there’s no demand, they are not going to hire more employees. They just can’t get this simple fact through their thick skulls.

Locally, gas is still selling for under $3.00/gallon. It’s the holiday season, so people are already out spending more money now than any other time of year. And this year, because of lower gas prices, more of that money is being spent here at home. And it’s having a direct stimulative effect on the economy. There’s no denying it. One can only wonder how the economy might have done last month had it not been for GOP obstructionism, the Shutdown and yet another round of manufactured fiscal crisis.

Oh, and just a reminder, the 90-day budget deal to end the Shutdown and reopen the government expires in January. Do you think the GOP has learned their lesson? Is The Pope Jewish?
 


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December 9, 2013 · Admin Mugsy · One Comment - Add
Posted in: Economy, Energy Independence, General, Jobs

Comments
  • Franklin C. Cole January 2, 2014 at 11:14 AM

    When many people think of the oil and natural gas industry, they think of an old, dirty, staid industry using technology from decades ago. The images they see on television or in the movies show oil gushing madly out of wellbore or a mechanical drilling rig with three men in dirty clothes throwing a chain around drill pipe. Most people do not realize how out-dated these images are. Oil and gas is a very technology-oriented industry; many techniques developed by the industry are now used in other industries, including the space program. Technological innovations have made it possible for the oil and gas industry to supply the fuels that power the world economy.

     
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