Things are Looking Better

[SEC=UGA]

I was at a trade show this past week. There is some good news and bad news that cam out of it.

 

We are beginning to see some movement in my sector, I'm in a very specialized, industry specific construction field. Our estimating department has been very busy over the past month and a half and have put out close to 10 million in proposals. This is roughly a 50% increase from what we have bid YTD. At the trade show, the attendance was low, but the people there are starting to bring projects on-line for bid and construction so we should see an uptick over the next six to 12 months should financing become available. The equity is definitely starting to become available.

 

On the downside, we see the same vendors at the trade shows and a number of people were missing, they have been the victims of downsizing due to the lack of volume in the metal building industry. I would say that roughly 12 to 13 people who I usually see at these shows were not there due to being laid off in the past two months.

 

So, while momentum seems to be building, we are still in quite a bit of turmoil in the construction industry, but I do see a silver lining and the sun starting to peek through.

 

Also, I found an article in Reuters that was pretty interesting as well and wanted to share with you guys.

(Reuters) - U.S. chief executives are becoming more confident about the economy, though many worry high employee health care costs and the possible end of Bush-era tax cuts for the wealthiest Americans could hurt businesses.

 

Vistage International, an organization for chief executives, said on Monday its confidence index edged up to 95.1 in the third quarter from 94.4 in the prior three months. The index is 12 percent above its year-earlier level of 84.9.

 

The survey, which was conducted between September 14-24 and covered about 1,800 CEOs of small-to-medium sized companies, found that 92 percent of the respondents expected health costs to rise as companies implement the healthcare reform plan, designed to provide insurance to 32 million Americans who don't have coverage.

 

Two-thirds of the CEOs said their businesses would suffer if the contentious Bush-era tax cuts were not extended.

 

The Obama administration is opposed to an extension of the tax cuts, arguing that the cost is too high as the country struggles to emerge from recession with a massive budget deficit.

 

The survey also found the CEOs did not expect a new recession, even though the recovery lost considerable momentum in the second quarter.

 

"No double dip is good news, but healthcare, taxes, access to credit, and overall economic uncertainty remain obstacles to jump-starting sustainable growth," said Vistage International chairman Rafael Pastor.

 

Still, just over half of the CEOs said they would not start their businesses in the current environment if they had to. About 46 percent said they planned to expand their workforce up from 39 percent a year ago.

 

"Nonetheless, fewer firms planned additions to their payrolls than any time prior to the 2008-09 recession," said Pastor. "Uncertainty about the level of future sales as well as concerns about the costs of new health care regulations continued to hold hiring plans at lower levels."

[detlef]

I am just curious about what the rationale being used to suggest that not extending tax cuts to the wealthiest hurting the economy is. I understand that, when you ask the wealthiest sector, many say that they think ending the tax cut would hurt. I just want to know why. I mean, I understand why they don't want it to end. That much is obvious. I just want to hear why it hurts us all? The assumption seems that they would expand their business if they stayed but won't if they don't. But, again, why? That is, unless they sell something very high-end that requires a number of very wealthy people with tons of extra money laying around to support their business.

 

Also, I understand the ethical issue with taxing the wealthy heavy. In the big picture, it does seem to penalize success, which is contrary to some of the principles this country is founded on. But that's another argument entirely, they should stick to that. However, if they're going to claim that it would have an immediate bad effect on the economy, I just want to know how that would be.

 

Here's why I don't think it would matter. Take the retail sector. That is driven by consumers, the vast majority of which would be unaffected by the tax cut expiring. Their buying power will be exactly what it is regardless. Even for the tiny percentage that is effected, the vast majority of what they buy will stay the same. Since they will still have more money than everyone after taxes there's no reason why their buying power when it comes to nearly everything they buy would change. Again, perhaps very high-end items take a hit, but I can't see that having a huge effect on the economy as a whole.

 

Here's why I think it would help. Anything paid for by public money should go up because there's more public money. So that would seem to help the construction sector somewhat. At least enough to offset what could be a drop in McMansions being built by the small group that is close enough to the bottom of the tax break threshold to have this cut repeal actually affect their purchasing power in any significant way.

[Azazello1313]

I am just curious about what the rationale being used to suggest that not extending tax cuts to the wealthiest hurting the economy is.

 

here is obama OMB director peter orszag on that question:

 

no one wants to make an already stagnating jobs market worse over the next year or two, which is exactly what would happen if the cuts expire as planned.

 

Higher taxes now would crimp consumer spending, further depressing the already inadequate demand for what firms are capable of producing at full tilt. And since financial markets don’t seem at the moment to view the budget deficit as a problem — take a look at the remarkably low 10-year Treasury bond yield — there is little reason not to extend the tax cuts temporarily.

 

another article

[dmarc117]

first off the definition of wealthy is off. if you make over 5mil a year, keep the tax rate same. 250k a year aint wealthy.

[SEC=UGA]

I am just curious about what the rationale being used to suggest that not extending tax cuts to the wealthiest hurting the economy is. I understand that, when you ask the wealthiest sector, many say that they think ending the tax cut would hurt. I just want to know why. I mean, I understand why they don't want it to end. That much is obvious. I just want to hear why it hurts us all? The assumption seems that they would expand their business if they stayed but won't if they don't. But, again, why? That is, unless they sell something very high-end that requires a number of very wealthy people with tons of extra money laying around to support their business.

 

Also, I understand the ethical issue with taxing the wealthy heavy. In the big picture, it does seem to penalize success, which is contrary to some of the principles this country is founded on. But that's another argument entirely, they should stick to that. However, if they're going to claim that it would have an immediate bad effect on the economy, I just want to know how that would be.

 

Here's why I don't think it would matter. Take the retail sector. That is driven by consumers, the vast majority of which would be unaffected by the tax cut expiring. Their buying power will be exactly what it is regardless. Even for the tiny percentage that is effected, the vast majority of what they buy will stay the same. Since they will still have more money than everyone after taxes there's no reason why their buying power when it comes to nearly everything they buy would change. Again, perhaps very high-end items take a hit, but I can't see that having a huge effect on the economy as a whole.

 

Here's why I think it would help. Anything paid for by public money should go up because there's more public money. So that would seem to help the construction sector somewhat. At least enough to offset what could be a drop in McMansions being built by the small group that is close enough to the bottom of the tax break threshold to have this cut repeal actually affect their purchasing power in any significant way.

 

The tax cut helps businesses two fold. One, it gives me the ability, more capital, to hire more workers. Number two it gives me the ability to purchase equipment/services which employ other people. If you take that money out of my pocket and send it to the federal government I'm not going to purchase things or employ people with it. Not only that, but it could actually trigger me to layoff some people in order to keep my profit margin where I feel it needs to be to justify me to continue to invest my money in said business.

 

The tax increase will hurt ll sectors as fewer people get hired, more people get laid off, there will be less demand for durable goods and machinery thereby creating fewer jobs in those sectors, etc... It's vicious what a tax increase can do to one's spending habits by taking money out of an individuals pocket, it impacts ALL sectors.

[Perchoutofwater]

I am just curious about what the rationale being used to suggest that not extending tax cuts to the wealthiest hurting the economy is.

 

Here is an article that spells out the affects pretty well. One thing to keep in mind though, you have to remember the government's idea of a small business and the real world idea of a small business are two different things. There are many businesses that most rational people would consider a small business that the government does not. So if you take that into consideration the impact on "small" businesses is even greater than what this article portrays.

[i_am_the_swammi]

250k a year aint wealthy.

 

Its wealthier than 93.4% of the population...

[Perchoutofwater]

Its wealthier than 93.4% of the population...

 

If 93.4% of middle age men wear a size 40 pant, does that make the guy that wears a size 38 skinny?

[Yukon Cornelius]

first off the definition of wealthy is off. if you make over 5mil a year, keep the tax rate same. 250k a year aint wealthy.

it is up here . maybe not in cali but up here in the great north woods that is quite a bit oh cash

[Perchoutofwater]

it is up here . maybe not in cali but up here in the great north woods that is quite a bit oh cash

 

It also depends on what you are doing with it, and what risks you are assuming in order to earn it. Here $250,000 a year would be a large salary for someone in a managerial position with the only real risk being that of being fired. On the other hand if you are a business owner facing a lot more risk than just losing your job it isn't that much. For those of you that would like to have those pay a higher tax rate because they make more, how would you like to give business owners that lose money a 39% tax credit on the money they lose if they lose more than $250,000 in a given year? I sure would like a tax credit like that next year.

[Azazello1313]

I tend to agree with orszag's argument....that the tax cuts should be extended across the board for the time being, but then I think they should be eliminated across the board once the economy is somewhat healthy again. democrats here try and say republicans are fiscally irresponsible for wanting to extend them indefinitely, saying it will cost $3.7 trillion in foregone revenue over the next 10 years. well the democrats want to extend them to everyone but the evil rich, and forego $3.2 trillion in revenue. the whole country is in this hole, the whole country needs to tighten their belts if we're going to get out of it. just expecting to pass more of the burden to the 5% who already shoulder 80% of the burden is a disingenuous cop-out, and it's just not going to work. you can't just tax the rich and get enough to pay for all of this schit. you could tax the rich at 100%, and even if they were willing to continue working just as hard and give all of their income to the government, we'd STILL have a massive budget deficit.

[dmarc117]

it is up here . maybe not in cali but up here in the great north woods that is quite a bit oh cash

 

 

agreed. but in the big cities, not a whole lot. but 5mil anywhere is a lot. keep the tax rates on them.

[Perchoutofwater]

I tend to agree with orszag's argument....that the tax cuts should be extended across the board for the time being, but then I think they should be eliminated across the board once the economy is somewhat healthy again. democrats here try and say republicans are fiscally irresponsible for wanting to extend them indefinitely, saying it will cost $3.7 trillion in foregone revenue over the next 10 years. well the democrats want to extend them to everyone but the evil rich, and forego $3.2 trillion in revenue. the whole country is in this hole, the whole country needs to tighten their belts if we're going to get out of it. just expecting to pass more of the burden to the 5% who already shoulder 80% of the burden is a disingenuous cop-out, and it's just not going to work. you can't just tax the rich and get enough to pay for all of this schit. you could tax the rich at 100%, and even if they were willing to continue working just as hard and give all of their income to the government, we'd STILL have a massive budget deficit.

 

I agree with you on that. I've said for a while now that eventually the tax cuts need to be ended, but I think you do that when the economy is healthy. Just like I was ins support of some health care reform, I thought the timing of it regardless of whether you think it a good piece of legislation or not, was terrible. The timing of the sunset prevision of the tax cuts is terrible, and they should be extended. Once the economy is better, then let's raise everyone's taxes, and let everyone start paying for the services they feel that our federal government should provide.

[bpwallace49]

I agree with you on that. I've said for a while now that eventually the tax cuts need to be ended, but I think you do that when the economy is healthy. Just like I was ins support of some health care reform, I thought the timing of it regardless of whether you think it a good piece of legislation or not, was terrible. The timing of the sunset prevision of the tax cuts is terrible, and they should be extended. Once the economy is better, then let's raise everyone's taxes, and let everyone start paying for the services they feel that our federal government should provide.

 

They were forced through via reconciliation, and the only way they could be passed was with a sunset provision. (which is disingenuous because who would ever WANT them to end??)

 

I am in favor of a limited extension, but I think we will run into the same political crapola when THAT extension runs out and there might be some "uncertainty" that requires another extension.

I agree on the timing of the health care bill (no matter what was in it) was terrible.

It scares me that even with the Bush tax cuts . . our economy STILL drove a cliff with all those "evil rich" :irishwink: GETTING those tax cuts for the last ten years.

[Azazello1313]

I am in favor of a limited extension, but I think we will run into the same political crapola when THAT extension runs out and there might be some "uncertainty" that requires another extension.

 

that's why I think the bill creating the extension should include some economic benchmarks (GDP growth above a certain percentage, unemployment below some percentage, just real basic stuff) before the tax hikes go into effect, and maybe they phase in over a year or two. build it in from the beginning so it isn't some vaguely defined cloud hanging over the economy.

 

but more important than any of this is spending. who is going to cut spending and how? tax hikes in the realm that ANYBODY is comfortable with simply cannot close the gap by themselves. that is what I REALLY want to see defined (a la paul ryan's roadmap), because that's creating a much greater cloud hanging over the economy.

 

edit to add: a picture

Edited October 5, 2010 by Azazello1313

[bpwallace49]

that's why I think the bill creating the extension should include some economic benchmarks (GDP growth above a certain percentage, unemployment below some percentage, just real basic stuff) before the tax hikes go into effect, and maybe they phase in over a year or two. build it in from the beginning so it isn't some vaguely defined cloud hanging over the economy.

 

but more important than any of this is spending. who is going to cut spending and how? tax hikes in the realm that ANYBODY is comfortable with simply cannot close the gap by themselves. that is what I REALLY want to see defined (a la paul ryan's roadmap), because that's creating a much greater cloud hanging over the economy.

 

edit to add: a picture

 

ding ding ding . . we have a winner.

 

But considering neither party has the balls to endorse some of the ideas in the roadmap, then all the political bullcrap will dominate. Neither party has proven by actions that they will actually make the right fiscal choices. I like the idea of tying it to benchmarks, but if there is the scaaaaary "uncertainty" of them eventally expiring, why would anyone hire people? It is Perch's own argumnet. Why would he ever expand and grow when there might be "uncertainty" in the scaaary future? It is a self fulfilling prophecy, that will create a lack of growth based on nothing more than a hunch.

 

The phasing is also a good idea. But IMO they really have to be reinstated eventually if the long term problem of deficits are addressed. A better option IMO is revamping the tax system and going to a flat tax system across the board with zero exemptions except a poverty floor.

[Azazello1313]

I like the idea of tying it to benchmarks, but if there is the scaaaaary "uncertainty" of them eventally expiring, why would anyone hire people? It is Perch's own argumnet. Why would he ever expand and grow when there might be "uncertainty" in the scaaary future? It is a self fulfilling prophecy, that will create a lack of growth based on nothing more than a hunch.

 

umm, that's the whole point of tying it definitely to benchmarks. it defines when and how tax policy will change, and says that it will only change once the economy is clearly recovering.

 

you're not the sharpest tool in the shed, are ya?

[Perchoutofwater]

umm, that's the whole point of tying it definitely to benchmarks. it defines when and how tax policy will change, and says that it will only change once the economy is clearly recovering.

 

you're not the sharpest tool in the shed, are ya?

 

It's also exactly what I've been asking for, but bp only reads what he wants to when he takes shots at people.

[bpwallace49]

umm, that's the whole point of tying it definitely to benchmarks. it defines when and how tax policy will change, and says that it will only change once the economy is clearly recovering.

 

you're not the sharpest tool in the shed, are ya?

 

Jesus you can be dense.

 

How will they GET to those benchmarks if they are too scaaaared to grow and reinvest? What is their motivation to grow if they "might" get their tax cuts taken away? It is the same argument that those on the right use about poor people and unemploymnet, that is causes a DISincentive to get a job right? Only instead of poor people living the high life on food stamps and unemploymnet, we are talking about people making over 250K a year that have a DISincentive to grow their business and therefore lower unemploymnet and raise GDP? You are well-documneted as being against gubmnet spending in all forms, so that part of the GDP equasion is flat or reduced. So you are counting on more private consumption and gross investmnet will rise? Why? If the argumnet du jour is the future is too scaaaary, then why would companies try to grow and reinvest if their taxes "could" go up as a result of their actions?

 

Then the benchmarks are never reached (or pushed off into infinity) and the Bush cuts become a perpetual rollover. Especially since neither party has the balls to tackle tax policy overall.

 

If you want to blame the scaaary future, so ahead. Just dont expect the future to be any less scaaaary when tied to benchmarks that may or may not ever be realized. At least man up and admit that you are creating a potentially permanent cut in revenues without a corresponding reduction in expenses . . .

[redrumjuice]

Taxes have never been higher.

 

Actual taxes paid are at the highest they have ever been.

 

We need to slash spending, destroy these public pensions and start over.

[Azazello1313]

How will they GET to those benchmarks if they are too scaaaared to grow and reinvest?

 

wait, I thought what was scaaaaaaaaaring them was the "scaaaaaaaaaaaaary 'uncertainty'"? that's what you said in your last post, now you seem to be changing your tune?

 

in any case, I am saying, remove the uncertainty. yes, knowing that tax rates are poised to go up -- purely in itself, detached from any "uncertainty" -- applies a certain amount of braking to the economy. but that is unavoidable -- with all the spending we are and have been doing, somebody (everybody) eventually has to pay for it with higher taxes. however, uncertainty clearly makes it worse, so it's better to address the issue directly. not knowing what the future tax policy is going to be makes people hesitant to do anything. combine that with not knowing whether or how government will ever begin to reign in lavish spending, raising the spectre of greater, more extreme tax hikes in the not-too-distant future, and yeah, "scaaaaaaaaaary uncertainty" is widespread right now, and something a smart government would be minimizing to the greatest extent possible.

Edited October 5, 2010 by Azazello1313

[SEC=UGA]

Jesus you can be dense.

 

How will they GET to those benchmarks if they are too scaaaared to grow and reinvest? What is their motivation to grow if they "might" get their tax cuts taken away? It is the same argument that those on the right use about poor people and unemploymnet, that is causes a DISincentive to get a job right? Only instead of poor people living the high life on food stamps and unemploymnet, we are talking about people making over 250K a year that have a DISincentive to grow their business and therefore lower unemploymnet and raise GDP? You are well-documneted as being against gubmnet spending in all forms, so that part of the GDP equasion is flat or reduced. So you are counting on more private consumption and gross investmnet will rise? Why? If the argumnet du jour is the future is too scaaaary, then why would companies try to grow and reinvest if their taxes "could" go up as a result of their actions?

 

Then the benchmarks are never reached (or pushed off into infinity) and the Bush cuts become a perpetual rollover. Especially since neither party has the balls to tackle tax policy overall.

 

If you want to blame the scaaary future, so ahead. Just dont expect the future to be any less scaaaary when tied to benchmarks that may or may not ever be realized. At least man up and admit that you are creating a potentially permanent cut in revenues without a corresponding reduction in expenses . . .

 

If I'm in a position where my potential revenue growth will outpace the growth of the taxes, then I am going to invest to grow said revenue. What is hurting is that there is not going to be the growth over the next 12 to 24 months, IMO, to offset the increased tax burden, thus I don't have the excess capital to hire or invest in equipment right now when that money is going to go out disproportionately in the form of taxes.

[Duchess Jack]

I am just curious about what the rationale being used to suggest that not extending tax cuts to the wealthiest hurting the economy is. I understand that, when you ask the wealthiest sector, many say that they think ending the tax cut would hurt. I just want to know why. I mean, I understand why they don't want it to end. That much is obvious. I just want to hear why it hurts us all? The assumption seems that they would expand their business if they stayed but won't if they don't.

 

Agreed. The economy is sluggish. Employers have more money on hand than every before. Theoretically - hiring more people would give the people more spending power - you know - trickle down. But companies are just sitting on the money.

[Duchess Jack]

If 93.4% of middle age men wear a size 40 pant, does that make the guy that wears a size 38 skinny?

this logic is golden.

 

100% of people who are seventy years old are seventy years old. Does that make 69 years old young?

[Azazello1313]

this logic is golden.

 

100% of people who are seventy years old are seventy years old. Does that make 69 years old young?

 

umm, that was perch's point.