There is always speculation about the state of the economy and plenty of people–mostly middle left–have looked at the goat entrails and pronounced a recovery underway if for no other reason than that they want to. More than a few folks disagree, and it is fair to say that to some small degree the opinion is colored by an overt objection to the current administration or a near liberal-like inability to accept their affirmations on mere faith alone. But they are not to be faulted for it, even for political reasons–at least not by the left who did the exact same thing in 2008 to get their boy anointed.
Now, if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income will be lower than it otherwise should be.
Also, the prospect of rising prices, higher interest rates and more regulations next year will further entice demand and supply to be shifted from 2011 into 2010. In my view, this shift of income and demand is a major reason that the economy in 2010 has appeared as strong as it has. When we pass the tax boundary of Jan. 1, 2011, my best guess is that the train goes off the tracks and we get our worst nightmare of a severe "double dip" recession.
Read the whole thing, it’s very enlightening, almost intimidating, and certain to cause an uproar amongst those still struggling to remain blinded by Obama’s cult-of-personality. Laffer will be vilified by the left for daring to object to beer-pong economics, while acolytes closer to home will simply misdirect and deflect in hopes of giving their denial another day or week of comfort before the cliff face comes calling.
All-in-all I’d like to be able to disagree with Mr. Laffer, but I can’t. I’ve been complaining of this very thing for a while and while I refuse to get all paranoid about it, (because it simply is what it is) the best I can hope for is that the government closer to home takes some concrete steps to protect its own residents by detaching as many tow-cables as possible from DC before the Obamacrats drag us over another cliff. We’ll have to wait until after November for that of course. Despite bipartisan objection the democrat majority just balanced the budget based on promissory notes from the crown–currency of the realm that does not even actually exist. Failed leader Lynch will apply his royal seal daming us to more debt and larger deficits down the road. And their fearless leader Party-boss Buckley has publicly stated that this is responsible.
Buckley can say this with a straight face because 12 months from now he’ll be holding republicans "responsible" for whatever hell the left have wrought. But then we saw that coming too.
So buckle your seat-belts. It’s going to be one hell of a wild ride.
Cross posted at NH Insider