The US Economy

by Jim Cathcart

My friends and investment advisors Bill & Mary Staton of America's Finest Companies recently posted the following in their monthly email report:
Brian Wesbury of First Trust Advisors sums up our thinking nicely, “Last year, U.S. exports, industrial production, real-hourly compensation, corporate profits, federal tax revenue, retail sales, GDP, productivity, the number of people with jobs, the number of students in college, airline passenger traffic and the Dow Jones Industrial Average all hit record levels. For the third consecutive year, global growth was strong, continuing to lift (and hold) millions of people out of poverty. In relative terms, the first five years of the current recovery have been much better than the first five years of the 1990s recovery.”

Now pause for a moment and reread the quote above.
Then answer this question, "What kind of shape is our economy in at present?"
Next question, "How does this compare to all the news you've been hearing and reading?"

My guess is that your impression of our economic status prior to reading the above, was that we were in a down economy and worse off than during the Clinton administration. The knee jerk response is "yes, but now we are at war and the economy is not the whole picture." Of course it is not the whole picture, but please get it that we have a robust economy right now DESPITE being at war. That is a big point.

In most situations the drains from fighting a war would sap the economy so much that it would be struggling for survival. The reason ours is not is that the current administration's economic policy of reducing taxes is working.

Our newly elected Democratic majority seems to be on a feeding frenzy to remove tax breaks and increase taxes on the business leaders, the ones who drive the economy. They claim that the "rich" are paying too little and the "poor" are paying too much. So they want to raise taxes.

Now, what's wrong with this picture? The economy is fantastically strong, jobs are plentiful, unemployment is way down and has stayed that way for years, tax income to the federal government is up due to the booming economy...so they want to "fix" it???

Folks, it doesn't matter what political party you embrace, the economy is driven by Ownership not by employees. Providing tax incentives to business owners is the quickest way to get increased salaries, increased tax revenues for the government and increased employee benefits. Successful companies with lower tax burdens tend to be more generous with benefits and raises. Struggling companies always tighten their belts and reduce what they pay to the employees, in order to survive.

Please do not listen to the politicians who are telling you we need more taxes. And for sure don't listen to those who claim that forced pay increases (via higher minimum wage laws) will help the workers. They won't. Never have and won't in the future. The more the employer HAS to pay to the government and to their employees the less they will invest in new technology, new products and new ways to grow the business. Businesses that grow require more employees (more jobs!) and they try harder to retain their good employees (more pay raises and benefits!).

Let's invest in education and raise the standards of performance so that everyone becomes productive. Leave the taxes low and get them lower if we can. That will stimulate business growth as we have seen it do for years now. Stop the insanity of the politics of good intentions and return to the policies of reason, logic and proven methods. Our economy is strong, please encourage your congressional leaders to stop tinkering with it in order to feel good about changing things (which, incidentally, don't need changing.)

Invest your energies in the issues that do need our attention: eliminating terrorism from the world, stopping the victimization of innocent people and expanding freedom and opportunity to all.