By Joe Conason

Smashed Records, Dead Theories: In First Quarter, Top Tax Rate Went Up And Markets Soared

March 30, 2013 12:39 am Category: Memo Pad, Politics 40 Comments A+ / A-
Smashed Records, Dead Theories: In First Quarter, Top Tax Rate Went Up And Markets Soared

Concluding the first quarter of 2013, we still await the portents of doom that preoccupied the right as the year began three months ago. Ending the Bush tax cuts for the wealthiest Americans – which President Obama insisted must be part of the “fiscal cliff” deal – would be ruinous to the economy, said his Republican critics. Unless we extended those tax breaks again, growth would be stifled and the consequences would be dire.

So far, so wrong, at least so far as the markets indicate: During the first three months of this year, stock indices have broken records that have remained intact since 2007. In fact, this quarter is the single best recorded by the Dow Jones index since 1998, with an increase of more than 11 percent.  Standard & Poor’s went up by 10 percent and NASDAQ increased by 8 percent.

While March was a very good month for the markets, the largest improvements came last January – almost immediately after the Bush tax cuts expired for the highest income bracket, rising to 39.6 percent. It was the first significant tax hike on the rich in the United States since 1993, when President Bill Clinton signed the Omnibus Budget Reconciliation Act – which was billed by Republicans at the time as the largest tax increase in American history and an economic policy disaster that would lead to recession.

Instead, as everyone now remembers wistfully, the economy boomed along with the markets.

Two decades later, raising taxes on roughly one million of the richest households, with incomes over $400,000, seems not to have damaged the economy at all so far – if the reaction of the markets provides any measure.

While it is true that employment still lags, growth is steadily improving. The Organization for Economic Cooperation and Development predicts that U.S. gross domestic product (GDP) will increase by 3.5 percent in the first quarter of 2013 and continue to grow at a slower rate during the following quarter. According to the OECD, which gathers data in all of the developed nations, the U.S. economy will continue to outpace those of the other G-7 countries this year.

Although overall growth remains severely imbalanced – with corporate profits soaring while workers’ share declines, middle-class incomes stagnate, and good jobs remains scarce – the nation’s general economic improvement undermines the sour outlook on the right. Clinton proved that raising taxes on the wealthy would not sink the economy, as his adversaries insisted – and to date, Obama seems poised to prove the same point once more.

Smashed Records, Dead Theories: In First Quarter, Top Tax Rate Went Up And Markets Soared Reviewed by on . Concluding the first quarter of 2013, we still await the portents of doom that preoccupied the right as the year began three months ago. Ending the Bush tax cut Concluding the first quarter of 2013, we still await the portents of doom that preoccupied the right as the year began three months ago. Ending the Bush tax cut Rating:

More by Joe Conason

Plutocrat Or Populist? Actually, Hillary Clinton Is Neither

Is Hillary Clinton a populist, a plutocrat -- or a firm believer in the American middle class?

Read more...

Stop Hillary? Not With These Mistakes (Or The Wisdom Of Dick Morris)

The latest attempted journalistic takedown of Hillary Clinton is rife with substantive errors.

Read more...

Newsmax’s Ruddy: Raise Minimum Wage, Vote For Common Sense

Even conservatives should see the value in paying workers a fair wage.

Read more...

Tags

Comments

  • http://www.facebook.com/dominick.vila.1 Dominick Vila

    The markets soared, the economy strengthened, and 23 million jobs were created in the Clinton era as a result of President Clinton raising taxes and restoring fiscal sanity. The reaction were are seeing now suggest that most large investors have a better grasp of what influences economic growth than people like Sarah Palin and the rest of the Tea Party, whose focus is on personal gain and the expense of most Americans and the welfare of our country.

    • RSDrake

      Again you are right on the mark Dominick … now if only we could get the nut jobs out of the House of Representatives

  • howdidisraelget200nukes

    That is great. Now that the corporations and the wealthy have recovered from not losing anything, perhaps our lazy, fearless leader can do something about the fraud committed by those same corporations and people.

    Perhaps he can do something about the out of control gas prices, started by bush, continued by Obama.

    Perhaps he can do something about those banks, started by bush, continued by Obama.

    Perhaps he can do something about those mortgage companies, started by bush continued by Obama.

    Perhaps he can do something about those out of control health care policies, started by raygun, continued by Obama.

    Perhaps he can do something about the jobs leaving America, started by clinton, continued by Obama.

    Perhaps he can explain his actions on Iraq and Afghanistan. Started by bush, continued by Obama.

    This government is beginning to look like a farce. Obama runs against the actions of the republiCON party and then continues them.

    This is not why people voted for him but then again, had they known that he was lazy and was going to take the easy way out by continuing failed republiCON policies, he would not have the opportunity to make 2 million per year each on those future board of directors jobs.

    I wondered what Obama was up to when he extended the bush tax cuts. Once it dawned on me that he would receive a large tax cut himself by extending them, it became apparent that he was a plant that was put in to continue our trip down the road of a third world country.

    We no longer live in a democracy. That ended 11.22.1963.

    • Independent1

      Your comments are so clueless that I have second thoughts about trying to respond but let me try:

      First of all, presidents have have very little if no influence on the price of gas, aside from the ability to release crude oil from the national reserves should a shortage come about. Given that under Obama, America has reached the point where we’re drilling enough oil to actually ship it overseas and we’re projected to actually exceed Saudi Arabia in Oil production by 202, that is not our problem – the price of gas is set by international markets.

      When you say Obama is fearless about attacking fraud, you’re obviously not aware that shortly after taking office in early 2009, he established a war on fraud in the defense and healthcare industries and has found and prosecuted more people and corporations trying to defraud the government via defense contracting overcharges and medicare/medicaid fraud than the previous 4 presidents combined – recovering billions. Do a search on War on Fraud in the Defense industry and you’ll find a paper there on Pepperlaw dot com that details some of the defense industry cases.
      About jobs leaving the country. I’m assuming you’re talking about jobs that have left the country because of international trade deals. Well those jobs pale in comparison to the jobs that have left the country because of people like Mitt Romney in the Corporate Pirating business that have probably shipped 5-10 times the jobs overseas than any trade deals have ever done – not only sending jobs but stripping thousands of Americans of pensions as they stuffed millions into their pockets.
      And about the healtcare, again your clueless, despite what you may think, and you obviously are not aware that over the passed two years, Obamacare has slowed the increases in medical costs to the slowest rise in 15 years. And in the news recently, was an article that a number of businesses that predicted their medical expenses under Obamacare would rise drastically, have just announced that their cost increases will be no where near as high as they had expected. AND, that’s before 2014 when everyone has to have insurance, which is the big driver in reducing costs.
      And on the wars, Obama got us out of the Iraq war as quickly as it was feasible with allowing the Iraqi military to be able to keep violence down in the country and unless you’re different than I am, I haven’t been aware of any extended violence there since we left. And with Afganistan, the same is true – Obama will get us out of there when he and our generals feel the Afgan army is in a position to protect the country. And for your info, news a week or two ago indicated that many outlying warlords and townships had finally gotten their fill of the Taliban and where they had previously protected them, they were not actively driving the Taliban out of their towns and the country. So maybe, just maybe we will end up just winning that war when Russia and Pakistan had failed miserably after years of trying.
      Unless you’ve been totally divorced from the news recently, you should realize why the Obama administration hasn’t more actively pursued prosecuting the large banks that contributed to the economic debacle – it’s been their feeling that doing so would create world-wide economic problems that could seriously jeopardize America’s recovery from the Great Recession.

      • howdidisraelget200nukes

        You are clueless. Explain exactly what it is that Obama has accomplished and done for the 98%. You cant because he has not done anything.

        My statements stand. If you can refute any, do so.

        If you cant, shut your pie hole because you are a chump.

        • Independent1

          Where do I start: 1st neither you not me nor anyone else in this country is in a position today to say exactly how Obamacare will impact America’s healthcare dilema; the only portion of Obamacare that has been enacted is the portion that requires insurance companies to provide coverages they didn’t provide before; and to not be able to refuse insurance for pre existing conditions. Despite the fact that these changes should have driven premiums sky high; the fact is that insurance and healtchare and insurance costs have risen at the slowest rate in 15 years over the past two years. And a number of companies that had projected that their healthcare costs for their employees were going to go up drastically, have retracted those projections over the past couple weeks and said the increase in costs will be much less than they had orginally projected. So Obama has done something no previous president has been able to do, get America started on the road to single payer healthcare by moving us first to Obamacare.
          Obama followed through on the auto bailout and TARP which not only saved at least 1.5 million Americans there jobs, which not only prevented Americans from having to go through another Big Depression but also resulted in bringing into the treasury over 115 billion in tax revenues from auto industry related companies and employees that would have been lost if the industry had gone bankrupt. (Not to mention Americans can continue to buy American cars and the profit from those purchases stays in America.)
          Despite the GOP transigence on going forth with legislation to help struggling Americans afford college, Obama has taken it upon himself to have his administration implement changes that have made it much easier for college bound students to afford college.
          Obama’s economic policies have greatly increased the confidence of investors which has driven the stock market to the highest levels in decades and which has done great things for millions of 98% people’s retirement funds including mine (after Bush had almost totally trashed it.)
          When he first took office, Obama started a war on fraud in the defense and healthcare industries which has succeeded in recovering billions of fraudulently charged monies in these two sectors of the economy which has allowed his administration to use these monies for other initiatives that benefit middleclass Americans.
          Obama followed through on his promise to get us out of Iraq and did so as quickly as was feasible with respect to the Iraqis being able to protect their own country. In doing this, he obviously has saved the lives of maybe hundreds of Americans in the 98%.
          If you need more, I can go on and on and on.

          • neeceoooo

            Part of that healthcare reform includes forcing the insurance companies to spend at least 80% of the income from premiums on healthcare costs for patients and not on the 2 million CEO salaries.

          • Independent1

            Thanks for the reminder on this; I’ll have to keep that in mind because it’s an important point. It’s my hunch that this new antagonist: ‘….200nukes’ is none other than one of our old clueless posters ‘nobsartist'; who has apparently taken a different screeename.

    • rcossebo

      Who started the Corporate War? If i remember correctly it was a push by Republican’s who were the ones behind the “big business” keep the “rich…RICH” because of TRICKLE DOWN which never happened, and tax the middle class more because there are more of them and they don’t do anything with their money like we (rich) do! Yes, we circulate it and spend it on things we need to live not on fantasy items that are so outrageous that even some wealthy people gasp (Warren Buffett). It’s time to back away from the political crap and start thinking longer term rather than who’s in office! It’s time to REALLY start thinking about what are WE doing to this planet and each other that is quickly approaching the point of NO RETURN, and I’m not talking about the damn economy or political environment!

      • exdemo55

        The bottom 50% is paying a tiny bit of the taxes, so you can’t give them much of a tax cut by definition. Yet these are the people to whom the Democrats claim to want to give tax cuts. Remember this the next time you hear the “tax cuts for the rich” business. Understand that the so-called rich are about the only ones paying taxes anymore.

        I had a conversation with a woman who identified herself as Misty on Wednesday. She claimed to be an accountant, yet she seemed unaware of the Alternative Minimum Tax, which now ensures that everyone pays some taxes. AP reports that the AMT, “designed in 1969 to ensure 155 wealthy people paid some tax,” will hit “about 2.6 million of us this year and 36 million by 2010.” That’s because the tax isn’t indexed for inflation! If your salary today would’ve made you mega-rich in ’69, that’s how you’re taxed.

        Misty tried the old line that all wealth is inherited. Not true. John Weicher, as a senior fellow at the Hudson Institute and a visiting scholar at the Federal Reserve Bank, wrote in his February 13, 1997 Washington Post Op-Ed, “Most of the rich have earned their wealth… Looking at the Fortune 400, quite a few even of the very richest people came from a standing start, while others inherited a small business and turned it into a giant corporation.” What’s happening here is not that “the rich are getting richer and the poor are getting poorer.” The numbers prove it.

        • http://www.facebook.com/profile.php?id=1362702462 Madelaine Ayers Henne

          Your point? So the rich should pay the same as anyone else regardless of how much they earn just because the didn’t inherit it?

          • exdemo55

            The point is the “rich” pay more than their share.

          • gahoof

            And that’s the way it should be. They are welcome to go to another part of the world and see if they can get a better deal. With all of the protections that are afforded (no pun intended) them here, I hardly think they will even consider that possibility.

            We index our taxes progressively to help make our country healthier for the middle class, upon which the economy rests. Sadly, the wealthiest among us have been given discounts on their tax rates for the past few decades (check out the top tax rate during the Eisenhower years).

            As the Britain’s prime minister commented recently: “It’s only fair that those with the broadest shoulders carry more of the load.”

          • exdemo55

            Carry your own load! Guit crying with your hand out to the government

          • Sand_Cat

            As usual, you assume those who oppose your ideas are freeloaders trying to steal from you.

          • Independent1

            When thousands of them get away with paying zero tax and thousands more less than 15% of their income. Talk about clueless!!! do you realize that in any given year, 300 of the Fortune 500 companies pay no tax!!! Even though many of them make billions in profits!!

          • awakenaustin

            Bullshit. If you balance what you get against what you pay you get more than your fair share also. Not everyone in the 50% who “pay” federal income taxes is rich. The tax is on incomes and not percentages of the population. “Oh poor pitiful me I make enough income to pay taxes. Those folks who don’t earn enough income to pay taxes have it so much better than me. I think I will give up my $100,000.00 a year income (or you pick a figure) for a job at McDonalds so I can make only $20,000.00 a year and start living the good life.” Everyone over the age of 18 (minors don’t ordinarily pay taxes but they do frequently pay taxes) pays taxes in this nation in some form at some level of government. Conservatives constantly “cherry pick” this statistic to make it possible to cry and feel bad about the burden their wealth has imposed on them. Talk to me about how you pay more than your share next time I see one of your kids lined up to enlist in the armed services. I am quite certain of who pays more than their fair share there.

          • exdemo55

            Appreciate the rich. You can’t do without them. If they weren’t here, you’d have no one to take from.

          • awakenaustin

            Oh, I do appreciate the wealthy, being marginally one of them. I would appreciate them more if anywhere near a majority of them displayed any capacity whatsoever to appreciate the contributions of others not related to their ability to make a lot of money. As far as I can tell the wealthy being wealthy do not beleive anyone has any value or merit unless they have a lot of money or are willing to parrot the line that money is the only valuable thing in our society and your value to our society is comensurate to your wealth..

            The rich take a lot more from others than has ever been taken from them. Maybe you could enlighten us with how the productivity of the wealthy has jumped up in the last 30 or 40 years or so which justifies the increasing concentration of wealth among those who already have.

          • exdemo55

            Don’t write in so much gibberish. Keep it simple for a simple man. Did you say the wealthy take more than they give? They don’t care about anyone that is not wealthy?

          • awakenaustin

            Really?

          • Independent1

            Sure, the poor are taking from the rich, that’s why the rich have gotten exponentially richer over the past 30 years while the poor are getting poorer. Boy are you clueless!!! You really believed that fairytale nonsense from Reagan didn’t you?? The trickle-down economics total nonsense. When the rich get more money, they don’t spend it in American; they either park it in an overseas tax shelter, or buy a yacht built in a foreign country just like Steve Jobs, or use it to take an around the world year-long cruise.

          • Sand_Cat

            Appreciate the sane. If they weren’t here, you’d have to go to some right-wing site and listen to a bunch of delusional idiots just like you.

          • Sand_Cat

            Bullshit. The rich control way more of the wealth and take in more of the money. They also endanger the liberty of the rest of us by buying our government and running even more for their benefit. Somehow, these poor, oppressed people manage to spend hundreds of millions for PACS and other legalized bribery.

        • http://www.facebook.com/people/Jim-Myers/100001512942781 Jim Myers

          There is a small flaw in your “theory” that the rich are the only ones paying taxes.

          That flaw is that Social Security and Medicare taxes are a “flat” tax of about 15%, when you consider the half paid by the employer, (which is a “benefit” of being employed), that is NOT paid on income above about $110,000.

          That is a savings of about 15% at the federal level for those making more than $110,000.

          Excuse me, but that is taxed on the first dollar for the wage slaves. It is also about the same tax rate as those who “earn” most of their income on long term capital gains.

          Don’t believe me? What about Mitt Romney, to name one.

          Is that really more than his “fair share?”

          • exdemo55

            You’re right, a small flaw.

    • charleo1

      Perhaps Obama could get the thirsty people in Hell, some ice water!
      Why don’t you start from reality, and see where you wind up? I am
      continually mystified by the power that otherwise intelligent Americans
      give to the President. Or, conversely, the President is doing something
      of which they disagree, he becomes a tyrannous, dictator, that should
      be tried immediately for sedition. If he raises taxes, it’s due to his anti-
      colonial, and decidedly Socialist determination to confiscate the wealth,
      and distribute it among a wide variety of undeserving, ne’re do wells.

      That distribution, quite literally running the gambit from welfare loafers, to
      Wall Street Titans. Both courted with taxpayer money, promoting his
      own agenda, at the expense of all that is Holy, and of course, hard
      working. There were times, Obama has been accused of simultaneously,
      entangling the U.S. in a fight in Libya, in which we had no National interests
      at stake. And, not taking the lead in supporting the good people of Libya,
      as they fought to free themselves from a brutal madman! Concluding then,
      President Obama is not a real American, or he would support freedom in
      the world. But, then he foolishly stood by, as one of our strongest allies was
      pushed from power, and replaced by the Muslim Brotherhood. So, I guess
      he should have at least encouraged the Egyptian military to get much tougher
      on those people, as they were ousting one of, “our guys?” Obviously, they
      say, he preferred Muslim Brotherhood. And we know why that is, don’t we?
      Yes, and, like all other Presidents, Americans believe the President can lower
      gas prices. And can, with a wave of his hand, stop illegal immigration. Or,
      he can produce jobs enough, to put every abled body in the Country to work.
      And, not spend a dime. Order the Wall street bankers to jail. And free our
      small businesses from the crushing weight of taxes, and regulation.
      All while beating the Taliban into submission. Making the Iranians quit
      chasing the bomb, And enforce family values, in laws like DOMA. Or,
      eliminate the blatantly discriminative law. Hardly any of these things fall
      solely within the power of the office of President. But, still we persist.

  • clarenceswinney

    more good news for a change

    1) As the President promised, income tax rates for middle-class families will stay low permanently. That’s good news for 98 percent of Americans and 97 percent of small businesses.
    2) As the President promised, for the first time in 20 years, a bipartisan agreement will increase tax rates on the wealthy. That rate increase will be immediate and permanent. Individuals making more than $250,000 will be asked to pay a little more to help reduce the deficit through a combination of increased tax rates and reduced tax benefits.
    3) This agreement cuts the deficit. It builds on the $1 trillion of spending cuts the President signed into law in 2011 through the Budget Control Act. This new agreement cuts the deficit by $737 billion by asking the wealthiest to begin to pay their fair share. Moving forward, the President is committed to reducing the deficit even more, splitting savings in a balanced way between spending cuts and even more revenue from the wealthiest
    4) As part of this deal, a group of tax cuts that help middle-class families keep more money in their pockets and afford to pay for higher education was also extended. The Child Tax Credit, Earned Income Tax Credit, and the new American Opportunity Tax Credit will stay in effect for at least the next five years.
    5) We’ll continue making investments that create jobs in domestic clean energy and innovation because the agreement extends the Production Tax Credit and the Research & Experimentation Tax Credit.
    6) Lawmakers agreed to extend emergency unemployment insurance for 2 million people looking for work.
    7) This agreement doesn’t cut Social Security benefits, Medicare, or Medicaid. That’s because the President stood strong against reducing our deficit on the backs of seniors, students, the poor, and working families.

    • Independent1

      Clarence, thanks for the updates. It’s good to hear some good news for a change. But under your item 2. – should that be “individuals making more than $400,000 will be asked….”? I think Obama did concede to Boehner to raise the point at which the Bush tax cuts were recinded up to $400,000 when he had wanted it to be $250,000.

      • neeceoooo

        He did, much to the disappointment of the democrats.

  • howa4x

    The problem isn’t only with the investor class, but also with the institutional investors like the giant pension funds, endowments of universities, who now want to maximize a return on investment. This is why the Koch’s are funding the right to work states, to break up unions, and have people work for less. My favorite of course is the richest of them all, the Walton family who have 3 scions each worth over 25 billion. Now you think they would spread some of that around considering they are all devout Christians, but you would be wrong. Instead they placed 80% of the workforce on part time status to avoid giving workers health benefits, and are one of the biggest supporters of not raising the minimum wage. And Republicans think these people have been burdened enough by the meager taxes they pay. Any middle class person who votes republican is being taken for the biggest ride in history.

    • plc97477

      That is why I refuse to shop at any of the walton’s stores

      • neeceoooo

        I agree

  • Siegfried Heydrich

    Damned reality!! How DARE it refuse to conform to our wishes! And after all that work we put into keeping the economic numbers as depressed as possible, too. Obviously, this is all some kind of socialist plot designed to lull us into a false sense of security before they make their move to confiscate our guns, nationalize all corporations, shut down all the churches, and send our youth off to gay re-education camps!!!! Keep your powder dry, boys, they’re a-coming for us!

  • option31

    You have to go deeper in the numbers. How much of this is European money fleeing Europe for safety? All this money is sloshing around looking for a safe haven – right now that is the US as Europe is in crisis. The European rich knew this by at least last quarter last year, thus the influx of money. Yeas some is US but you have to look outside the bubble and realize that money just goes where ever it is safest. Give it a couple of years and it will flow elsewhere. The 1920’s – roaring 20’s had the same type of things going on due to WW1 and the Treaty of Versailles and the hang over. Virtually same thing is happening now, once the money flows out of the US look out below.

  • http://www.facebook.com/joseph.grieco.946 Joseph P Grieco

    Republicans have never allowed facts to get in the way of their theories.

    • plc97477

      They have even been known to make up “facts” to fit their theories.

  • http://www.facebook.com/yebby61 Jerry Brooks

    The myth exposed

  • http://www.facebook.com/gary.graves.18062 Gary Graves

    The more the repubs fight Obama the more he wins and the greater his president history becomes.

  • http://www.facebook.com/brad.dickieson.71 Brad Dickieson

    The markets soared because Obama continues to dumb 85 billion in
    borrowed money into the economy every month. If you are going to tell half truths,
    please stop calling yourself a journalist and start calling yourself an activist.

    The markets are about to poop on themselves. And when they do please be sure to
    report it. A fair explanation would be one which suggested that Mr. Obama’s spending was a was a waste of your/my grand children’s retirement and quality of life. Be honest with yourself.

    Obama is lost; and so are people who fabricate half lies to promote their own clouded agenda.

scroll to top