S and P 500 and QE

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Analysis of Ryan's "The Path to Prosperity"

Here is his full plan. Path to Prosperity

Here are some critiques.

Robert Wensel writes:

Mainstream media will portray him as a big government slasher for this proposal. He is nothing close

Ryan's "radical" budget would only reduce government spending to 20% of GDP by 2015. Obama wants to cut it to 23%. It is currently at 25%. In other words, there's only a 3 percentage point difference between Ryan's proposal and that of wild spending Democrats. And, this of course is before all the Congressional horse trading that goes on that would surely boost spending levels...

Ryan's plan does not touch the Empire.

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Nick Gillespie and Veronique de Rugy write:

the GOP's plan written by Rep. Paul Ryan (R-Wis.) "is refreshingly engaged with reality. Unfortunately for taxpayers and citizens, Ryan's plan looks better when standing in the shadow of Obama's. Neither budget provides a good way forward for a country still battling the effects of recession and the non-stop, self-inflicted spending binge that began with George W. Bush and has proceeded unabated since then. Ryan's budget is indeed a positive break from past efforts by Republicans and Democrats alike, but it doesn't provide the solutions the American people deserve."

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Jacob Sullum writes:

Instead it lays out "a path to prosperity–by limiting government to its core constitutional roles, keeping America's promises to seniors, and unleashing the genius of America's workers, investors, and entrepreneurs." From this I gather that Ryan thinks sending retirees a check every month and paying for their health care are among the federal government's "core constitutional roles." Judging from the programs that Ryan wants to cut or consolidate rather than eliminate, so are a lot of other activities that one would be hard pressed to locate under any of Congress' enumerated powers, including medical coverage for poor people, agricultural subsidies, college scholarships, and job training.

Ryan is on firmer ground when he says "the first responsibility of the federal government is to provide for the defense of the nation." But that should not mean that anything labeled "defense" gets a free pass. One of the plan's notable weaknesses is its failure to question the premise that defending the nation requires the U.S. government to spend as much on military programs as the rest of the world combined—and more today in real terms than at the height of the Cold War.

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The 19 Percent Solution: How to Balance the Budget Without Raising Taxes

Ryan v. Obama

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Paul Ryan's Budget Proposals

Our budget, which we call The Path to Prosperity, is very different. For starters, it cuts $6.2 trillion in spending from the president's budget over the next 10 years, reduces the debt as a percentage of the economy, and puts the nation on a path to actually pay off our national debt. Our proposal brings federal spending to below 20% of gross domestic product (GDP), consistent with the postwar average, and reduces deficits by $4.4 trillion.

A study just released by the Heritage Center for Data Analysis projects that The Path to Prosperity will help create nearly one million new private-sector jobs next year, bring the unemployment rate down to 4% by 2015, and result in 2.5 million additional private-sector jobs in the last year of the decade. It spurs economic growth, with $1.5 trillion in additional real GDP over the decade. According to Heritage's analysis, it would result in $1.1 trillion in higher wages and an average of $1,000 in additional family income each year.

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Cartoon: Irrational Exuberance

2011 Budget Battle

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Income Mobility

1. For American households that were in the lowest earnings quintile (bottom 20 percent) in 2001, only 56% of those households remained in that quintile in 2007, and 44 percent had moved to a higher quintile by 2007. Five percent of low-income households in 2001 had moved to one of the top two quintiles in just six years.

2. For those households that were in the highest earnings quintile (top 20 percent) in 2001, 34 percent had moved to a lower quintile by 2007, and 5 percent of those households had moved all the way to the bottom quintile.

3. For those households in the middle earnings quintile (middle 20 percent) in 2001, about one-third moved to a higher quintile by 2007, more than one-fourth moved to a lower quintile, and only 42 percent remained in the same quintile.

4. More than half of the households in the second, third, and fourth quintiles in 2001 moved to a different earnings quintiles by 2007 (see bottom row in chart).

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Housing Double Dip?

Home prices fell in 13 of 20 cities in January, paced by a 3.4 percent decline in Minneapolis, a 2.4 percent drop in Seattle, and a decline of 1.9 percent in San Francisco. On a year-over-year basis, Phoenix saw the biggest drop, down 9.1 percent, followed by a decline of 8.1 percent in Detroit, and prices fell 7.8 percent in Portland. source

Manufacturing Profits and Profit Margin

Profits for U.S. manufacturing firms reached $135.3 billion in QIV last year, the highest amount of profits ever recorded in a single quarter for America's manufacturers, and surpassing the previous record of $127 billion in QII 2007 before the recession started (see top chart above). The after-tax profit margin for U.S. manufacturers also reached an all-time time of 9.1%, at least for the data the Census Bureau has available going back to 1999 (see bottom chart above).

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Personal Consumption Expenditures

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Job Loss by Recession

The employment graph shows the percentage of payroll jobs lost during post WWII recessions - aligned at maximum job losses.This shows the severe job losses during the recent recession - there are currently 7.5 million fewer jobs in the U.S. than when the recession started.

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Q4 GDP Growth Revised from 2.8% to 3.1%

The Commerce Department reported that, in the third and final estimate for the fourth quarter of 2010, the U.S. economy grew at a seasonally adjusted annual rate of 3.1 percent, up from the prior estimate of 2.8 percent.The upward revision was due mostly to higher business investment and a smaller inventory build.

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GDP Growth Rates

On an annual basis, real GDP grew by 2.9% in 2010, the highest annual gain since a 3.05% increase in 2005, according to today's BEA report. In dollars, real GDP in 2010 was $13.248 trillion, which set a new annual record for U.S. output, surpassing the $13.228 trillion levels in 2007 and 2008.

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Corporate Profits

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Real Gross Domestic Income Still Below Pre-Recession Peak

According to the Bureau of Economic Analysis (BEA), real GDP is now slightly above the pre-recession peak. Real GDP (in 2005 dollars) was at $13,380.7 billion in Q4, just 0.13% above the $13,363.5 billion in Q4 2007.However real Gross Domestic Income (GDI) is still 0.25% below the pre-recession peak.

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Q4 Real GDP Growth revised up to 3.1%

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Spending is the Problem

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The Rich--A Changing Group

Robert Frank writes:

Researchers and journalists (myself included) often refer to the rich as a
fixed group. There are the “the rich” who keep getting richer, with ever-rising
shares of the nation’s income and wealth. And then there are “the rest,” who
aren’t getting much of either.

At a time when the American Dream is supposedly dead for most Americans,
while Wall Streeters seen as permanently ensconced in government-backed
luxury, the chances of moving up or down would appear slim.

But the rich and poor may be far more fluid than the conventional
wisdom would have us believe. What is most surprising is the churn at the top of
the income ladder.

A Census Bureau study shows that from 2004 to 2007, about a
third of the households in the highest income quintile (the top 20%) moved down to another income group. In the same period, a third of those in the lowest income group moved to a higher group.

This isn’t to say Horatio Alger is the norm, and America ranks below
many other developed countries when it comes to intergenerational mobility, or
the chances of rising higher than your folks did. And wealth mobility, which
measures accumulated assets over a lifetime, is more persistent than income
mobility. The period of 2004 to 2007 also is selective, since the country was
prospering from the real-estate bubble...

“One of the most enduring economic myths in our society is that the
rich keep getting richer, while the poor keep getting poorer,” he writes. “It isn’t true.”

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Housing Market

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US Wireless Provider Market Share

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