A Struggling Economy About To Collapse

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A rip-roarer for job creation and a major drop in the unemployment rate. At least, that's how the mainstream media sum up November's job numbers. But scratch the data and a different story surfaces.

A lot of pundits thought the November jobs data were pretty good, with 146,000 new jobs and a drop in unemployment to 7.7%. But look closer, and you see recession mode.

With nonfarm payrolls swelling by 146,000 and the jobless rate easing from 7.9% to 7.7%, November looked pretty good to many pundits. But the underlying trends aren't so favorable, and the future, with a slowing economy about to drive off a fiscal cliff, isn't bright at all.

Start with payroll jobs. The 146,000 wasn't awful, but to make a serious dent in joblessness, we need to add at least 200,000 a month for a prolonged period. In this poisoned atmosphere for business, that won't happen.

Since 2011, businesses have added about 151,000 jobs a month. But since June that's slowed to just 139,000. We're clearly going the wrong way.

And by the way, remember those big payroll gains in September and October, right before the election? Forget it. The Labor Department has revised down its job estimates for those two months by 49,000.

OK, but we still have private-sector job growth, right? Not really. In the last six months, 621,000 of the 847,000 new jobs created have been in government, not the private sector, according to CNSNews.com. That's 73% of all jobs — not a healthy labor market.

As for that big "drop" in the unemployment rate, all of it was due to the fact that 540,000 Americans are no longer looking for work. They either dropped out, took early disability or retired. Since the start of 2009, 9.7 million Americans have fallen into this category.

All told, more than 24 million Americans who want jobs don't have them, driving the labor force participation rate to 63.6%, just above August's 31-year low of 63.5%. This is the worst labor market in a recovery ever.

And it may get worse. The quarterly Wells Fargo/Gallup small-business survey found that 21% plan to cut jobs over the next six months — a surge from 10% last June and a record high.

IBD's own research shows that small businesses account for nearly 80% of all new job creation in America. A small-business slump means no jobs. It's that simple.

Why is the labor market refusing to recover as it has in the past, with millions of new jobs each year amid rapid economic growth? In a word, Obamanomics.

Thanks to ObamaCare, "stimulus" spending of $860 billion, threats of higher tax rates on small business owners and entrepreneurs, the economy's going nowhere. We may soon enter a new small-business recession that can be blamed on no one but Barack Obama.

http://news.investors.com/ibd-editorials/120712-636313-jobs-data-remain-at-recessionary-levels.htm

 

And, that's not all that's going to hit us. All because the government has a huge spending problem and won't stop.

Even if lawmakers somehow stop the Bush-era tax rates from expiring, taxes are still expected to rise on Jan. 1 -- thanks to a trio of new fees tied to the federal health care overhaul.

The IRS this past week published rules for some of the first major taxes meant to help pay for President Obama’s massive insurance coverage expansion. Together, they will raise investment and income taxes on top earners and impose a separate -- and controversial -- tax on medical devices.

The bundle of fees has been largely overlooked as lawmakers and the White House bicker over the Bush tax rates, with Republicans demanding they be extended for everyone and Obama insisting rates rise for top earners. But that same group of earners is already in the crosshairs under the ObamaCare tax rules published this week.

Starting Jan. 1, investment income for individuals earning over $200,000 and households earning over $250,000 will be subject to a new 3.8 percent tax. Further, regular income above those thresholds will be hit with a .9 percent Medicare surtax. Should the Bush tax rates expire for those workers, those increases will be compounded.

But the rather obscure medical device tax is the one that has stirred the most controversy in Washington and the business community. This week, groups and lawmakers renewed their calls to repeal it as the IRS published its final rules.

“This week, the Internal Revenue Service outlined which medical supplies and technologies will be subject to a tax. Now, everything from latex gloves to pacemakers will become more expensive and in some cases, more scarce,” Rep. Tom Price, R-Ga., said in a statement. “The tax on medical devices harms America’s ability to conduct the necessary research and development to maintain our global competitiveness, resulting in the loss of tens of thousands of jobs and fewer groundbreaking innovations in this field. With millions of Americans unemployed, this simply makes no sense.”

The Affordable Care Act imposed the 2.3 percent tax on medical devices with the goal of raising nearly $30 billion over the next decade.

Equipment makers, though, argue that the tax ends up being much higher than that since it’s on gross sales. One industry spokesman estimated earlier this year that the impact on actual earnings is more like 15 percent.

Already, some have warned that the tax will stifle growth. Indiana-based Cook Medical earlier this year announced it was scrapping plans to open five new plants because of the tax.

The Republican-controlled House voted over the summer to repeal the tax, but the Senate never took it up.

The administration, though, has defended the provision. According to the Treasury Department, the medical device companies actually stand to benefit from the law. Though the 2.3 percent tax hits the industry, the department argues that the millions of new health care customers insured as a result of the law will increase the demand in hospitals to order more equipment -- in turn boosting medical device companies' profits.

That’s not how the industry sees it. Stephen J. Ubl, president of the Advanced Medical Technology Association, said this week in response to the IRS rules that the tax could cost thousands of jobs – and is already causing companies to lay off workers and cut back on research and development.

“While Washington talks about a fiscal cliff, this tax could push us off an innovation cliff, costing as many as 43,000 jobs and hurting the ability of medical technology companies to find tomorrow’s treatments and cures. It should be repealed,” he said.

It’s unclear whether any of the ObamaCare taxes could be reduced or delayed as part of a deal to avert the looming fiscal crisis. So far, negotiations have centered on the Bush tax rates, overall tax reform and entitlement cuts.

The House Republican counter-offer unveiled this past week did not mention the health care taxes.

Meanwhile, the health insurance industry is already raising alarm about an ObamaCare tax on health insurers taking effect in 2014. America’s Health Insurance Plans says that cost will be passed onto the consumer, leading to another $2,000 in premium costs over the next decade for the average individual purchaser.

Read more: http://www.foxnews.com/politics/201...taxes-poised-to-hit-next-month/#ixzz2EVAE5CkT