Tag Archives: Brazil

What happens when socialist governments runs out of other people’s money?

The face of socialism
The real face of socialism

Which socialist nation ran out of money? Brazil.

Investors Business Daily explains what happened next:

Back to the wall, Brazil’s biggest socialist manque, Luiz Inacio “Lula” da Silva, has issued a loud call for tax cuts to revive his nation’s moribund economy. Why is it it takes a depression and impending political doom for socialists to recognize the truth about tax relief?

Newly named as cabinet chief by embattled President Dilma Rousseff, the once-popular and much-hailed former socialist president told a press conference Monday that he wanted tax cuts (and more consumer credit) to revive Brazil’s economy. He’s got no support from Dilma’s finance chief, and he won’t improve anything with more consumer credit. But on taxes, you heard right, a heavy-duty socialist had just embraced supply-side economics as a proven means of reviving economic growth.

And no question he believed it: “I am convinced that I can contribute, and it will be possible to change the mood in this country in a few months,” Lula declared. Such a transformation could only come of a near-death experience. Which is about economic situation in Brazil right now.

The country isn’t just experiencing a bad recession. It’s heading for what qualifies as a depression — a third year of economic contraction, with another negative 3.66% of GDP forecast in 2016. Inflation has topped 10% and unemployment is above 18%. Both huge industries and small businesses have gone belly-up. More than half of Brazil’s 95 million consumer credit accounts are delinquent, and sovereign debt has been cut to junk.

Do tax cuts work? Only about every time they are tried. But what about raising taxes – what does that do?

According to the Tax Foundation’s William McBride, citing an aggregation of 26 studies, 26 tax hikes slashed economic growth in all but three instances, while cutting taxes consistently sets the stage for economic growth. McBride found that in one study, a 1% tax hike slashes GDP by 1.3%, while a 1% tax cut yields a 1.4% rise the first year and another 1.8% gain in the second.

McBride also found that the most powerful impact comes from cutting the corporate tax, which mainly affects investment and capital formation, the very thing Lula said Brazil needs. Corporate tax cuts also fuel startups and entrepreneurial activity.  Brazil’s corporate income tax is 34%, the 16th highest in the world last year.

The U.S. corporate tax rate is the third highest in the world, 39.1%. And we just got a number for the most recent GDP change in the US economy – 1.4%. The average GDP growth under Obama is much lower than under George W. Bush.

Real Clear Markets explains:

Right now, the nation is probably already in a recession. The BEA’s first estimate of 4Q2015 RGDP growth was only 0.69%, and there is mounting evidence that this will later be revised downward. However, making the wildly optimistic assumption that 2016 RGDP growth will come in at the CBO’s current forecast (2.67%), Obama will be the only U.S. president in history that did not deliver a single year of 3.0%+ economic growth.

Again, assuming 2.67% RGDP growth for 2016, Obama will leave office having produced an average of 1.55% growth. This would place his presidency fourth from the bottom of the list of 39*, above only those of Herbert Hoover (-5.65%), Andrew Johnson (-0.70%) and Theodore Roosevelt (1.41%)

No matter what happens in 2016, Obama’s record on economic growth will be considerably worse than that of the much-maligned George W. Bush. Bush 43 delivered RGDP growth averaging 2.10%, with two years (2004 and 2005) above 3.0%.

You might remember that Bush cut taxes by over $2 trillion, and that created 8.1 million new jobs before the Democrats took over the House and Senate in January of 2007. Obama? Our labor force participation is around a 38-year low. Economic growth creates jobs, and we haven’t had any under the socialist Barack Obama.

Anyway, enough of that. We’re hearing a lot about socialism these days, and how great it is.  The young people have been taught by their public school teachers and others about how great socialism is. But is it really? It seems to me that in order to make that decision, we should look at countries like Brazil and Argentina and Venezuela and Cuba – where socialism has been tried – and then decide based on their experiences. We know what creates economic growth, and that’s leaving the money in the hands of the people who earn it.

How Barack Obama used taxpayer dollars to outsource green energy jobs

This is from Hans Bader at GlobalWarming.org.

He links to this ABC News story.

Excerpt:

Despite all the talk of green jobs, the overwhelming majority of stimulus money spent on wind power has gone to foreign companies, according to a new report by the Investigative Reporting Workshop at the American University’s School of Communication in Washington, D.C.

Nearly $2 billion in money from the American Recovery and Reinvestment Act has been spent on wind power, funding the creation of enough new wind farms to power 2.4 million homes over the past year. But the study found that nearly 80 percent of that money has gone to foreign manufacturers of wind turbines.

“Most of the jobs are going overseas,” said Russ Choma at the Investigative Reporting Workshop. He analyzed which foreign firms had accepted the most stimulus money. “According to our estimates, about 6,000 jobs have been created overseas, and maybe a couple hundred have been created in the U.S.” Even with the infusion of so much stimulus money, a recent report by American Wind Energy Association showed a drop in U.S. wind manufacturing jobs last year.

[…]Iberdrola, one of the largest operators of renewable energy worldwide, is based in Spain and has received the most U.S. stimulus dollars — $577 million. It buys some of its turbines from another Spanish manufacturer, Gamesa, which has a U.S. connection. Gamesa has two facilities to manufacture turbine blades in Pennsylvania, but the company said the market forced it to temporarily lay off nearly 100 workers.

[…]A Chinese company called A-power is helping to build a massive $1.5 billion wind farm in West Texas. The consortium behind the project expects to get $450 million in stimulus money.

Walt Hornaday, an American partner on the project, said it would create some American jobs. “Our estimation,” he said, “is that we are going to have on the order of 300 construction jobs just within the fence of the project.”

But that’s in addition to 2,000 manufacturing jobs — many of them in China.

And this News Max story.

Excerpt:

Gulf Oil CEO Joe Petrowski says President Barack Obama’s weekend comments in Brazil that the United States looks forward to purchasing oil drilled for offshore by that nation “is rather puzzling,” and “hypocritical” as his administration has imposed a virtual moratorium on domestic drilling. The signal to purchase more foreign oil comes after the U.S. Export-Import Bank invested more than $2 billion with Brazil’s state-owned oil company, Petrobras, to finance exploration.

“Any drilling, or any new production, especially production outside the Mideast – that is inherently unstable and probably is going to become more unstable as we move forward – is a positive,” Petrowski said Tuesday on Fox News.

“But why Brazil, when we could have the jobs and foreign exchange in this country, is rather puzzling – and I’d say somewhat humorous,” Petrowski told Fox News’ Neal Cavuto. “What is it about Brazil that they have that we don’t have?

Read the rest here – there’s a lot more Obama outsourcing to read about.

Obama spent $1.6 billion on Chinese wind and $2 billion on Brazilian oil

Obama Budget Deficit 2011
Obama Budget Deficit 2011

ABC News reports on the subsidies for Chinese wind turbines. (H/T GP)

Excerpt:

Despite all the talk of green jobs, the overwhelming majority of stimulus money spent on wind power has gone to foreign companies, according to a new report by the Investigative Reporting Workshop at the American University’s School of Communication in Washington, D.C.

Nearly $2 billion in money from the American Recovery and Reinvestment Act has been spent on wind power, funding the creation of enough new wind farms to power 2.4 million homes over the past year. But the study found that nearly 80 percent of that money has gone to foreign manufacturers of wind turbines.

“Most of the jobs are going overseas,” said Russ Choma at the Investigative Reporting Workshop. He analyzed which foreign firms had accepted the most stimulus money. “According to our estimates, about 6,000 jobs have been created overseas, and maybe a couple hundred have been created in the U.S.”

Even with the infusion of so much stimulus money, a recent report by American Wind Energy Association showed a drop in U.S. wind manufacturing jobs last year.

NewsMax reports on the subsidies for Brazilian oil driling. (H/T GP)

Excerpt:

Gulf Oil CEO Joe Petrowski says President Barack Obama’s weekend comments in Brazil that the United States looks forward to purchasing oil drilled for offshore by that nation “is rather puzzling,” and “hypocritical” as his administration has imposed a virtual moratorium Gulf Oil,Joe Petrowski, Barack Obama, Brazil, Drillingon domestic drilling. The signal to purchase more foreign oil comes after the U.S. Export-Import Bank invested more than $2 billion with Brazil’s state-owned oil company, Petrobras, to finance exploration.

“Any drilling, or any new production, especially production outside the Mideast – that is inherently unstable and probably is going to become more unstable as we move forward – is a positive,” Petrowski said Tuesday on Fox News.

“But why Brazil, when we could have the jobs and foreign exchange in this country, is rather puzzling – and I’d say somewhat humorous,” Petrowski told Fox News’ Neal Cavuto. “What is it about Brazil that they have that we don’t have?

“What concerns me – in addition to we are going to lose the jobs, and in addition to not having the foreign exchange – is one of the untold problems, I think, in the world oil markets, besides that we are getting too much of our oil from the Mideast, is 75 percent of our oil is being produced by government-run entities,” he continued.

“And I just have a theory that private companies are going to be more efficient in finding it, and getting it out at a more reasonable price, than state-owned companies,” Petrowski said.

Cavuto asked whether buying oil from Brazil is bad for the U.S. economy.

“It would be a lot better if we had the drilling here,” Petrowski said. “And it seems a double standard and it seems somewhat hypocritical [that] a country that desperately needs jobs, and we need them here, that we are encouraging other countries to create the jobs that we need.”

Obama has so much taxpayer money to hand out to China and Brazil, but now he wants to prevent AMERICAN oil companies from getting tax deductions for asset depreciation (depletion allowance).

What happens when we use American taxpayer dollars to stimulate energy production in other countries?

Gas Prices under Obama and Bush
Gas Prices under Obama and Bush

We pay more for energy, that’s what. Because we shipped our energy sector jobs overseas.

From the Washington Examiner. (H/T JWF)

Excerpt:

At least $53 million in federal funds have gone to ACORN activists since 1994, and the controversial group could get up to $8.5 billion more tax dollars despite being under investigation for voter registration fraud in a dozen states.

The economic stimulus bill enacted in February contains $3 billion that the non-profit activist group known more formally as the Association for Community Organizations for Reform Now could receive, and 2010 federal budget contains another $5.5 billion that could also find its way into the group’s coffers.

An Examiner review of federal spending data found that ACORN has received at least $53 million in federal money since 1994.

Meanwhile, Obama gave $3 billion taxpayer dollars to ACORN, which has been indicted on voter fraud charges, and 0.35 billion taxpayer dollars to Planned Parenthood, which has been caught on film covering-up statutory rape. Why is it that organizations that support Democrats like ACORN and Planned Parenthood are below the radar, while Obama keeps complaining about oil companies? Does taxing oil companies make the price at the pump go down? Or rather, doesn’t taxing oil companies cause the price at the pump to go up? And if taxing companies is such a good idea, why did Obama’s favorite crony corporation GE make $14.2 billion in profits in 2010, but pay NOTHING in taxes?

UPDATE: This post linked by the Competitive Enterprise Institute.