Can’t you just feel that Obama recovery?
Sales of new homes in the U.S. unexpectedly fell in January to the lowest level on record, a sign that an extension of a government tax credit may not be enough to rekindle demand.
Purchases declined 11 percent to an annual pace of 309,000, below the lowest forecast in a Bloomberg News survey of economists, figures from the Commerce Department showed today in Washington. The median sales price dropped 2.4 percent from January 2009 and the supply of unsold homes increased.
Its happening because a tax credit to get people to buy homes just advances the purchase date a little bit. People who were thinking about buying a home went ahead and did it to cash in on the tax credit – and that is fine and good for them. But that doesn’t increase actual demand – and it leads, inevitably, to a big slump in sales because the demand for the future is now reduced. Cash for clunkers did the same thing for auto sales.
We can’t increase aggregate demand until we increase wealth and we can’t increase wealth until we start making, mining and growing more things here in the United States. The only way to pry the necessary funds out of investors hands and put it to work in such enterprises is to make such investments highly lucrative – by cutting capital gains taxes; by cutting business taxes; by cutting corporate income taxes; by reducing or eliminating regulations which put a huge burden on starting up or expanding a factory, farm or mine.
There is no other solution to our economic problem. We can’t print our way out of this. We can’t borrow our way out of this. We can’t tax our way out of this. We can’t pick and choose from on high who gets government goodies our way out of this. We can only work our way out of it.
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