The Pardu

The Pardu
Watchful eyes and ears feed the brain, thus nourishing the brain cells.
Showing posts with label taxes. Show all posts
Showing posts with label taxes. Show all posts

Saturday, October 29, 2016

Taxation When It Doesn't Trickle-Down



"This post was first published on BillMoyers.com."
Images independent of the article and garnered via Google


Conspicuous Consumption

noun
expenditure on or consumption of luxuries on a lavish scale in an attempt to enhance one's prestige.
 
"an age of increasing conspicuous consumption"
Poor Pope Benedict. The current issue of Time magazine, highlights four “ways the pope is cleaning house,” and labels the pope emeritus the “Prada pope” for his “lavish apartment” and “custom red shoes.” Elsewhere, the Huffington Post mentions Benedict’s “luxury cars” that “included a custom-made Renault, a BMW X5, and a Mercedes.” The context is Pope Francis arriving at Castel Gandolfo in…a Ford Focus.
A far less Papal view
 Image result for trump gold rooms Image result for trump gold rooms Image result for trump gold rooms
 "BillMoyers.com Staff."

Why We Should Tax Conspicuous Consumption

October 27, 2016 by

This post first appeared on BillMoyers.com.

As part of our election series focusing on the issues that aren't getting the attention they deserve in campaign 2016, we talked with Cornell University economist Robert H. Frank about how to address growing income inequality in the United States.



Economist Robert Frank is arguably the country’s leading expert on wretched excess.

Over the course of a four-decade career as a distinguished academic (he has written several college textbooks, including one with former Federal Reserve Chairman Ben Bernanke), the Cornell University professor has developed a curious subspeciality: Studying the lifestyles of the filthy rich and spectacularly successful.

His anthropological field guides to life among the extremely affluent, including Luxury Fever and his recently published Success and Luck: Good Fortune and the Myth of Meritocracy, have led him to one conclusion: The 1 percent are a problem. But not necessarily for the reasons you might think.

The reason the nation’s wealthiest have become a menace to the commonweal, Frank has concluded, is not because of how much more they make than the rest of us. It’s how much more they spend.

For a society that has consumers (as opposed to private investment or the government) to thank for two-thirds of all its spending, that considers the Consumer Confidence Index a key measure of economic health, what Frank has to say might be regarded as unconventional, if not downright heresy. He prefers the term “radical pragmatism.”

It boils down to this: Scrap the income tax.

It’s not that Frank is a dour socialist who wants to completely level the playing field. Let the rich have their baubles, he said. Just impose reasonable limits, and keep the rest to make investments that will benefit everyone.

“Who’s happier? A guy driving a $300,000 Ferrari on roads riddled with foot-deep potholes, or somebody driving a $150,000 Porsche 911 Turbo on well-maintained roads?” reasoned the professor, whose reed-thin physique suggests a long-distance runner, but who described himself as an unredeemed “car buff.”

Ultimately, given the advances in technology that is replacing humans in even complex jobs, Frank said in an interview with BillMoyers.com, the next president may want to consider an even more radical method of sharing the wealth: A guaranteed income and a broad public works program that would subsidize displaced workers to take on socially useful tasks like planting green spaces, transporting the frail elderly and assisting in day care centers.

To Frank, the real source of the middle-class squeeze and much of the anger in the year’s presidential campaign, is both a matter of hard facts and human psychology.

The facts are that globalization and technology have promoted “winner-take-all” economies in which “winners” are able to completely shut out people and companies whose skills (or luck) and products are just marginally less than their own. That has led to “an enormous concentration of economic rewards,” Frank said.

The psychology is that when we humans have it, we like to flaunt it. Among the super-wealthy, Frank said, has triggered a “spending cascade” that forces people further down the income ladder to work more and more hours or go deeper and deeper into debt to keep pace. Call it trickle-down consumerism.

Whatever you do, just don’t call it keeping up with the Joneses on steroids. Frank finds that too judgmental. The reason the median family is spending 50 to 75 percent more to buy a house that's at least 50 percent bigger than the ones they bought in 1970, or proud parents are spending more than three times as much on weddings than they did in 1980, Frank says, has less to do with envy or status-seeking than what he calls “context.”

To explain, Frank recalls a house he lived in when he was a young Peace Corps volunteer in rural Nepal. It had two rooms, no plumbing and no electricity. “Never once during the two years I lived in that house did it ever occur to me for an instant that the house was unsatisfactory in any way,” he said.

But he acknowledges, “if I lived in a house like that in Ithaca,” his home town in upstate New York, “it would have been shameful… a clear signal that I’d failed in some spectacular way to meet even the minimal expectations of society.”

Yes, on one hand, what Frank is describing is classic peer pressure. “There’s a sense in which people are a prisoner of what others do," he said. But, he added, the consequences of not meeting the minimal expectations of society can be very real: “The better schools are located in the neighborhoods where the houses are more expensive," he said. So middle-class families “bid up the prices, of course, in the better school districts.”

But if he believes “you can’t escape context,” Franks also is convinced that “it’s a problem we can solve politically.”

How his proposed “ steeply progressive consumption tax” would work: Taxpayers would report to the IRS how much they made and how much they saved. The difference is their consumption. Frank envisions a “big standard deduction, say $30,000 for a family of four” that would mean “people in the bottom half and slightly above would pay no more tax than they do under the current system."

“Once your consumption goes beyond a certain point, though," he said, "the rates begin rising." How much? “Let me not frighten you,” Frank hesitated, evidently forgetting his context (speaking to a journalist). “But I’ll say, suppose it were 100 percent for people consuming already $5 million a year or more, what would that mean?”

It would mean the $1 million yacht might cost the purchasers $2 million. Or the $10 million New York City penthouse suddenly gets a price tag of $20 million. Frank doesn’t think it will stop luxury spending. But, he predicted, “By making additional purchases for people at the top of the ladder much more expensive, that would steer money out of those purchases and into savings and investment.”

In 1980, Frank said, the average expenditure for a wedding was $10,000; last year, $31,000. “Nobody thinks the people getting married who are spending $31,000 are happier,” he said. “In fact there’s some evidence that they are less happy because the extra debt they take on creates problems for them.”

It’s not that he’s looking to put florists out of business, but Frank argued, “florists and gratuitously expensive weddings aren’t inherently a better form of employment than people planning landscaping in public spaces. There are lots of things we could do that would generate employment that I think people would value more highly.”

Top on his list: Improved infrastructure. Noting that the American Society of Civil Engineers estimates the cost of the overdue maintenance at $3.6 trillion, he said that should be the top of the nation’s agenda.

Further down the road, Frank said, the next president may need to focus on growing “concern that new advances in AI — artificial intelligence — are putting people out of work who never thought they’d be automated out of their jobs.” As an example, he cited radiologists. That’s causing economists like him to have doubts about whether the labor market will continue to create enough new jobs to replace the ones that innovation destroys.
“We’ve started to hear now even conservatives calling cautiously for a basic income guarantee,” said Frank, who recommends that it be “too small to [allow people to live] wholly at taxpayer expense,” but able to be supplemented with low-income jobs “in the old tradition of public works employment.”

"A good life can never be had with just private consumption,” he said. “You need good schools, you need good roads, you need safety features to keep people from harm. And those expenditures contribute to well-being too.”

Frank doesn’t expect his recommendations to come to fruition overnight. “This is not a natural way for people to think about things,” he said. But, he noted, other once-unthinkable things, such as a tax on carbon consumption and legalized gay marriage, gained rapid acceptance once they had gathered momentum. “Things happen incrementally until they don’t,” said Frank. “Revolutions, when they come, are never widely predicted.”

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Thursday, February 28, 2013

Connect The Dots USA: Income Tax Breaks


Cross posted from Facebook Connect The Dots USA.

Tax Breaks!  Any tax breaks for you?
______________________



Connect The Dots USA

Connect The Dots USA

Contrary to the naive rhetoric of the “flat tax” pushers, simplifying and restoring fairness to the federal income tax code does not mean flattening our current seven rates to one rate. Before Reagan came along, we had 25 rates and much less income inequality. TurboTax or an online calculator can easily figure out your blended rate, so there’s no real complexity or paperwork there. 


And when it comes to fairness, a 15% income tax rate on a family with annual income of $30,000 would likely mean foregoing necessary healthcare, food or rent, while the same is not true for a 15% rate on a household with annual income of $300,000 or $3 million.



What makes our federal tax code ridiculously complicated and unfair are not the seven brackets, but rather all the special deductions, breaks and credits that reduce the amount of household income subject to tax (aka "taxable income"). Think of them as government discount coupons that favor one activity or group over another.

For better or worse, each tax break is a government social engineering program... Why do we subsidize home loan debt, but not auto loan debt? For a country that screams about debt, why do we encourage more debt with the mortgage interest deduction? Why not a home down payment deduction instead? That would encourage saving, but it would not benefit the banks, the builders or the real estate agents. Perhaps that’s what this deduction is really about.

And why do we favor families with more children over those with fewer or none? Why do we favor capital over labor? President Lincoln famously said, “Labor is the superior of capital, and deserves much the higher consideration.” But Wall Street lobbyists make sure our tax code gives special perks to the plutocrats.



This graphic shows the top 20 individual income tax breaks that comprise 90% of the $1.1 Trillion in lost revenue EVERY SINGLE YEAR. When you hear politicians refer to “spending in the tax code” or reducing “tax expenditures” this is what they are talking about. Eliminating the coupons for only the Top 1% would recoup more than $200 Billion in one year (= $2 Trillion over ten years). Compare that to the looming sequester cuts, which only save $1.2 Trillion over ten years.

See how the Top 1% gains the most from these IRS discount coupons:
Note that the Top 1% alone enjoys 75% of the benefit of the capital gains/dividend special rate. 

You sometimes hear Republicans say they are willing to close tax loopholes as long as rates are reduced so no more revenue is generated. That’s just a stupid waste of time. What is the point of the whole “tax reform” endeavor if not to bring in more revenue to reduce the deficit and/or invest in something more worthwhile like infrastructure or education?
____________________

The Pardu..."Revenue is an ISSUE!"
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Friday, December 28, 2012

John Liming: Fiscal Cliff

Cross Posted from Blue Heart Chronicles....John Liming

An Inconvenient Slap In The Face!



December 28, 2012 - - My Opinion - -

Some  of our more obstructionist and intransigent Republicans, Democrats and other assorted and varied nork-wallowers on the farthest reaches of the extremist political cess pools in this country do not seem to be, to my way of thinking, so much concerned about growing the economy or saving our fiscal rear ends as they are about preserving and protecting their own over-massaged egos, their political careers and their many perks as electeds.

Of course I am the perennial cynic, I guess! 

Here we are supposedly going over some kind of "fiscal cliff" and there is, as of yet, little or no reported movement (other, perhaps than little oral theatrical bowel movements) from either the left who keeps on "waiting for the right to make a move" or the right who keeps on accusing the left of not being reasonable.

Even with all this gridlock, some of the newsies are reporting that the nation views the Republicans as the culprits who will, as the cliff comes and goes, be seen as the responsible party for everybody's taxes going through the roof and for milk costing $8 a gallon.

Whether that is a fair assumption or not is, in my opinion - -  a matter of . . . opinion! (snark..snark!) 
  
It is strange to me that Republicans - - who cannot seem to sell their rather indistinct and sometimes mysterious agenda to the American Voter - - always seem to me to be harping about the dire need to control spending at the Federal Level and who are more than willing to throw thousands of needy folks under the bus with their continued insistence on cutting the guts out of every social safety net program they can get the cumulative fingers on have shown they are more than capable of running up exponential budgets through uncontrolled spending habits  - - - ala "The Bush Years" during which they created the biggest and most expensive government bureaucracy ever known to this country.

And some of them still have the mentally ejaculatory moxie to accuse the Left of these same idiotic things?

But then what is someone like me supposed to think when I observe  some of the Liberals, democrats and progressives spending just as wildly as their rightie counterparts and perhaps even a little more so?

Why do some of our elected geniuses appear more interested in throwing blame around than in finding workable solutions for problems?  Has anyone figured that one out yet? 

It is all too awe inspiring to someone like me who, like most "opinion" bloggers has no great amount of expertise in the affairs of high finance or in the nuances of Government machinations.

This should please the trolls who are always accusing me of lacking facts for my presentations.  Of course I lack facts for my presentations because there are too many facts and those facts are too varied in this present governmental mess - - and if the elected experts can't figure it out, how does anyone expect me to? I can't do it and neither can the arrogant a-wads who are so quick to challenge me whenever I write a blog post.  So, in a word - - "Up yours, a-wads!"

But I am wondering if perhaps the Left does not deserve a little verbal butt kicking too for being weak enough to let them get away with it and I am wondering if they were given the same chance to overspend the national treasure, would the Left spend just as much or even more? And, in matter of fact - -  have they actually done so?
Is it all a matter of degrees?  Some people claim they have done exactly that!

But do the ones who make such claims have the foggiest notion of what they are talking about or are they talkingmore from the resounding chambers of some of their physical orfices than from common sense contained in reasoning noggins?

I imagine it depends on which side of the creek one stands on whether Lefties are more spendy than righties or the other way around.

Even though I believe there are some circumstances and some historical factualizations that need further perusal if one is to arrive at a safe, sane and valid conclusion:  

The world does not need to consult the phantasmagoric wastelands of right wing mythology to understand which of our political entities is responsible for our current "down- the- crap hole" fiscal situation.  The whole civilized world has now had the opportunity to observe as conservatives spun this web and they cannot deny culpability regardless of the amount of horse manure they try to shovel onto it in an attempt to hide it.

Well - - that is one of the arguments floating around out there anyway. 

Oh I am sure to catch hell from my favorite trolls on this one

So, basically - - "up theirs" with their phony little "fact-seeking" expeditions onto the comment section of my blog.

I cannot fathom, in the remotest stretches of my fertile imagination, exactly why the richest 1% of Americans at the top of the national food chain seems to always feel so poor, put off, neglected and vulnerable whenever anyone asks that they pay a few dollars more in taxes to help keep this nation afloat.

So far, as I see it, these 1% are the ones who have been getting the free ride on the backs of the fabled (and now somewhat notorious 47%) and if they have any kind of patriotism at all they should not object to seeing their first tax raise in more than 13 years.  Even some of their own kind who just happen to be billionaires have already publicly stated that it is time for the rich to pay a little more.

But some of the meatheads on the right wing extreme- - the effluvient ignoramuses who vomit propaganda and lies, who wallow in greed and ignorance, who hate and detest the commoners among the 47% of us peons- - they steadfastly keep their noses to the manure-scented winds of their governmental and fiscal fantasies (because they cannot seem - - in my view - - to escape the bonds and boundaries of their self-imposed mental blocks... their locked-in-thinking!) (The chains forged by the affliction of being enamored of the idea they are legends in their own minds.)

Is there any doubt in any body's mind why it is that most of America soundly rejected the rightist-proferred mind-sex and took the more Liberal path to their hearts in the most recent test of Voter Will Power in this country?  

These damnable tax cuts for the rich have yet to produce the first viable job for workers in the United States as far as I can tell.  I think that most of the money gained through those tax cuts was probably invested (squandered)  in the markets in order to make more money or it may have been invested in overseas industrial adventures  - - the kind of adventures known for sucking American jobs away to overseas climes.

The bitch slapping of America by the far right extremist nut wagon may just be on the verge of doing it to us all again but I have a sneaking suspicion that if they don't get off their fur-lined crap pots and get their collective asses in gear to do something to avoid this fiscal cliff and if they cause the American Voters to suffer any more than they already have - - there may be a new brand of hell to pay when the next opportunities to vote roll around in the mid terms of 2014 and beyond.

I am under the sneaking impression that if the Lefties don't get their acts in gear, they may see similar unhappy results when the ire of America gets vented at the polls the next time around also.

The time for gridlock is over; the time for working together has returned with an immediate urgency that dare not be neglected! 

In my opinion, both collections of politicos over there in D.C., have joined hands - - either wilfully or through weakness - - to create this damned "cliff" thing and I think sinice they are the recognized "experts" in governing us all,  I think it is their collective responsibility to get us all out of this mess they have created.  

Posted by John R. Liming  

Picture Credit:  Illustration from DonkeyHotey ( Click Here ) is used under creative commons license. ( Click Here )        
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Tuesday, December 18, 2012

The Economic Policy Institute: Budget Taxes and Public Investment



While scouring around for information of issues related to the US Budget, l ran across a piece that is worth sharing. The Economic Policy Institute granted permission for sharing an Andrew Fieldhouse commentary about the US Budget and public investment.  My affinity for the piece is its focus and opining on the prospect of what Fieldhouse calls, 'full employment'.  We also have heard the words infra-structure with every presidential election since Ronald Reagan.  Maybe it is time for serious investments infra-structure and its second benefit in prospects for employment for unemployed Americans. 

As the nation faced the formidable work of warding-off a second Great Depression, Robert Reich, Paul Krugman and other noted economist have stated that infra-structure expenditures offer greater returns. Many of those same experts stated the 'shaved' Obama stimulus was not enough for more rapid growth from the jaws of the Great Recession. Obama and his team requested (proposed) $1.2 Trillion in Stimulus funds. The final stimulus funds numbers fell in the range $740 billion to $800 billion. 

Andrew Fieldhouse


Restore full employment with a massive infrastructure program


This piece originally appeared in The International Economy magazine’s symposium  One Policy Change, Please.One policy change? Restore full employment with a mass infrastructure program. 
The U.S. economy faces a huge shortfall in aggregate demand—with output running $988 billion (6.0 percent) below potential—which is holding back employment. In today’s liquidity trap, boosting demand with deficit-financed fiscal stimulus remains the most effective lever for restoring full employment. A mass surface transportation, water, and energy infrastructure investment program—exceeding $1 trillion over 5–7 years—would efficiently accelerate the return to full employment, and more opportune timing is difficult to imagine. 
Infrastructure spending is particularly cost-effective in boosting demand in a depressed economy; Moody’s Analytics estimates that $1 of infrastructure spending presently generates $1.44 in demand. Consequently, the sticker price of infrastructure investments overstates their effective cost; the cyclical deficit shrinks about 37 cents for every dollar output rises toward potential, so more than 53 percent of outlays are self-financing. This undertaking would reduce long-run economic scarring by employing a higher level of resource utilization today, but also increase the productive capital stock, laying the foundation for higher potential output. 
The American Society of Civil Engineers estimates that $2.2 trillion of investment is needed over five years just to raise our infrastructure from “poor” condition to “good.” Only half of this investment is expected to be met. State budgets are in no position to pick up this slack. The federal cost of financing investments is also near record lows: Treasury’s 10-year borrowing cost is under 1.7 percent and in the negatives for real interest rates (that is, TIPS). Further deferring maintenance increases net-present-value costs to taxpayers, because upkeep and rehabilitation is cheaper than replacing defunct infrastructure. 
Federal infrastructure investment should muster bipartisan support; it traditionally has and it’s supported by business groups and organized labor alike. Increasing investments in the midst of a jobs crisis and during a period of near-record low financing costs is a no-brainer.

Of course, we realize the nation has spending considerations.  I posit spending as delineated by Fieldhouse are much more effective  investments in our future than the billions we currently spend on national defense, oil industry subsidies and various other non-sense federal expenditures.  


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Tuesday, September 11, 2012

Romney Coming Uncloaked On His $102 Million Dollar IRA!



The scourge of the Money-changers!

The Atlantic has published a screed about Mitt Romney's $102 million IRA.  By any standard, common folk like you and me know just how much we can stash-away (from federal taxes) in an Individual Retirement Account and we know the difference between the Simple IRA and the Roth IRA.

Now, imagine the "privilege" of money which shapes the lives of those who are not bound by the same life experiences and unreachable opportunity. Money earned legally, but in many cases off the backs and sweat of common folk.  Imagine being able to borrow copious sums of money (Based on past earned income), invest in a business, lay-off employees or sell-off operation to repay the borrowed debt, use it as a cash-cow, and when markets decline of performance drops below an artificial benchmark.  Millions of lower income and middle class people know the experiences from a receiving and helpless end; They had no power, no say, just jobs.  

The aforementioned was the plight of the under trodden, and the opposite life from the "Money-Changers".   Where have your read those words, the "Money Changers"?

While I know the genesis and context of the biblical archive, I thought I would seek a bit more authoritative rendering. (Do not read religious denomination into my choice, I have no interest in a specific denomination.)

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Tuesday, December 13, 2011

Corporate Taxpayers & Corporate Tax Dodgers, 2008-2010

There people out there who research that which is relevant to our society. 


 The Citizens for Tax Justice is just such an organization. The linked report is a bit much for our short attention span (and universally shared slight cases of AD & D). It is a serious archive item for for review, scrutiny, or as source of data.

When we have people who wish to serve as president while railing to a crowd about how corporations are people, data such as that int eh report have contradictory meaning: Paying No taxes seems unAmerican!

No, they are not People . they are charter entities with the sole purpose of remaining an on-going business concern and returning a profit to shareholders. The concerns of employees (major corporate assets) fall-in line very much far down the profit and loss considerations.


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Monday, August 15, 2011

Buffet Speaks As a True American


"He who speaks from facts has a solid foundation."  
  Origin...
 The Pardu 


I have often commented that the Democratic Party would do themselves lots of good if they leverage sympathetic billionaires as strategy components for their campaigns (agenda).  Two weeks back, I believe that I actually wrote someplace that the DEMs would do well to actually solicit a couple of the more notably progressive 'uber' rich to sit for camera interview or 30 second campaign or policy advertising spots.

Well, as usual I am slightly off the mark, but I think I may have suffered a bit of prophecy after reading Warren Buffet's recent Op-ed in the New York Times.   

"My friends and I have been coddled long enough by a billionaire-friendly Congress. It's time for our government to get serious about shared sacrifice," The 80-year-old "Oracle of Omaha" wrote in an opinion article in The New York Times.


http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.htm




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Saturday, July 16, 2011

Ali Velshi (CNN): The Sane one?

I am often critical of CNN due to my perception  that the network does not perform probing interviews.  While Anderson Cooper occasionally performs such interviews from time-to-time, he will not venture with serious questioning on topics for which he seems slightly unschooled.


Time has come for me to pay deep respect and show appreciation for the work of Ali Velshi.  I believe that Velshi comes from a background that includes understanding and reporting on Markets and financial matters. He has stepped to the plate on a network that sorely needs probing-revealing-grit filled interviews during a period of extreme flux in Washington D.C.  I will admit that Velshi of late has taken the RIGHT to task for what appears to be planned 'stone-walling', I suspect he would also aggressively tackle messengers from the LEFT if they practiced same (in his presence).

This article illustrates my point. I have also posted information about the debt ceiling crisis that seems to place all issues into perspective.  Whoever, wrote the posted material seems to have labored to do so without obvious bias.

RUN of the SHOW (to follow)

Videos
A. Velshi interviewing Santorum

B. Velshi interview Norquist

C. Velshi explain the debt ceiling crisis while delineating both LEFT and RIGHT perspectives


Debt Ceiling Cheat Sheet: The Facts



 Grover Norquist and his Taxes Pledge...(Shallowness Personified)



Real interview vs. Fox News 'prompt to talk' interview format



The Facts (according to CNN)

Washington (CNN) -- Here it is -- a cheat sheet to the talks over the national debt. These are the plans on the table, simplified and put in terms a human being can understand:


Key figures
• $14.29 trillion -- current debt limit. That's also nearly the value of the European Union's gross domestic product -- or everything produced in the EU -- last year.

• August 2 -- the date when the federal government is forecast to hit the debt limit and see all new loans cut off. Falls during "Simplify Your Life Week." Really.

• $2.4 trillion -- the increase to the debt limit officials think is needed to get the government through November 2012.

• $4 trillion -- the amount of deficit reduction in a longer, broader, "grand compromise" idea.


Plans in the discussion
From smallest to largest:
1. The "fallback": The McConnell and McConnell/Reid plans
Harry Reid, left, and Mitch McConnell
Harry Reid, left, and Mitch McConnell
These plans are built in case Congress and the White House cannot reach a specific deal on raising the debt ceiling. In theory, they include relatively simple legislation and could lead to an increase in the debt ceiling in a matter of days.


Specifically, Senate Minority Leader Mitch McConnell, R-Kentucky, proposes a shift in how government raises debt ceilings, resting the decision and power more with the White House. McConnell's plan would allow the debt ceiling to go up if a) the president requests a specific increase, b) the president submits proposed budget cuts in an amount greater than the debt ceiling increase and c) if two-thirds of Congress does not vote against it (if one-third supports the debt ceiling increase).


The mechanisms for that plan are complex, but just believe us that those are the bottom lines.
Senate Majority Leader Harry Reid, D-Nevada, is working with McConnell to add more components to this plan.


The two leaders are considering an attachment of $1 trillion to $1.5 trillion in spending cuts. And they are talking about a commission or group that would propose spending cuts and possibly wider reform. This plan is fluid, but right now the idea is to create something similar to the Defense Base Closure and Realignment Commission, guaranteeing the commission's recommendation a straight up-or-down vote in each chamber of Congress. That group could speed up the process to cut spending.


Supporters: This "fallback" could save the U.S. from hitting an unprecedented financial wall. It also takes the politics out of debt ceiling debates.


Opponents: The McConnell plan requires no spending cuts or change in fiscal policy. It demands only proposals, which Congress may or may not pass. Even if the McConnell/Reid spending cuts are included, this idea makes few or no difficult fiscal decisions.


Odds: Increasing rapidly.
2. The 'kick the can' short-term deal


tzleft.can.ts.jpg 
This proposal could take many forms but would raise the debt ceiling for a matter of weeks or a few months, with offsetting spending cuts and/or revenue changes.


It may be as much as $1.5 trillion or as little as a few hundred billion.


President Barack Obama has repeatedly said he will not sign such a deal. But in White House talks Wednesday, House Majority Whip Eric Cantor, R-Virginia, suggested looking at a short-term bill, famously leading to a pronounced pushback and a musical flourish, Jed Bartlet-style moment. "This could bring my presidency down," Obama said, according to Republicans, "but I will not yield." Both sides agree he ended the meeting at that point.


Supporters: The two sides cannot agree, and this deal is the best they can do.


Opponents: It's putting off the tough decisions and barely scratches the surface of the problem.


Odds: Very unlikely. Cantor told reporters that Obama said he would not relent, even if it risked his presidency.


3. The 'just get to 2012' middle-term deal
tzleft.groupdebtsheet.jpg 
This kind of compromise would raise the debt ceiling about $2.4 trillion, giving the government enough funding power to get through next year's elections.


The president insists this time frame is a minimum for any debt ceiling compromise. But thus far, Republicans and Democrats have not been able to agree on any way to offset the $2.4 trillion.


Republicans demand this plan be offset with spending cuts and that it include no revenue increases. Democrats say it's not fair, nor mathematically realistic, to get all the money for deficit reduction from program cuts.


It is not clear if such a deal would include a significant entitlement overhaul but probably not.


Supporters: This is a down payment on the debt problem. It is a first, small bite toward reducing deficits. And it is politically easier (on all sides) than a longer term fix.

Opponents: Whimps! Incompetent procrastinators! This is a long-term crisis, and lawmakers must start coming up with long-term solutions.


Odds: At the moment, more likely than the next one.


4. The 'grand compromise' long-term deal
tzleft.obamadebtsheet.jpg 
This deal would be the most sweeping and would take a significant bite out of the deficit colossus. A plan in this realm would reduce the deficit over the next 10 or 12 years by roughly $4 trillion (though, it does not solve the entire problem).


This compromise would likely include major reform of Medicare, possibly Social Security reform and a potentially sweeping overhaul of the U.S. tax system.


It could mean: changing retirement ages as well as how much seniors pay on Medicare and simplifying taxes so there are fewer deductions but also fewer, lower tax rates.


Obama continues to urge lawmakers on both sides to forge such a deal.


But the politics are the stuff of the "Divine Comedy." The second book.


All sides are warm to broad tax reform. But Democrats sharply oppose anything resembling benefit cuts to Medicare or Social Security. Republicans likewise are fierce in rejection of any net increase in revenue, which seems to be part of the Democratic offer on tax reform.


Supporters: This is why we sent members to Congress, to make difficult political decisions that may be tough for them but that are good for the country in the long run. Our debt crisis won't be solved with lollipops and starlight. It will hurt, but lawmakers need to pull the trigger.

Opponents: No such deal could get the votes to pass. Republicans will block any perceived tax increases and Democrats will stand against benefit cuts to Medicare. It's simply impossible.

Odds: It's not dead. Those rooting for it, see a path toward a late breakthrough. Others say "no way."

Comment: I personally do not possess the level of knowledge to speak completely intelligently about the intricacies of the issue. My perspective is one of a consumer and one who stands to lose significantly if the RIGHT is wrong, the stock plummets, interest rates shoot up, the Nation's Treasury Bonds become junk.  

Bush Era decisions led to enormous loses in the total value of my investment portfolio.  The same Administration laid the nation at the feet of anther Great Depression. Therefore, I am not at all inclined to buy-into what appears to be pure obstructionism from the RIGHT. GOP party leaders have declared their major strategy over the near term was to ensure that President Obama is a one term President. Does such language proved any basis for belief that the GOP will work with the DEMs and the President?

One very intriguing aspect of use of that language is, why?  Why was it necessary for just about all top GOP leaders declare they are workign to unseat the President. The sort answer, in my opinion, to deliver messages to their supporters: Big Business, Far Right conservatives, the Tea Party, and to those in the nation who fell to psychology levels near death when Obama won the elections and Democrats took over majority in both Chamber s of Congress.  I will leave my opinions on GOP obstructionism at that point during this treatise. 

I do not feel that it takes much thought to see what has occurred across the nation once the GOP won back the HOUSE and won many governorships and state legislatures.  

Not a pretty picture!


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Fiscal FactCheck - Long but Historically Relevant

 Of course, you know that I am a devoted fan of FactCheck.org and specifically a fan of their author/investigator and contributor Brooks Jackson.

 

The following information was delivered to my email box and probably delivered to yours as well.  Yet,  there are many who do not subscribe to FactCheck updates, so I am posting the article.  Again, I tried to cut parts of the material and supplant it with links to the original article. You have the original article linked below but I refuse to dissect this work; it is far too relevant and I posit will become part of a national archive of the Obama Administration.

 

I have retained the original font from the article to simply save space on this web page.

 

  Fiscal FactCheck

Does Washington have a spending problem or an income problem? We offer some key facts.
July 15, 2011

Summary

Washington's spending has recently been higher as a percentage of the nation's economic output than at any time since World War II. But by the same measure, Washington's revenues are the lowest in more than 60 years.

So does the U.S. have "a spending problem," as Republicans keep repeating in the current debate over how to reduce the nation's record deficits? Or is the problem that taxes are not high enough? Those questions frame a long-running partisan debate, and as usual we won't offer an opinion one way or the other. But for those seeking their own answers, we can offer some fiscal history and factual context.
Some key facts we think are worth considering:

  • Federal spending ("outlays" in budget jargon) is expected to equal 24.1 percent of the nation's gross domestic product in the current fiscal year, which ends Sept. 30. The figure was 25 percent in fiscal year 2009, highest since 1945.

  • On the other hand, federal revenues are expected to drop to 14.8 percent of GDP this year, lower even than the 14.9 percent attained in both 2009 and 2010. There has been only one year since World War II when revenues have been as low as in any of these years: 1950, when the figure was 14.4 percent.

  • These historically high rates of spending and low rates of taxation have combined to produce a chain of deficits that are also the highest since WWII. The deficit was 10.0 percent of GDP in fiscal 2009. It declined to 8.9 percent last year as the economy started to recover, but is projected to go up to over 9 percent this year. Each of these deficits is larger than in any year since 1945, measured as a percentage of GDP.

  • The U.S. is borrowing about 36 cents of every dollar spent so far this year. It borrowed 37 cents on the dollar last year, and 40 cents in fiscal 2009.

  • The largest components of federal spending are Social Security and Medicare programs for the elderly (33.5 percent of total outlays in 2010) and national defense (20.1 percent). Interest payments on the federal debt alone accounted for 5.7 percent of all federal spending, and that percentage is rising.

  • The federal income tax accounted for 41.5 percent of federal receipts in 2010 (down from 49.6 percent prior to the Bush tax cuts of 2001 – 2003). Corporate taxes brought in only 8.9 percent, also down sharply since the recent recession. Payroll taxes and other "social insurance" payments accounted for 40 percent of total receipts in 2010.
     
It's easy to argue one side or the other by just citing facts that support a particular view, and omitting others. In the Analysis that follows, we offer some graphics, details and documentation in an attempt to give our readers a quick look at the entire picture — both where the money goes, and where it comes from.

Analysis

 

A glance at this chart quickly puts our current fiscal mess in historical context. We created it using historical budget data from the federal Office of Management and Budget, updated with the most recent estimates of the current fiscal year's outlays and receipts from the nonpartisan Congressional Budget Office, issued June 22 as part of CBO's 2011 long-term budget outlook.

Not since the enormous effort required to defeat Nazi Germany and Japan in WWII has the gap between Washington's spending and its revenues been so large, as a portion of the economy. Then, taxes were increased sharply to pay for the war, but spending increased even faster. In recent years, Washington has increased spending while cutting taxes.

The current situation is a marked change from the booming 1990s. In those years revenues increased, due to a 1993 tax increase, which fell most heavily on those making more than $200,000 a year. Meanwhile spending decreased relative to the rapidly growing economy, partly because of an absolute decline in military spending following the collapse of the Soviet Union in 1991. Deficits were erased, and the government posted surpluses in fiscal 1998, 1999, 2000 and 2001.

But then a string of deficits began in the fiscal year 2002, and there is no end in sight. For the current year, the administration originally projected in February a deficit equal to 10.9 percent, a new postwar record. The Congressional Budget Office in April, using different economic assumptions, projected that enacting the president's budget would produce a deficit of 9.5 percent of GDP, and that making no changes to current law would result in a deficit of 9.3 percent of GDP.



  • Income-tax receipts are down sharply since the Bush tax cuts. In fiscal 2000, the year before the cuts began to take effect, receipts from the federal income tax on individuals amounted to 10.2 percent of GDP. That figure was down to 6.2 percent of GDP last year.

  • Spending for the military and for homeland security has risen substantially since the attacks of Sept. 11, 2001. Spending for national defense rose from 3.0 percent of GDP that year to 4.8 percent last year.

  • Non-military spending also has continued to rise. President George W. Bush pushed through an expensive prescription drug benefit for seniors in 2003, the largest expansion of Medicare in its history. In the financial crisis of 2008, Bush also pushed for and signed for a massive banking bailout. In early 2009, President Barack Obama pushed for and signed an expensive stimulus measure, and after a long fight in Congress he signed another expensive plan, the health care law, in March of last year, aimed at expanding coverage for millions who lack health insurance.

  • Two economic recessions have had their effect. The recession of 2001 began in March and lasted until November. And the worst downturn since the Great Depression began in December 2007 and continued until June 2009. In both cases unemployment remained high for long after business activity began to recover, holding back both wages and the taxes that jobless workers would have paid on them.
We won't attempt to assign blame to one party or the other for the deficits. There is plenty of blame to go around, some of which rests with an American public that won't accept cuts in the largest categories of public spending, and also resists tax increases on anybody but "the rich."


Where Does It Go?
The biggest share of federal spending now goes for Social Security (20.4 percent in 2010) and Medicare (13.1 percent), the two entitlement programs that big majorities of Americans want to protect from any reductions, according to a recent poll. Together these two programs for senior citizens consume more than one-third of spending, far more than national defense, which accounts for just 20.1 percent, despite the increases of recent years.

Some categories that are unpopular with much of the public turn out to represent a fairly small part of total spending. Foreign aid, for example, amounts to less than 1 percent of the entire budget — even counting in military assistance to Israel, Egypt, Iraq and Afghanistan. All agriculture programs — including farm subsidies — make up just over one-half of 1 percent.

Where Did It Go?
Major components of the $3.5 trillion spent in fiscal 2010
Social Security 20.4%
National Defense 20.1%
Medicare 13.1%
Medicaid/CHIP 8.1%
Interest 5.7%
Low-Income Assistance 5.3%
Unemployment Compensation 4.6%
Education & Training 3.7%
Federal Employee Retirement 3.5%
Veterans 3.1%
Transportation 2.7%
Other health care  2.6%
Parks & natural resources 1.3%
Space/Science 0.9%
Foreign aid 0.9%
Agriculture 0.6%
Everything else 3.5%
The wildly unpopular TARP program, used to finance banks, a big insurance company and two U.S. auto companies, is now actually bringing billions back into the Treasury, as old loans are repaid and government-owned stock is sold to the public. The nonprofit investigative project Pro Publica figures that $322 billion has now flowed back into the Treasury, of the $573 billion loaned, invested or spent originally. And even the Obama administration's $787 billion stimulus program, so excoriated by Republicans, has nearly run its course. It was enacted in 2009, and according to the official Recovery.gov website, had spent 84 percent of the total as of June 30. That included 90 percent of the tax benefits, 83 percent of entitlements, and 78 percent of contracts, grants and loans.


Borrowing 36 Cents on the Dollar
The current gap between tax revenue and congressionally approved spending is so great that so far this fiscal year the federal government has borrowed an average of 36 cents of every dollar paid out. According to the most recent "Monthly Budget Review," issued by the Congressional Budget Office on July 8, the total spent through the end of June (the first nine months of the current fiscal year) was estimated at $2.705 trillion. But government receipts fell $973 billion short of spending, CBO estimates.
The good news — if it can be called that — is that the huge deficit is running at $31 billion lower than last year at this time. Spending is higher (Medicaid is up 6 percent over last year, for example), but federal income tax receipts are running higher as well. CBO credited "higher wages and more employment" than last year for the increase in tax revenue. And borrowing 36 cents on the dollar is an improvement of sorts. For all of fiscal 2009, the deficit amounted to 40 cents of every dollar spent, and it was 37 cents in fiscal 2010.


Where the Money Comes From
Taxes make up the vast bulk of federal revenues, of course. Individual income-tax payers supplied 41.5 percent of all federal revenues in fiscal 2010, but Social Security and Medicare payroll taxes paid both by workers and their employers made up nearly as much. Combined with federal unemployment insurance taxes and a few others, these social insurance taxes made up 40 percent of revenues. The income tax on corporations brought in just under 9 percent, while excise taxes, on such things as gasoline and diesel fuel, alcoholic beverages and telecommunications services, brought in just over 3 percent.

We found a surprising bit of news buried in the "other" category, which made up 6.5 percent of all revenue.

Breakdown of "other" in 2010
(Percent of total revenues)
Federal Reserve 3.5%
Customs 1.2%
Misc 1.0%
Estate & Gift 0.9%
Total "Other" 6.5%
It turns out that in 2010, more than half of that category came from profits made by the Federal Reserve System, whose lending operations expanded dramatically to address the financial crisis that started in 2007. The Fed's payments to the Treasury made up 3.5 percent of all federal revenue in 2010 — nearly $76 billion. The rest of the "other" category is made up of customs duties (1.2 percent of all revenue), federal estate and gift taxes (0.9 percent), and miscellaneous sources.



Who Pays?
Who pays all of these taxes? The best information on that comes from the Congressional Budget Office, which has tracked the tax burden for many years. The most recent complete data cover 2007. CBO figured in that year more than half of all federal taxes was paid by the top 10 percent of income earners. They paid 55 percent of all federal taxes in 2007, CBO said.

That's a comprehensive figure, counting the income tax, payroll taxes, excise taxes and even the corporate income tax (borne by stockholders in the form of reduced dividends and appreciation). And perhaps surprisingly, the top 10 percent of earners pay a greater share of federal taxes now than they did before the Bush tax cuts, which Democrats constantly criticize as a giveaway to "the rich." The top 10 percent paid 50 percent of all federal taxes in 2001.

However, that comes in spite of lower tax rates at the top, not because of it. The reason the most affluent 10 percent pay a greater share of taxes is that they are getting a greater share of all income. Their share of all pre-tax income went from 37.5 percent in 2001 to 42 percent in 2007.

One figure that gets a lot of attention is the percentage of individuals and married couples who pay zero federal income taxes. Those figures come from the nonpartisan Tax Policy Center. The TPC's most recent report was released June 14, and it shows that this year 46.4 percent of "tax units" (individuals or married couples) had zero federal income tax liability. That's because of various exemptions and tax credits aimed at reducing the income-tax burden on lower-income workers and families with children. The figure is down from 2008 and 2009, when the percentage topped out at 50.8 percent.

But practically all workers (and their employers) pay Medicare taxes on every dollar of wages, and Social Security taxes on every dollar of wages up to $106,800. Consequently, those who pay no federal income or payroll taxes at all amount to only 18.1 percent this year, the Tax Policy Center figures.

There's plenty more where these figures came from. We could focus more closely on what was paid and earned by the top 1 percent, for example. Or we could zoom in to examine the role of rising medical and drug costs in pushing up spending for Medicare and Medicaid. We may well visit those subjects in future articles. For now, we've tried to give a quick, accurate and balanced look at the big picture: Both where Washington spends, and where its money comes from.
– by Brooks Jackson



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