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Archive for Wednesday, December 8, 2010

Tax deal should help economy, analysts say

December 8, 2010

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— The tax deal struck by President Barack Obama and congressional Republicans essentially gives Americans a pay raise — pumping money into the economy almost immediately and probably creating hundreds of thousands of jobs over the next two years, economists say.

Senate Finance Committee Chairman Sen. Max Baucus, D-Mont., left, holds his head as he walks on Capitol Hill in Washington on Tuesday as negotiations continue on a bill to extended unemployment benefits and preserve tax cuts.

Senate Finance Committee Chairman Sen. Max Baucus, D-Mont., left, holds his head as he walks on Capitol Hill in Washington on Tuesday as negotiations continue on a bill to extended unemployment benefits and preserve tax cuts.

The compromise already has economists raising their forecasts for growth next year, mainly because it includes a surprising one-year cut in Social Security taxes. The amount of that cut — 2 percent of pay for most American workers — instantly becomes more take-home money. Critics complain that the deal would further swell the $1.3 trillion federal budget deficit.

Two central parts of the agreement extend income-tax cuts that would have expired Dec. 31 and renew benefits for the long-term unemployed. Those were both expected. But they still give a psychological boost to shoppers in the midst of the holiday shopping season.

The certainty that income-tax cuts will now remain for at least another year could also reassure Americans and businesses to spend more in 2011 and help rejuvenate the still-sluggish economy.

“It will ensure the economic recovery evolves into a self-sustaining economic expansion,” said Mark Zandi, chief economist at Moody’s Analytics. “Prior to this, I was less sure of that.”

Zandi noted that the plan doesn’t only put more money in people’s pockets. It also gives businesses more incentives to invest by increasing tax write-offs for new equipment. Zandi has raised his forecast for economic growth next year from 2.7 percent to 4 percent. Economists at JPMorgan Chase have raised theirs from 3 percent to 3.5 percent.

Their old projections had assumed that Congress would approve only an extension of the income-tax cuts Congress enacted in 2001 and 2003.

“It will make a real difference in the lives of the people who sent us here,” Obama said Tuesday at a news conference in which he defended concessions he made to Republicans as part of the tax-cut compromise.

The deal

Under the deal, the president and the GOP agreed to extend benefits for the long-term unemployed for 13 more months. That aid had expired Nov. 30. Up to 2 million unemployed people would have run out of benefits by year’s end.

Economists note that cutting Social Security taxes and extending unemployment benefits are among the most effective ways that policymakers can energize the economy. Both steps free up more cash for low- and moderate-income families who are most likely to spend it.

The one-year reduction in Social Security taxes amounts to a cut in the rate from 6.2 percent of gross income to 4.2 percent. A worker earning $40,000 a year would receive an $800 windfall. Someone earning $100,000 would take home $2,000 more.

The activist group Citizens for Tax Justice estimates that the plan would save the average taxpayer just under $3,000 next year. The top 1 percent of earners would save nearly $77,000 on average. And the poorest 20 percent would get an average tax break of just $396.

Economists at Deutsche Bank say the Social Security tax cut alone would increase economic growth by 0.7 percent next year. The Center for American Progress estimates that it would create 720,000 jobs within two years.

On long-term unemployment aid, the Labor Department says every $1 spent generates $2 in economic growth. The Center for American Progress predicts that extending those benefits through next year will generate an additional 520,000 jobs.

The White House and Republicans also agreed to extend tax breaks to low-income families. And businesses will be able to write off 100 percent of their investments in equipment next year, up from 50 percent.

The deal also limits the estate tax to 35 percent of estates on any value above $5 million. Obama had wanted to impose a 45 percent tax on estates starting at $3.5 million. Michael Linden, a tax policy specialist at the Center for American Progress, estimates that only about 3,200 estates a year would have to pay estate taxes under the plan.

“There’s no question that people at the top will receive a much, much larger per-person benefit” from the tax plan, Linden says.

That’s because of the lower estate-tax rate and the extension of income tax cuts for everyone, regardless of income. Obama had opposed an extension of the tax cuts for the highest-earning Americans.

The deal should also ease both political and economic pressure on the Federal Reserve and its embattled chairman, Ben Bernanke. Last month, Bernanke pushed the Fed to start buying $600 billion in government bonds to try to help stimulate the economy. That decision came under fire from Republican leaders on Capitol Hill. Some said they feared the Fed’s action will spur inflation and lead to speculative buying on Wall Street.

Bernanke acted at a time when Congress seemed unlikely to approve any new stimulus money for the economy. But the new agreement, especially the Social Security tax cut, amounts to a stimulus by another name.

Now the spotlight will turn to Congress and tax cuts. And critics are warning that the plan could push the federal budget deficit to new record highs.

Analysts at BNP Paribas estimate the cost of the package at $1 trillion over two years. That would increase the federal deficit in the 2012 budget year from 6.9 percent of the nation’s gross domestic product to what BNP calls a “much scarier” 9.8 percent.

Comments

cato_the_elder 4 years ago

The irony in this is that if Obama and the Democrats had done this much earlier, they could have avoided the Republican landslide in November and given our economy the boost it has sorely needed. The projections discussed in this article are correct. This plan alone will do more to boost the economy and provide sorely needed private-sector jobs than all of Obama's ill-conceived Porkulus spending. Our unemployment rate is still at 9.8%, with an effective rate in the neighborhood of 16%. Hopefully, tax-and-spend Democrats in Congress will see the handwriting on the wall and agree to this, which would at least garner them some redemption in the eyes of the majority of those who voted last November.

Kirk Larson 4 years ago

So doing more of the same of what we've been doing will somehow result in something else happening? G.H.W. Bush was right: this is just more voodoo economics.

cato_the_elder 4 years ago

Cappy, this is what should have been done two years ago, only to a much greater extent, including the lowering of corporate tax rates and the abolition of the capital gains tax and the estate tax. The Democrats' attempts to spend America out of the recession have been a complete, abject failure, which privately the few of them who have a modicum of common sense realize. They don't want to enter the 2012 election season with unemployment still at 10%, and while it goes against their ideological obsession with redistributing wealth, this is the only road they can take at the present time politically. Of course, they might also want to think of what's actually best for our economy and our country, but they have traditionally found that to be a tough row for them to hoe.

Kirk Larson 4 years ago

Historically, the economy performs better under Democratic administrations. The republicans screwed it up this time and will now continue to do so. I'm hoping the public will see that truth come 2012.

jafs 4 years ago

Also, Republican administrations don't do any better at balancing the budget.

cato_the_elder 4 years ago

"Historically, the economy performs better under Democratic administrations."

Yeah, those Carter years were really special.

Kirk Larson 4 years ago

Compared to the Bush years, Carter's term was the good old days.

cato_the_elder 4 years ago

Cappy, the economy during the Bush years was increasingly robust, despite 9-11 and Katrina, with the highest Dow ever, over 14,000, in the fall of 2007 - and then the meltdown hit, ultimately caused by Freddie Mac and Fannie Mae abuses for which liberal politicians were solely responsible. The Bush administration attempted to rein in Freddie and Fannie on multiple occasions, but was prevented from doing so by those same politicians - who had been on the Freddie and Fannie take for years. The recession we're still in was caused by liberal social engineering schemes carried out through Freddie and Fannie. Look it up and find out who got the most money from them, and over how long a period of time. Dodd and Frank in particular should be in jail for what they did.

cowboy 4 years ago

This is a complete and utter disaster. Pundits like this author sing the praises of how this will create jobs. The capital investment portion of the bill may well do that. The rest of the bill is a bunch of hooey. The Bush tax rates on the rich have not created a single job in ten years. It has however created the single largest redistribution of wealth into the top 2% in history. Problem is they are hanging on to it and not investing in American interests.

In the meantime we are piling on the deficit spending by short changing revenue.

I call BS

notajayhawk 4 years ago

"The Bush tax rates on the rich have not created a single job in ten years."

Really?

What was the unemployment rate before the tax cuts?

What was it two years later?

"It has however created the single largest redistribution of wealth into the top 2% in history."

Class jealousy is such an ugly thing. There was no "redistribution", i.e. the rich didn't take a single thing from the non-rich.

All I want for Christmas: For the whiny liberals to a) find some way to measure their financial status in some terms other than how it compares to someone else's, and b) stop believing they're somehow entitled to some kind of 'share' in the wealth, that just because someone else's wealth increased theirs was supposed to magically grow along with it. Of course, I'd have to believe in Santa Clause to expect that to happen.

libra101 4 years ago

How silly for people to expect that when businesses are making record profits, that they might share in what their labor produced. They should work longer hours, for less pay and just be thankful that their job hasn't been shipped overseas, yet!

notajayhawk 4 years ago

Waaaaah.

Except they're not working longer hours or getting less pay. Oh, and most of the jobs that went overseas would have been lost to American workers anyway, through automation or business failings. But don't let that get in the way of your rant.

notajayhawk 4 years ago

Sorry it took so long to get back to you, Libra. Couldn't stop laughing.

Next time you read the NYT (even one of their blogs), get some help with the big words. And have someone explain the difference between "they're not working longer hours or getting less pay" and "median household income". (Pssst - hey Libra: It has something to do with unemployment being higher; surprised you hadn't heard about that, it's been in all the papers.)

cowboy 4 years ago

There is no class jealousy nota , just an overriding realization that the whole economy is stacked against common man.

It is a fact that the 20% additional gross that the top 1% enjoyed as a result of the Bush tax strategy has not shown up in investment , job creation , in the real market. Thus it did nothing other than line the feather beds of the rich.

At the same time while spending on wars and vendettas we have held those dollars out of the treasury.

Seems a simple republican idea, don't give it away if you can't afford it.

notajayhawk 4 years ago

When you use terms like "redistribution of wealth into the top 2%", then yes, it is jealousy, pretty much by definition. It is an argument founded in the belief that the rich got richer at the expense of someone else. They didn't. If I made 5% more this year than last, and my neighbor made 500% more, who the heck cares? It didn't cost me a dime, and I'm still doing better than I was.

Some people make more than you do, cowboy. Deal with it.

whats_going_on 4 years ago

aren't you whining...a little? Thought so.

just_another_bozo_on_this_bus 4 years ago

Bottomline-- everything the Republicans insisted on will do nothing to improve the economy, while increasing the deficit. While everything the Democrats wanted were half measures that won't do nearly as much as they might have were they full measures.

Godot 4 years ago

I will be phoning all Kansas reps and senators today to let them know I think this is a disaster. Guaranteeing the unemployed another 13 months of income is foolish and dangerous. This is a disincentive to even bother looking for work! The "one year" social security tax reduction will be permanent; what politician will have the nerve to raise it by 2% again in 2012, during an election year? And this comes at a time when the apparently irrelevant debt commission recommends increasing contributions and cutting entitlements. Obama and the Republicans seem to have used the work of the debt commission as a road map for what not to do.

Just say no!

Carol Bowen 4 years ago

I agree wholeheartedly with your comments. Those who still have an income have to bite the bullet and starting paying down this mess.

libra101 4 years ago

So what would you cut Liberty? The only things in the budget that would come close to closing the deficit are defense and medicare.

libra101 4 years ago

That scenario is pretty ugly. What would you do with all of the people in their 60's, 70's and 80's who will still be alive in 10 years, but with no health care and little income? I disagree with you, but it so rare to hear a libertarian or conservative who actually says what they think, instead of hiding behind nice philosophical theories, that is kind of refreshing.

libra101 4 years ago

People did die in the streets before we had those programs. Are you serious? Or they died in hospitals, or homeless shelters or churches, or the homes of their equally poor relatives.

My Grandma is almost 80. She is set up pretty well, but still needs ss and definitely needs medicare. More than half of her savings went to paying my Grandpa's nursing home care in the last 2 years of his life, and that was with nursing home insurance and a pension plan paying part of the cost. Without ss or medicare she would be out of money within the next 2 years and since both of her parents and all of her aunts and uncles lived into their late 90's, I honestly expect that she will as well, that would leave her destitute and on medicaid. She doesn't have enough money to invest and risk. What do you suggest for people like her? Should she plan on bagging groceries at the local grocery store?

libra101 4 years ago

Right, all the poor and destitute died in feather beds at the Waldorf.

And my parents were married when I was born, so I'm not a bastard.

libra101 4 years ago

Right, all the poor and destitute died in feather beds at the Waldorf.

And my parents were married when I was born, so I'm not a bastard.

libra101 4 years ago

And the personal attacks? Thought we were having a civilized discussion.

"Greedy, selfish bastards" are people who don't want to honor the commitments made to people who have played by the rules for decades and paid into the system, because paying taxes hurts their feelings, or something.

Carol Bowen 4 years ago

We are the government. The deficit will be paid by us giving up services, infrastructure, defense, diplomacy, etc., and continuing to pay taxes.

notanota 4 years ago

Yes. So true. That's why in the UK, where unemployment benefits never cut off, they've got a rate at a whopping 7.7% compared to our 9.3 (which doesn't include those who gave up looking for work.)

Carol Bowen 4 years ago

Once we cut the social security tax, we will have the same " tax increase battle" to restore the tax to 6.2. Since some claim that social security is going broke, what does this tax cut accomplish? Are anti-social security-privatize folks maneuvering?

jafs 4 years ago

I guess you missed the part about how companies are laying employees off in massive numbers? Not so easy to find a job during a recession when employers aren't hiring.

And, of course, people aren't dogs, and your analogy is distasteful.

I agree that unemployment is meant to be temporary, and to hold people over while they find the next job - but the best way to ensure that is not clear - what if employers simply aren't hiring?

Don't you think that employers factor into the salaries they offer the fact that they have to pay into unemployment?

verity 4 years ago

I apologize for responding to HAC's stupidity. It is only feeding the troll. Sorry.

notanota 4 years ago

Hmm, I'd take an extra $40-$60 per week, especially if it comes with health benefits.

jafs 4 years ago

This is the kind of compromise that we are stuck with if one party doesn't have enough of a majority to simply enact legislation on their own.

Some think it is the best way for the government to work.

I think sometimes it is, and other times it's a jumbled hodgepodge of ideas that doesn't really make sense.

We'll see what happens here.

Cutting Social Security taxes seems like a pretty dumb idea, given the difficulties Social Security is in.

just_another_bozo_on_this_bus 4 years ago

Why, yes, let's just put all those unemployed out on the streets. With no food, shelter, or need to get the kiddies to soccer practice, they'll be so motivated to get a job that they'll be breaking down the doors of the companies that laid them off, volunteering to work for whatever wages the employer decides to pay them, and the employers will be pleased as punch by this that they'll trickle all over the formerly unemployed with their big new tax cuts.

You guys are so brilliant!! Why didn't anyone think of this before?!!!

notanota 4 years ago

Because $7.25 an hour is really holding employers back? I hear child labor laws really put a crimp in their style, too.

libra101 4 years ago

Fight to the death, old versus young, to work at Burger King. We could televise it. It would get sweet ratings and make millions in advertising!

notanota 4 years ago

Just as long as you don't share any of those earnings with the people racing to the bottom!

notanota 4 years ago

Yes, I hear 9 year olds are a feisty lot when it comes to competing for jobs in textile mills. Too bad the government has so unfairly prevented them from bottoming out an already low market labor market and decreasing wages for minority groups along the way.

notanota 4 years ago

Yes, because that lack of labor law worked out so well historically, didn't it? My snarky example of child labor in the textile mill wasn't so snarky during the Gilded Age. It's also not so snarky in many other countries right now. If you eat a chocolate bar, chances are a child had a hand in making it. Hopefully they were paid, but that's not a guarantee.

The minimum wage is already too low, but removing it would result in further entrenching the permanent underclass, not a temporary unemployment problem. Not only would sub minimum wage workers barely be able to eek by, their children would be forced to leave school to help earn household income and would doom themselves to a future of serfdom. Furthermore, your posts seem to argue that minority groups deserve less pay. Is that what you're saying?

notanota 4 years ago

What's wrong with a 14 year old doing the same work a 16 year old does? That 14 year old is legally required to be in school. That's what. Not finishing school condemns that kid to a lifetime of lowered income potential.

Your argument still begs the question that unemployment by black youths is caused by their inability to command sub-minimum wage payroll employment. I don't buy it. You've offered no proof.

jafs 4 years ago

Also, of course, once it's a 14 year old, the argument continues - why not a 12 year old? Etc.

notanota 4 years ago

16 year olds are not legally required to be in school, which is why they face fewer restrictions on work availability.

notanota 4 years ago

You're going to have to start labeling when it is that you're offering absurd arguments on purpose, so we can distinguish it from the rest of your posts.

notajayhawk 4 years ago

"But how will families spend this money? Flat screens made in Asia? A Ford truck? Or will they pay down debts? Either way... it's not going to spur corporations to hire. "

Even TV's made in Asia require American workers to wholesale, retail, and transport them. Even if someone can only afford a used Ford truck, the increased demand makes it more likely someone will sell them one so they can in turn buy a new one. Paying down debts may not be considered increased spending, but it reduces corporate cash flow and reduces the amount they have to borrow, freeing up more money for expansion; it also means that the people who get their debts paid off will have more to disposable income spend sooner than they would have.

Liberty275 4 years ago

I'll be spending mine on a set of vintage bose 601s and a sansui 9000 series receiver from the late 70s. We already have a flat screen and you couldn't give me a ford without me trading it for something else within the day.

notajayhawk 4 years ago

It's okay, he wasn't trying to be "malevolent". Maybe he's trying out for the vice presidency.

independant1 4 years ago

deja vu

This compromise is a replica of the Clinton/Gringrich agreement that created the Clinton economic boom. Republican landslide mid term election followed by Clinton compromising with Newt.

verity 4 years ago

I'm sure I will be corrected if I'm wrong, but I remember President Clinton calling Mr. Gingrich's bluff. And then the economy improved.

independant1 4 years ago

People want just taxes more than they want lower taxes. They want to know that every man is paying his proportionate share according to his wealth. Will Rogers

Which is why the Dem rhetoric about 'giving to the wealthiest' doesn't pass muster.

It's laughable to think the wealthiest americans would be touched by an increased in income tax, their wealth is sheltered and not reported as income.

After Obama announced the compromise, I applaud him for that, market went up 100 points. Then Harry Reid and left Dems, who are against extending Bush tax cuts for all, crapped on their leader and market closed down 3 points. The President compromised and the Repubs. compromised to no avail yet. Gee thanks.

So there is still uncertainty about tax rates for 2011.

The crime of taxation is not in the taking of it, it’s in the way that it’s spent. Will Rogers

independant1 4 years ago

The only money being given away in the current proposal is the 13 month unemployment extension. I'm gonna have to put up with the cousins for another 13 months? Ohhhh nooooooo!

independant1 4 years ago

Which reminds me, I need to check the police blotter for Merriam, Shawnee and DeSoto.

gudpoynt 4 years ago

Unemployment benefits are NOT a disincentive to work! You cannot make a sustainable living on unemployment benefits. I'm sick of the Republican brainwashing that perpetuates this myth.

Anybody who is content to live off unemployment benefits in lieu of looking for a job certainly IS a moocher. Anyone who thinks that this mentality represents anywhere near a majority of the unemployed is clueless.

Furthermore, it is highly likely that any dollar given out in unemployment benefits will go directly back into the economy, almost immediately.

That's what the Labor Department means when they say: "every $1 spent [on long-term unemployment aid] generates $2 in economic growth."

libra101 4 years ago

Why not cut taxes to 1%? If lowering taxes increases revenue then that ought fix everything!

libra101 4 years ago

It doesn't but, try telling the folks at Heritage or Cato that. They claim that lowering taxes, increases revenue, through increased output.

gudpoynt 4 years ago

You're absolutely right. Giving everybody a bunch of money would very likely lead to an economic boom.

Unfortunately, we don't have access to a bunch of money to give everybody. Why not? Where did the money go?

Well, a lot of it is in China now. A lot of it went to funding 2 wars.

As for the money that's right here in the US, about half of it is in the hands of 2% of it's citizens.

notanota 4 years ago

Well, since it's just a piece of paper, you won't mind if the government takes a few more pieces of paper from the top earners.

gudpoynt 4 years ago

true, money is not wealth. It's a representation thereof. As long as we all buy into this concept, a farmer would likely be happy to grow food for a lottery winner in exchange for a portion of his or her winnings.

If the economy is the beast, money is the blood. It has to flow to keep the beast alive. Sure, we need outside resources, but equally important is the internal flow. Without the constant internal flow, pockets of economic activity will dry up. With them go the jobs, and with jobs go the salaries, and with salaries go the demand. Without demand, industry contracts and the power to bargain for external resources is reduced.

But to address your concerns more directly, we will not all starve and freeze to death if the unemployed get some spending cash, nor if multi-millionaires see a tax increase. Don't be so dramatic.

gudpoynt 4 years ago

You may be right. In your hypothetical, unrealistic hyperbole, if everyone were given lots of money and nobody produced anything, then yes, that would be a bad situation.

Fortunately we're not teetering on the edge of becoming a government controlled welfare state like so many Republicans and Libertarians seem to think.

No, when over half of the nation's wealth is privately owned by 2% of it's citizens, I think oligopoly is a much more apt term than government run welfare state.

monkeyhawk 4 years ago

Transcript

" KEN ROGULSKI: Why are you here?

WOMAN: To get some money.

ROGULSKI: What kind of money?

WOMAN: Obama money.

ROGULSKI: Where's it coming from?

WOMAN: Obama.

ROGULSKI: And where did Obama get it?

WOMAN: I don't know. His stash. I don't know. I don't know where he got it from but he's giving it to us, to help us. We love him. That's why we voted for him. Obama! Obama!

Here's how another woman responded to Rogulski's questions:

ROGULSKI: Did you get an application to fill out yet?

WOMAN: I sure did. And I filled it out, and I am waiting to see what the results are going to be.

ROGULSKI: Will you know today how much money you're getting?

WOMAN: No, I won't, but I'm waiting for a phone call.

ROGULSKI: Where's the money coming from?

WOMAN: I believe it's coming from the City of Detroit or the state.

ROGULSKI: Where did they get it from?

WOMAN: Some funds that was given by Obama.

ROGULSKI: And where did Obama get the funds?

WOMAN: Obama getting the funds from... Ummm, I have no idea, to tell you the truth. He's the president."

http://freedomeden.blogspot.com/2009/10/detroit-woman-obama-money.html

gudpoynt 4 years ago

Wow, these people sure are dumb aren't they?

I guess that sums it up. People on unemployment are dumb.

Wow, that was simple! Which great, because so am I!

What else would you like me to think Rush?

jafs 4 years ago

So you like the analogy of unemployed people to stray dogs.

I suppose that shouldn't be surprising, but it still is somehow.

bad_dog 4 years ago

You seem to be on very thin ice perpetuating that analogy, Tom...

Godot 4 years ago

We are already there. We are simply in denial.

gudpoynt 4 years ago

Wait... which party is defending the top 2% of wealth hoarders in America? Which party is saying essentially that "if the richest of the rich don't keep their tax cuts, then nobody keeps their tax cuts"?

And by contrast, which party wants to return the tax rates of the wealthiest 2% to their previous levels, prior to the "temporary" cuts.

I'm sure you have a theory about how letting tax cuts for the wealthiest 2% in an attempt to shift the overall wealth distribution in America back toward the middle class is the insidiously underhanded implementation of Obama's "fundamental transformation" designed to rocket the oligopoly to unprecedented power.

I'm sure your theory will involve Pelosi and Reid and several uses of the word "ilk".

Tom, I hate to be the one to tell you this, but you suffer from political dyslexia.

notajayhawk 4 years ago

"Which party is saying essentially that "if the richest of the rich don't keep their tax cuts, then nobody keeps their tax cuts"?"

Which party, in opposition to the president, leader of their own party, is saying "If you don't raise taxes for the rich we're going to let the middle class and poor have their cuts expire, and give up the reduction in payroll tax and extension of unemployment benefits?"

"which party wants to return the tax rates of the wealthiest 2% to their previous levels, prior to the "temporary" cuts"

Actually these were the rates before Clinton added the 10% surcharge on the top bracket (making it 39.6% instead of 36%).

But hey, if you want these "temporary" cuts to expire, I guess we're saying bye-bye to the 10% bracket, the additional child tax credit, the changes to the AMT, and all the other cuts that went to the poor and middle class, and cost three times as much as the cuts for the 'wealthy' (even before factoring in secondary gains)?

Carol Bowen 4 years ago

Yes. The tax cuts were temporary. We did not have the money to cover the cost at the time. We certainly do not have the money to cover the costs now.

notajayhawk 4 years ago

Quick question, hear_me: Did federal revenues increase or decrease following the Bush tax cuts?

Carol Bowen 4 years ago

I'm guessing increase. However, the decision to cut taxes was risky. The money was not in hand. Either outcome was possible. Hardly, a conservative approach.

gudpoynt 4 years ago

political dyslexia.

The Democrats are the ones proposing. The Republicans are the ones refusing. The sticking point is the tax cuts for the wealthiest 2%.

What is the Republican logic for defending those wealthiest 2%?

"You can't raise taxes in a recession," seems to be their mantra.

The hell you can't. You can raise taxes on those who are capable of paying them. How will increasing taxes on those who make over a million dollars a year hurt the middle class? Answer: it won't. Not at all. And it would provide a revenue stream to help fill in the deficit (a relatively small stream, but one that needs to be there sooner or later).

I've yet to hear sound logic for the defense of lower taxes for those making over a million dollars a year. I'm open to a rational argument, and I'm honestly hoping there's a real reason, because the only reason that jumps out at me is that the Republican party lives much deeper in the pockets of said millionaires than I feared.

notajayhawk 4 years ago

political ignorance.

The Republicans had an agreement in place with the Democrat in the White House. The Democrats in Congress are blocking that agreement. Try to spin it any way you want: The Democrats have established themselves as the 'Party of "No"!'

"I've yet to hear sound logic for the defense of lower taxes for those making over a million dollars a year."

As soon as you give a single legitimate reason they should pay any more than they already are. (Hint: 'They have more' or 'They can afford it' are not legitimate justifications.)

Flap Doodle 4 years ago

Is "wealth hoarder" the new talking point term that has replaced "running dogs of capitalism"?

Kirk Larson 4 years ago

You forget that the primary drive of our economy is consumer spending (I don't think it's best, but that's what we have). You leave the long time unemployed without the ability to buy groceries or pay their bills, the economy grinds to a further halt and the recovery takes even more time. However, if you get some money to the people who will spend it (as opposed to the people who can't even spend the money they already have) that creates demand and drives the recovery.

Kirk Larson 4 years ago

Businesses only buy and sell with each other when they are making products and providing services to sell to consumers. No consumer demand, no commerce between businesses.

Kirk Larson 4 years ago

I don't think consumer demand is as flat as you imagine. Just ask the retailers who wait in anticipation on Xmas sales.

Dispersant 4 years ago

Not all rich people are employers. I'd like to see the percentage of those rich people who are getting the tax cuts that are actually employing people. Tom Cruise is rich. He's getting the tax cuts. Does he run a Manpower, or an Adecco, or any other employment agency?

I'd say that if we can show, individually, if these rich people are actually employing people, then, sure, give them a tax cut. If not, they don't get one. (or as big of one).

notanota 4 years ago

You then have to show that the tax cut leads directly to more hiring. Since the cut isn't tied to the behavior, I'd say no. Businesses hire people when it makes them more money to do so, not just because they have more money.

libra101 4 years ago

The poor and middle class may not be the employers, but they are the consumers. And since we are 90% of the country we by definition are the majority of the consumers.How many rich people will start a business if no one can afford to buy their products or services? And plenty of middle class people do employ others. We employ our accountants, our real estate agents, our doctors and the teenage kid who mows the lawn. Our problem right now is the poor and middle class can't afford to by the crap the rich are selling, because the rich aren't hiring. But by all means, tax cuts for those who don't need and won't spend it ought to fix that little problem.

Kirk Larson 4 years ago

They'll be blamed because it was their fault to begin with. I hope people remember that.

gudpoynt 4 years ago

Rich people who hire lotsa folks are not hiring because demand is way down.

Demand is way down because people are low on cash.

People are low on cash because their investments didn't pan out for them.

Because of lowered demand (and some poor investments on their own parts), the rich people who hire lots of folks decided to fire lotsa folks in order to stay rich.

Now even more people are low on cash because they are out of a job, and having to spend 100% of their unemployment benefits on necessities, and 0% on extraneous stuff.

Which decreases demand for the rich folks' products, which causes them to "right-size" themselves again, which leads to fewer jobs, fewer cash for consumers, lower demand for products, ashes, ashes, we all fall down.

Rich folks will once again hire lotsa people if, and ONLY IF, it's profitable for them to do so. And they will try to make a profit no matter who is in office.

verity 4 years ago

In my opinion, Obama should have done what FDR did, create a jobs program. Private industry and banks are not going to invest/hire in the U.S. as long as they think they are better off sitting on their money or outsourcing.

I know L 1 will be screeching at me, but there are some things only the government can do. Libertarianism will never work for the same reason that communism on a large scale does not work. Human nature. Libertarianism is just the flip side of communism.

I agree with the rightwingers on one thing. We have been betrayed by Obama. But it's not because he's too far to the left, it's because he is a Republican.

notajayhawk 4 years ago

"there are some things only the government can do"

The list gets shorter every day ...

http://news.yahoo.com/s/ap/20101209/ap_on_sc/us_sci_test_rocket

Godot 4 years ago

I admit that I do not know what specific outcome Obama is working toward, but it is clear that his means of getting there is to create chaos, fear and distrust.

gudpoynt 4 years ago

I found this study to be rather enlightening. Take 15 minutes and check it out.

http://bit.ly/dvrouP

Some highlights:

"[Americans] dramatically underestimated the current level of wealth inequality [and] constructed ideal wealth distributions that were far more equitable than even their erroneously low estimates of the actual distribution."

"the United States distribution was far less desirable than both the [...] Sweden distribution and the equal distribution, with some 92% of Americans preferring the Sweden distribution to the United States"

"Given the consensus among disparate groups on the gap between an ideal distribution of wealth and the actual level of wealth inequality, why don’t more Americans (especially those with low income) advocate for greater redistribution of wealth? First, our results demonstrate that Americans appear to drastically underestimate the current level of wealth inequality, suggesting they may simply be unaware of the gap. Second, just as people have erroneous beliefs about the actual level of wealth inequality, they may also hold overly optimistic beliefs about opportunities for social mobility in the United States, beliefs which in turn may drive support for unequal distributions of wealth. Third, despite the fact that conservatives and liberals in our sample agree that the current level of inequality [is] far from ideal, public disagreements about the causes of that inequality may drown out this consensus. Finally, and more broadly, Americans exhibit a general disconnect between their attitudes towards economic inequality and their self-interest and public policy preferences, suggesting that even given increased awareness of the gap between ideal and actual wealth distributions, Americans may remain unlikely to advocate for policies that would narrow this gap."

notajayhawk 4 years ago

"why don’t more Americans ... advocate for greater redistribution of wealth?"

Gee, I dunno' - maybe because we're not a socialist or communist country?

gudpoynt 4 years ago

oh geez. grow up. pull the wads of capitalism out of your ears and accept that we already embrace many socialist concepts that have actually had a positive effect on our society.

Understand that the phrase "redistribution of wealth" by itself is not dirty, and that it's going to have to manifest in some form or other if we're ever going to escape the grossly disproportionate and inequitable status quo we seem to be addicted to perpetuating.

Your response seems to fall into the second and third explanations (from above) as to why Americans continue to put up with such disparity.

notajayhawk 4 years ago

"oh geez. grow up."

Coming from yet another of Larryville's revolutionary school children, that's amusing.

"Understand that the phrase "redistribution of wealth" by itself is not dirty"

Yes, it is. It is a malignancy that is rooted in entitlement, a belief that you are somehow owed something by those that have more than you do, that just by the virtue of breathing you're supposed to get a 'share' of everything. It's rooted in the lazy and misguided thought processes that lead one to cling to a Utopian dream where everyone is 'equal' and where life is 'fair'.

"as to why Americans continue to put up with such disparity"

As to why, it's because outside of a few immature and delusional malcontents, most people don't see anything wrong with it. Because they'd rather earn what they have and be satisfied with what they've done for themselves rather than demanding a handout. Because they're comfortable enough with themselves and their lives and their circumstances that they can measure themselves without comparing what they have to what someone else has. Because they're adult enough to take responsibility for their own welfare and circumstances.

Maybe when you grow up, you'll realize a few of these things, too. But more likely, you'll just continue being a bitter malcontent who blames his miserable life on being ripped off somehow.

monkeyhawk 4 years ago

Did you see where the helpers now want to call food stamps "financial aid"? I do believe they want to eliminate emotions such as "pride, self esteem, dignity, self respect, self-sufficiency," etc. and replace with "entitlement, government, social justice, neutrality", etc.

It should not be such a difficult feat considering many out there have never known a time without political correctness.

Godot 4 years ago

I lost several points of intellect trying to make sense out of this puke.

The reason for the income inequality in the US is the combination of government intervention and criminal acts.

Our Federal Reserve chairman has testified before Congress that he has committed illegal acts to bail out favored financial institutions and other businesses, yet he has not been tried and convicted, let alone fired

Our financial regulatory agencies are working in favor of the richest people in our country, yet nothing has been done to stop this.

The biggest banks in this country have committed fraud upon the US citizens and the government, their executives have committed perjury before Congress, and they have lied in their required filings, and everyone knows it; they have admitted to it; they have paid "slap on the wrist" fines, and their criminal executies continue to receive massive taxpayer funded bonuses.

Then there is the reality of unlimited compensation for being unemployed, without means testing. This includes people whose spouses make $200K per year, but, because we all feel so sorry for them for being "homeless," they qualify, without question, for 3 full years of staycation.

How about receiving government services for free while paying no income taxes whatsoever as the majority of US citizens do, and you receive free food and free rent? What incentive is there to do anything other than wait for the handout?

Our system is FUBAR because of government.

We do not have a taxing problem; we do not have a revenue problem; we have a criminal problem. We are governed and ruled by criminals who are kept in office by people who expect the government to provide them withtheir food, shelter and recreation.

Until this is recognized, and corrected, we have no hope.

gudpoynt 4 years ago

It's just a study. Pretty straightforward. And interesting I thought. Sorry you thought it was puke. Sorry for your loss of intellect points (what exactly are intellect points anyway?).

You seem to identify with the third possible explanation for why Americans don't advocate for a greater redistribution of wealth (see puke above).

Regardless, don't you agree that the wealth distribution is a little FUBAR too? If so, now what?

jafs 4 years ago

The fact that most people underestimate the inequality, and would prefer a system which was more equitable is interesting.

The argument for a more equitable distribution is not based on jealousy or entitlement, it's based on the idea that workers deserve to be well compensated for their contributions to business success, and that the increasing concentrations at the top don't reflect any reasonable ratio of contribution/performance/etc.

verity 4 years ago

"The argument for a more equitable distribution is not based on jealousy or entitlement, it's based on the idea that workers deserve to be well compensated for their contributions to business success, and that the increasing concentrations at the top don't reflect any reasonable ratio of contribution/performance/etc."

Well said.

And when the middle class exists no more, there will be no one to buy the stuff that business success depends on. The destruction of the middle class by the upper 2% is not in their best interest, but they are too short sighted to see that.

Richard Heckler 4 years ago

A local USA economy = economic growth and new wealth for the USA!

Food for thought: The war is killing the economy not medicare, Social Security, public education or food stamps!!!

  1. The U.S. health care system is typically characterized as a largely private-sector system, so it may come as a surprise that more than 60% of the $2 trillion annual U.S. health care bill is paid through taxes, according to a 2002 analysis published in Health Affairs by Harvard Medical School associate professors Steffie Woolhandler and David Himmelstein.

  2. Social Security adds to the deficit Reality: It's not just wrong—it's impossible! By law, Social Security's funds are separate from the budget, and it must pay its own way. That means that Social Security can't add one penny to the deficit.

  3. Benefit cuts are the only way to fix Social Security. Reality: Social Security doesn't need to be fixed. Baby boomers were being planned for decades ago.

But if we want to strengthen it, here's a better way: Make the rich pay their fair share. If the very rich paid taxes on all of their income, Social Security would be sustainable for decades to come. Right now, high earners only pay Social Security taxes on the first $106,000 of their income. But conservatives insist benefit cuts are the only way because they want to protect the super-rich from paying their fair share.

  1. Politicians forget to tell the news media privatizing Social Security will add $700 billion to the deficit annually for the next 20 years.

  2. Letting tax cuts for the top 2 percent—which were never meant to be permanent—expire as scheduled would pay down the federal debt by $700 billion over the next ten years.

  3. Medicare is NOT free. Millions of people using medicare insurance STILL pay into medicare insurance every month.

  4. The military industrial complex requires 60% of every tax dollar.... way tooo much money. REDUCE THIS BY 50%!

Food for thought: The war is killing the economy not medicare, Social Security, public education or food stamps!!!

independant1 4 years ago

If I own myself... from Walter Willaims Dec 8

I am my private property and you are yours. If we accept the notion that people own themselves, then it's easy to discover what forms of conduct are moral and immoral. Immoral acts are those that violate self-ownership. Murder, rape, assault and slavery are immoral because those acts violate private property. So is theft, broadly defined as taking the rightful property of one person and giving it to another.

If it is your belief that people do not belong to themselves, they are in whole or in part the property of the U.S. Congress, or people are owned by God, who has placed the U.S. Congress in charge of managing them, then all of my observations are simply nonsense.

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