Barney Frank has gotten very full of himself. So full, in fact, that his memory isn’t working as well as it probably should:
House Financial Services Chairman Barney Frank (D-Mass.) is pressing state and federal authorities to seek criminal and civil penalties on financial actors that helped cause the current crisis.
“Rules don’t work if people have no fear of them,” Frank said at a press conference Thursday.
He announced a hearing March 20 with Attorney General Eric Holder, bank regulators and the Securities and Exchange Commission as witnesses to discover what their plans are to prosecute irresponsible and in some cases criminal behaviors.
I wonder if he’d include this guy:
A September report from the Business & Media Institute suggests one possible target for investigation: a senior member of the House Banking Committee. This congressman is “a recipient of more than $40,000 in campaign donations from Fannie since 1989” and “was once romantically involved with a Fannie Mae executive.” The same congressman “was and remains a stalwart defender of Fannie Mae.”
In case you’re not up to speed, that “senior member” mentioned is House Financial Services Chairman Barney Frank (D-Mass.).
Another day older and deeper in debt. Of course, that’s because you plan to spend $3.6 Trillion on budget over the next year.
WASHINGTON – President Obama laid out his first budget plan, a bold $3.6 trillion proposal that would transfer wealth from rich taxpayers to the middle class and the poor, and predicts a stunning federal deficit of $1.75 trillion this year – nearly four times last year’s record.
Obama blamed the expected federal deficit explosion on a “deep and destructive” recession and recent efforts to battle it, including the Wall Street bailout and the $787 billion stimulus plan.
Among the budget proposals, the plan would:
extend a $400 tax credit for most workers while letting expire former President George W. Bush’s tax cuts for couples making more than $250,000 a year. The budget contains almost $1 trillion in tax hikes over 10 years on individuals making more than $200,000 and couples earning more than $250,000;
close tax loopholes for the wealthy to raise $318 billion toward a down payment on Obama’s universal health care plan;
clamp down on the Pentagon budget, which would get a 4 percent boost next year, but would then get increases of 2 percent or less over the next several years;
make permanent the expanded $2,500 tax credit for college expenses;
spend more than $6 billion on cancer research at the National Institutes of Health next year, a 15 percent hike;
spend $3.9 billion to improve the nation’s sewage treatment plants and drinking water systems; and
raise $15 billion a year, beginning in 2012, from auctioning off carbon pollution permits to help develop clean-energy and renewable-energy technologies. The administration “will work expeditiously” to get Congress to approve an 83 percent reduction in global warming emissions by mid-century. There’s also more money at NASA for space-based monitoring of greenhouse gases.
After reviewing some of the comments from those intended to be taxed, as well as some of the criticisms of those taxpayers’ intelligence [as an aside, I think the liberals denouncing both the story and the interviewees are playing a little fast and loose with the assumptions, since the taxpayers displayed no misunderstanding of marginal rates, and voiced concerns solely based on principles], I got to thinking about how much money will this proposed tax hike really raise. This seems important, not only because of the size of proposed budget, but also since a common refrain from those in favor of letting the top rate snap back to 39.6% (from the current 35%) is that it will only cost those taxpayers 5 cents on the marginal dollar, which is very little to worry about much less enough to change behavior, or so the argument goes.
Before looking at the actual numbers, let’s get something straight first. While it is accurate to say that raising the top rate only costs these taxpayers a nickel per extra dollar earned, that is not all that is being proposed. These taxpayers will also be losing deductions and credits that they would otherwise have, as well as paying extra taxes on anything subject to cap-and-trade taxes, should that lovely piece of legislation be passed. Moreover, if you truly believe Obama when he says that those with incomes less than $250,000 per year will receive a tax cut, then it seems ludicrous to pretend that at least some, if not virtually all, of those taxpayers near the margin will change their working behavior so as to be in the benefit group rather than the extra-taxed one.
Nevertheless, for purposes of calculating the expected tax revenues generated under this plan, I’m going to assume that nobody changes their behavior in the slightest (i.e. everyone earns as much taxable income as possible), and that the number of taxpayers and the amount of taxes paid largely mirrors the 2006 numbers (which is the most recent data available).
According to IRS figures [xls], about 50% of all taxable income came from the $200,000 and above earners in 2006. By my calculations that came to $2.056 Trillion dollars in taxable income from 3,847,241 taxpayers (about 9% of all returns). This cohort paid approximately $522 Billion in taxes, or about 62.4% of the total $837 Billion in tax receipts. These are the people upon whom the new burden will be placed according to President Obama.
In order to figure out how much taxable income is above $200K (there is no breakout for $250K and above), I took all of the taxpayers in the $200K to infinity range (3,847,241) and multiplied it by 200,000 (= 769,448,200,000).
I then subtracted that number from the (rounded) total of taxable income for the same range (@ $2.056 Trillion), and got $1,286,551,800,000. If I thought about it correctly, then that should be the amount of taxable income above $200K.
I then took my above-$200K number and multiplied it by 5 cents, figuring that the increase in marginal rate of 4.6% would lead to about a nickel per taxable dollar earned in new revenues, if everything were to remain static.
From all of that I figured that approximately $64.3 Billion in new taxes would be raised by the new tax hike … to cover a $3.6 Trillion budget.
I sent my calculations to Dale, who became so engrossed in the matter that he put together an entire spreadsheet figuring the numbers in not one, not two, not three, but in six different ways. I realized later that asking Dale to check out my math was rather like standing on one foot and excitedly calling attention to my “skill” while in the midst of an acrobat convention.
After Dale played with the numbers [xls] for awhile, he arrived generally at the conclusion that the absolute most that could be raised was in the neighborhood of $85 Billion, and at worst around $55 Billion. On average, Dale calculated that approximately $65 Billion was the likely amount of new tax revenue that could be expected if all payers in the 2006 cohort behave exactly as they did then. Sticking with the metaphor, “Yes, Michael, that’s a decent one-legged stand you have there.”
In short, a complete klutz has a better chance of joining the Flying Wallendas than the bottom 95% of taxpayers do of getting a tax cut. Instead, they will all see a significant tax hike, whether in their marginal rates, in excise taxes, corporate taxes, fuel taxes, or other forms of indirect taxation. And as those taxes begin to mount up, and the national debt does it’s best imitation of the Challenger, people will work and produce less and less, and tax revenues will dry up.
That is the plan for our recovery. Read it and weep.
So, 95% are going to get a tax cut are they? Well, that’s great. But what the government gives on the one hand, it will find a way of taking with the other. It needs money folks, and it will get what it needs one way or the other:
A senior Senate Democrat said Tuesday he would consider taxing U.S. workers on their employer-sponsored health insurance to help pay for extending coverage to millions of uninsured Americans.
“I think that tax provision should be on the table,” said Senate Finance Committee Chairman Max Baucus, who will play a major role in writing the legislation to revamp the U.S. healthcare system as promised by President Barack Obama.
“It’s too aggressive. It skews the system,” he said of the tax benefit.
Most U.S. workers with health insurance get it through their employers — 160 million of them — although recent surveys have shown that number is declining as businesses try to cope with the rapidly rising cost of insurance.
The employer-provided benefit is not taxed as income and critics say the tax break encourages workers to seek a more generous benefit package than they might want if it was taxed.
You shouldn’t be getting as “generous” a benefit as you now have, you see – government decrees it and will remedy the “problem” with a tax. You skew their cobbled together system as if it is “the” system, not your welfare, which is most important.
Result – more money out of your pocket at the Doctor’s office (as you scale back the benefit to reduce the tax) and more money out of your pocket to the government.
And you wondered what you’d spend that $13 a week windfall on didn’t you?
This may never come to pass, but understand that when it comes to taxes, the “tax cut” promised is mostly smoke and mirrors – whatever income it preserves will be gotten some other way, mark my words. The government wants revenue and there’s only one large pool available too it. It may not be income, per se, that’s taxed, but government will manage to find a way to get what it needs from you in the coming years. It has bridges to build and signs to make.
UPDATE: If you need more proof of this, here it is:
Despite President Obama’s promise that “If your family earns less than $250,000 a year, you will not see your taxes increase a single dime. I repeat: not one single dime,” his new budget raises 45 percent of its revenue from energy taxes that will be paid by everyone who fills a gas tank, pays an electric bill, or buys anything that was grown, shipped, or manufactured.
Who in the world do you think will actually end up paying the “cap-and-trade” bills? It’s the “excise tax” of the ’30s and will have the very same effect. Read the whole article.
Well sort of. He tells us in his latest piece that he considers himself a “moderate-conservatitve” (what in the world is that?) and he finds the Obama budget (and agenda) waaay to “progressively liberal” for his taste.
Like David Broder, he seems to be surprised by that.
But the Obama budget is more than just the sum of its parts. There is, entailed in it, a promiscuous unwillingness to set priorities and accept trade-offs. There is evidence of a party swept up in its own revolutionary fervor — caught up in the self-flattering belief that history has called upon it to solve all problems at once.
So programs are piled on top of each other and we wind up with a gargantuan $3.6 trillion budget. We end up with deficits that, when considered realistically, are $1 trillion a year and stretch as far as the eye can see. We end up with an agenda that is unexceptional in its parts but that, when taken as a whole, represents a social-engineering experiment that is entirely new.
The U.S. has never been a society riven by class resentment. Yet the Obama budget is predicated on a class divide. The president issued a read-my-lips pledge that no new burdens will fall on 95 percent of the American people. All the costs will be borne by the rich and all benefits redistributed downward.
The lesson the left learned from the Clinton era is to move boldly and unapologetically toward what they want while they have the power and popularity to do so instead of screwing around with moderation, incrementalism and governing from the center. And the Republicans only reinforced the lesson when they tip-toed around while they had power, seemingly more worried about being liked than getting things done that agreed with their principles. Well, as Brooks and the “moderates” who were fooled into thinking Obama would be another Clinton have found out, there’s nothing “centrist” to this bunch now in power.
To their horror, they find they’re getting exactly what they were told they would get and, for some reason, they’re surprised and don’t like it. But without them, this little progressive song and dance never had a chance of hitting the main stage.
Now, per Brooks, its up to the moderates to save the country.
Pardon me if I don’t hold my breath. The squishy middle save us from anything? Based on what? What principles do they rally too? As easily as they were gulled in the last election, they have little credibility when it comes to such activities. And to whom or what would they appeal? Other moderats who were as clueless as they were? Then what?
But losing the middle would be a bit of a blow to the Obama administration’s plans. Obama is presently trading off of his popularity and there seem to be more questions about his true intentions than satisfactory answers. A loss of popularity might stiffen the spines of some blue dog Dems and slow this rocket sled to hell down a bit. Of course, it seems there’s a RINO in the weeds for every blue dog that says no, so I’m not sure what real impact that would have. But hey, even the RINOs may get the message (again, not holding my breath).
I know it’s not much to hope for, but it is interesting to see the scales finally begin to fall from moderate eyes. It demonstrates the brilliance of the candidate being the projection screen and with a few key words like “hope” and “change”, conning the middle into pretending that the fantasies they’ve conjured up and projected on him would become reality. Now we pay the piper for that little screw up, don’t we?
Eric Holder talked about reviving the assault gun ban. But he’s meeting opposition from unexpected quarters.
Senate Majority Leader Harry Reid will join Speaker Nancy Pelosi (D-Calif.) in opposing any effort to revive the 1994 assault weapons ban, putting them on the opposite side of the Obama administration.
Reid spokesman Jim Manley said the Nevada Democrat will preserve his traditional pro-gun rights voting record.
“Senator Reid would oppose an effort (to) reinstate the ban if the Senate were to vote on it in the future,” Manley told The Hill in an e-mail late Thursday night.
There’s a pretty political explanation for the opposition.
A) gun bills are always losers for Democrats. It seems that Pelosi and Reid have finally figured out (at least in this case) that it is rather stupid to hand your opposition ammo (no pun intended).
B) unpopular legislation like this wastes time and goodwill. They have a much more ambitious plan to sell us down the river than piddling stuff like this, and they don’t want to be distracted by something that will be virtually ineffective the second it is signed into law (but put the pro-gun lobby front and center for a while).
A number of House Democrats lost their seats after being targeted by the National Rifle Association for voting for the 1994 ban.
And finally, it is a way to make sure the Obama administration knows that it is Congress they must coordinate these things with before they go shooting their mouths off. Eric Holder said, without such coordination, that he planned on trying to reinstate the assault weapons ban. Pelosi and Reid used the opportunity to send a message.
That said, be aware that Holder certainly appears to have an anti-gun agenda, or, at least, so it seems.
Barack Obama is about to submit his first budget to Congress.
Finally, because we’re also suffering from a deficit of trust, I am committed to restoring a sense of honesty and accountability to our budget. – President Barack Obama to a joint session of Congress, Feb 24, 2009
That’s the promise. The reality, as the Washington Post observes, isn’t quite in keeping with the promise:
President Obama’s spending plan is built on the assumption that lawmakers can resolve some hugely contentious issues — and it relies on a few well-worn budget tricks.
The tricks? The usual stuff – calling something what it isn’t and inflating future spending numbers to make the future real numbers appear to be “savings”. For instance:
And though Obama told Congress on Tuesday that his budget team has “already identified $2 trillion in savings” to help tame record budget deficits, about half of those “savings” are actually tax increases, administration officials said. A big chunk of the rest of the savings comes from measuring Obama’s plans against an unrealistic scenario in which the Iraq war continues to suck up $170 billion a year forever.
The tax increases, of course, include an increase in taxes on the top 2%. And further savings are based on pretending that the Bush administration planned on spending $170 billion (seems like a small number when compared to the numbers being thrown around these days, doesn’t it?) beyond 2011 when it planned on pulling the bulk of the troops out of the country.
“It’s a hollow number,” said Sen. Judd Gregg (R-N.H.), the senior Republican on the Senate Budget Committee, who recently withdrew as Obama’s nominee to head the Commerce Department. “You’re not getting savings if you’re assuming spending that isn’t actually going to occur.”
What accounts for the other major source of income?
But to pay for it, the president counts on a big infusion of cash from a politically controversial cap-and-trade system, which would force companies to buy allowances to exceed pollution limits.
The promise that energy costs are going to skyrocket seems one promise he’s bent on keeping. That of course will require more spending to offset the consequences (but don’t figure on being in on the subsidy, you probably won’t qualify). And then there’s the redistributionist “spread the wealth” bonus to be realized from cap-and-trade:
Obama also wants to use the money to cover the cost of extending his signature Making Work Pay tax credit, worth up to $800 a year for working families. That credit, which will cost $66 billion next year, was enacted in the stimulus package, but is set to expire at the end of 2010.
Cover the cost is a way of saying, making the program permanent.
Then there’s the deficit promise. Obama has set a goal of cutting the deficit in half by the end of his first term. As observers say, there’s absolutely nothing difficult about reaching that goal:
This year’s budget deficit is bloated by spending on the stimulus package and various financial-sector bailouts, expenses unlikely to be repeated in future years. The nonpartisan Congressional Budget Office recently predicted that the deficit could be halved by 2013 merely by winding down the war in Iraq and allowing some of the tax cuts enacted during the Bush administration to expire in 2011, as Obama has proposed. That alone would cut the deficit to $715 billion, according to the CBO.
Notice that final number, folks. That’s “half” of the deficit. In other words he’s going to be running a deficit north of $700 billion dollars and trying to convince you how well he’s done. In fact, all he’ll have done is add several trillions to the debt with several trillions more to come if reelected.
The era of big deficit financed government isn’t just back, it’s back on steroids sitting in a rocket sled pointed at economic hell.
Sen. Harry “the SURGE has failed” Reid is again in the analysis business:
Senate Majority Leader Harry Reid (D-Nev.) said on Monday that the banking industry is “very close” to being stabilized and the nation’s economy is starting to rebound.
“We tend to talk about the negative. … Things are beginning to turn and I think the American people are going to feel that very soon,” Reid said during an appearance on MSNBC’s “Morning Joe” show.
Cancel the “stimulus” and cut the deficit by 789 billion.
Fiscal responsibility somewhat restored (well, except for Social Security, Medicare and Medicaid).
Funny how this works, eh?
Your lack of details is no surprise–an essential component of the government’s PR blitz is the obscuring of details because, in fact, Social Security faces no immediate crisis. President Bush is lying to us, again.Despite the president’s sky-is-falling forecasts, the system’s trustees give Social Security another four decades of soundness; the nonpartisan Congressional Budget Office gives it five. Many independent economists believe the program will stay healthy closer to six or seven more decades.
January of the same year:
It all sounds awful, but is it really so bad? Is there a Social Security crisis?
Most Democrats say no. They contend the president is trying to scare people into supporting his plan for drastically changing the program.
“The future is not as bleak as some people would have the public believe,” says Peter Diamond, an economics professor at the Massachusetts Institute of Technology. “Social security is not bankrupt in the usual sense of the term — not going broke, not going ‘flat bust.’”
But professor Diamond says, yes, in 2042, benefits will have to be cut, but retirees then would still get more money than today’s retirees.
“We’ve got 35 or more years to phase in very slow changes that people can certainly adapt to and live with,” he says.
From the majority Democratic Congress of last August:
“The Medicare trigger was cooked up by Republicans behind closed doors as a political ploy to foster an unfounded panic about the strength of Medicare’s finances,” said Rep. Pete Stark (D, Calif.), chair of the House Ways and Means Subcommittee on Health. “We must turn off the trigger and reject Republican attempts to arbitrarily limit Medicare financing.”
Stark and other Democrats argue that Medicare’s trend to require an increasingly larger portion of its funding to be in the form of general tax revenues has no bearing on the program’s long-term solvency. Although Democratic lawmakers support some of the Bush bill’s provisions, they take issue with his proposal to ease the drain on tax dollars in part by charging wealthier seniors more for their Medicare drug benefit premiums.
Yet what is going to happen today?
On Monday, Obama will bring together more than 130 lawmakers, heads of advocacy groups and economists in the White House State Dining Room to lay out the bad news – a federal deficit of at least $1.3 trillion, the largest as a share of the nation’s economy since World War II. The fiscal summit is meant as a first volley in the battle to address runaway costs for Medicare, Medicaid and Social Security.
Runaway costs? But, but … I thought Republicans were trying to scare everyone? I thought Bush had lied? You mean they were right? My goodness, you mean that it may have been the Democrats who were being disingenuous.
Heh … that can’t be so, can it?
Hope and change.
UPDATE: Apparently Democrats are still pushing the “there’s nothing wrong with Social Security” meme. From the Joe Scarborough show, and interview with budget director Peter Orszag, who will be chairing today’s “Fiscal Responsiblity Summit” (yes, it’s okay to laugh):
JOHN HEILEMANN: Peter, it’s John Heilemann from “”New York”” magazine. there’s a report in “”the New York Times”” today, this goes back to a question that Joe kind of hinted at a minute ago, which is that Barack Obama considers doing a White House task force on Social Security reform to announce today and he got pushed back from Democratic leaders in the House and Senate. is that report true? Is the question of Social Security reform still on the table for you guys, how important is it?
PETER ORSZAG: Well, I want to come back to the point that was raised earlier, which is that Medicare and Medicaid are the primary drivers of our long-term fiscal problem. We want to address that first. we want to get health care done this year. Social Security is also an issue and after we’ve dealt with health care I think it probably does make sense to try to get Social Security on sounder ground also, but let’s get the big problem fix first.
HEILEMANN: Peter, did you guys back down or not?
ORSZAG: I don’t think it’s constructive to get into the back and forth of discussions in, you know, in internal discussions. i think the important point is, the president is committed to addressing the largest problem that we face which is Medicare and Medicaid.
JOE SCARBOROUGH: Peter, please understand, it may not be constructive, but it’s an awful lot of fun. Did Nancy Pelosi tell you to back off of Social Security and Medicare and Medicaid reform?
ORSZAG: You guys are wild having fun like that. We want to get — I really want to focus on — SCARBOROUGH: Peter, it’s all we got.
MIKA BREZEZINSKI: He fits the show. Answer the question, Peter. You got an answer for us?
ORSZAG: Again, Social Security is, you know, does face a long-term deficit, it does need to be addressed, but it’s much smaller than the problems than Medicare and Medicaid and the health system. i think it makes sense to focus there first.
It doesn’t take a rocket scientist to see through Orszag’s rather poor attempt to obfuscate the issue. Apparently they did back down. Medicare and Medicaid only remain on the table because they are a means to an end – what the Democrats like to euphemistically refer to as “health care reform”. That, by the way, does not refer to making either Medicare or Medicaid more efficient, less costly or less wasteful, it instead refers to expanding both programs. That, in the era of Democratic rule is considered to be “fiscally responsible”.
You could hear jaws dropping all over the world’s human right’s establishment as Secretary of State Hillary Clinton stated the Obama administration’s new policy about human rights vs economic, environmental and security concerns:
Amnesty International and a pro-Tibet group voiced shock Friday after US Secretary of State Hillary Clinton vowed not to let human rights concerns hinder cooperation with China.
Paying her first visit to Asia as the top US diplomat, Clinton said the United States would continue to press China on long-standing US concerns over human rights such as its rule over Tibet.
“But our pressing on those issues can’t interfere on the global economic crisis, the global climate change crisis and the security crisis,” Clinton told reporters in Seoul just before leaving for Beijing.
Hmmm … 4th place.
The latest to be caught up in it is Rahm Emanuel:
News broke last week that Rahm Emanuel, now White House chief of staff, lived rent- free for years in the home of Rep. Rosa De Lauro (D-Conn.) – and failed to disclose the gift, as congressional ethics rules mandate. But this is only the tip of Emanuel’s previously undislosed ethics problems.
One issue is the work Emanuel tossed the way of De Lauro’s husband. But the bigger one goes back to Emanuel’s days on the board of now-bankrupt mortgage giant Freddie Mac.
So, lived free for 5 years and didn’t pay taxes on the gift (which, frankly doesn’t particularly bother me, but since Democrats would crucify a Republican official who did the same thing, I think hoisting a Dems on the same petard is perfectly acceptable), allegedly threw business into the lap of the person who was providing the gift, and fiddled while Freddie Mac burned.
To me the most serious of the three is the last. I see it as gross dereliction of duty. FM was fined 50 million bucks while Emanuel was paid $262,000 (speaking of fat cats) for obviously doing nothing as a FM board member during the time for which the fines were assessed. It isn’t a ‘golden parachute’ or a bonus for failure, but it is darn close.
I’d say a tax audit is called for, but then since Timothy Geithner would have to call for it, so nevermind.
Then there’s the ongoing probe into supporters of John Murtha which has now widened to include him. Allegations have surfaced that he may have broken campaign-finance laws during a fundraiser held by the same people now under FBI investigation. I’m just shocked, shocked I tell you! Then there’s Charlie Rangel.
And Roland Burris? Heh … “Oh, yeah, um by the way, I did offer to raise money for the ex-gov. Somehow that just slipped my mind during the hearings.”
Tell me again how it is now so much more ethical and honest in Washington DC since the Democrats took over? Oh, and transparant. That too.
“Just words …”