Apparently President Obama is sure his newest budget proposal is so good there’s no room or need for negotiation. Or so a senior White House official says:
“We don’t view this budget as a starting point in the negotiations. This is an offer where the president came more than halfway toward the Republicans,” a senior administration official told reporters Tuesday, speaking on condition of anonymity to detail the forthcoming document.
“So this is our sticking point,” the official said. “And the question is: are Republicans going to be willing to come to us to do serious things to reduce our deficits?”
Obama is proposing a $3.78 trillion dollar budget. Estimated tax revenues for 2014 are $3.22 trillion. Yet, this is being touted as a “budget cutting” budget and the White House claims it is exactly what the Republicans have wanted.
What … another deficit?
By the way, I don’t want “reduced deficits”. I want NO deficit. I.e. any budget that begins with an amount higher than the estimated tax revenues for the year is Dead On Arrival.
And that’s precisely the declaration this budget (like all the other budgets Obama has submitted) deserves.
Thought these two graphs illustrated part of it very well:
But remember — they want you to believe it is a revenue problem.
State Farm, the nationally-known insurance chain headquartered in Bloomington, Illinois, has apparently had its fill of “The Land of Lincoln’s” confiscatory taxes. The 800 million dollar company is reported to have purchased “substantial workspace” in the Dallas, Texas area. The giant insurance firm’s workers are being kept in the dark reportedly to avoid “alarming them”; but is it their workers or the State of Illinois they would like to keep in the dark about this move? If this doesn’t signal State Farm’s coming dash out of Illinois’s clutches, what could it mean?
A knowledgeable Dallas real estate insider has called this impending move “a major business relocation” of record-breaking proportions. The numbers involved are approximately 2.5 million square feet of workspace and thousands of workers. No company in Dallas’ history has made a move this large.
Texas isn’t the only state State Farm is running to. There has also been a report that it has leased office space in Atlanta. The combined amount of both new locations roughly equals the 3.5 million square feet it has in Bloomington.
These moves should come as no surprise to anyone. In spite of (or maybe because of) raising its corporate and personal income tax rate by 67% in 2010, Illinois has seen its credit rating fall and its deficit raise. A review of the tax structure in Georgia shows the personal and corporate income tax is 4% as compared to Illinois’ 6.25%.
Texas has no personal or corporate income tax.
But, you know, the South has just replaced physical slavery with economic slavery – and all those Texans and Georgians who will benefit from employment with State Farm after the move know that only too well, don’t they? /sarc
I’m sure the taxes are just part of the reason. Most likely the complete business atmosphere in the South is more likely the draw. A welcome mat instead of a outstretched hand have to be appealing. The same thing is happening in a number of northern states – the difference being the fiscal mess of today coupled with the difference in Blue state remedies vs. Red state remedies has started to turn a trickle exiting Blue states into a flood.
Electricity prices are rising in Germany – and citizen with a low-income are suffering particularly. They are at risk of fuel poverty. 10 to 15 percent of Germans are now struggling to pay their energy bills. 600,000 households have the electricity turned off every year.
Remember, Germany ran scared after the Fukushima disaster and dumped nuclear power (because, you know, German has so many earthquakes and tsunamis). They then went “green”. Result? See above?
The CEOs of manufacturing industries are warning that production in Germany is at risk because of low energy prices in the United States. The energy prices there are now only a third of those in Germany. “Many industrial companies are planning to build new factories in the U.S. and not in Europe because of low energy prices there,” said Gisbert Rühl, chief of steel trader Kloeckner. “We are now reacting to this development and plan new business units in the United States.” To move production to the U.S. is especially attractive for companies in energy-intensive industries such as steel and aluminium or chemistry.
That would seem to be good news for us, no?
Well, it should be … except for the Democrats plan to raise taxes on the oil companies. And Obama’s new wave of regulations. Oh, and the Obama desire to see fuel prices “skyrocket”, ably aided by his Secretaries of Energy and the Interior. And the EPA.
Remember, this “tax fairness” was something which was going to solve our fiscal problems, if you listened to the left’s claim that is. However, reality is fairly brutal and usually doesn’t much pay attention to rhetoric based in lies and stupidity. Case in point:
Congress is poised to clear the final $50 billion chunk of emergency aid for Superstorm Sandy relief Monday — and in one vote, it will have used up all the new tax money President Obama won by raising rates on the wealthy in the “fiscal cliff” deal.
The “cliff” … well they’re busily engaged in trying to see if they can kick the can nearer the edge and, by the way, make the “cliff” a little higher while they do that by raising the debt limit … again.
Meanwhile, let’s talk about immigration, gun bans and whatever else our “leaders” can think of to distract us from this pending disaster.
I continue to be stunned by the apparent willingness of all involved on the left to whistle past the graveyard when it comes to understanding what our fiscal governmental problem is and how to fix it. Here … let’s try a picture:
Oh, look … it’s spending. Specifically, spending on entitlements and interest on the money we’ve borrowed to do so. And what are we talking about cutting? The military, of course. Because, you know, it is in the blue slice of the pie. Make sense?
Pac Man’s revenge. By 2050, he will have swallowed all of the blue.
But, hey, it’s “absurd” to argue about raising the debt limit. By the way, does anyone remember when Sen. Obama declared that raising the debt limit signaled a failure in leadership?
I hate to say “I told you so”, but it isn’t just the rich who will be paying increased taxes. And what should be clear to anyone with the I Q of a turnip, is that this will cost people their jobs.
The compromise called for taxes to rise to 39.6% from 35% on personal income above $400,000. In a 2011 study, the Treasury Department found that raising taxes on incomes over $500,000 would affect roughly 750,000 small businesses organized as S-Corps, partnerships and other small entities.
Of course, you remember the Democrats claiming that this wouldn’t affect small businesses. Well, that was a flat out lie. But then we live in an era of lies which, if there political apparently, we’re willing to overlook. While most of us are. I just had to be one of those who isn’t. Not that Democrats are the only political liars, but they seem to be the most prolific and the most blatant. Especially when it comes to budget, deficit, and financial matters. They are the quintessential “snake oil” salesman.
And they have sold us are huge bottle of snake oil.
Couple these tax increases with the Obamacare taxes that kicked in on the 1st, and you have two reasons for 750,000 small businesses not to hire. And you can bet none of them will go over 50 employees, and some may even reduce staff to get under that number.
These are your “rich”. They happen to be the “rich” would generate jobs, or what have, if they hadn’t been hit by two new taxes this year.
Your government at work.
In case you’re looking for an “fiscal cliff” bottom line, here it is in one sentence.
According to the Congressional Budget Office, the last-minute fiscal cliff deal reached by congressional leaders and President Barack Obama cuts only $15 billion in spending while increasing tax revenues by $620 billion—a 41:1 ratio of tax increases to spending cuts.
If there’s any good news in this “compromise” bill, it is that the Democrats will get their tax on the rich, and it will make absolutely no difference in the debt.
As we’ve been saying for years, it’s not a revenue problem, it is a spending problem.
In fact going over the fiscal cliff is not been avoided, the chasm has just been deepened. Or said another way, the can has been firmly kicked down the road.
The word of the day?
UPDATE: In case you were wondering what this means in nice round numbers in terms of debt:
The fiscal cliff deal approved by Congress will increase deficits over the next decade by close to $4 trillion, according to the Congressional Budget Office.
Like I said, in full sarcasm mode, “great job!”
If you love ObamaCare, you’re sure to be thrilled with whatever comes out of this attempt to cash in on taxing thin air. Climate change is going to be a “priority” because it would be a new source of revenue, nothing more:
President Obama has identified climate change as one of his top three priorities in his second term after coming under fire from environmentalists for giving the issue short shrift during the campaign.
The president, in an interview for TIME’s Person of the Year award, said the economy, immigration, climate change and energy would be at the top of his agenda for the next four years.
The interview took place before the fatal shootings at Sandy Hook Elementary School in Newtown, Connecticut, an incident that had pushed gun control to a top spot on Obama’s agenda.
Obama said his daughters have influenced his thinking about the need to tackle climate change.
“[O]n an issue like climate change, for example, I think for this country and the world to ask some very tough questions about what are we leaving behind, that weighs on you. And not to mention the fact I think that generation is much more environmentally aware than previous generations,” he told TIME.
The comments continued a trend of Obama vowing to focus on climate without laying out details of his agenda.
You have to be stunned by the irony of his statements. The man has been “influenced” by indoctrinated children. Just as stunning is his statement about asking “tough questions about what we are leaving behind”. One has to wonder if he’s looked at the record debt he’s piling on which will have to be paid by future generation in their standard of living, taxes and productivity. Now he wants to add more cost to that future by involving government in regulating CO2.
That despite the fact, no inspite of the fact, that the science he’d base his “priority” upon has simply fallen apart.
The analysis of global combined land and ocean surface temperature in [the IPCC’s draft report] is inadequate for what it admits is seen as the prime statistic of global warming. It is highly selective in the references it quotes and in the use of time periods which obscures important, albeit inconvenient, aspects of the temperature data. It is poorly drafted, often making a strong assertion, and then somewhat later qualifying if not contradicting it by admitting its statistical insignificance.
Real science simply doesn’t agree with the alarmist creed established by Al Gore, the UN IPCC and the other prophets of doom:
We can now estimate, based on observations, how sensitive the temperature is to carbon dioxide. We do not need to rely heavily on unproven models. Comparing the trend in global temperature over the past 100-150 years with the change in “radiative forcing” (heating or cooling power) from carbon dioxide, aerosols and other sources, minus ocean heat uptake, can now give a good estimate of climate sensitivity. The conclusion – taking the best observational estimates of the change in decadal-average global temperature between 1871-80 and 2002-11, and of the corresponding changes in forcing and ocean heat uptake – is this: a doubling of CO2 will lead to a warming of 1.6-1.7C. This is much lower than the IPCC’s current best estimate, 3C.
But a politician has an inherent ability to sniff out potential revenue sources even when they’re just faintly carried by the wind.
The result of such policy and legislation will be even worse of an economic disaster than ObamaCare. The “solution” will cost us much more than the “problem” was ever worth in terms of GDP, jobs and economic progress.
However, Obama will then be able to report to his two daughters who’ve been feed the alarmist creed for years that he “did something”, even if that something was, as usual, with your money and has forced you to reprioritize your own life downward.
It is the nature of the beast – and unfortunately we continue to allow the beast to feed at will and seem to find it natural that the beast is involved in all aspects of our life. All we argue about is which group we’re going to sacrifice to the beast. This time it’s the “rich”.
Oh, and gun control is also a 2nd term “priority” – more on that later.
So tell me again why the government can’t seem to get along with what it already gets?
Taking into account all taxes on earnings and consumer spending—including federal, state and local income taxes, Social Security and Medicare payroll taxes, excise taxes, and state and local sales taxes—Edward Prescott has shown (especially in the Quarterly Review of the Federal Reserve Bank of Minneapolis, 2004) that the U.S. average marginal effective tax rate is around 40%. This means that if the average worker earns $100 from additional output, he will be able to consume only an additional $60.
And yet the prevailing political attitude seems to be that of France’s “leadership”, i.e. government, has first claim on all your earnings and if you protest you’re “greedy”.
Speaking of France, California seems bound to duplicate its latest tax scheme:
Consider California, which just enacted higher rates of income and sales tax. The top California income-tax rate will be 13.3%, and the top sales-tax rate in some areas may rise as high as 10%. Combine these state taxes with a top combined federal rate of 44%, plus federal excise taxes, and the combined marginal tax rate for the highest California earners is likely to be around 60%—as high as in France, Germany and Italy.
Yet they wonder why people are fleeing the state.
Impact and implications?
Higher labor-income and consumption taxes also have consequences for entrepreneurship and risk-taking. A key factor driving U.S. economic growth has been the remarkable impact of entrepreneurs such as Bill Gates of Microsoft, Steve Jobs of Apple, Fred Smith of FedEx and others who took substantial risk to implement new ideas, directly and indirectly creating new economic sectors and millions of new jobs.
Entrepreneurship is much lower in Europe, suggesting that high tax rates and poorly designed regulation discourage new business creation. The Economist reports that between 1976 and 2007 only one continental European startup, Norway’s Renewable Energy Corporation, achieved a level of success comparable to that of Microsoft, Apple and other U.S. giants making the Financial Times Index of the world’s 500 largest companies.
Yet we continue to try to recreate Europe’s debacle here.
The economy now faces two serious risks: the risk of higher marginal tax rates that will depress the number of hours of work, and the risk of continuing policies such as Dodd-Frank, bailouts, and subsidies to specific industries and technologies that depress productivity growth by protecting inefficient producers and restricting the flow of resources to the most productive users.
If these two risks are realized, the U.S. will face a much more serious problem than a 2013 recession. It will face a permanent and growing decline in relative living standards.
These risks loom as the level of U.S. economic activity gradually moves closer to that of the 1930s, when for a decade during the Great Depression output per working-age person declined by nearly 25% relative to trend. The last two quarters of GDP growth—1.3% and 2.7%—have been below trend, which means the U.S. economy is continuing to sink relative to its historical trend.
But your political and financial lords and masters know best, don’t they? Just ask them. They continue down this road despite the fact the destination is in plain sight in Europe and it isn’t pretty.
Occam’s Razor states “entities should not be multiplied unnecessarily.” Said another way, the simplest explanation is usually the most likely explanation. In this case the simplest explanation is incompetence. But is it really incompetence? With the European example staring them right in the face it’s hard to believe anyone is that incompetent. The conclusion to their policies have already been proven to be a disaster.
So one has to being to consider other possibilities when those who are pushing the policies seem oblivious to the obvious.
You have to begin to wonder if it is a problem of hubris. I.e. “the only reason it hasn’t worked before is we weren’t in charge”. We’ve seen that in any number of instances throughout history where discredited or obviously illogical ideological ideas were tried and they again failed.
Or you have to consider the words “by design”. But then you’re stuck with trying to come up with a valid reason “why”. Recreating Europe’s debacle, or Japans’s or, for heaven sake, our’s in the ’30s would seem to be something smart politicians would attempt to avoid.
But here we are.
Economic growth requires new ideas and new businesses, which in turn require a large group of talented young workers who are willing to take on the considerable risk of starting a business. This requires undoing the impediments that stand in the way of creating new economic activity—and increasing the after-tax returns to succeeding.
And yet, we see a government bent on erecting even more impediments via increased taxation, costly new laws and onerous regulation.
Isn’t it about time we demanded to know “why?” More importantly, maybe we should ask whose side they’re on.