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.
France’s prime minister, Jean-Marc Ayrault, is hopping mad. In response to the French socialist government’s plan to significantly increase taxes on "the rich"—including a proposed 75% tax on incomes above €1 million—rich people are moving out of the country. This is intolerable to Mr. Ayrault.
"Those who are seeking exile abroad are not those who are scared of becoming poor," the prime minister declared after unveiling sweeping anti-poverty measures to help those hit by the economic crisis.
These individuals are leaving "because they want to get even richer," he said. "We cannot fight poverty if those with the most, and sometimes with a lot, do not show solidarity and a bit of generosity," he added.
It could be a scene right out of "Atlas Shrugged".
Mr. Ayrault is angry because rich Frenchmen are fleeing the country to keep their money, instead of handing it over to him. And he is joined by the baying of the other hounds in France’s left wing. Case in point, French actor Gerard Depardieu, whose announcement that he was moving to Belgium provoked responses such as:
Socialist MP Yann Galut called for the actor to be "stripped of his nationality" if he failed to pay his dues in his mother country, saying the law should be changed to enable such a punishment.
Benoît Hamon, the consumption minister, said the move amounted to giving France "the finger" and was "anti-patriotic".
In a stinging editorial, Libération, the left-leaning daily, called him a "drunken, obese petit-bourgeois reactionary".
They are owed this money, by God, and how dare you try and steal it away from them!
This is always the implicit argument of the Left: They have the first claim to your income, and you have a duty to honor that claim. No matter how you earned that money, they have the right to take as much of it as they please away from you, and if you dispute that right, you’re unpatriotic, and should be punished.
This is Leftism in a nutshell. You are not a free individual, but rather a serf of the state or some other politically-defined "larger community" that has an absolute claim on your property and income that you may not defy. This is no different in concept, or in practice, than the idea of ancient Babylon or Akkad that every subject is a slave of the king.
You can dress it up in high-sounding phrases like "solidarity" or "social justice", "helping the poor" all you want, and it still amounts to nothing but the simple declaration that the state owns you.
The people who believe in this idea are the enemies of freedom, and should be treated as such.
Because we’re served by the worst political class ever:
President Obama’slead negotiator in the “fiscal cliff” talks said the administration is “absolutely” willing to allow the package of deep automatic spending cuts and across-the-board tax hikes to take effect Jan. 1, unless Republicans drop their opposition to higher income tax rates on the wealthy.
Treasury Secretary Timothy Geithner said in an interview with CNBC that both sides are “making a little bit of progress” toward a deal to avert the “cliff” but remain stuck on Obama’s desired rate increase for the top U.S. income-earners.
“There’s no prospect for an agreement that doesn’t involve those rates going up on the top two percent of the wealthiest,” Geithner said.
Apparently there is no way to raise the desired revenue, at least according to Obama/Geithner, that “doesn’t involve those rates going up on the top 2%”. No way.
Oh, wait …
What we said was give us $1.2 trillion in additional revenues, which could be accomplished without hiking taxes — tax rates, but could simply be accomplished by eliminating loopholes, eliminating some deductions and engaging in a tax reform process that could have lowered rates generally while broadening the base.
Say, wasn’t that President Obama in July of 2011 at a press conference? Why yes it was. So there is a way, but he and apparently his “negotiator” refuse to pursue it (btw, no I”m not fooled by the illusion that this isn’t just as much a tax hike as what they’re proposing)? It that what is happening?
Why yes, yes it is. So there is another way to do this, apparently. Unless our President was telling a tall one about what he’d be willing to do in July? Yeah, I know, perish the thought. Lie to us? Unthinkable.
Instead according to Turbo Tax Timmy, they’d “absolutely” take us over the cliff, because, you know, raising taxes on the “rich” is now the only acceptable position. You and your life? You’re a mere pawn for these poppinjays. They’re fine with playing with your life and livelihood to score a political win. They have no problem holding your life and property ransom and using your future to force their desired resolution. But if we go over the cliff, screw you.
Meanwhile, in the House, Speaker Boehner continues to look for a comfortable place to lie down and surrender.
In the Senate the GOP actually tried to bring the President’s proposal to a vote and Majority Leader Reid denied it. Because it was, per Reid, a “stunt”.
This is all a “stunt”. A miserable stunt perpetrated by a miserable group of people who have no concept of leadership or service to their country but are long on ego and party.
It is the price of always voting for the “lesser of two evils”.
When is the GOP (and the public) going to learn?
How many times have we heard that the only thing standing in the way of a grand bargain to reduce our growing national debt is Republican intransigence on taxes? If Republicans would only agree to dump Grover Norquist, Democrats will agree to cut spending and reform entitlements. Then, we can all join hands and sing Kumbaya as we usher in a new era of compromise and fiscal responsibility.
Except that now that Republicans have agreed to raise taxes, er, revenue, as part of an agreement to avoid the looming fiscal cliff, liberals appear to have decided that there really isn’t a need to cut spending after all.
Yup, in fact they’ve taken entitlement reform “off the table”.
Senate Democratic leaders signaled Tuesday they would not agree to any entitlement reforms before the end of the year that cut spending on Medicare and Medicaid beneficiaries.
They also said that any year-end deal to avoid the expiration of tax cuts and implementation of spending cuts — known as the fiscal cliff — must include a provision to raise the debt ceiling, which would otherwise have to be addressed early next year.
The White House and Reid have indicated they will not consider cuts to Social Security, a notable change from 2011, when President Obama said “everything is on the table,” including entitlement programs dear to his party’s base.
In other words, we’re back to “tax the rich”, raise the debt ceiling and spend, spend spend. Meanwhile, it is left up to the GOP to “compromise” by breaking the tax pledge (led by the Judas goats, Saxby Chambliss and Lindsey Graham) or be forever branded as the intransigent “bad guys” in this.
Meanwhile, low information Americans who, by over 60% approve of taxing the rich, will buy the spin by the press painting the GOP as the cause/reason for the calamity while Democrats “lament” the problem (“but, hey, that’s now the law thanks to Republicans”) and gleefully rub their hands in delight at all the new revenue they’ll have to “redistribute”.
Some things never change, do they?
Rob Port throws up a couple of graphs that show that, as most of us have been saying for quite some time, it’s not a revenue issue causing the Federal Government’s deficit problem – it’s a spending issue.
Per Port, since 2009, tax revenues are up 19%.
So how does one get the message across to government that it must live within it’s means if it gets a tax increase without spending cuts?
You don’t. You just encourage it to push for more. Already “millionaires” are defined as those making $250,000 a year.
But let’s make excuses for the GOP’s capitulation, shall we (the hapless GOP, which will get blamed if we go over the fiscal cliff or if we avoid it and everything crashes anyway)?
Apparently the new conventional wisdom, “spend till your wallet bleeds and then break out the credit cards” has repealed the laws of economics once again. Ask Paul Krugman if you don’t believe it.
Apparently when you pledge your word and you’re a politician, that pledge (and your word) has a shelf-life:
The decades-old pledge from the Americans for Tax Reform group has been signed by 238 House members and 41 senators in this Congress and has essentially become inescapable for any Republican seeking statewide or national office over recent election cycles, especially in the Republican-controlled lower chamber.
New York Rep. Peter King and Sen. Lindsey Graham said Sunday they would break the pledge and accept tax changes to generate more revenue to curb the trillion-dollar federal deficit.
Their statements followed a similar one Thursday by Georgia Republican Sen. Saxby Chambliss.
“I agree entirely with Saxby Chambliss,” King said on NBC’s “Meet the Press.” “A pledge you signed 20 years ago, 18 years ago, is for that Congress. … The world has changed, and the economic situation is different.”
That’s what you get for electing moral cowards (aka, “politicians”) to office.
Forget about it. It is your fault they spend more than they have so pay up and shut up. After all, voters don’t seem to hold them accountable for any of this so why should they worry or take responsiblity?
The great cave-in begins.
The good news? We won’t have to hear any moralizing by the GOP about “principles” … or at least we won’t have to take it seriously.