by | ARTICLES, ECONOMY, HYPOCRISY, POLITICS, TAXES
What is so special about April 29, 2009?
It’s the last time Congress passed a budget. 1000 days later, we are operating without any plan. Oh, the delicious irony that it is today… I can’t wait to hear about it during the State of the Union tonight, right? Just like last year’s State of the Union; the budget Obama tried to pass shortly thereafter, modeled on the ideas espoused during his speech, failed 97-0. It was so outrageous, not one Senator of either party would put his name to it.
I’ve read some recent articles about the last 1000 days. Human Events had some worthwhile observations:
Senate Majority Leader Harry Reid (D-NV) said it would be “foolish” to have a budget.
“There’s no need to have a Democratic budget in my opinion,” Reid said in a May interview with the Los Angeles Times. “It would be foolish for us to do a budget at this stage.”
The breakdown in the Senate came after Sen. Kent Conrad (D-ND), chairman of the Budget Committee, failed to get a consensus among panel Democrats last year on any plan that was proposed to the caucus.
Meanwhile, U.S. Rep Sandy Adams penned a short piece about Congressional budget activity, (or lack thereof)
The previous Democrat-led Congress had ample time to do so. With President Obama in theWhite House, Senate Majority Leader Harry Reid and former Speaker Nancy Pelosi had the power to implement any budget they chose. Unfortunately, they punted on their responsibilities, choosing to pass legislation creating a national energy tax and an unpopular health-care law instead.
And finally, the Heritage Foundation put forth their list of facts about our nation’s budget and America’s money:
- The last time the Senate passed a budget was on April 29, 2009.
- Since that date, the federal government has spent $9.4 trillion, adding $4.1 trillion in debt.
- As of January 20, the outstanding public debt stands at $15,240,174,635,409.
- Interest payments on the debt are now more than $200 billion per year.
- President Obama proposed a FY2012 budget last year, and the Senate voted it down 97–0. (And that budget was no prize—according to the Congressional Budget Office, that proposal never had an annual deficit of less than $748 billion, would double the national debt in 10 years and would see annual interest payments approach $1 trillion per year.)
- The Senate rejected House Budget Committee Chairman Paul Ryan’s (R–WI) budget by 57–40 in May 2011, with no Democrats voting for it.
- In FY2011, Washington spent $3.6 trillion. Compare that to the last time the budget was balanced in 2001, when Washington spent $1.8 trillion ($2.1 trillion when you adjust for inflation).
- Entitlement spending will more than double by 2050. That includes spending on Medicare, Medicaid and the Obamacare subsidy program, and Social Security. Total spending on federal health care programs will triple.
- By 2050, the national debt is set to hit 344 percent of Gross Domestic Product.
- Taxes paid per household have risen dramatically, hitting $18,400 in 2010 (compared with $11,295 in 1965). If the 2001 and 2003 tax cuts expire and more middle-class Americans are required to pay the alternative minimum tax (AMT), taxes will reach unprecedented levels.
- Federal spending per household is skyrocketing. Since 1965, spending per household has grown by nearly 162 percent, from $11,431 in 1965 to $29,401 in 2010. From 2010 to 2021, it is projected to rise to $35,773, a 22 percent increase.
So there you have it. We stopped having a budget with a Democrat in the White House, a Democrat-controlled Senate, and with a Democrat-controlled House of Representatives. 1000 days ago. So how come they aren’t talking about it?
Update: The Hill is reporting that some Republicans will be sporting “1000 days” buttons to mark the 1000 days of ineptitude
by | HYPOCRISY, SOCIAL SECURITY, TAXES
One of the most common means by which politicians deceive their constitutents is by referring to Social Security as a either a tax or as a retirement system — but usually only as the politics or issues of the day suit them.
We have politicians who stand strongly behind the concept that Social Security must be maintained because it’s a retirement system that people pay for. I certainly believe, as FDR did when he started Social Security, that this is a forced retirement system. As such, it is critical that the entity managing it (the federal government) include Social Security’s actuarially calculated expenses in the current year. By not doing that with their accounting, they are able to simultaneously mischaracterize Social Security as a tax.
If Social Security is truly a retirement and disability plan, it is patently unfair to also consider Social Security collections as a tax that is paid. This is hypocrisy to the citizens contributing toward their retirement. Therefore, when you hear a politician calling Social Security a tax, understand that such a description qualifies it as an entitlement supported the general revenue fund. It can’t be both. The true Social Security Fund, as it is currently being collected and paid out, has been stolen from the taxpayers.
Social Security as a retirement plan has lost its meaning along the way. Yes, benefits promised to recipients have been much more than the amounts taken from pay. For that reason, and for the way by which Social Security is accounted by the government, the system is broken. Nevertheless, we must fundamentally maintain the view that Social Security is the way by which people pay for their own retirement — if we are to fix the imbalances.
The way to lead Social Security back to health is to convince people that the amounts taken from their pay is protected and truly going to their retirement by reclaiming the Social Security Fund so it reflects that reality. Often when it’s realized how little income tax many people pay, the focus typically goes on to how much people do pay toward Social Security. This is not altogether a bad thing. With citizens trying to retire at the age of 65 but often having life expectancies until 90, people need to contribute more money to their retirement.
We need to restore Social Security to a level of sustainability by moving it back to being a path to retirement, view it as a forced retirement system, and hold it accountable in that regard. By modifying the system to be more like present-day 401ks, people can better realize the amount that they are actually putting in. In doing that, more people will ultimately be happy with their Social Security accounts and will also make a mockery of such recent legislation as the payroll tax holiday.
If though, the powers that be continue to insist Social Security is a tax, then the fact becomes that people are really not paying for their own retirement. Therefore beneficiaries are not entitled to anything other that what Congress on a whim decides, because it is subject to the general revenue fund via tax revenue. This would be an outrageous outcome. It turns Social Security into a means by which the people are dependent on government to provide a modest stipend by extracting money from us.
by | HYPOCRISY, OBAMA, TAXES
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by | ECONOMY, HYPOCRISY, TAXES
Other pundits are writing about tax cuts and wondering how aloud how the Republicans vote against a tax cut. The answer is simple: the temporary payroll Social Security tax reduction is not, never was, and never will be a tax cut.
There are many ways to look at the 2% reduction in the Social Security tax that is being collected. But effectively, it is no more than a spending increase all dressed up to look like a tax cut. The cost to taxpayers was $120 billion dollars. Congress simply decided to put more money into the hands of the lower and middle class. Rather than write a check, they made the 2% payroll decrease on the Social Security tax collection rate so workers could see a tangible benefit in their paychecks. But because it is temporary, and because it is limited, it has none of the effects of a true tax cut. As it’s been shown in history, most recently with the Making Work Pay tax credit for example, such temporary items have none of the stimulative effects on the economy. It served no purpose other than to create political turmoil among voters, party lines, and taxpayers.
What’s worse, no one is talking about the fact that the Democrats plan to pay for this holiday and its proposed extension ($265 billion), by levying a surtax on successful Americans earning over $1 million. This is legal plunder. It is redistribution of wealth at its core. Our government borrowed money directly intended for the Social Security Fund, and now wants someone else to pay for it. The so-called tax cut is really a net tax increase on the very Americans who are most responsible for job creation in this country. Just the effect of debating this nonsense in Washington continues to stifle businesses and harm our economy.
by | ECONOMY, GOVERNMENT, HYPOCRISY, TAXES
While pushing for a Social Security payroll tax extension, Obama wants a 3.25% surtax on millionaires to pay for it. This is wealth redistribution under the guise of “fairness”.
Are you going to cut taxes for the middle class and those who are trying to get into the middle class, or are you going to protect massive tax breaks for millionaires and billionaires?” he said. “Are you going to ask a few hundred thousand people who have done very, very well to do their fair share or are you going to raise taxes for hundreds of millions of people across the country?”
by | ECONOMY, HYPOCRISY, TAXES
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by | HYPOCRISY, TAXES
The concept of an American President going after people making a lot of money and paying a relatively low tax rate on it is particularly naïve; it displays an absolute lack of familiarity with how people get wealthy. As a CPA, I can attest to the fact that the most common way people accumulate massive wealth is either by a huge amount of hard work (creating a successful business) or selling an asset (an invention, real estate, etc).
Many people who file tax returns with large amounts of income, such as selling a business for $10 million, will have a multi-million capital gains amount. It’s not that the higher income earners have some sort of capital gains loophole, but it’s really that the wealthy have done something well to attain the American Dream. And when they do strike it rich through their effort, part of their wealth is treated as a capital gain and it gives those earners a chance to keep a part of it. Knowing that there is a low capital gains rate is an extra incentive to work hard and be successful.
Many of my clients are wealthy, and I have experienced time and again that they will come to me and ask the question: if they are successful, can they keep the majority of their money?”. This is because they know that government wants to take more from the highest income earners who have proven their success, while at the same time, the government is quite happy to let them lose on their own on their particular endeavor.
Most in the top echelon get there from a one-time income-producing significant event. To punish such success by raising the capital gains tax only serves to drive a deeper wedge between the have- and have-nots in an attempt to level the economic playing field.
by | ARTICLES, ECONOMY, GOVERNMENT, HYPOCRISY, TAXES
I’ve seen very few fact checks pertaining to Obama’s record and/or speeches. USA Today did a nice little round-up of some recent claims by Obama regarding the jobs bill, taxes, etc. I’ve reproduced it below in it’s entirety because it was simple and straightforward.
AP fact check: Obama claims miss some evidence
By Jim Kuhnhenn, The Associated Press
WASHINGTON – In challenging Republicans to get behind his jobs bill Thursday, President Obama argued Republicans have supported his proposals before, demanded that they explain themselves if they oppose him, and challenged others to come up with a plan of their own. The rhetoric in the president’s quick-moving press conference dodged some facts and left some evidence in the dust.
Obama: “If it turns out that there are Republicans who are opposed to this bill, they need to explain to me, but more importantly to their constituencies and the American people, why they’re opposed, and what would they do.”
The facts: While Republicans might not be campaigning on their opposition to Obama’s plan, they’ve hardly kept their objections a secret.
In a memorandum to House Republicans Sept. 16, House Speaker John Boehner and members of the GOPleadership said they could find common ground with Obama on the extension of certain business tax breaks, waiving a payment withholding provision for federal contractors, incentives for hiring veterans, and job training measures in connection with unemployment insurance.
They objected to new spending on public works programs, suggesting instead that Congress and the president work out those priorities in a highway spending bill. And they raised concerns about Obama’s payroll tax cuts for workers and small businesses, arguing that the benefits of a one-year tax cut would be short-lived. The memo also pointed out that reducing payroll taxes, which pay for Social Security, temporarily forces Social Security to tap the government’s general fund. And it opposed additional spending to prevent layoffs of teachers, police officers and other public workers.
Obama: “Every idea that we’ve put forward are ones that traditionally have been supported by Democrats and Republicans alike.”
The facts: Obama proposes to pay for his jobs bill by raising taxes, something traditionally opposed by Republicans and, in the form Obama proposed it, even some Democrats. Senate Democrats were so allergic to Obama’s approach, which relied largely on limiting deductions that can be taken by individuals making over $200,000 a year and couples making more than $250,000, that they’re eliminating it and replacing it with a new tax on millionaires.
In claiming bipartisan support for the components of his proposal, the president appears to be referring just to what the plan would do, not how it’s paid for, but that’s a crucial distinction he doesn’t make.
Some of tax-cutting proposals offered by Obama have received significant Republican support in the past. But some of the new spending he proposes has received only nominal Republican backing. Evidence of bipartisanship provided by the White Houseincludes legislation last year that provided $10 billion to prevent teacher layoffs. It won the support of only two Republican senators —Olympia Snowe and Susan Collins, both of Maine and among the most moderate Republicans in Congress. Another example cited by the White House was proposal last year to offer tax breaks to businesses that hire new workers — it passed the House 217-201 with six Republican votes.
Obama: “The answer we’re getting right now is: Well, we’re going to roll back all these Obama regulations. … Does anybody really think that that is going to create jobs right now and meet the challenges of a global economy?”
The facts: Well, yes, some think it will. The U.S. Chamber of Commerce last month submitted a jobs proposal to Obama that included a call to ease regulations on businesses. It specifically called for streamlining environmental reviews on major construction projects and to delay the issuance of some potentially burdensome regulations until the economy and employment have improved. In the letter, Chamber President Thomas Donohue also called on Congress to pass legislation that would require congressional approval of major regulations. The chamber did not indicate how many jobs such regulatory changes could create, but it said: “Immediate regulatory relief is required in order to begin moving $1 trillion-$2 trillion in accumulated private capital off of the sidelines and into business expansion.”
Obama: “We can either keep taxes exactly as they are for millionaires and billionaires, with loopholes that lead them to have lower tax rates, in some cases, than plumbers and teachers, or we can put teachers and construction workers and veterans back on the job.”
The facts: True, “in some cases” wealthy people can exploit loopholes to make their tax rate lower than for people of middle or low income. In recent rhetoric, Obama had suggested it was commonplace for rich people to pay lower rates than others, a claim not supported by IRS statistics. But on Thursday, Obama accurately stated that it only happens sometimes.
In 2009, 1,470 households filed tax returns with incomes above $1 million yet paid no federal income tax, according to the IRS. Yet that was less than 1 percent of returns with incomes above $1 million. On average, taxpayers who made $1 million or more paid 24.4 percent of their income in federal income taxes; those making $100,000 to $125,000 paid 9.9 percent; those making $50,000 to $60,000 paid 6.3 percent. The White House argues that when payroll taxes — paid only on the first $106,800 of wages — are factored in, more middle class workers wind up with a higher tax rate than millionaires.
by | ECONOMY, GOVERNMENT, HYPOCRISY, TAXES
Class warfare has become a key component of Obama’s policies and re-election rhetoric. The components of such a tactic are easily recognized: 1) the political opponent will hurt those among us who are most vulnerable (elderly, poor, etc); 2) the political opponent does not care about the “middle class”; 3) the political opponent wants to benefit those most advantaged (the rich/elite). The third point of this strategy is the one that is most popular with Obama, as he continuously and intentionally rails against “millionaires and billionaires” in order to separate that particular population from mainstream America.
Besides the obvious baseness of such an argument coming from the President of the United States, it is critically important to note that he doesn’t actually ever define a millionaire or billionaire. The amount of true millionaires and billionaires are so few in number, that taxing them more – as Obama plans to do – will not help with any significant deficit reduction. His assertion is pure dishonest political speech because you cannot possibly create enough revenue from the millionaire/billionaire population even if you were to tax them at 100%. Our fiscal situation is so dire in this country that an increased tax on this group in any large or small amount solves nothing.
Unfortunately, none of this matters to Obama. He intentionally throws the labels around so that they conveniently fit whatever emotive language will coerce voters and supporters to rally behind his outrageous fiscal policies. It is classical class-warfare: antagonizing lower socio-economic groups against the “rich”.
Obama has stated his intent to raise the marginal rates on the top income earners, (aka the “rich”, “wealthy”, or “top 2%”). Yet according to the IRS, the threshold for this bracket is actually 200K for individual taxpayers or 250K for married couples. These incomes are certainly no where near millionaire or billionaire amounts.
Since there is a clear federal definition for a group of taxpayers whom Obama is targeting for tax increases, Obama really has no right to say millionaires and billionaires as a collective for the highest income earners. But he uses the generic terms anyway. By making it sound like one kind of people, it pits the average/middle-class against “the other guy”. And if he actually tried to define that other guy instead of resorting to generic terms, it would include a lot of people who would be upset to be included.
History shows us that higher tax rates results in less – not more – tax collections. Democrats like to wax poetic about the high rates of 70% and even 91%. What they fail to comprehend or deliberately don’t explain is that at those times, there were an enormous amount of tax shelters such as real estate, so that people could legally lower that taxable income and would not have to actually pay the outrageous tax rates.
With the IRC reforms of 1986, Reagan reduced the tax rates to 28% in exchange for getting rid of the tax shelters. As a result, the amount of federal income collected was more at 28% and a clean tax code than at 91% and tax shelters, because at 28%, it really wasn’t worth the time, cost, and effort to hide money. If the tax rates are going to rise again – in addition to state and local tax hikes – the tax burden in this country will be staggering. People will do one of two things: 1) start finding ways not to pay it like they did when the rates were outrageous or 2) stop working and investing so much because it’s just going to get taken away from them. When that happens, it’s not good for the economy.
Blindly going after “millionaires and billionaires” (who earn $200,000 or more) is simply a tactic Obama uses to pit classes against one another for political gain. Imposing higher taxes on that segment of the population most able to invest in and aid our recovery is true economic ignorance. Why take additional money from those taxpayers who have been able to create wealth and employment successfully and give it to the government and politicians who have proven their ability to mismanage and squander income?
by | BUSINESS, GOVERNMENT, HYPOCRISY
As Obama keeps pushing his (non) jobs bill that looks like another stimulus package, I’m tired of hearing that the bailouts worked. One of the amazing non-stories in the country is that when the bailouts occurred, what the government was doing was taking those companies and their employees who were totally solvant (ie Ford, Chrysler, etc) and rewarding their achievement by having their competitor bailed out (GM). If there has ever been unfair competition in this country, it was then. Those companies competed unsuccessfully, and then were given government money so they could produce again. This is pure hypocrisy — and practically discrimination — toward those successful companies.
