Nearing agreement says NYT
An administration official said that in the emerging deal, the “Making Work Pay” credit would be replaced with a one-year reduction in payroll taxes for workers.
In addition to a two-year extension of the income tax rates enacted under President George W. Bush, the deal includes a one-year extension of jobless aid for the long-term unemployed. Officials said negotiators were also close to an agreement to restore the federal estate tax, which lapsed at the start of this year, with an exemption of up to $5 million per individual, and a maximum rate of 35 percent.
(bolding mine)
The proposed 2% cut in FICA contributions is curious.
I guess the SSTF is in fact a fiction.
The mania for cutting taxes everywhere is quite disturbing. Hello Greece.
That’s what happens when you let a $14T debt bubble grow on you.
http://research.stlouisfed.org/fred2/series/CMDEBT
Heywood Mogroot: “The proposed 2% cut in FICA contributions is curious.
“I guess the SSTF is in fact a fiction.”
The devil is in the details. If the law is written right, the cut should not affect later benefits. Fortunately for us, there are people here who know and understand the details. 🙂
What they’re gonna do is cut the FICA contributions and then reimburse the TF for the 2% of payroll it’ll cost from general revenue. Brilliant–NOT. And, doesn’t cut income taxes either because whatever comes off FICA comes out of general revenues. A wash at best. At worst, a scam. NancyO.
The proposed 2% cut in FICA contributions is curious.
It is the only way to cut taxes for the majority of the population. The bottom 50% of taxpayers pay virtually no income tax http://www.ntu.org/tax-basics/who-pays-income-taxes.html , the only federal tax they pay is FICA.
So now you have Joe 6 rolling with a few exta sheckels in his pocket and hope this stimulates aggregate demand. It is “Trickle Up” economics. because we all know that we can’t cut taxes on the rich or corporations because there is no way they create jobs or invest. All I can say is that is better than wasting money on another Stimulus boondoogle. At least people can spend it on things they derive utility from, rather than have the government build bridges to nowhere, or weatherize homes at prevailing wage.
Sammy, moron.
Endless studies show the positive effect of infrastructure stimulus, and show that tax cuts for the rich are the least effective. But those studies occurred in the United States, on Earth, not on Planet Rush.
The estate tax stuff is truly depressing. It shows Obama’s complete indifference to incme and wealth inequality. If those exemptions and rates were made permanent, there would be a ten year aggregate loss of revenue above $500M.
It really does appear that his Harvard cultural bubble is completely impermeable.
Heywood Mogroot – “That’s what happens when you let a $14T debt bubble grow on you.”
Your point on household debt is well taken, but the Fed Z.1 Flow of Funds accounts data which you and the St. Louis Fed cite doesn’t identify the 2010q2 household debt service ratio and financial obligations ratios for renters and homeowners. The debt ratios have improved substantially, though further improvements may be desirable by households.
The household debt service ratio (DSR) of 12.13 is the lowest since 1999q2.
The financial obligations ratio (FOR) Total of 17.02 is the lowest since 1995q3.
The financial obligations ratio (FOR) Renter of 24.24 is the lowest since 1993q4 with the exception of 2008q2.
The financial obligations ratio (FOR) Homeowner Total of 15.52 is the lowest since 2002q1.
The financial obligations ratio (FOR) Homeowner Mortgage of 10.33 is the lowest since 2005q1.
The financial obligations ratio (FOR) Homeowner Consumer of 5.19 is the lowest since 1995q1.
—–
Household Debt Service and Financial Obligations Ratios
Federal Reserve
http://www.federalreserve.gov/releases/housedebt/default.htm
“The household debt service ratio (DSR) is an estimate of the ratio of debt payments to disposable personal income. Debt payments consist of the estimated required payments on outstanding mortgage and consumer debt.
The financial obligations ratio (FOR) adds automobile lease payments, rental payments on tenant-occupied property, homeowners’ insurance, and property tax payments to the debt service ratio.
The homeowner mortgage FOR includes payments on mortgage debt, homeowners’ insurance, and property taxes, while the homeowner consumer FOR includes payments on consumer debt and automobile leases.”
Uh, 500B that is. Hurts to type it.
I used to be surrounded by trust fund kids in Orange County, CA. Well, not really surrounded, they tended to all be south of me. But I always thought that was the way around estate taxes. So if they do this estate tax break permanently, disgusting as it sounds, is it really a loss of tax revenue? Or does it just eliminate the “need” for trust funds.
Min
the cut shows that we are ruled by folks who prefer “cute” to honest. there is no reason to cut the payroll tax except to damage Social Security politically. even if the money is repaid to the trust fund by the general taxes.. and what will have been gained by that… all you will have accomplished is to break the link between worker contributions and worker benefits: the whole point of social security.
turn it into welfare so the rich can kill it at their leisure.
MG
do us a favor and summarize the salient points.
probably i am as guilty of this as you are, but a long comment full of “ignorant article,” “spit out…junk,” “just not that smart,” “asleep at the switch,” doesn’t really tell us anything except that you really, really, believe that you are smarter than we are.
CR,
There is lots of ways around the estate tax. And this still hits everything over $5M to a max rate of 35%.
Its really very easy to protect wealth (as oppossed to income) from the tax man. Bill Gates Fondation is a perfect example. the Feds won’t be getting his money when he kicks…
Islam will change
when Bush wanted to kill Social Security the selling point was that Social Security did not pay as high a “return on investment” as the stock market. to prove this point they made sure to tell us “most economists agree” that the employer’s contribution was “really’ the workers money… cutting the effective roi in half.
now that we have a recession, it is no longer the workers money, it is “a jobs killing tax.” so it’s just a new lie for a new day. and of course the folks will swallow it. they have no choice.
so the government is going to give you “really your own money” back. take it out of your retirement fund so you can spend it on chinese made crap at Wal Mart.
MG,
I read it. I can pretty much assure you you can find similar speeches made by Bush Jr, Clinton, Bush Sr, Reagan, Carter, Ford, etc etc. plus a boat load of Presidential wannabe’s, and to lessor extent Governers, Senators etc.
Obama has had two years, with a Dem stanglehold on the Fed Gov during the entire time, to start his vision, show us his leadership. Look around you at where his vision has brought us.
Now look again.
In January we will have divided government again. Obama has shown us these last two years he has less vision than Bush Jr (reguardless of what you thought of the vision). He has not led on almost anything and has folded at every turn when faced with difficult decisions. He is no Reagan, LBJ, or an FDR. Eisenhower sent fed troops to integrate schools in the south. Obama can stop enforcement of DADT with a stroke of the pen and could have had it gone two years ago. Yet its still the law of the land. And that is an easy one.
You are drinking the Koolaid of the pretty words again. This speech will be forgotten in a day (as almost all political speeches are). I will not stay alert for another installment of meaningless pretty words.
Islam will change
Yep, Mr. C. Thing is this administration is filled with high minded people who say, “Trust us!” to both their D friends and their R enemies. Then, they proceed to provide whatever the R enemies want at the expense of their D friends. In this case, in the name of giving the bottom earners relief in payroll taxes, they do the reimbursement shuffle I described above. They fail to grasp the importance of keeping FICA out of reach of ordinary politics.
Meanwhile, interest rates are near zero and retired people who depend on interest income are taking it in the neck. I’ve about had it with them. You can’t trust people who either can’t or won’t deliver and trust is the key to effect leadership. NancyO
Buff, you have voiced my original feelings when I read the speech, but in deference to MG and maybe in a fading hope Obama actually gets it, I did a little bit of analysis. It didn’t change my original feelings, but at least I can now see a possible path. Like you, I doubt Obama has the will and ability to move along that path.
Obama, our biggest mistake in presidents ever? Perhaps.
Now, let’s get inventing!
It was those pretty words that got him elected instead of Hillary and frankly that is not a mistake I will ever make again. He talked well, but has shown fewer leadership skills than Carter and I thought Carter was the low point of my life. The tax deal is just the latest debacle–I really hope Pelosi stiffs him.
Well, still hope that nothing will actually happen.
“Bipartisan leadership agreements” are a dime a dozen.
This agreement is poor. Very poor.
The progressive aspect of a temporary payroll tax cut (which no doubt will become another permanent hole in the consolidated budget) and unemployment extension are swamped by the continuation of tax-phobia.
Terry, your comments and feelings represent the lefvt’s view of the “O”. The following article reflects the conservative’s view and HOPE for “O”.
The Presidency that Saved America
(The actual meaning in the article: Rather, the history of our time will show that it was the radical nature of Obama’s dogged devotion to a liberal progressive philosophy far out of the American mainstream that jolted awake a generation of apathetic and passive citizens just in time to save the republic.)
Can be found here, one of many: http://www.americanthinker.com/2010/12/the_presidency_that_saved_amer.html
Terry, your comments and feelings represent the left’s view of the “O”. The following article reflects the conservatives’ view and HOPE for “O”.
The Presidency that Saved America
(The actual meaning in the article: Rather, the history of our time will show that it was the radical nature of Obama’s dogged devotion to a liberal progressive philosophy far out of the American mainstream that jolted awake a generation of apathetic and passive citizens just in time to save the republic.)
Can be found here, one of many: http://www.americanthinker.com/2010/12/the_presidency_that_saved_amer.html
Buff, you said, “Obama has had two years, with a Dem stanglehold on the Fed Gov during the entire time, to start his vision, show us his leadership. Look around you at where his vision has brought us.” I agree with one exception. There was no D “stranglehold on the Fed Gov.” (Emphasis mine.) The R’s skillful use of the fillibuster checked both the House and the Executive through simple obstruction. So, if the D’s had a stranglehold, it’s hard to see what they throttled other than their own chances for election in 2010.
So, the TP’ers have come to Washington and have immediately signed up with various K Street outfits to repay campaign debts and establish themselves as worthy recipients of campaign contributions for their next lap around the track in 2012. And this is different from the Washington insider bad guys how? NancyO
The laws of unintended consequences.
I could retire any time now, in fact 31 Dec is on the tip of my tongue.
Getting 2% more on my first 106,000 has made up mind mind to hang in some more.
The effects, I charge more and do better than the young guys who might getthe work cheaper but with lesser revenue product. The younger don’t get the job nor build their credentials to do what I do.
But in a few years there will be only a third the war machine as now, so beter I hang in a year more.
Letting the tax breaks expire might have made 31 Dec 10 my end of work date, but not now.
JG, tax-phobia and not addictive spending? Dunno, one’s the primary cause, and the average voter has the opinion it’s spending.
NanO, I agree with your comment in this way: “The R’s skillful use of the fillibuster…” is a counter point to the D’s inept use of their stranglehold.
When the D’s did use their stranglehold they POed so many voters they lost the midterms.
buff
corev
sadly, i agree.
co rev
not sure you are endorsing this view. obama’s dooged devotion to caving to the insurance companies and financial interests is why this person has no respect for him. that liberal progressive philosophy meme is why the right scares the hell out of me. what jolted the people awake was their stupid susceptibility to the same sorts of lies that have manipulated the masses since the first criminals needed the support of the people to become their rulers.
co rev
pardon the expression: b.s. but i mean it in the most friendly way. my old Apple is a far better machine than the stuff that runs Windows, but the competition that made Bill Gates a billionaire has nothing to do with quality. America is run on b.s. and we are reaping the rewards.
co rev
i’d settle for paying for what we already bought… before we cut ourselves another tax break.
goodwin
there is nothing progressive about a payroll tax cut. it’s part of a plan to destroy social security utterly. and the goddam liberals and progressives are part of the plan. even if only as reliable dupes. what makes social security work is that the workers pay for it themselves.
but our liberal and progressive friends won’t be happy until we are all on the dole. yes mr rich man, thank you very much. (touches cap) please, sir, can i have some more?
It was a standard speech. Heard it before from other Presidents. Meh. NancyO
You know the thing is Coberly, I do not think of myself as being anything but middle of the road. certainly, I am risk adverse to a fault in my personal life, I am a creature of habit who has so much difficulty with change that most people call me a Luddite and believe that a strong sense of personal responsibilty is important for the success of a person, family and country and yet I get lumped with the left because I do not think slavish devotion to self interest in the face of great suffering is in the country’s best interest, that growing income inequality is the greatest menace to this country’s long term economic viability, that keynesian economics works–at least better than trickle down, voodoo, deficts don’t matter economics -and that you can not have any freedom if you depend on the wealthy elite for your daily bread. I concur that Obama is in the running for the worst president ever and hope that the Democrats in Congress will rise to the occasion.
The R’s understood that procedure is power in a legislative body. That’s more than the D’s did. And, the D’s also deferred to individual members to their great cost. You can’t let individual members off without punishment when they go Lieberman on you, or highjack the HCR hearings like Baucus did. It only enables your adversary to take advantage of your apparent weakness and turn it into real vulnerability. Jeez. This stuff is Office 101. Anyone who has done first line supervision learns this stuff fast or gets out of the job. The balance of power goes up and down. You can’t stay in the game unless you’re prepared to take losses and come back from them. NancyO
CoRev, No epiphany or Great Man can salvage this situation. People need to stop fooling around and get their **** together. One side keeps trying to save the country by caving in while the other just hangs on to obstruction as a means to power. I wouldn’t mind the obstruction if there were a reasonable goal to achieve. But, blowing up this government is not a reasonable goal.
No need to rewrite every line of case law in the federal sector and outlaw Sharia (!) to get the economy going. We can have faith in the country as long as we can deliver on what we can do as individuals. It doesn’t get better than that. NancyO
Nancy,
The Dem’s were unsuccessful with their push to a command economy because of the product they attempted to sell, not because of their competition.
In some cases they couldn’t reveal their product because they knew their customer would reject it on sight.
The game was to get cover from the Rep’s, but luckly the Rep’s didn’t budge. If the Dem’s had a product that the American people wanted, the Rep’d wouldn’t even exist right now, but the mask was ripped off by June 2009, and Dem’s will be lucky to get any power to speak of by 2016….and rightfully so!
Alto, what were they selling that I don’t know about? Their stuff was the same-O-sameO. No threat to anyone. And, don’t forget. The R’s were dead meat after the last general election, right? Wrong, as anyone with a brain knew. So, the D’s are down now, and some day soon, will be up again. They need…well, another sly slick guy like Clinton. A man you love to hate would fill the bill, alright. Don’t worry you won’t be going to the funeral of any political party any time soon. NancyO
Yup, Dan Bartlett: “We knew that, politically, once you get it into law, it becomes almost impossible to remove it,” says Dan Bartlett, Bush’s former communications director. “That’s not a bad legacy. The fact that we were able to lay the trap does feel pretty good, to tell you the truth.”
Think we aren’t seeing this game plan again with pay roll taxes? Can’t restore the tax in a recession now, can we.
Funny how the recession was declared over, but we’re still in a recession for policy arguments. One of the positions is wrong.
I’ve become convinced that there is no such thing as a “one time” policy event. All we do is set precidents. So my vision of the future is we get a never ending stream of Bush tax cut extensions and payroll tax holidays whenever GDP growth drops below 10% or unemployment rises above 5%.
The only missing from this deal is a tax rebate check. I guess they don’t have to always use the whole arsenal of “policy options”.
I know good estate planning can lower the tax. But the revenue numbers say the incremental loss of this provision alone is $88B. And by forcing the money into trusts and foundations to avoid the tax, it diffuses the political power and dynastic force of the large inheritances. All that is out the window now…..
“He talked well, but has shown fewer leadership skills than Carter”
Folks, take a long step back from your bickering about the worst vs the worst. Maybe Obama doesn’t lack anything other than a committment to all those campaign speeches that he made when attempting to out do HC. They worked because he new the right words to enhance his image as a full scale liberal Democrat, but maybe he didn’t actually have the heart of a Democrat. He’s made a damn good Republican President for the past two years with the party of his heart out of power. He has helped to assure the passage of legislation that is well within the Republican ideology which had started life as potential legislation that would have restored a genuinely progressive slant to health care and taxation.
Look back at Obama’s legislative initiatives as a Senator. I don’t see anything that makes him stand out proggressively. Run of the mill centrist stuff with a right leaning tilt. Where soes his reputation as a liberal Democrat originate besides Fox News? And now we have this abomination of a “compromise” over tax cut extentions, FICA reducations, etc. Who said there’s a deficit that needs attention? Has Social Security suddenly come back to full health.
Or was it really ever sick? Maybe the great concilliator is just another form of the Manchurian Candidate.
But look at the alternative – McCain. The past several election cycles have provided for bad candidates from both parties – Bush, Kerry, McCain, not sure where to place Gore. What next in 2012? Palin V Obama? I will assume Hillary decides not to challenge Obama in the primary, which she may do if he is wounded.
coberly: “turn it into welfare so the rich can kill it at their leisure.”
The attack on Social Security is unrelenting. SS needs a lobby/propaganda machine. We need to stress that the reason that people say that SS is broke or broken are the ones who want to take it away, and if you want to save your Social Security, vote for someone else. We need to stress that the richest nation in the world can afford Social Security, no matter how it is funded. The opponents of SS are playing mind games.
“Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.” – C. S. Lewis
Sammy: “It is the only way to cut taxes for the majority of the population.”
Not so. As Mark Thoma has pointed out on his blog ( http://economistsview.typepad.com/economistsview/2010/12/a-few-reactions-to-the-tax-cut-agreement.html ) people could get a tax rebate without tying it to Social Security. We have done it before. 🙂
Alto,
When did the US not have a command economy?
It is run from Wall St by a few. Do you think Obama and his few followers had any chance to move the commanders toward favoring the 98%?
“Command economy”. Oh that’s real precious.
Killing us with kindness.
The Bush tax cuts were made affordable by foreign inflows. Those inflows, dollar recycling through mostly t-bill purchases, kept interest-rates historically low and that made government borrowing costs low enough to warrant deficits. The Bush deficit was in fact a way of increasing private sector capital formation via the tax cuts, while keeping global savings tied-up so as to limit competition. The deficits were therefore an offset that allowed the US to control global savings, as a type of economic warfare.
But now, selling t-bills through the primary market (auctions), is a dubious affair. By buying G-bonds in the secondary market, the Fed, with QEII hopes to replace foreign demand for t-bills with domestic demand by putting large banks in a position that encourages increased auction participation. This, by the Fed removing t-bills from balance sheets in exchange for keyboard cash, with hopes that banks will then have increased demand for t-bills with their excess of dollars. Clever stuff.
So… the capital formation that was allowed by the Bush tax cuts has become something on an addiction. Like so much of the growth in the US economy, any slowdown, on any front, leads to write-downs due to debt levels. And of course write-downs lead to adverse feedback loops which are chomping at the heels of an economy that is far too dependent on its financial services sector. But this paradox is the same as all of the major economic choices being made over these past few years, the economy is in peril no matter which choice is made.
The irony though is interesting, the Conservatives are in fact taking a sort of Keynesian-trickle-down position by extending tax cuts that will increase deficits at a time when those deficits are no longer being subsidized by foreigners. And of course as the supply of liquidity goes down, at some point the interest-rates must go up.
Conversely, the Dems are feigning fiscal responsibility at a time when dubious t-bill auctions make that a sane choice, but… the Dems being overly optimistic about ‘their’ leadership thus far, and their inability to understand that the only economic progress that they have achieved, is that of minimizing the effects of the Paradox of Thrift, while hiding the rest with deficit spending, leaves their position vulnerable to the adverse feedback loops.
What a confusing mess! So much so that Obama is getting the same treatment that Hoover got, we are awash in irony.
The sad piece about the SS tax break is that the idea came from progressives interested in broadening and democratizing the reach of stimulus, both to fight the real problem (wages can’t support home prices, and with home prices falling, there still remains a huge gap between affordable home prices and the wage structure so look out below) and to avoid further giveaways to the elites that played the system till it broke.
I think a negative income tax would have been a better choice, being a believer that the bonds held in the SS trust fund are as real as obligations as any other treasury bonds.
Actually, there is a class of treasury bonds I don’t believe represent real obligations, and those are the ones which the FED is currently buying to run the printing presses.
The Fed is having difficulty realizing success with QEII so far. The 10 year was at 2.35% when they started jawboning about doing QEII to push down long term rates. It steadily rose instead up to 3.10% this morning. Tacked on 16 basis so far today alone. Fiscal responsibilty worries perhaps?
Mortgage rates going up along with it, as normal.
And oh yes … congress, please don’t pass the $5M exemption, $3.5 is more than enough tax exemption. I’ll not contribute to a Democrat again for 20 years if the $5M exemption is passed by a Democratic congress, a Democratic senate, and a Democratic president.
Cedric,
It is of course impossible to know for sure what BB is up to, but, it seems that QE1 and QE1.5 were educative enough that BB knows what to expect in general. What is hard to figure, is whether he anticipated, or possibly even encouraged, the reactions of the emerging nation Fin Mins. But if driving up participation at the auctions is his primary objective, then carry trade activity will need to be made less attractive going forward, otherwise why would anyone buy US t-bills at such low rates when Brazilian bonds and etc are at 10.75% with a conversion booster. A booster that could be more profitable than than the rate gains themselves, and predictable… until lately of course.
I am thinking BB is one step ahead of Wall St. and that he is either working with the Fin Mins, or at least able to anticipate their resolve. Of course the absence of US push-back regarding the imposing of capital controls could be BB sending signals to the ROW. Geo-politics always has an element of gesturing. Interesting times.
(I grew up on the Irvine ranch back when it was still a cattle and farming operation)
Obama was clearly no liberal let alone a progressive. I did not expect him to do much other than public infrastructure projects. Even Hoover did that. So far, not so much as a highway overpass named for him. I saw a problem with his “SS is mainly ok stuff.” Didn’t forsee the Catfood Gang. Of course, who could have foreseen? Oh, that’s right. Pete Peterson when he handed over the check to the O campaign, “We have to have a little talk about Social Security, Senator Obama.” Oy. NancyO
The payroll tax break will enable the little peoples to buy a dollhouse at Walmart for the little girl(s) in the family just in time for Christmas, provided the credit card isn’t maxed out already.
It’s a start towards our goal of being an ownership society, and also a lesson in the rewards that come from fighting government confiscation of our hard earned money.
Can’t help remembering dad gave me a piggy bank, however.
http://digbysblog.blogspot.com/
Here you go, guys. This is what the “payroll tax holiday” means in the real world. NancyO
I know a guy that married the daughter of the owner of Irvine Ranch (who developed and sold it after you left). The dummy messed around on her and got caught, divorced, and now pays child support to the daughter of one of the richest guys in CA. He gets some ribbing over that.
I don’t think BB knows what he is doing, at least past his publicly stated goal of pushing down long rates in the US in order to stimulate the economy. I think he’s worried that it won’t work however.
Realize that Lord Blankfien and his peer group think of the Fed as a bunch of “suckers”. They have been overheard making comments like that.
I guess the one thing I’d disagree with is that Obama and Dems haven’t done much. They’ve done a ton — by some estimates more than any administration in 40+ years. But I agree that the Dems and Mr. O are folding poorly. I’d like to see the Dems in the Senate hold people’s feet to the fire. The House Dems passed the original President’s plan for extending tax cuts below $250k. Let’s watch the GOP actually filibuster that — unlimited debate, on C-SPAN, wall-to-wall coverage of the GOP fighting tax cuts. The Dems haven’t got the … intestinal fortitude.
But the Dems and Obama could do nothing in the Senate and these tax cuts would expire. We won’t see that, either.
As a boy in 60s I knew some of the Irvine heirs. One of them married William White and they owned the Parker Ranch on the big island of Hawaii. About 20 years ago I stayed there on the Parker Ranch for a couple of months. William died not long after that and I think he was one of the richest men in the world at the time.
The Irvine ranch was owned by the same family going back to when California was first invaded by Americans. It was at one time very probably the most valuable privately owned piece of land ‘ever’.
cent21,
Try not to lose sight of the fact that that Senate and House of Representatives has enough obstructionist Republicans to allow them to act as though they had a majority. In effect they are all a bunch of whores to great welath. And that’s an insult to honest prostitutes who actually provide some service for what they’re paid.
Could this be a result of the law of unintended consequences; or something else? I seem to remember reading somewhere, recently, that with M1 Multiplier being below 1, every dollar added to M1 is in fact less than one dollar. Edumacate me CR.
We are told SS is not sustainable, then they reduce payroll taxes by 2%, if it is split between employer and employee it is a 1% wage reduction, I do see the employer contribution as part of wages earned.
The 2% payroll deduction is the only stimulus money not increasing the federal debt, since it is not a federal tax to begin with. The middle class pays for job creation IMHO.
Who believes the government will replace lost revenue to the TF? So far they do all they can to avoid honoring the Tbonds.
The simplest, and mostly likely to be correct way of thinking of it, is the Fed can try to manipulate markets (or the economy), but they may not wholly succeed.
The surest way to get confused is to think too much about the M’s and the money multiplier. Especially nowadays that we have “fractional banking cubed”. For all practical purposes assume we have zero reserve banking, and the money multiplier could probably be anywhere from zero to infinity, but the horse is still mostly in charge of the cart.
Not sure what you expected from someone styling themselves “Alto Pluto.”
It is progressive by being the inverse of the payroll tax which is regressive because it is applied to capped income.
It isn’t a good idea either way, and probably will be as permanent as anything can be.
Social security won’t exist when I retire not because social security is a bad idea or will go bankrupt, but because the US probably won’t last that long, not because of any ideological anything in particular, but simply because the country is too large to effectively govern. I’m shocked we’ve lasted this long.
They reduce the payroll deductions because they know SS is financially sound. That makes demagoging SS as a ponzi scheme even more cynical.
Coberly,
I said the President had a vision for the future and that the normal talking head economists and some others don’t. Those guys don’t have a clue because they’re not looking that far ahead at the big picture nor do they have any viable solutions on the scale necessary to address the growing problems. That’s obvioius from their commentary.
Seems like they have come up with a solution: http://www.nytimes.com/2010/12/08/us/politics/08cong.html?_r=1&hp
dolared,
I doubt that. the few families I know who are living large on these trusts use them to maintain the family power and increase the estate. When only family are on the board and they decide what to pay them selves…
All this does is make it a little above board for a moment. Good estate planning will AVOID the tax, not just lower it. Gates may be worth $50B but I would bet if he and Melinda died today less that $100M would ever be see by the Feds,
Islam will change
NancyO,
I replied on anotehr thread to Bruce who was saying its all teh R’s fault. Sorry – doesn’t hold water. the Dems ahd at least part of the time enough D’s in the Senate to make the Rs irrelavent. They had a stranglehold on the law-making apparatus. And failed at their goals (thank God). Mostly becuase they brought up unpopular legislation, over and over again. Since Jan 2007 not one law got passed that wasn’t supported by the Dems, yet Bush seemed to have no problem governning. For the past two years the Dems had the greatest legislative majorities in my LIFETIME, and they couldn’t get the progressive agenda passed and then were soundly trounced by the voters for their ability to govern.
If they want to tax the high income Americans – do so. Pass a bill, they’ve had two years to do so. Have they even tried?
Or let all the tax cuts expire and pass a tax cut bill for people under $250K. The house did it, but did Obama come through with pretty words and pound the Senate into passing it? Or at least voting on it? Nope – you can thank Reid for that.
None of that makes the Rs saints, but teh Dems still have the ball for two more years. We saw Obama’s leadership ability these last two. Do you think it will improve???
Islam will change
Buffpilot – “I can pretty much assure you you can find similar speeches made by Bush Jr, Clinton, Bush Sr, Reagan, Carter, Ford, etc etc. plus a boat load of Presidential wannabe’s, and to lessor extent Governers, Senators etc. …You are drinking the Koolaid of the pretty words again. This speech will be forgotten in a day (as almost all political speeches are). I will not stay alert for another installment of meaningless pretty words.”
Buff, I believe it safe to say that you didn’t hear or read Secretary Chu’s November 29 speech which the President followed up on December 6 in North Carolina. It’s also unlikely that you are aware of the action that Secretary Chu representing the Department of Energy and other agencies undertook today, December 7.
The President reinforced his North Carolina message during his press briefing on Tuesday. That speech and his message are not going away. His vision for the future and the questions he has raised will become the centerpiece for discussions and arguments that will kick off next year in Washington, D.C..
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CoRev, stay tuned. This will become very interesting.
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Mcwop, unfortunately McCain wouldn’t have had the energy to tackle the recession, the political upheavel, and still lay out a successful encompassing plan for the future. Obama can go the distance if he is willing to take the heat from all quarters as he lays out the issues for the future. He’s now beginning to understand and accept the full responsibilities of his office. So, there is some hope.
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Terry – “I concur that Obama is in the running for the worst president ever and hope that the Democrats in Congress will rise to the occasion.”
I wouldn’t count out President Obama just yet. You had better hope that the Congressional Democrats get onboard with the President’s plans for the future instead of trying to undercut him. Simply, they will lose and lose big if they keep fighting him.
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Nancy Ortiz – “It was a standard speech. Heard it before from other Presidents. Meh.”
You have never heard that “standard speech” before from other U.S. presidents for the simple reason that the USA has never fallen behind China or India previously in so many key technical areas.
You obviously didn’t hear, read, or understand Secretary Chus’ November 29 speech from which President Obama built on with his December 6 North Carolina speech.
The President is focusing on the big picture over the long term. He is thinking and planning at least 20 years out in the future. You’re thinking how far out into the future and on what scale of big picture considerations?
Buffpilot – “I can pretty much assure you you can find similar speeches made by Bush Jr, Clinton, Bush Sr, Reagan, Carter, Ford, etc etc. plus a boat load of Presidential wannabe’s, and to lessor extent Governers, Senators etc. …You are drinking the Koolaid of the pretty words again. This speech will be forgotten in a day (as almost all political speeches are). I will not stay alert for another installment of meaningless pretty words.”
Buff, I believe it’s safe to say that you didn’t hear or read Secretary Chu’s November 29 speech which the President followed up on December 6 in North Carolina. It’s also unlikely that you are aware of the action that Secretary Chu, representing the Department of Energy, and other agencies undertook on Tuesday, December 7.
The President reinforced his North Carolina message during his press briefing on Tuesday. The North Carolina speech and the President’s message are not going away. His vision for the future and the questions he has raised will become the centerpiece for discussions and arguments that will kick off next year in Washington, D.C..
—–
CoRev, stay tuned. This will become very interesting.
—–
Mcwop, unfortunately McCain wouldn’t have had the energy to tackle the recession, the political upheavel, and still lay out a successful encompassing plan for the future. Obama can go the distance if he is willing to take the heat from all quarters as he lays out the issues for the future. He’s now beginning to understand and accept the full responsibilities of his office. So, there is some hope.
—–
Terry – “I concur that Obama is in the running for the worst president ever and hope that the Democrats in Congress will rise to the occasion.”
I wouldn’t count President Obama out just yet. You had better hope that the Congressional Democrats get onboard with the President’s plans for the future instead of trying to undercut him. Simply, they will lose and lose big if they keep fighting him.
—–
Nancy Ortiz – “It was a standard speech. Heard it before from other Presidents. Meh.”
You have never heard that “standard speech” before from other U.S. presidents for the simple reason that the USA has never fallen behind China or India previously in so many key technical areas.
You obviously didn’t hear, read, or understand Secretary Chus’ November 29 speech from which President Obama built on with his December 6 North Carolina speech.
The President is focusing on the big picture over the long term. He is thinking and planning at least 20 years out in the future. You’re thinking how far out into the future and on what scale of big picture considerations?
CoRev,
It would be worth your time to read Secretary Chu’s November 29 speech. The link is posted on the first page of this thread under my UPDATE to coberly and other readers.
We’re in trouble on a number of fronts. The President’s call to action is necessary or we will slide down the cliff. We’re up against the cliff right now, so the next steps are critically important.
min
or they have lost their minds.
there is a lobby for SS. trouble is they are not quite clear themselves that ss is not welfare and they argue for it as if it is welfare and needs to be protected by raising taxes on the rich.
did i say they have lost their minds. both sides.
MG
thanks for the excerpts. i am sorry to say that Obama is full of shit. we have had our “debate” about social security but no one listened, and no one was allowed to talk but the crazies. we are always going to “win” the global competition by making the schools better. been doing it since i wrote a better editorial on the subject for my jr high school paper in 1957, and i think we must have been doing it before that or i wouldn’t have known what to say, not being any more original than any other jr high school editor.
terry
sounds like you are agreeing with me. maybe if we just hunker down we can emerge from our hovels when all this is over and try to pick up the pieces.
ray
i knew what Lewis meant by this. i am not sure i know what you mean. unless you mean that tax cuts are the kindest cut of all?
The White House released a fact sheet on the proposed framework agreement, followed by another WH release listing a number of supporter statements.
What no links?!? You feeling OK? Something wrong down there? Huh? Wazzup?
I read the documents this afternoon, but had parked them in another file. Here they are:
Framework agreement fact sheet
http://www.whitehouse.gov/the-press-office/2010/12/07/fact-sheet-framework-agreement-middle-class-tax-cuts-and-unemployment-in
Framework agreement supporters
http://www.whitehouse.gov/the-press-office/2010/12/07/statements-support-framework-agreement-middle-class-tax-cuts-and-unemplo
What are the odds that a tax package won’t be passed in the next two weeks?
Is anyone really surprised that the entire package of Bush II era tax cuts are likely to be kept in place for two more years? I don’t consider that a surprise at all.
MG,
I’m sorry to say your drinking the Koolaid again. The Pretty Words have seranaded you back into zoombie land. You, like others on the left, want to desperately beleive that Obama is the next LBJ or FDR to the point of disbelieving the reality surronding them. Unless Obama can change, which I doubt, he will continue to make Carter look good.
We have had two years of Obama’s leadership. We saw all his Pretty Words during the campaign. Yet when it comes time to actually make a hard decision, he folds.
We heard for years from Obama and the Dem establishment that the Bush tax cuts were horrible, evil, unwise, stupid, etc, etc. To get rid of them requires the Democrats to do exactly – nothing. Nothing the Rs can do will stop the sunset. So we have Obama and the Dems standing up and proudly (once again) passing legislation in support of a Bush initiative they reviled for years. Now they have become the bi-partisan Bush-Obama Tax cuts.
NancyO was right on the money this was just a standard speech, said by many Presidents before. The idea that Obama is thinking and planning 20 years out in the future is laughable on its face.
MG come back to reality…
Islam will change
coberly,
The Lewis quote was meant to expand on what you said here:
“but our liberal and progressive friends won’t be happy until we are all on the dole. yes mr rich man, thank you very much. (touches cap) please, sir, can i have some more?”
MG
i appreciate your sincerity on this issue. but i have been at the center of “education reform” for over sixty years. it is standard political boilerplate. can be relied on to sell your candidate when he has nothing else to recommend him.
ray
thanks.
sammy
joe rolling around with an extra six bucks in his pocket is going to spend it on beer. then when he wants to retire he won’t be able to. cutting taxes in a time of unsustainable deficits, or even a “looming crisis in Social Security” doesn’t seem like the smartest move.
if joe needs to spend an extra six bucks at wal- mart, send him a voucher direct from the treasury. no need to get social security involved at all.
but the Big Liars rely on your being able to think of only one thing at a time.
and god help us, pay prevailing wage?
you mean let folks earn their money instead of giving them welfare? you mean having the people whose homes are weatherized paying a fair wage for what they get instead of a what-the-traffic-will-bear starvation wage while they protect their own champagne budgets from higher taxes?
goodwin
it’s not regressive, though i know that some folks are mesmerized by that word. if i sell everyone in the crowd a lottery ticket for one dollar, and then after the show is over i ask them to all hold up their last pay stub and i give everyone back his dollar plus ten cents to the guys with the smallest pay stub and five cents to the guys with average pay stubs and 2 cents to the guys with the highest pay stubs, is the dollar for the ticket “regressive”?
(where does the extra ten, five, and two cents come from? well, it comes from that ponzi scheme, you see, this is such a good deal i can sell tickets to the next lottery for a dollar-five. and the one after that for a dollar ten. or maybe its not a ponzi scheme, maybe its growth in the economy, the same place interest comes from.)
or, once more with feeling, it’s not a payroll “tax,” it’s an insurance contribution.
you can call it a tax, and argue passionately that it looks like a tax so it must be a tax. but its a strange sort of tax that gives you your money back with interest when you need it most.
and you get the money back because you paid in, not just for being there when the rich guy has his pocket picked.
ray
i suspect you are right about this. but i’d need to see it explained so a layman can understand it.
(this… your comment above re foreign inflows and capital formation. btw is it “capital formation” if its only dollars on paper (phony iou’s?) and not actual factories, roads, processes, better health and education?)
MG–No surprise. If you don’t know how to negotiate, you get what the other guy wants. NancyO
coberly,
‘Capital formation’ is just a fancy way of saying that investors are left with more money to invest. The Treasury fact sheet has an excellent chapter on Reagan’s tax act of 1981 and beyond that does well to explain how the tax code was reformed to accelerate ‘capital formation’ but the site is coming up blank, but this is not complicated, the US is set up to maximize global gains. Boo-koo capital formation. And foreign inflows are (were?) used in lieu of monies that are seeking higher returns.
ray
hard to believe, but what is clear to you is less clear to me. i really do suspect you are right, but i know so little about finance that i can’t really say i understand what you are saying.
my point about “capital formation” is that i am not sure that accumulating money ought to count. money is really not real.
Buff,
I’m a centrist, not a leftist and an Independent voter.
You didn’t bother to read Secretary Chu’s speech, did you?
President Obama is just throwing out “Pretty Words” at this point. The Presidnt specifically threw out some unpleasant realities about future employment, funding, and so forth. Guess you missed that.
The President advised on Tuesday during his press conference that the discussion about the future of the nation will begin next year. So much for your thinking that the North Carolina was a one day and forget it event.
You’re way out of whack in assuming that the North Carolina speech is simply a standard speech said by previous U.S. presidents. President Obama’s speech built on Secretary Chu’s speech. The U.S. has never been in risk of falling behind China in technical performance areas. That is what Chu’s speech identified, including the presentation of a list.
President Obama isn’t the main issue here. The issue is the United States and where we stack up in education, innovation, industrial production, and R&D, for starters. I don’t care who addresses these issues in a serious manner as long as they are addressed. The problems are very serious and the reaction time is closing down extremely fast.
You’re going to eat crow on this one before it’s over. Mark my words, Air Force. Bring the ketchup and the coffee canister. You’ll need them. You stand a rare chance of choking on your words this time.
Buff,
I’m a centrist, not a leftist. And I’m an Independent voter.
You didn’t bother to read Secretary Chu’s speech, did you? Come on, admit it.
President Obama is isn’t just throwing out “Pretty Words” at this point. The President specifically threw out some very unpleasant realities about future employment, funding, and so forth. Guess you missed that. Chu did the same in his ugly speech.
The President advised on Tuesday during his press conference that the discussion about the future of the nation will begin next year. So much for your thinking that the North Carolina was a one day and forget it event.
You’re wrong in assuming that the North Carolina speech is simply a standard speech said by previous U.S. presidents. President Obama’s speech built on Secretary Chu’s speech. The U.S. has never been at risk of falling behind China in so many technical performance areas. That is what Chu’s speech identified, including the presentation of a list. Hell, it had to be shocking for the average listener or reader.
The issue is the United States and where we stack up in education, innovation, industrial production, and R&D, for starters. I don’t care who addresses these issues in a serious manner as long as they are addressed. The problems are very serious and the reaction time is closing down extremely fast. The situation is FUBAR.
You’re going to eat crow on this one before it’s over. Mark my words, Air Force. Bring the ketchup and the coffee canister. You’ll need them. You stand a rare chance of choking on your own words this time. Sad to say…