Tag: taxes

Up Date 16:33 EDT: Republican Senators have taken Social Security off the table as part of the negotiations for the “fiscal cliff.”

With the deadline for the expiration of Bush Tax cuts and austere spending cuts, the Senate negotiations have reached a stalemate. At the last minute, the Republicans demanded significant cuts to Social Security benefits. House Majority Leader Harry Reid (D-NV), who was described as  “shocked and disappointed” and this may well be the “poison pill” that ends the charade of “fiscal cliff” talks.

The development came after a long weekend of negotiations during which the two sides had been making progress.

The aide said Democrats had shown flexibility on the major sticking points involving taxes. They had not ruled out maintaining the tax on inherited estates at the current low rate, as Republicans prefer. And they had been open to a deal that would allow taxes to rise on many fewer wealthy households than President Obama had proposed. Republicans were seeking tax increases only on income higher than $400,000 or $500,000 a year, while Obama wanted to set the threshold at $250,000 a year.

But Obama was pressing for $30 billion in new spending to keep unemployment benefits flowing to the long-term unemployed, and he wanted to postpone roughly $100 billion in automatic spending cuts set to hit agency budgets next months. In exchange for those items, Senate Minority Leader Mitch McConnell (R-Ky.) insisted Sunday that Democrats put cuts to Social Security benefits on the table, noting that Obama had offered to do so as part of the big deficit-reduction package he had been negotiating with House Speaker John A. Boehner (R-Ohio.)

Republicans declined to comment on the new offer, but noted that Obama endorsed the adjustment, known as chained CPI, again Sunday, in an interview on NBC’s Meet the Press.

President Obama suggested that he was open to the highly unpopular proposal to cut increases to Social Security by linking it to the “chained CPI” in the context of a larger deal.

The other “monkey wrench” that McConnell threw into the mix was estate taxes which are scheduled to increase to the Clinton level of 55% on estates over one million dollars. The estate tax currently exempts the first $5 million of inheritance and taxes the remainder at 35 percent, which the Republicans want to keep. Pres. Obama wants to make it less generous, reducing the exemption to $3.5 million and taxing the remainder at a 45 percent rate. This tax only affects an extremely small number of people.

Under the Republican proposal, 3,800 people would pay the estate tax year, also near an average of $3.3 million. The GOP proposal would raise $182 billion for federal tax coffers over the next 10 years.

Under Obama’s proposal, 6,500 people would pay the estate tax next year, with an average payment estimated at about $3 million. The president’s proposal would raise $284 billion in tax revenue over the next 10 years.

No action by Congress would send the estate tax back to what it was in the 1990s – with a $1 million exemption and 55 rate percent for the remaining share. That would affect more than 40 million Americans.

Senate Minority Leader Mitch McConnell (R-SC) has reached out to Vice President Joe Biden to break the impasse.

Barack Obama’s presidential legacy will most likely be that he was the Great Prevaricator. His plan has always been to protect the 1% and sell out the rest of us. So far he succeeded quite nicely, with just a few minor bumps in the road that were possibly preplanned.

Two important points that Jane Hamsher and Jon Walker at FDL Action makes about Barack Obama, that even Marcos Moulitsas gets wrong, is:

1st, Ms. Hamshire writes that Pres. Obama did not capitulate on Social Security cuts and we should stop pretending that he did:

Everywhere you look, the media narrative is that President Obama is “capitulating” to Republicans by agreeing to cuts in Social Security benefits.

And I have to ask, where is this collective political amnesia coming from?

Obama has made a deliberate and concerted effort to cut Social Security benefits since the time he took office.  FDL reported on February 12, 2009 that the White House was meeting behind closed doors to consider ways to cut Social Security benefits, and that the framework they were using was the Diamond-Orszag plan, which was co-authored by OMB Director Peter Orszag when he was at the Brookings Institute.

The birth of the now-ubiquitous “catfood” meme came on February 18, 2009 with this FDL headline:

   Hedge Fund Billionaire Pete Peterson Key Speaker At Obama “Fiscal Responsibility Summit,” Will Tell Us All Why Little Old Ladies Must Eat Cat Food

[..]

The administration backed off its immediate plans for reforming Social Security. The New York Times reported that they were “running into opposition from his party’s left” who are “vehement in opposing any reductions in scheduled benefits for future retirees.” But NYT columnist David Brooks reported that shortly after the summit, “four senior members of the administration” called him to say that Obama “is extremely committed to entitlement reform and is plotting politically feasible ways to reduce Social Security.” [..]

In January of 2010, a bill sponsored by committed Social Security slashers Judd Gregg and Kent Conrad which would have created an official commission to make recommendations about the nation’s deficit was defeated by the Senate on a bipartisan vote – 22 Democrats and 24 Republicans voted no.

After the Senate defeat, on February 18, President Obama issued an executive order creating what subsequently became known as the “Catfood Commission” anyway. [..]

The composition of the Commission was conveniently stacked with 14 of the 18 members committed deficit hawks looking to start balancing the federal budget on the backs of old people.

And who supplied the staff to the commission? Why, Pete Peterson.

Are we to believe that the President was blissfully ignorant of the agendas of the people he appointed to this commission, created with the goal of bypassing Congressional process? [..]

The President has been very forthcoming about the fact that cutting Social Security benefits is something he wants to do.  When he said during the debate that he didn’t differ from Mitt Romney on entitlement reform, he meant it.   It’s time for people to remove the rose-colored glasses and stop projecting their own feelings on to the man.  It’s time to take him at his word.

This is what he has always wanted. Ignore it if you choose but the facts and Obama’s actions and words bear it out.

2nd, John Walker points out that Pres. Obama lied about not raising taxes on the middle class. By using the chained CPI, a lower measure of inflation, no only are SS benefits cut, it winds up being it would end up being a significant tax increase on the middle class by causing tax brackets to raise more slowly. While the tax increase would be very small at first, over the next decade it would mean the middle class will pay ten of billions more in taxes. John calls this the “Lie of the Year”

For five years Obama repeatedly and unequivocal promised not the raise taxes by one penny on anyone making less than $250,000. He did so in ads, campaign stops, emails, and interviews. There is probably no other single policy proposal that was more central to both of Obama’s presidential campaigns. Millions likely voted for Obama based on this firm promise.

Yet even before Obama’s second term begins, he has rushed to break this campaign promise. [..]

Obama was not forced by some extraordinary unforeseen event to accept this tax increase. Obama include this middle class tax increase in his counter offer. Obama didn’t need to do this, he chose to do it.

Right after Obama was re-elected, based on a promise not to raise taxes on the middle class, his first major action was to push for a middle class tax increase. This is a pathological level of dishonesty. The only thing more disturbing is the weak shoulder-shrugging response by most of the media to such a profound act of deception.

So whether the Bush tax cuts expire on Dec 31 or the rate of inflation is calculated by the chained CPI, middle class taxes are going up and SS recipients will be eating cat food.

There are those of us who knew this all along but everyone was focused  on the prospects of a Democratic resurgence that would govern from the left. They were blinded by the bright shiny object that was this man who gave a great speech and had an attractive family. But he came from the roots of Chicago Democratic politics and had an agenda that really wasn’t so hidden. He just lied and everyone believed him even though the facts were right in front of them that Pres. Obama is a right wing, corporatist, Republican and has been flat out lying to us all.

As anyone watching the news knows by now that the major topic of discussion is the coming expiration of the Bush/Obama Tax cuts and the mythical “fiscal cliff”. President Obama has said that he will not extend them again and that any budget agreement from congress that does not raise taxes on income over $250,000 will be vetoed. So far, he’s sticking with that story. Over the weekend Treasury Secretary Timothy Geithner was dispatched to the Sunday talk show rounds to pitch the budget proposal while the president took to the road and social media to sell it to the public. Needless to say the Republicans roundly rejected the proposal with House Speaker John Boehner calling it a “La-La-Land offer.” That’s a real adult response.

Former policy analyst to Presidents Ronald Reagan and George H. W. Bush, Bruce Bartlett, who lost all his conservative credibility when he made the case that the Bush/Cheney administration agenda didn’t make any sense, joined the discussion of the Grover Norquist‘s tax pledge for Republicans and the pro’s and con’s of increased taxes. Gov. Dannel Malloy, Democrat of Connecticut; Veronique de Rugy, senior research fellow at the Mercatus Center at George Mason University; Elizabeth Pearson, fellow at The Roosevelt Institute; and Dedrick Muhammad, senior economic director at the NAACP join host Chris Hayes and Mr. Bartlet to discuss the “story of the week”: the tax battle

President Obama will open deficit reduction talks on Friday with a call for a $1.6 trillion tax hike on corporations and the wealthiest Americans over the next 10 years. Obama and House Speaker John Boehner are sitting down to avert the so-called “fiscal cliff” of expiring tax cuts and automatic spending reductions set to take effect at the end of the year. We’re joined by Guardian columnist Glenn Greenwald, who says the protection of “entitlement” programs will depend on action from Obama’s progressive supporters. “The question is: Will the Democratic Party, and specifically the progressive and liberal component of the Democratic Party, change its behavior from cheerleader, from blindly supportive, partisan apparatchiks … into some kind of a force where they actually fulfill their duties as citizens, which is to hold political leaders accountable?” Greenwald asks.

Transcript can be read here

They don’t call it the “cliff” for nothing. It’s the fiscal spot where a nation’s representatives can gather and cry doom. It’s the place – if Washington is to be believed – where, with a single leap into the Abyss of Sequestration, those representatives can end it all for the rest of us.

In the wake of President Obama’s electoral victory, that cliff (if you’ll excuse a mixed metaphor or two) is about to step front and center. The only problem: the odds are no one will leap, and remarkably little of note will actually happen. But since the headlines are about to scream “crisis,” what you need to understand American politics in the coming weeks of the lame-duck Congress is a little guide to reality, some Cliff Notes for Washington.

As a start, relax. Don’t let the headlines get to you. There’s little reason for anyone to lose sleep over the much-hyped fiscal cliff. In fact, if you were choosing an image based on the coming fiscal dust-up, it probably wouldn’t be a cliff but an obstacle course – a series of federal spending cuts and tax increases all scheduled to take effect as 2013 begins. And it’s true that, if all those budget cuts and tax increases were to go into effect at the same time, an already weak recovery would probably sink into a double-dip recession.

But ignore the sound and fury. While prophecy is usually a perilous occupation, in this case it’s pretty easy to predict how lawmakers will deal with nearly every challenge on the president’s and Congress’s end-of-year obstacle course. The upshot? The U.S. economy isn’t headed over a cliff any time soon.

A peek at the obstacles ahead makes that clear. [..]

Among all the spending and tax changes in the queue, and all the hype around the cliff, the great unknown is whether it’s finally farewell to the Bush tax cuts for the wealthy. And that’s no perilous cliff. Letting those high-end tax cuts expire would amount to a blink-and-you-miss-it 0.003% contraction in the U.S. economy, according to Moody’s, and it would raise tens of billions of dollars in desperately-needed tax revenue next year. That’s no small thing when you consider that federal revenue has fallen to its lowest point in more than half a century. Ending these tax cuts for the wealthy would bring in cash to reduce deficits or increase funding for cash-starved priorities like higher education.

It’s impossible to say how Congress will come down on this final issue, though we do know how lawmakers will arrive at their decision. At least Congress is consistent. On this, as on all other matters in the fiscal obstacle course, it’s not the economy.

It’s the politics, stupid.

The Report the GOP doesn’t want to be seen: “All the hues of a banana republic”

The Congressional Research Service has withdrawn an economic report that found no correlation between top tax rates and economic growth, a central tenet of conservative economic theory, after Senate Republicans raised concerns about the paper’s findings and wording.

The decision, made in late September against the advice of the agency’s economic team leadership, drew almost no notice at the time. Senator Charles E. Schumer, Democrat of New York, cited the study a week and a half after it was withdrawn in a speech on tax policy at the National Press Club.

But it could actually draw new attention to the report, which questions the premise that lowering the top marginal tax rate stimulates economic growth and job creation.

“This has hues of a banana republic,” Mr. Schumer said. “They didn’t like a report, and instead of rebutting it, they had them take it down.”

The GOP was upset that the report confirmed what most of us already know: Tax cuts for the wealthy have no effect on the economy and don’t create jobs. But, hey if you don’t like the facts them bury them. Writing at The Maddow Blog, Steve Benen explained that Senate Minority Leader Mitch McConnell insisted the report be withdrawn because people outside of Congress concerns about the report. Those concerns were raised by conservatives from think tanks such as The Heritage Foundation who oppose tax increases on the one percent.

It’s important to understand that the Congressional Research Service, generally recognized as Congress’ own think tank, has a well-deserved reputation for non-partisanship. The CRS is counted on to provide lawmakers with the most reliable and accurate information available, and the notion that partisan lawmakers can pressure, censor, and possibly even intimidate independent researchers is simply unacceptable.

In other words, we just can’t have public offices’ scholarship being stifled because Republicans find reality politically inconvenient. Our system of government isn’t supposed to work this way.

Nor as Benen continues is the first time a report has been stifled by Republicans because it was politically inconvenient and didn’t fit their policy agenda.

This was consistently one of the more offensive hallmarks of the Bush/Cheney era. In 2005, for example, after a government report showed an increase in terrorism around the world, the administration announced it would stop publishing its annual report on international terrorism. Reality proved problematic, so rather than addressing the problem, the Republican administration decided to hide the reality.

Soon after, the Bush administration was discouraged by data about factory closings in the U.S., the administration announced it would stop publishing information about factory closings.

When Bush’s Department of Education found that charter schools were underperforming, the administration said it would sharply cut back on the information it collects about charter schools.

The Bush administration worked from a strange assumption: if we get rid of the data pointing to a problem, maybe the problem won’t look so bad. It redefined ridiculous governing, but it seemed to make Republicans feel better to bury their heads in the sand. If a report tells you something you don’t want to hear, the obvious move is to get rid of the report.

“If a report tells you something you don’t want to hear, the obvious move is to get rid of the report”, yeah, that works.

The Romney/Ryan tax plan is not serious. As Matt Taibbi, contributing editor of Rolling Stone, points out, we should all be rolling our eyes and laughing at this farcical plan. He also takes the mainstream media to task for not being offended by the dishonest tactics and lies that the Republican candidates are using to bamboozle the electorate into handing these two frat boys the White House.

I’ve never thought much of Joe Biden. But man, did he get it right in last night’s debate, and not just because he walloped sniveling little Paul Ryan on the facts. What he got absolutely right, despite what you might read this morning (many outlets are criticizing Biden’s dramatic excesses), was his tone. Biden did absolutely roll his eyes, snort, laugh derisively and throw his hands up in the air whenever Ryan trotted out his little beady-eyed BS-isms. [..]

The load of balls that both Romney and Ryan have been pushing out there for this whole election season is simply not intellectually serious. Most of their platform isn’t even a real platform, it’s a fourth-rate parlor trick designed to paper over the real agenda – cutting taxes even more for super-rich dickheads like Mitt Romney, and getting everyone else to pay the bill. [..]

Think about what that means. Mitt Romney is running for president – for president! – promising an across-the-board 20 percent tax cut without offering any details about how that’s going to be paid for. Forget being battered by the press, he and his little sidekick Ryan should both be tossed off the playing field for even trying something like that. This race for the White House, this isn’t some frat prank. This is serious. This is for grownups, for God’s sake. [..]

Sometimes in journalism I think we take the objectivity thing too far. We think being fair means giving equal weight to both sides of every argument. But sometimes in the zeal to be objective, reporters get confused. You can’t report the Obama tax plan and the Romney tax plan in the same way, because only one of them is really a plan, while the other is actually not a plan at all, but an electoral gambit. [..]

The proper way to report such a tactic is to bring to your coverage exactly the feeling that Biden brought to the debate last night: contempt and amazement. We in the press should be offended by what Romney and Ryan are doing – we should take professional offense that any politician would try to whisk such a gigantic lie past us to our audiences, and we should take patriotic offense that anyone is trying to seize the White House using such transparently childish and dishonest tactics.

Like Taibbi, I am no fan of the Obama/Biden administration, but this campaign by the Republican candidates is a bad joke being played out with the blessings of the traditional MSM. It’s time to get answers. This is serious business.

Last week, Bill De Blasio, New York City’s Public Advocate and possible mayoral candidate, proposed raising taxes on NYC residents making over $500,000 to provide funds for “more pre-kindergarten classes and after-school activities for students in grades six through eight”:

Mr. de Blasio argued that improvements in early childhood education were critical to improving the city’s long-term economy and its middle class. He estimated that the new programs would cost about $500 million, which could be generated through a small tax surcharge on New Yorkers who earn $500,000 or more. [..]

A person earning $1 million in annual income would pay an additional $2,120 under Mr. de Blasio’s plan, which was modeled after a similar surcharge used to hire new police officers under a 1990s anticrime initiative of Mayor David N. Dinkins, Mr. de Blasio’s former employer. Any new surcharge would require approval by the State Legislature.

New York’s three term billionaire mayor, Michael Bloomberg was horrified stating that Mr. De Blasio’s proposal was “about as dumb a policy as I can think of.”

Capital New York reports that Bloomberg– whose net worth as the country’s 10th richest person increased from $22 billion to $25 billion over the course of six months this year— responded to a question Monday about de Blasio’s tax, saying, “Well if you want to drive out the 1 percent of the people that pay roughly 50 percent of the taxes, or the 10 percent of the people that pay 70-odd percent of the taxes, that’s as good a strategy as I know. That’s exactly the ways to do it, and then our revenue would go away, and we wouldn’t be able to have cops to keep us safe, firefighters to rescue us, teachers to educate our kids.”

Mayor Bloomberg has flip-flopped from his position in 2008 backing NY State Governor David Paterson’s tax on millionaires:

I can only tell you, among my friends, I’ve never heard one person say I’m going to move out of the city because of the taxes. Not one. Not in all the years I’ve lived here. You know, they can complain, ‘Ugh, I got my tax bill, it’s heavy.’ But my friends all want to live here.

The “good” Mayor has been in England, where he maintains a home and a business, addressing Britain’s governing Conservative Party on Wednesday. He compared his governing style to the right wing austerity government of Prime Minister David Cameron:

Mr. Bloomberg noted that both he and Mr. Cameron had taken office amid crises – the mayor in the aftermath of the Sept. 11 terrorist attacks, and the prime minister during the world economic crash.

Mr. Bloomberg said he and Mr. Cameron had each made difficult decisions on the economy, a reference to the sweeping austerity measures Mr. Cameron has introduced. Balancing his own city budget, Mr. Bloomberg said, involved “raising taxes and cutting spending, and let me tell you, that didn’t make me the most popular man in New York.” [..]

Conservative officials, who have felt hampered by their coalition government with a liberal party here, also expressed admiration for the New York police commissioner, Raymond W. Kelly, who visited London before the Olympic Games this summer. “They run things a bit like we’d like to,” one official said, “if we didn’t have to worry about inconveniences like compromise.”

The British conservatives would love to be able to crack down o civil liberties as Bloomberg and his private army, the New York Police Department, has. What our world traveling mayor failed to point out to his austerian buddies was that NYC’s rich make 40 times more that the average poor person living in the city. Nor would he have mentioned that NYC’s poverty rate reached its highest point in a decade rivaling some Sub-Saharan countries:

Median household income in the city last year was $49,461, just below the national median and down $821 from the year before (compared with a national decline of $642). Median earnings for workers fell sharply to $32,210 from $33,287 – much more than the national decline.)

New Yorkers at the bottom end of the income spectrum lost ground, while those at the top gained.

Median income for the lowest fifth was $8,844, down $463 from 2010. For the highest, it was $223,285, up $1,919.

In Manhattan, the disparity was even starker. The lowest fifth made $9,681, while the highest took home $391,022. The wealthiest fifth of Manhattanites made more than 40 times what the lowest fifth reported, a widening gap (it was 38 times, the year before) surpassed by only a few developing countries, including Namibia and Sierra Leone.

It is well past time that taxes on the wealthiest were raised, and not in just New York City. Richard (RJ) Eskow thinks the tax rates for the highest earners should be doubled:

Forget the “Buffett rule.” It’s not enough. What’s more, “letting the Bush tax cuts expire for the rich” isn’t enough either — although it might get us halfway there.

As for that “Simpson Bowles” so-called “deficit reduction” plan: It’s a hoax, another ploy to give the ultra-rich yet another huge tax cut — unless you believe that the lobbying fairy will magically grant a wish that’s never been granted before: an end to billionaires’ loopholes.

If you buy that — which I don’t — then the plan’s just grossly unfair.

The real moment of truth Washington won’t face is this one: It’s time to admit that we can’t rebuild our economy — or balance the Federal budget — without raising taxes on the very wealthy. That’s what Simpson, Bowles, and all their highly-funded friends won’t tell you: We need to raise their taxes a lot.

And by “a lot,” I mean doubling them.

Let’s be clear: I’m not talking about imposing sharp increases on incomes over $250,000 or even $500,000, at least not until the economy’s healthier. At those levels an expiration of the Bush tax cuts would probably be enough. But once you hit income of a million dollars a year and over, we should go back to the higher tax rates that were in place for millionaires during the Nixon years.

Not a bad idea, at least until the economy has stabilized and there is a handle on regulating Wall St.

Oh and Mr. Bloomberg, do NYC a favor, resign and stay in England.

In a speech to the National Press Club, Senator Charles Schumer (D-NY) rejected the current compromise for a bipartisan deficit reduction plan that would prevent the trigger of tax increases and automatic spending cuts that go into effect on January 1. He stated that the compromise could not bring in more revenue by lowering the top tax rate and still protect the middle class from tax increases:

Specifically, he’s publicly urging Democrats to abandon a tax reform model that calls for ending tax expenditures, many of which benefit middle income earners, in order to finance a large tax rate cut for wealthier people. It’s a framework that’s popular among economists, particularly conservative ones, but that a group of Democrats negotiating with Republicans to avert large tax increases and sharp spending cuts next year have also embraced.

Instead, he proposes targeting tax loopholes and deductions that benefit top earners and raising their top income tax rate, while simultaneously narrowing the tax code’s preference for capital gains by ratcheting up the capital gains rate from its current, historically low rate of 15 percent. Taken altogether it’s a call for significantly more revenue from high-income earners than Dems have sought by proposing to allow the Bush tax cuts for top earners to expire; and an attempt to strengthen Dems’ negotiating posture, lest they get lured into conceding another large income tax cut for the wealthy.

Sen. Schumer proposes to freeze the top two tax bracket, cut the loopholes and deductions that benefit the top earners and raise the capital gains tax.

David Dayen at FDL News Desk notes that this would be a “major blow” to the Simpson-Bowles plan that would see the tax rates reduced to 23% for the top earners.

So how would Schumer get the Republicans to sit down at the table? As David point out, simple by dangling “entitlement” reform:

But there’s a giant caveat to all of this, based on the excerpts (haven’t yet found the full speech):

  But he says that Republicans should be drawn to such a deal by the prospect of a bipartisan bargain that also includes changes to improve the sustainability of entitlement programs. Those programs – such as Social Security and Medicare – are expected to run substantial shortfalls in the future, adding dramatically to budget deficits.

   “The lure for Republicans to come to the table around a grand bargain should be the potential for serious entitlement reform, not the promise of a lower top rate in tax reform,” Mr. Schumer is expected to say, according to excerpts of his speech.

So Schumer wants to trade unworkable “tax reform” for deeply unpopular “entitlement reform.” That’s not really a great trade. It’s good to acknowledge that tax reform will never work the way its most passionate advocates suggest. But if that doesn’t exist as a “get” for Republicans in a grand bargain, and entitlement cuts are the substitute, we have a whole different problem.

While Schumer claims that the concession on “entitlement” reform would not include privatization or a voucher program,  Atrios noted the Republicans have no interest in “reform” of entitlements unless it includes privatization and tax cuts for the wealthy. In other words, the chances of getting anything done have greatly increased.

This weekend on MSNBC’s Up with Chris Hayes Nobel Prize winning economist Professor Joseph E. Stiglitz and Avik Roy, an adviser to Presidential Republican nominee Mitt Romney, debate the nominee’s tax plan and its impact on Americans.

In the second segment, Prof. Stiglitz and Mr. Roy try to outline what is known about Mr. Romney’s tax plan and whether he would be able to implement the plan if elected president.