Tags: Fiscal Cliff, Jobs, Philosophy
The bombardment has already started, and will intensify until, as the year ends, either a solution to the “debt crisis” will emerge—or our fearless leaders will kick the can down the road. Again.
There are actually three sides to the discussion. One side believes that the need to eliminate the national debt has been overhyped. After all, they say, people have been crying for decades that the sky has been falling. But it hasn’t, and it isn’t. People, regardless of nationality, have been falling over themselves trying to lend us money, with the result that the interest rate on our national debt is at an all-time low. (There are many other arguments for not worrying so much…but I understand that one, and agree with it.) What we need to do is worry about improving the economy as a whole; if we can do that, the national debt will take care of itself.
The other sides are mostly debt hawks, and they have framed the discussion in terms of reducing/eliminating the national debt, with the health of the general economy at a lower priority.
One group (let’s call them conservatives for short) has an economic philosophy akin to the European Austerity policy. They believe we can’t afford social programs, we need to spend more money on the military, and we must reduce taxes. They say that cutting social programs (especially entitlement programs) will save the money we need to reduce the deficit. They say that by reducing taxes we will induce business and wealthy individuals to create more jobs, thus raising more revenue to further reduce the deficit.
But look what Austerity has brought the Europeans: their economies are in decline, and their people are rioting or striking because they’re not getting a fair return on the time and energy they spend working. They’re not creating jobs. They’re not increasing revenue. They are imposing poverty on their populations.
Another group (yes, we’ll call them liberals) believes differently. They’d like to increase taxes on the very rich. The increases won’t make a bit of difference to the lifestyles of these people, nor cause them to fire people. The proposed increases would apply only to the income over $250,000. The liberals would like to eliminate certain tax breaks treasured by big businesses and wealthy individuals, like the oil depletion allowance. They’d like to eliminate tax breaks that help pay for corporate jets, and tax loopholes that encourage businesses to make as much of their money as possible overseas and avoid taxes here. Liberals say that by increasing taxes on the very wealthy and eliminating tax breaks and loopholes we’ll increase revenue we can apply to the national debt.
They’re probably right. But both groups are forgetting that the best way to reduce the national debt is to create jobs. We need to invest in physical infrastructure, like roads, bridges, power grids, and buildings. Those physical projects will create thousands and thousands of jobs, most of which can only be done here. The workers who get those jobs will pay taxes and buy products, creating more revenue for the government and more demand for products, thus even more jobs. Employers will hire, but only if there is more demand for their products and services.
The federal government needs to invest in the states. Money for education will help our workers compete in an ever more challenging workplace—and provide jobs for teachers. Money for public safety will reduce crime rates and improve state and local responses to disasters—and provide jobs for police officers, firefighters, and disaster relief workers. Those are only a couple of examples of areas where federal investment can provide programs, equipment, and jobs to improve our lives. And the workers who get these new jobs will pay taxes and buy products, creating more government revenue and more demand for products and services.
The top priority is not the national debt: it’s the economy. The conservatives and the liberals need to work together, to find compromises that will get the job done. You need to pass this message to your friends and let your elected representatives know how you feel. They need to stop “standing on principle” and start governing: the country is at stake.
Tags: ethics, personal/public life, public morals
Are we a nation of prudes? I don’t condone adultery, but it seems to me that we make unreasonable demands on our leaders. They are not “ordinary” people, or they wouldn’t be leaders. But neither are they superhuman, or immune from the temptations most of us face. In fact the moral temptations they face dwarf those most of us must handle.
Nobody will ever know whether Mr. Petraeus seduced Ms. Broadwell or she seduced him, or whether it was a mutual infatuation. I can tell you that Ms. Broadwell is a very hot lady. She has a great body, and she knows how to make the most of it. She also has a tremendous intellect, judging from her accomplishments. That is a combination that is extraordinarily attractive. Mr. Petraeus is in very good shape physically, and is a superb military leader. From all accounts he was doing a good job as CIA head, too. And I’m told that men who wield power are attractive to women because of it.
So we have a situation of extreme temptation, and the two gave in to that temptation. Their spouses are justly upset, and each family will handle the situation in its own way. Mr. Petraeus and Ms. Broadwell violated their marriage vows and will pay the price in the anger and grief of their families.
There is no question about it: The affair was a violation of our society’s ethics and morals. But there is no indication that the affair had national security implications; according to the FBI it did not. There is no indication that the affair had any effect on the performance of the couple’s jobs.
That’s what sticks in my craw. the nation has lost the services of one of our most brilliant generals because, as Mr. Petraeus put it, he showed bad judgment and behaved in a way that is unacceptable. But his judgment and unacceptable behavior were a part of his personal life, not his public life nor his job performance. Yet because he committed an immoral act he has been pilloried and driven out of a public life that has otherwise been inspirational.
Media attention to leaders has become intrusive. The media seizes on anything that makes a spectacle and plays to the public’s prurient interest. The public throws up its hands in (frequently hypocritical) horror at the stories, characterizing the actions as unforgivably immoral and disgusting.
I don’t think it’s anybody business, except of course for the families of those involved. Without in any way approving what Mr. Petraeus and Ms. Broadwell did, I conclude that the punishment does not fit the crime, and that our nation is being harmed by the loss of a fine leader.
We certainly are a nation of prudes, and we need to do better.
Diogenes, were he still around and looking for an honest man, would have done well to have avoided the first Presidential Debate of the season. President Obama came out with a few “stretchers” and certainly spun things in his favor. Governor Romney, on the other hand, seems to live in a parallel universe in which arithmetic as we know it does not exist.
Of course people who expect candor from politicians are doomed to a life of disappointment. I don’t expect perfect candor, but in one of only three chances for the candidates to impress people I do expect some wit, some cleverness, perhaps some risk-taking, and some substance. I didn’t get any of the above last night.
President Obama was laid-back, relaxed, and comfortable. He expressed his reactions to his opponent’s remarks far more forcefully in his facial expressions than in his spoken responses. He made his points logically, with little emotion, and failed to point out most of his opponent’s factual errors. When he did remark on a Romney plan he did so with great detachment and little force.
Governor Romney was not cool. He seemed like a kid who, having been sent to the Principal’s office, knew he was in trouble. He sweated. He blinked rapidly. He twisted and turned under the implacable stare of the camera. And, again, he changed his positions on many issues to what he thought his audience wanted to hear. Aside from the nervousness, the few emotions he showed looked phony.
The famous Romney “zingers” were pretty flat. Neither candidate voiced outrage at the policies or the philosophy of the other—or showed much pride in his own. Neither took advantage of a loose, discussion-type format to tear the other up. It was painfully polite, painfully low key.
Most of you know I’m a liberal. Of the two choices I prefer Obama. I just wish he’d come out swinging, because if he did he’d set himself up for a mandate from the voters, and provide some much-needed coattails for Democratic candidates for Congress.
Note: Health issues, resulting in low energy levels, have prevented me from posting for quite a while now, and it doesn’t look as though the problem is going to go away. It’s not the writing, it’s the research. I have always tried to be factually accurate, even though my conclusions are decidedly opinionated. The following piece, however, is unmitigated opinion, based on observation not research. I hope you’ll read it anyway and enjoy it, even if you violently disagree.
Until Saturday, the Romney campaign was what one observer called “squishy.” It was an amorphous glob of rhetoric, with little substance, and even less detail; a glob that changed constantly, depending on the audience of the moment.
Then, with the picking of Paul Ryan to be Romney’s running mate, the glob extruded a pin with a very sharp point. The Ryan budget plan offends me, but at least it has substance and detail. We all know that Paul Ryan wants to throw the people in the bottom three-quarters of the economy under the bus, and throw the other quarter a bonus they neither deserve nor need. (Give me a break on the numbers here: I’m not sure whether it’s two thirds, three quarters, ninety percent, or what. You get the point.)
The media has relentlessly discussed the choice, the Ryan budget, and the politics involved. Romney rather plaintively said that he has a budget plan too, but few people listened. After all, as House Speaker Boehner observed, nobody loves Romney: those who vote for him will do so because they don’t like President Obama.
Perhaps the conservatives will love Mr. Ryan. His budget plan certainly generates strong feelings, although I’m not sure what else he has accomplished. But Ryan stood up on his hind legs and actually said something!
It kind of makes me wonder just exactly who is the leader on this ticket? It makes me think about Bush/Cheney. If we’re dumb enough to elect Ryan/Romney are we going to wind up with Vice running the show?
Think about it.
Tags: I-95, North Carolina, Tolls
The North Carolina Department of Transportation plans to add lanes and replace or modify some interchanges and overpasses along I-95. They want to pay for the improvements by charging tolls.
The plan for Robeson County would add two lanes to our part of I-95. Adding two lanes would add at least 24 feet to the width of the road, and the plan is to widen the median as well, making the road even wider.
Increasing the width of the road would have a serious impact on businesses on Kahn Drive, Dawn Drive, Capuano Street, and Lackey Street. Hotels, motels, restaurants, auto dealers, and other businesses might lose large pieces of their parking lots, if not access to their property. Many of these businesses would be unable to relocate. They would close, and the area would lose jobs, tourism revenue, and tax revenue. Many of the existing buildings would become abandoned eyesores bordering the highway.
In addition, the DOT wants to turn I-95 into a toll road. Those who use I-95 to commute to work, to go to stores, restaurants, and other businesses, or to go on vacation or to recreational areas would have to pay ten cents a mile, with a minimum toll of $.25. If you go border to border it would cost you about $19.20. If you drive an 18-wheeler it would cost you about $57.
The DOT forecasts that traffic will go up enough to justify the increased road capacity. I question that forecast: in the current economy, with fuel prices going sky high, I would expect traffic to go down.
I’m not aware of any studies on the economic impact of the I-95 project, but a few things seem clear. People and shippers will do what they can to avoid the tolls, and in North Carolina route 301 is parallel to I-95 for much of its length. Elsewhere, there are local roads that can expect increased traffic, heavier vehicles, and increased maintenance costs. Neither 301 nor the local roads are designed for the kind of traffic they are likely to get. High volume traffic mixed with shoppers, pedestrians, and kids on bicycles would mean more accidents: adding a toll in money to I-95 would add a toll in blood to other roads.
The Indiana Toll Road is a similar situation. The state leased the road, projecting that traffic would increase. The tolls went up, the traffic went down, and the company that leased the road is in financial difficulties. Traffic went to parallel roads, and it is now slower, more difficult, and more costly in fuel to get across Indiana.
I believe that the NC DOT plan for I-95 is a bad plan that will be economically disastrous for Lumberton, for Robeson County, and indeed for all of North Carolina. Others agree: The Johnson County Commission passed a resolution opposing the plan, and Representative Renee Elmers, who represents the Harnett area, introduced legislation in Congress to forbid it.
I’ve sent messages like this one to officials at the Federal, State, County, and City levels. If you’re a resident of North Carolina I’d appreciate your writing your elected officials. We can defeat this plan!
Tags: Constitution, Debt Limit
People are going into panic mode—again. We are rapidly approaching the debt limit imposed by legislation and, people say, if we reach that limit the country will default. Defaulting would indeed be a catastrophe for the U.S. and world economies. It would result in a deep recession here and probably across the world. Yet President Obama still leads from the rear, and the Democrats in Congress do little. The Republicans in Congress mulishly refuse to consider increasing revenue, while insisting that we cut spending with a blunt axe before they’ll vote to raise the debt limit even if it sends us into default.
But we don’t need to default. When we reach the debt limit President Obama could thumb his nose at Congress and just keep spending the money to pay the country’s obligations, like Government bonds, Social Security and Medicare payments, subsidies for school lunches, and all that stuff.
President Obama could ignore the debt ceiling and keep spending, because the legislation that imposes the limit is… well, unconstitutional. Section 4 of the 14th Amendment to the Constitution says, “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”
That means we can’t question whether any debt legally incurred by the government is valid (must be paid). It must be paid, and that’s all there is to it. But establishing a debt ceiling casts doubt on whether existing debt will be paid, because the government borrows money to pay its debts: bonds, Social Security and so on. It means that the debt ceiling law is unconstitutional, and the President can ignore it.
That’s not just my opinion. It’s the opinion of several noted Constitutional lawyers, Congressmen, and other Serious People. The option has been raised to President Obama himself at a news conference, and he did not rule it out. It could happen, and while I hope it’s not necessary, it’s a lot better than defaulting.
Raising the debt ceiling (or ignoring it) would give the politicians a chance to get off their ideological high horses, negotiate a budget in good faith, and get the country moving toward financial stability. Will they take the chance? That’s up to you. Write and tell them what you think.
A few weeks ago at Rotary we were talking politics. (Our discussions sometimes get heated, but never discourteous: they’re a good model for the rest of the nation to emulate.) Somebody asked me how much money the top 2% make—the ones liberals want to tax more. So I did a little research, which turned into a whole lot of research. Most of the statistics I found were less than objective, less than adequate, and difficult to understand: I’m no statistician. Eventually I found some numbers I could both trust and figure out, and the following article is the result.
Most people agree: the deficit is too big. We have to do something about it, and the politicians are making loud noises about how to fix it. They have politicized the discussion beyond all belief, which guarantees that any “solution” they come up with will be a disaster.
The sad fact is that solving the deficit problem is going to require sacrifices from all of us: we’re all in the same boat; it’s sinking, and we must all help to bail.
Sensible, precisely directed spending cuts will help reduce the deficit, but they won’t eliminate it, nor will they achieve objectives like repairing crumbling infrastructure, reducing dependence on fossil fuels, or adding the huge numbers of jobs we need to get the economy back on its feet. Draconian cuts to needed programs won’t help either: in the long run they’ll destroy our economy and our people.
Well if you can’t solve the problem by cutting government spending, how can you solve it?
By increasing government revenue.
One approach we ought to take is to eliminate tax loopholes. The tax code could be vastly simplified to ensure that every individual, household, and corporate entity pays a fair share. Some deductions ought to remain, because they encourage behavior we want to encourage. Charitable giving is an example. Others, like the mortgage interest deduction might be phased out over the next several decades, but slowly, because the mortgage interest deduction is a huge factor in many families’ financial security.
Another approach is to increase the tax rates. Doing so would have an immediate effect, yet could be designed make the comfortable and wealthy contribute more, while minimizing the sacrifices made by those who can least afford to sacrifice. Some of you will recoil in horror: “Redistribution of wealth!” you will scream. Perhaps, but we need to increase revenue to reduce the deficit, and some of us can well afford to provide more revenue, while others cannot.
Who? Let’s take a look at how wealth and income are distributed and at how we are taxed.
Economists define wealth as being equivalent to net worth. A person’s wealth is the sum of the values of his or her marketable assets (like real estate, stocks, and bonds) less the value of his or her debts (like mortgages, and credit cards).
2007 is the latest year for which good numbers are available. In a paper titled Wealth, Income, and Power, Professor G. William Domhoff of the USC Santa Cruz Sociology department says that in 2007 the top 1% owned 34.6% of all privately held wealth, and the next 19% owned 50.5%. Remember the 80-20 rule? Well the wealthiest 20% owned 85% of the wealth, leaving only 15% for the bottom 80%! (The amount of wealth held by the top 20% is shown by the red and green areas of the chart combined.)
If that comes as a shock, don’t feel lonesome: a 2010 study showed that most Americans, regardless of income level, gender, or political affiliation, have no idea what the distribution of wealth is. If you’re ready for another shock economist Edward Wolff estimates that since 2007 there has been a 36.1% drop in the wealth of the median (middle of the middle class) household, while the wealth of the top 1% dropped only 11.1%
Wealth and income are two different things: income is money earned from work (wages and salaries) and from wealth (dividends, interest, rents, and royalties).
Looking at income gets us to the question I was asked at Rotary: “How much money does the top 2% make?” The answer is…I dunno. But I do know this: in 2009 the top 5% averaged $295,388 in income. In 2007 it was $287,191.
In the table below, the top 5% is included in the top 20%. That is, in 1983, the 20% with the highest incomes earned 45.1 percent of the aggregate income and the rest of us earned 54.9%. (Also note that we’ve added a year not included in the wealth chart.)
Income distribution is important because income taxes are the biggest source of government revenue. Our Federal Income Tax system (like most) is progressive, meaning that the richer you are the higher your tax rate. The theory is that the richer you are, the more of your income you can afford to pay in taxes. The chart below shows how much people paid in taxes (Federal, state, and local) as a percent of their income. Our system, when you count all taxes, is mildly progressive—until you get to the top 10%, where it flattens out. Then it becomes regressive: the top 1% (who held about a third of the wealth) paid a smaller percentage of their income.
They paid less because, as you can see from the blue areas on the chart, state and local taxes are regressive, meaning that the poorer you are the more of your income goes to these taxes. The problem is that the less income you have the more of it you need.
The chart below is another way to look at how income—and tax liability—are distributed. The lowest 20% earned about 3.5% of the aggregate income in 2010, and paid about 2% of the taxes. The fourth 20% earned 19% of the income and paid 19% of the taxes. Only the top 20% paid a larger share of taxes than their share of income, with the top 1% earning 20.3% of the aggregate, and paying 21.5% of the taxes.
I’ve been told, by my conservative friends, that 47% of the population doesn’t pay any taxes. Well that’s a great number to feel outraged about, but it’s not quite true. According to Congress.org, the number came from a study done by the nonpartisan Tax Policy Center. The study does estimate that 47% of U.S. Households did not pay any Federal Income Tax in 2009. 85% of them, however, paid payroll and Medicare taxes, and of the 6% who did not, most are elderly or very poor. Fair enough: they can’t afford to both pay taxes and eat, so let them eat. Over the years, the Congress has consistently ensured that the poorest Americans don’t have to pay taxes.
In a “normal” situation, that is when we don’t have huge deficits, the effects of our tax policy are reasonably fair, except for the regressive State and local taxes. I think the tax code ought to be simplified drastically, and many loopholes, subsidies, and entitlements eliminated. But the simplification needs to be done carefully, so that our tax system continues to encourage socially useful behavior and doesn’t impose an unfair burden on those who are already suffering. And we should change the tax rates appropriately. What is appropriate? Let’s look at some history.
The first Federal income tax was imposed during the Civil War, but was repealed afterwards. The current system was enacted in 1913, and the chart that follows shows how the top tax rate has changed over the years.
Between 1914 and 1918 the top tax rate shot up to nearly 80% to pay for World War I. After the war the rate came down, but in 1929 the stock market crashed, ushering in the Great Depression. The top tax rate started going up again to pay for President Hoover’s attempts to improve the economy, and then for President FDR’s New Deal. Then, between 1941 and 1945, the top rate soared to over 90% to pay for World War II.
It stayed up there until 1968, paying off the war debt, and paying for the Marshall Plan and other forms of foreign aid. But (believe it or not) dropped during the Viet Nam War! It has continued to decline since then even though we spent huge amounts of money fighting the Persian Gulf War, beefing up internal security after the 9/11 attacks, and fighting wars in Afghanistan and Iraq.
There’s a pattern here: raise taxes to pay for wars and economic disasters. That technique worked for 60 years after the income tax started. Then we got the idea that we could pay these extraordinarily large expenses without extra revenue and our top tax rate is lower than it has been since 1928! We also have a deficit so big it’s incomprehensible, and an economy that totters along like a drunk navigating between curb and gutter.
We’re not going to get out of this situation by cutting spending, even if we use a dull axe and turn the whole middle class into a lower class. That strategy would turn us into a Third World country and probably a wholly-owned subsidiary of the People’s Republic of China.
We need to raise taxes. How much? I don’t know, but it’s clear that our government needs a lot more revenue to do what it needs to do. The lower income people among us are teetering on the edge of total financial disaster, and much of the middle class is close to disaster as well. We need to continue the programs that are keeping those people going, and we need to require that those who can afford to pay do so. We must make our Federal Income Tax system fiercely progressive and a whole lot simpler.
The boat is going down, and we’re all going to sink together, so pay up or start swimming.
Tags: Julian Assange, secrets, security, Wikileaks
Dear Governments and Media Outlets: Wait a minute. Stop. Take a deep breath. Put your heads down on your tables and close your eyes. The milk and cookies will be here soon.
Why are you all screaming about Julian Assange and Wikileaks? They didn’t steal any secret documents. The Swedish government has made two criminal accusations of Assange. They say that he had consensual sex with a woman twice, the second time without a condom. And they say that while having consensual sex with another woman (a friend of the first woman) his condom broke while he was climaxing—and he continued to climax. Did you ever try to stop in the middle of a climax? Well, the women went public because each one is angry at him for cheating on her with the other. But one of them has quit cooperating with the prosecutors anyway.
The Swedish government issued a warrant for Julian’s arrest; the British government arrested him and held him, setting bail at $316,000. The Swedish government wants to extradite him, but when told about the bail said “Huh? Bail?” (OK, I’m paraphrasing here, but you get the point.)
Murderers, drug lords, financiers who fraudulently steal huge sums money—all of you stand aside. Julian Assange’s condom broke, which puts him ahead of you in the Master Criminal category, requiring more than $300,000 in bail. Vindictive, yes. Silly, yes. If you believe they want him that badly because of a broken condom I have a nice toll bridge for sale.
Despite the screaming and yelling, nobody has actually charged Wikileaks with anything, and the reason is quite simple: as far as anybody knows they didn’t steal anything, buy anything stolen, or sell anything stolen. They took material that was given them—250,000 U.S. Government classified documents. They gave copies of these documents to three newspapers: Le Monde in France, El Pais in Spain, and The Guardian in Great Britain. The Guardian gave the documents to the New York Times. Wikileaks worked with these newspapers on timing the release, and redacted its copies in cooperation with the newspapers to prevent intelligence sources from being revealed or national security being compromised. I think that counts as responsible journalism, and if what was released makes governments uncomfortable, that’s too bad. One of the most important functions of the free press we have under our constitution is to make governments uncomfortable.
By the way, U.S. Army Private Bradley Manning, who is alleged to have stolen the documents, has been held in solitary confinement since his arrest in May, according to reports. He hasn’t been convicted; his trial has not even begun. In many places extended solitary confinement is considered torture. It is certainly unheard-of in pre-trial confinement! What happened to the principle that the accused are innocent until proven guilty? Private Manning should probably be confined until trial, but he should be confined under the same conditions as other accused people. If found guilty he must pay the penalties prescribed by law, and he should serve his time under the same conditions as any other convict. Anything less is vindictiveness, not justice.
How about the people who designed the procedures and environment that allowed an Army private to allegedly steal 250,000 classified documents? A few heads need to roll, I suspect. President Obama has ordered federal agencies to review their procedures on classified material. Better late than never.
There are some questions about this whole incident that need to be examined. Should governments have secrets? If so, what ought to be secret and what should be fodder for whistle blowers?
Should governments have secrets? Absolutely. It is impossible to conduct the business of governing, diplomatic and otherwise, without keeping some things secret, at least for a time. Just to look at the diplomatic side of things, frank communication between diplomats in the field and diplomats at home is critical to good diplomacy. If diplomats must fear that their cables may be released to the public they won’t speak frankly and honestly, and U.S. interests will be compromised. The same thing is true for personnel matters; for military matters; for financial negotiations, etc.
I don’t mean these secrets should be kept secret forever, and I don’t mean that everything government does should be secret. We all know that there are people in government who classify documents to conceal wrongdoing or incompetence. There must be checks and balances, and there are: the freedom of the press I mentioned earlier is one. It’s part of the media’s job to find out what’s going on, and to let the public know about it. Whistleblowers are another: they bring to the attention of the media—and therefore the public—things that the public ought to know, but that are being concealed.
But I don’t think we’re dealing with a whistleblower here. There are simply too many documents involved, and it’s not credible that the alleged thief knew enough about them to select the documents that show a specific problem. I think we’re dealing with the actions of a disgruntled individual, and the problem is that he was able to steal so much classified information.
Government, get your house in order. Improve your security, protect classified information, and prosecute any criminal wrongdoing. But don’t be vindictive—even when your security is inadequate, even when the theft of a huge number of classified documents makes a big, worldwide stink.
And Julian…trust me, you need to start buying a better grade of condom. And using one every time.
Tags: Bush Tax Cuts, Unemployment Compensation
Thursday evening the House of Representatives defeated a bill that would have extended unemployment benefits. It would have cost $33 billion next year, but would have added thousands of jobs, pumped $1.90 per budget dollar into the economy, and allowed the unemployed to live with at least some dignity while they’re looking for a job. It would have been a net gain for the economy and a humane thing to do.
Many of those who voted against the bill are also opposed to the Democratic plan to let the tax cuts for the very wealthy expire, while keeping the tax cuts for the middle class. That plan would provide $700 billion in revenue that could be used for aid to states, tax credits for job creation—and unemployment compensation. Everybody, including the very wealthy, would still get a tax break, because the first $250,000 of income would be taxed at the lower rate.
By the way, the argument that letting the tax cuts for the very wealthy expire would hurt small businesses is complete and utter nonsense. Less than 2% of small businesses would be subject to the tax increase. More than 98% would continue to get the middle class tax break we now enjoy.
Also nonsense is the argument that ending the tax cuts for the very wealthy would slow economic growth. Tax cuts lower government revenue and raise government debt; higher government debt leads to higher interest rates, which restrain growth.
According to the Congressional Budget Office (CBO), extending the Bush tax cuts would have little effect on the economy, increasing the GDP by only 10 – 40 cents per dollar. The very rich don’t spend as much of their income as lower income people do, so extending the Bush tax cuts only for the wealthiest 2% would be even less stimulative than extending all of the tax cuts. The CBO said that extending tax cuts would have the least value of the eleven economic stimulus policies it studied. A combination of direct aid to states, tax credits for job creation, and extended unemployment compensation would have three times the effect of extending the Bush tax cuts. Extending unemployment compensation alone would add as many as 600,000 jobs and boost economic output by as much as $1.90 per budget dollar. That’s because people will spend the money right away. For necessities. And for Christmas.
Republicans and Blue Dog Democrats who claim to be deficit hawks say we can’t afford to spend $33 billion to help the unemployed, even though it would add hundreds of thousands of jobs and put nearly $2 per budget dollar into our struggling economy. Nor do they want the government to have the $700 billion in extra revenue that would result from ending the Bush tax cuts for the very rich, even though the revenue could be used reduce the deficit or stimulate the economy.
Please write your elected representatives and tell them you want unemployment compensation extended. And tell them you want to let the Bush tax cuts for the very wealthy expire. That will help the economy and reduce the deficit. Pretty good deal, huh?
Tags: election finance
You may have heard that MSNBC has suspended Keith Olbermann without pay, indefinitely. If you haven’t heard about it, you can read about it in the New York Times, here. Those of you who are conservatives will no doubt rejoice; the rest of you will be saddened.
I sent the following comment to MSNBC:
You made a poor decision when you suspended Keith Olbermann. He has never pretended to be objective, and therefore the contributions he made cannot endanger his status as an objective journalist.
I am a constant viewer of his, and I hope you will quickly reverse this decision—and revise your policy to specifically exempt commentators (like Mr. Olbermann) from the prohibition.
Mr. Olbermann is an effective voice for the liberals in this country, at a time when our very political system is in danger. I look forward to seeing him back on the air again very soon.
I hope you will join me by sending your comments to MSNBC. Their online comment form is located here.