Monday, March 9, 2009

THE TRUTH WON'T HURT

In 2010, assuming we begin an economic recovery, President Obama's budget will restore the top two marginal income tax rates to their 1990s levels of 36% and 39.6% for individuals earning more than $200,000 and couples earning more than $250,000. These changes will affect only the top 3% of taxpayers, the group that has enjoyed the largest gains in income and wealth over the last decade. In addition, for these taxpayers the tax rate on capital gains will increase to 20%, the lowest rate in the 1990s and the rate President Bush proposed in 2001, and the tax rate on dividends will increase to 20%, a rate lower than the rate of the 1990s and nearly 40% lower than that proposed by President Bush in 2001.
Critics charge that President Obama's tax rates for high-income earners will strangle small business and stifle economic growth. Such claims are misguided or disingenuous. A full 97% of small businesses will see their rates unchanged or enjoy additional tax benefits under the Obama plan. And the strong expansion of the 1900s proves that the tax rates on income, capital gains and dividends in the Obama budget will support rapid economic growth and substantial income gains at the top. Moreover, the higher tax revenues resulting from these rates will reduce the deficit by about $750 billion, bringing it down to an average of 3.9% of GDP over the next 10 years and to 3.1% of GDP by the end of the decade. This compares to an average deficit of 3.6% of GDP between 1982 and 1997, when the Dow Jones Industrial Average increased by 835%.
In addition, the president proposes to limit the deductions for dependents, charitable contributions and other expenses to 28%, the top rate for such deductions under Ronald Reagan. Some critics claim this is class warfare. But why should a family in a higher tax bracket get a bigger break on expenses than a middle-class family? And restoring this limit to its Reagan level will raise enough revenue to cover about half of the $634 billion reserve President Obama needs to finance health-care reform with the other half coming from savings in health spending. These savings include competitive bidding in order to reduce Medicare payments to private insurance plans, increasing the Medicaid rebate for brand-name drugs, and strengthening Medicare pay-for-performance incentives for hospitals.
The president's budget is progressive and ambitious. It will not, however, explode the size of government as some critics warn. If the economy recovers as projected, over the next decade taxes as a share of GDP at around 19% will be lower than they were during the second half of the 1990s, government spending as a share of GDP at around 22.5% will be about where it was under Reagan, and nondefense discretionary spending at around 3.6% of GDP will fall to its lowest level since that data was first collected in 1962.
The real risk lies in the possibility that the economy's recovery starts later and is much weaker than the economic assumptions in the budget. In this case, by no means remote, President Obama will have to adjust his plans while remaining true to his values. In a very few days in office, he has already demonstrated that he has the leadership skills to rise to the challenge.

10 comments:

Papa Giorgio, M.A.T.S. said...

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Another appointee (the most antisemitic of them yet) is gone... how many does that make now??

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Kim said...

I can't keep track. I must admit the Obama vetting process is less than what it should be.

What are these people thinking....why not just be honest up front and stay under the radar and out of the public spotlight?

Very embarassing. He must be privately seething.

Papa Giorgio, M.A.T.S. said...

It is slated that within the first 20-months Obama will have spent more than the entire 8-years of Bush’s Budget... Hmmm, I seem to remember a post a while ago...
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Saturday, June 16, 2007

THE AUTHOR OF RECORD DEFICITS NOW WANTS TO CURB SPENDING--NEWS FROM THE BLATANTLY ABSURD

CRAWFORD, Texas - President Bush warned Congress on Saturday that he will use his veto power to stop runaway government spending.

“The American people do not want to return to the days of tax-and-spend policies,”

Bush said in his radio address.

Any one not seeing the irony in the President's statement, signify by putting a "I am one of the 26 percentile" bumper sticker on your automobile. You would do well to remember which party is against ear-marking bills with pork and a return to "pay as you go" spending, meaning when the administration comes up with another "trickle down" tax cut for the ultra rich, he must cut programs to pay for them. You might also want to look up the last time we had a balanced budget.....And now for a brief moment of sanity, from the Senator from Louisiana....

"I know people don't like to pay taxes, but the fact of the matter is, is that this administration has produced a record deficit that is really threatening in long measure our ability to make the kind of investments we need to keep America safe," Sen. Mary Landrieu, D-Louisiana, said in a Fox News interview.
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Oh the irony... for sure! I would add that:

"When you raise marginal rates it depresses economic growth," said Rep. Paul Ryan, R-Wis., ranking member of the Budget Committee. "This budget was written almost as though they ignored the fact that we are in a recession."

"I'm not sure that raising taxes, even in the smallest way, on those making over $250,000 a year, that it's going to have an impact on this recession," replied Senate Majority Whip Dick Durbin, D-Ill .

Papa Giorgio, M.A.T.S. said...

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Pork... ha! Spend as you go, ha!


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Kim said...

The budget was full of REPUBLICAN PORK from last year, and you know it. $6 million for Mc Keon and he didn't even vote for the bill.

Both parties are to blame. Republicans spent like drunken sailors, and the Dems never had the balls to fight them on it.

Obama was left with the worst economy since the great depression. Even you will admit that. From a surplus (Clinton) to the worst economy since the great depression. The Bush legacy, pure and simple. Oh, and he prevented another 911 (huh???).

Papa Giorgio, M.A.T.S. said...

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Obama can actually do what he said he was... "No Pork!" Now both parties are to blame? Clinton didn't leave Bush with a surplus either. The books were cooked (Clinton learned from WorldCom, a company he and his wife were intimately involved with -- Enron like, but because many Dems were involved with it, the press didn't cover it as much) and remember the .com bubble. Similar to the housing bubble. Clinton legacy... watch this:

http://www.youtube.com/watch?v=5kPie_QCD80

All Obama will do is worse than Bush did. you are arguing against yourself. Read your post from 07' and then apply that to Obama. Hello, McFly? If I had a car (sold mine), I would get that sticker that says, "I am going to give your president the same respect you gave mine."

As the great Mitch Headberg would say, "ridiculous."

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Papa Giorgio, M.A.T.S. said...

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Here's one example of a price gouge that my Wife's $26 increase will disappear to:

It’s not an upfront tax though. That would be too simple and may sound unfair. Even the most ardent tree hugger might consider forcing the oil industry to pay higher tax rates as excessive. That’s why it’s all in the form of increased fees and accounting rules changes.

Included among the proposals to squeeze $30 billion out of the oil industry are:

* Establishing a new excise tax on Gulf of Mexico resources
* Creating new fees for the permitting process of development projects on federal land
* Eliminating tax deductions for repair, site prep, and transportation costs of drilling

There are five or six more changes that will have a significant impact on the domestic oil industry. Each will have price tags of a few hundred million dollars for oil companies. When added all up, the eventual cost is around $30 billion.


Just one of many examples.

Kim said...

The government is despirately seeking the American public to be more energy wise and use less foreign oil. Unfortunately, the easiest way to do this is insure that the price at the pumps go up. And if in doing so, the government coffers get some of the proceeds, so much the better.

Papa Giorgio, M.A.T.S. said...

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I thought you don't like politicians? yet you want their coffers to be full and for them to run health-care. You see the mess they are making out of most things money now, right. They will be better in managing who gets health-care and who doesn't get a procedure how? You hate the gov., but yet, you want it to have more control. That just doesn't make sense.

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Kim said...

It does make sense, for it is the last despirate act of someone who is on his last legs (my last leg being complete and total apathy).

I liked free markets, the somewhat naive notion that the market will ultimately correct itself, that competition cures all.

But I have seen what happens when we let the financial markets operate unfettered and without oversight, then leave us holding the bag. Madoff bothers me far less that the SEC who should have figured out his ponzi scheme.

BTW, have you watched the Mad Money vs. Jon Stewart episode on comedy central? Classic.

The only positive I can take over the last year in the stock market was I had the foresight to transfer my 401K money into a money market, while others either ignorantly let it sit without notice, or thought the market would keep growing passed 14000.

Sad part is watching my employees lose 20% of their 401K funds because of the greed and arrogance of bastards like the CEO's of AIG and outright thieves like Madoff.