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Tag Archives: Democratic Party (United States)

$278k Per Job “Created or Saved.” So the Stimulus Worked?

From Jeffrey H. Anderson at The Weekly Standard:

When the Obama administration releases a report on the Friday before a long weekend, it’s clearly not trying to draw attention to the report’s contents. Sure enough, the “Seventh Quarterly Report” on the economic impact of the “stimulus,” released on Friday, July 1, provides further evidence that President Obama’s economic “stimulus” did very little, if anything, to stimulate the economy, and a whole lot to stimulate the debt.

The report was written by the White House’s Council of Economic Advisors, a group of three economists who were all handpicked by Obama, and it chronicles the alleged success of the “stimulus” in adding or saving jobs. The council reports that, using “mainstream estimates of economic multipliers for the effects of fiscal stimulus” (which it describes as a “natural way to estimate the effects of” the legislation), the “stimulus” has added or saved just under 2.4 million jobs — whether private or public — at a cost (to date) of $666 billion. That’s a cost to taxpayers of $278,000 per job.

Wow.  Not very efficient, right? I would say that in corporate America, and you were running a company that was that inefficient, you’d get canned. When hiring an employee, there is the employee’s salary. Then, factor in another 30%-40% of the salary, which is what it costs the employer to train the new employee. Then, factor in another 20% of salary to account for benefits, social security, and other costs. Even if every employee accounted for in the stimulus numbers were new hires, and they were all paid $100,000 salaries, it STILL wouldn’t cost $278,000 to hire them. So one has to wonder why the cost was so high.

In the face of these numbers, as well as the fact that unemployment post-stimulus is higher than pre-stimulus, the argument made by Obama supporters that things were “worse than they thought” doesn’t justify the inefficient spending. Then again, I have to agree with Anderson–that maybe the stimulus would’ve worked better if the money had not been spent “mostly on Democratic constituencies rather than in a manner genuinely designed to stimulate the economy.”

 

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Dems Say They Just Want to Go Back to pre-Bush Tax Rates. Don’t Be Fooled.

For years now, Democrats have been lobbying to have the current tax rates pushed back up to where they were before Bush II cut the rates.  The top marginal rate, now 35%, would go up to 39.6% for individuals earning more than $200,000 per year and families earning more than $250,000 per year.  Claims such as the rich need to pay their “fair share” (a term that is an undefined value, but effective in getting folks riled up), or that the rich have benefitted for long enough and need to pay up, are always used to try and bolster the argument.  I support the idea of raising the marginal rates for EVERYONE to where they were before the Bush tax rate cuts, and have said so many times.  But I discovered that, under further review, Democrats are attempting to go even further in their quest to turn high income earners into bigger cash cows for the government.

What most people don’t realize–and Dems aren’t going to hip folks to it–is that once the healthcare reform plan (“Obamacare”) goes into full effect, the tax rates for $200k/$250k earners will be more than they were pre-Bush.  How?  I’m glad you asked.

Baked into Obamacare are a number of tax rate increases designed to raise revenue to pay for the bill.  The number of taxes built in varies depending on which source you use, but there were two that jumped out at me.

First, there is a new 3.8% surtax on investment income for the over $200k/$250k crowd.  Currently, the tax rate on capital gains (profit made from an investment) and dividends (cash received for owning stock in a company) is at 15%.  The new surtax will push that rate up to 18.3%.  When the argument is made to go back up to the pre-Bush rate, which was 20%, there is no mention of the surtax.  If Democrats have their way, the rate for capital gains and dividends would be at least 23.5%.

Next, there is the 0.9% Medicare surtax, also for the $200k/$250k people.  Currently, 1.45% of everyone’s income is deducted to pay for Medicare.  Unlike Social Security, there is no cap on taxable income, so everything the person makes in income is taxed at the 1.45% rate.  However, with the new surtax, income over the $200k/$250k threshold will see a 0.9% tax increase, making the new tax rate 2.35%.  Instead of raising the top rate 4.6% to get it back to pre-Bush levels, the increase would actually be 5.5%.

A different discussion for another day is the laundry list of other taxes built in, such as the tanning tax, the medical device tax, the health insurers tax, ect.  The bottom line is, these taxes make the “we just want to go back to pre-Bush rates” argument nothing more than political foolery.  And, as usual, most of the masses fall for it.

Where Does Tax Rhetoric Meet Reality?

There has been a lot of talk lately about taxes.  George W. Bush lowered tax rates twice while in office.  Democrats portray those cuts as “tax cuts for the rich” as though no one else benefitted–not even the large number of folks who were removed completely from the tax rolls due to the minimum taxable amount being increased.  Democrats also complain about the cost of the cut for the richest folks, constantly ignoring that the cost of the cut for the other brackets was 3 times as much.  Obama then extended those cuts, much to the chagrin of the Dems.

Now, as talk of deficit reduction and debt reduction heats up, there is much hand wringing going on regarding what to cut and where to get more revenue.  Democrats, of course, say raise taxes.  Republicans say no.

Republicans are playing hardball in terms of tax policy, saying no tax increases will be on the table.  In a way, I can agree, as the more important thing is to lower spending.  Not only that, but the government has a pattern in place:  every time more money comes in, they find a way to spend it.  Without going into detail, the fact that by law, surplus Social Security money is put into the general fund for spending purposes is a prime example.  Anyway, Republicans have their own tax mantra that they will say over and over and over again:

Tax cuts spur economic growth.  But tax increases destroy the economy and destroy jobs!

Having heard this so many times, I finally wondered how much truth there is to this.  Nevermind that I personally believe that taxes can be increased with with no devastating effect to the economy.  I wanted to know what history has shown.  Was there any conclusive proof that showed where tax increases had really hurt the economy?

From what I knew already, I knew that there were examples where tax rate cuts had at least helped spur the economy.  Higher taxes helped fund World War II.  JFK also decreased taxes, which led to economic growth.  Even under G.W. Bush, the economy grew after his tax rate cuts, though in a very tepid fashion.  But what about tax increases?

I was skeptical that I would find evidence and was convinced that the notion was simply a Republican talking point, but there is indeed proof.

  • President Herbert Hoover signed a major tax increase in 1932.  The top marginal rate was increased from 25% to 63%, among other rate increases.  Tax revenues in 1933 were 42% of what they were just two years prior.  Unemployment rose to nearly 25%.  Slowly, though, the economy recovered until…
  • In 1937, Roosevelt signed into law new tax increases.  The result was that the economy went back into recession and didn’t come back until during WWII.  Truman actually cut taxes during that time and by the end of the decade there were budget surpluses.
  • Reagan signed a major tax rate cut in 1981.  Many Republicans like to point this out about Reagan and say that those cuts are why the economy grew during the Reagan years.  But that leaves out part of the story.  Reagan signed a number of tax increases starting in 1982.  Tax loopholes were closed and Social Security was overhauled.  Businesses ended up paying more taxes as a result.  Despite this, there was still economic growth.
  • During the 90s, Clinton raised taxes.  The country was coming out of a recession, and even with the tax increases, the economy grew.  Clinton did, however, also lower taxes on capital gains in the mid-90s.  Many say it was actually the tax cut and not the increase that provided the huge boost in revenue to the government.

So, what is the outcome of my info hunt?  Well, as usual, both sides will make declarations without telling the entire story.  But right now, Republicans are most guilty of cherry picking.  While it’s true that some tax increases did real damage, both Reagan and Clinton showed tax increases can be done and they NOT throw the economy into chaos.  I will also point out that they are especially guilty of ignoring Reagan’s tax increases (yes plural) when talking about how his cuts grew the economy.

Bottom line, rolling tax rates back to pre-Bush levels will not damage the economy.  Just like before, businesses will still find a way to survive and eventually thrive, the economy will grow, and there will be jobs.

Georgia Legislature Considering Bill to Require Proof of Citizenship

Republicans won’t pass a bill to allow Sunday alcohol sales, but evidently, verifying a candidate’s citizenship is much more important!

Georgia has become the 10th state to require proof of citizenship for a presidential candidate before they are allowed to be put on the ballot:

Even though Hawaii officials have repeatedly confirmed Obama’s citizenship, his birth certificate has been made public and courts have rebuffed challenges, the so-called ”birther” issue hasn’t gone away.

Georgia Rep. Mark Hatfield, a Republican, said he still doesn’t know if Obama is eligible to serve as president, and 92 of his GOP colleagues and one Democrat support the bill introduced Monday.

”Most people feel it’s an issue to a significant enough portion of our population that it needs to be addressed by the state,” Hatfield said. ”It is, in a sense, a response to … the sitting president and his inability or unwillingness to release his original birth certificate.”

Lets be clear. This is nothing but playing politics. Somehow, these folks don’t realize how stupid they look. If there is anything about this that is shocking, its that one of the sponsors is a Democrat.
Need proof that Georgia deserves the bottom ranking for education in the US? Just look at our politicians.

In Wisconsin, the line between Unions/Dems and Repubs is drawn in the sand

In the state of Wisconsin, the state government has a $3.6 billion shortfall.  Similar to other state legislatures across the country, they are coming up with a number of measures to attempt to close the budget hole.  One of the ways new Republican governor Scott Walker has proposed has created an outcry from teachers and unions:

In addition to eliminating collective bargaining rights, the legislation also would make public workers pay half the costs of their pensions and at least 12.6 percent of their health care coverage — increases Walker calls “modest” compared with those in the private sector.

According to Walker, the proposal will save $300 million over the next two years. But Dems are not at all happy with what they see as being deprived of a right. Teachers have staged massive “sick outs” so that they can protest. Democrats in the Wisconsin legislature have left and gone into hiding to prevent any vote from occurring. Protesters at the capital have been heard chanting “Freedom! Democracy! Unions!”

Wait. Did they actually include the word “unions” with freedom and democracy? Wow.  I thought democracy is people getting out to vote, voting in politicians whose job it is to steward taxpayer money, and make cuts when necessary when there is a deficit, even if the other side doesn’t like it.  Which would mean the unions are actually trying to stifle a democratic process by protesting and causing school closings.  But I digress.

Having spent my entire young working life in a right-to-work, merit pay environment, I have yet to develop much sympathy or support for unions. I admire the important things they helped with over the years (40 hour work week, child labor laws, ect). But am I supposed to be upset because they wouldn’t be able to force people to pay union dues? That they wouldn’t be able to to negotiate for things other than pay? Or that they would have to pay more money for pension and benefits just like most of us in the private sector?
Sorry, but I say no. Especially when taxpayer’s money is involved.

Links to the story can be found here and here.

Neither party is serious about debt, and the joke is on us

As of today, to pay off the entire US debt would require every US citizen to write a check for $45,400.  EVERY citizen.  The total debt is right at $14.1 TRILLION.  And neither party is really serious about doing something about it.

On the right, they are making a lot of noise, but as the saying goes, “full of sound and fury, signifying nothing.”  First, after promising to cut $100 billion in spending from the next budget, they are only able to come up with about $65 billion.  After being called to task by the Tea Party, they are able to dig and find the promised $100 billion.  The problem?  Not only are the cuts based on a budget that President Obama never sent to the House, but they also used the infamous “baseline budgeting” tricks.

Quick refresher:  Baseline budgeting is a technique where by the budget of a particular department or organization is projected years in advance.  Typically, those budgets include an already-applied increase in funding.  So, a department may already have on paper that in 2011, they will be funded at $10 million, but due to a budget increase already factored in, they may know that their budget in 2012 will have $10.3 million due to an expected 3% increase in funding.

What republicans have done is to say “we are going to cut x billions,” not acknowledging that instead of truly cutting funding, they are simply reducing the already scheduled budget increase.  So instead of cutting a department’s funding from $10 million to $9 million, they are simply advocating cutting the 3% increase to 2% or some other number.  The cut isn’t really a cut.

Further, in the “fraud waste and abuse” category, some republicans are on board with funding a 2nd, alternative engine for the F-35 Lightning II project.  The F-35 is slated to replace thousands of fighter jets in the US inventory, and the building effort is being shared across many countries, including the US, Canada, the UK, and Turkey.  The engines for the plane are made by Rolls Royce, but there is an effort in Congress to secure funding for a second engine.  The reasoning given is “in case the first one has problems,” but the real reason is to secure jobs and a contract for an American firm.  Even the Pentagon has said they don’t want it.

Democrats aren’t helping.  Even thought the White House has proposed cutting funding to some programs (like a heating oil assistance program), many Dems refuse to go along with any proposed cuts in “entitlement” spending.   Though everything should be on the table, dems are resisting anything that might touch Social Security, Medicare, and Medicaid.  Obama and the democrats have also been using the baseline budgeting trick, especially with the healthcare reform bill.  Once again, a cut isn’t really a cut.

For there to be real solutions, someone on both sides needs to wake up and wake up their fellow politicians to the real threat they all know about but are afraid to do something about (don’t want to mess up their reelection chances!).  The recommendations of the Debt Committee would be a good place to start.

Another ruling against the healthcare bill

As has been widely reported, U. S. District Judge Roger Vinson ruled on Monday that the requirement to make individuals purchase health insurance is unconstitutional. Not only did he rule against that provision, he ruled against the entire law:

“I must conclude that the individual mandate and the remaining provisions are all inextricably bound together in purpose and must stand or fall as a single unit,” Vinson wrote.

As expected, the White House announced they would appeal. But what does this mean for the law?
Republicans announced right after the bill was passed that they would do whatever they could to repeal it. The House has already voted to repeal, and conservatives believe they can use procedural techniques to force a repeal vote in the Democrat-held Senate. But somewhere, Dems are nervous. While there have been two judges that upheld the new law, and now two that have ruled against, it’s highly likely the argument will not be settled until reaching the Supremes. Currently, the court leans conservatively, with no change in sight. This would seem to bode well for the right and not so well for the left–though stranger things have happened in regards to the court and their judgements (look up “Kelo” and “imminent domain“).

Via OCD3 and CNN: Palin ain’t Reagan

Much debate has been had about Sarah Palin and pinning blame on her regarding the Arizona shootings.  I’ve had an interesting time with this–balancing my opinion that she shouldn’t be blamed the way the left is applying blame to her and the right, while trying not to come across as a Palin fan, which I am not.  Still, I appreciate different perspectives, and my good friend (and Front and Center contributor OCD3) caught this article on CNN and recommended I post it.  In it, Paul Begala explains how “Palin is no Ronald Regan:”

Official Portrait of President Ronald Reagan

Image via Wikipedia

When she first burst on the national scene, I watched her convention speech an

d could not imagine Ronald

Reagan delivering it. She was sarcastic and caustic and harsh — everything Reagan was not. I felt the same thing watching her post-Arizona video presentation. The Gipper was a tough partisan and a strong conservative, but he had a sunny, optimistic worldview and a resilient, Teflon manner that slipped

punches, drawing in even those who disagreed with him, and driving Democrats to distraction.

Reagan understood the biblical wisdom that “A soft answer turneth away wrath, but grievous words stir up anger.” Palin seems hell-bent on using the most grievous words (including the calumnyblood libel“) to stir up still more anger: the one thing we already have a surplus of.

At this rate, we’ll NEVER fix the issues

Today is the final vote on recommendations from Obama’s deficit panel.  For those who missed it, President Obama put together a bipartisan panel of 18 appointees, tasked with producing solutions for debt reduction.  The commission did its job, recommending multiple ideas that, if enacted, would help move the country towards fiscal stability.

As expected, the response was chilly at best.  Folks on both sides took the expected approach–“we need cuts, but don’t cut programs that I support!”  Republicans didn’t like the idea of tax increases on gas.  Democrats didn’t like the notion of raising the retirement age or lower tax rates.  Neither side wanted to sign on to doing away with popular tax breaks (even though lowering tax rates would offset it).

So, unless there is some sanity injected into things, we will continue on the rocky road to fiscal disaster.

QuickHit: very good article about tax cuts and small businesses

today on Yahoo, there is a very good fact checking article about tax cuts and small businesses. As is usually the case, both parties are bending numbers to make their argument look better, but the truth is in the middle:
FACT CHECK: Small business caught in tax battle

Tax shenanigans, or why $700 billion is unaffordable, but $3 trillion is affordable

The level of back-and-forth over the extension of tax rate cuts enacted under Bush 43 has reached a fever pitch.  From the right, we get “all or nothing!” or “no one should have a tax increase in this economy!” or, to borrow from a classic hip hop song by the one-hit-wonder group, The Double XX Posse, “not gon be able ta do it!”  From the left, we get “no tax cuts for millionaires and billionaires!” or “tax cuts for the rich” and “no subsidizing the rich” or “they don’t need it.”  But my favorite is that, in essence, we can’t afford the $700 billion cost (CBO projected).

For the life of me, I could not figure out how anyone would have the nerve to specifically talk about the $700 billion that extending the current rates for high-income earners may cost (remember, they are projections, so its only a guess), but not talk about how the cost of the rest of the cuts.  After all, the same CBO that produced the $700 billion number also stated that the TOTAL cost of extending ALL current tax rates would be $3 trillion.  So what gives?

Just more political shenanigans.

Let’s step back for a moment to 2007.  From wikipedia:

The PAYGO system was reestablished as a standing rule of the House of Representatives (Clause 10 of Rule XXI) on January 4, 2007 by the 110th Congress:

It shall not be in order to consider any bill, joint resolution, amendment, or conference report if the provisions of such measure affecting direct spending and revenues have the net effect of increasing the deficit or reducing the surplus for either the period comprising the current fiscal year and the five fiscal years beginning with the fiscal year that ends in the following calendar year or the period comprising the current fiscal year and the ten fiscal years beginning with the fiscal year that ends in the following calendar year.

Less than one year later though, facing widespread demand to ease looming tax burdens caused by the Alternative Minimum Tax, Congress abandoned its pay-go pledge.

So, to set themselves apart from the previous congressional crew, the swept-into-power Democrats in the House re-enacted a rule that makes a lot of sense–if we are gonna spend it, we are going to pay for it. Tub notice the next next line: it lasted less than a year. PAYGO was shelved, allowing major pieces of legislation, like the Bush Stimulus package in 2008 and Obama’s Stimulus package in 2009, to be passed without the rules applying. Then, new statutory PAYGO rules were again passed in February of 2010.
In addition, Obama signed new budget rules. From Businessweek:

Under the budget rules, any tax cuts benefitting individuals earning more than $200,000, or couples earning more than $250,000, must be offset with new tax revenue or spending cuts elsewhere.

Apparently, the tax cut line-in-the-sand was drawn long ago. After bucking the PAYGO rules, now the rules must apply and for those high-income earners, tax cuts aren’t affordable.
Here’s what’s missing.
Lets be honest. If there is an argument to be made, its that NONE of the tax rate cuts are affordable. But let’s stick to the current discussion. The reason that Democrats are saying we can’t afford the $700 billion is not because we can’t afford it. That can’t be the case, since evidently, financing $2.3 trillion via debt is not a problem (and allowed under the rules!). The real problem is that offsetting spending cuts would have to be made. History has shown that Democrats are not big on cutting spending (unless its Defense related). Any mention of cutting programs, especially entitlement programs, is met with more resistance than a goalline stand in the national championship game. Any other arguments, like referring to lower tax rates as a “subsidy” (how can the government grant or gift a person their own money) or “welfare for the rich” (once again, its their money) just distracts from the true discussion.

Don’t worry, my Dem friends, I’ll tackle the Repubs too.

Tax cuts, small businesses, and the $250k line

During the long drawn out battle regarding the Bush Tax cuts.  Democrats have drawn the line at $200k/yr for individuals and $250k/yr for families as the dividing line between those who should get permanent tax cuts and those who shouldn’t.  The main argument is that the $700 billion in lost revenue over the next 10 years is unaffordable.  Republicans counter that not only should there be no tax increases in these economic times, lots of small businesses will be negatively affected.  Of course, the truth (as I see it, of course) is somewhere in the middle.

A logical approach would be to extend them all temporarily (give it a year or 2), then let them expire.  Now, people are right now saying I’m crazy.  But if we’re going to be for real about getting the deficit under control, that should be option 1 on the table.  Republicans like to say “no tax increases” but there has to be a middle ground where folks aren’t overtaxed and the government is getting more revenue.  If anything, add a new bracket for folks making a million per year or more.  Either way, its illogical to completely remove the idea of a tax increase of some kind to combat spending.

Democrats, on the other hand, have established $250k as the line in the sand.  Mind you, no one has any idea why this number is the magic number.  But as Dems often do, it becomes an emotional issue.  That approach started from the beginning, when the tax cuts were enacted.  Despite the easily researchable facts that the cuts actually removed a number of lower income taxpayers from the tax rolls, reduced the lowest tax rate, and shifted the overall tax burden to the highest income levels (look it up), the cuts have often been referred to as “tax cuts for the rich” simply based on the sheer amount that an upper income earner got to keep (not “was given to them” as is often used as yet another argument).  What’s often heard is that folks making that much money either “don’t need a cut” or “won’t spend it.”  Or, that they cost too much.  I usually wonder how it can be said that the estimated $700 billion over 10 years is considered unaffordable, when the rest of the cuts are estimated to cost over $2 billion over the same time.   This is why if anything should be done, ALL should be rolled back.

I predict that the White House will give in to all cuts being renewed for 2 years in order to avoid all of them expiring on 12/31/10, which would be a political disaster.

The sky is falling!!

Unless you’ve been sleeping under a rock, you have heard or seen that republicans took over the House, gained seats in the Senate, and won a few governors races.  From the reactions of many of my left-leaning friends, one would think the world is about to end, or that something large, dark, and ominous is coming (Think the dark planet in “The Fifth Element” or a comet or asteroid in “Armageddon” or “Deep Impact”).

While I’m sure this puts a wrench in the plans of Dems to get certain things passed, its not the end of the world.  The government has gone back and forth between the major parties for years and the country has yet to fall off the edge of the flat planet and drift into outer space.  Its not even the first time that one house was controlled by one party, while the other (and the White House) was controlled by another.  Republicans and Democrats will have to figure a way to work together.

Now we get to see if President Obama really meant all those nice bipartisan things he said before getting elected.