THIS PLUS a $1.3 Trillion Deficit = Impressive

[101A]

Backdoor taxes to hit middle class (http://news.yahoo.com/s/nm/20100201/bs_nm/us_budget_backdoortaxes)

By Terri Cullen Terri Cullen – Mon Feb 1, 4:09 pm ET
NEW YORK (Reuters.com (http://us.rd.yahoo.com/dailynews/nm/bs_nm/storytext/us_budget_backdoortaxes/34956111/SIG=10kahpe9q/*http://Reuters.com)) --The Obama administration's plan to cut more than $1 trillion from the deficit over the next decade relies heavily on so-called backdoor tax increases that will result in a bigger tax bill for middle-class families.
In the 2010 budget tabled by President Barack Obama on Monday, the White House wants to let billions of dollars in tax breaks expire by the end of the year -- effectively a tax hike by stealth.
While the administration is focusing its proposal on eliminating tax breaks for individuals who earn $250,000 a year or more, middle-class families will face a slew of these backdoor increases.
The targeted tax provisions were enacted under the Bush administration's Economic Growth and Tax Relief Reconciliation Act of 2001. Among other things, the law lowered individual tax rates, slashed taxes on capital gains and dividends, and steadily scaled back the estate tax to zero in 2010.
If the provisions are allowed to expire on December 31, the top-tier personal income tax rate will rise to 39.6 percent from 35 percent. But lower-income families will pay more as well: the 25 percent tax bracket will revert back to 28 percent; the 28 percent bracket will increase to 31 percent; and the 33 percent bracket will increase to 36 percent. The special 10 percent bracket is eliminated.
Investors will pay more on their earnings next year as well, with the tax on dividends jumping to 39.6 percent from 15 percent and the capital-gains tax increasing to 20 percent from 15 percent. The estate tax is eliminated this year, but it will return in 2011 -- though there has been talk about reinstating the death tax sooner.
Millions of middle-class households already may be facing higher taxes in 2010 because Congress has failed to extend tax breaks that expired on January 1, most notably a "patch" that limited the impact of the alternative minimum tax. The AMT, initially designed to prevent the very rich from avoiding income taxes, was never indexed for inflation. Now the tax is affecting millions of middle-income households, but lawmakers have been reluctant to repeal it because it has become a key source of revenue.
Without annual legislation to renew the patch this year, the AMT could affect an estimated 25 million taxpayers with incomes as low as $33,750 (or $45,000 for joint filers). Even if the patch is extended to last year's levels, the tax will hit American families that can hardly be considered wealthy -- the AMT exemption for 2009 was $46,700 for singles and $70,950 for married couples filing jointly.
Middle-class families also will find fewer tax breaks available to them in 2010 if other popular tax provisions are allowed to expire. Among them:
* Taxpayers who itemize will lose the option to deduct state sales-tax payments instead of state and local income taxes;
* The $250 teacher tax credit for classroom supplies;
* The tax deduction for up to $4,000 of college tuition and expenses;
* Individuals who don't itemize will no longer be able to increase their standard deduction by up to $1,000 for property taxes paid;
* The first $2,400 of unemployment benefits are taxable, in 2009 that amount was tax-free.

[coyotes_geek]

Obama's 2011 budget is projecting an 18% increase in revenues from personal income taxes this year alone. The economy isn't going to expand that much. Someone's getting a tax hike this year.

[ElNono]

Should have thought of this when Congress passed Medicare Part D and didn't explain how it was going to be paid for... Same for Iraq/Afghanistan... Same for the TARP...

It's easy to bitch now that we got the bill...

[coyotes_geek]

Our elected leaders still aren't getting the message though. So clearly the bitching isn't nearly loud enough.

[smeagol]

So Reagan and the Bushes ran surpluses?

[ElNono]

Our elected leaders still aren't getting the message though. So clearly the bitching isn't nearly loud enough.

They only care about staying in power and engrossing wallets at this point, not what people want.

[coyotes_geek]

So Reagan and the Bushes ran surpluses?

Do you see anyone here saying they did?

[Winehole23]

I thought smeagol was referring to the (by now discredited, I hope) saying that "deficits don't matter"

[DarrinS]

gMH9QZdjS2Y

[DarrinS]

Reuters withdraws story.


http://news.yahoo.com/s/nm/20100202/bs_nm/us_budget_backdoortaxes

WTF




The story Backdoor taxes to hit middle class has been withdrawn. A replacement story will run later in the week.

[ElNono]

Still available here:

http://news.yahoo.com/s/nm/20100201/bs_nm/us_budget_backdoortaxes

[coyotes_geek]

Interesting. I wonder why they did that?

[ElNono]

We should send James flippin' O'Keefe to investigate... :lol

[coyotes_geek]

We should send James flippin' O'Keefe to investigate... :lol

:lol

I'm sure he and his buddies are at the local goodwill store looking for bad sportscoats and fedoras to complete their "PRESS" costumes as we speak.

[101A]

Interesting. I wonder why they did that?


Because it's off message:

ie: The Bush Tax Cuts ONLY helped the rich; therefore when they expire, they will only hurt the rich. Neither was/is true.

[RandomGuy]

The AMT is something that will have to be addressed at some point soon.

[RandomGuy]

One has to hope that whatever the president decides to do, the GOP will actually stop making the political decision to simply oppose him for the sake of opposing him, and actually do the right thing.

That was what pissed me off about the Dems when the Dems were out of power.

I fully expect the GOP to disappoint me.

[doobs]

I thought Obama was going to extend the Bush tax cuts for the middle class? Is that why the story was retracted?

[Winehole23]

Because somebody asked them to retract it or else a "factual" problem with the reporting was disclosed? Quien sabe? Reuters will explain the scrubbing themselves or they won't.

Web-only content is usually scrubbed without explanation, no?

[ChumpDumper]

I thought Obama was going to extend the Bush tax cuts for the middle class? Is that why the story was retracted?Yep.


ADVISORY: Backdoor taxes story
Tue Feb 2, 2010 1:35pm EST

The Feb 1 story headlined "Backdoor taxes to hit middle class" is wrong and has been withdrawn. The story said lower-income families will pay more under tax provisions scheduled to expire Dec 31. The Obama administration's budget calls for the extension of those tax provisions for households earning less than $250,000. There will be no substitute story.

http://www.reuters.com/article/idUSTRE6114QK20100202

This was extremely easy to find. I wonder if the rest of the media and blogosphere will take note if they run a story about the retraction.

Their bluntness about being wrong is refreshing.

[Winehole23]

Factually flawed, then.

[101A]

Yep.



http://www.reuters.com/article/idUSTRE6114QK20100202

This was extremely easy to find. I wonder if the rest of the media and blogosphere will take note if they run a story about the retraction.

Their bluntness about being wrong is refreshing.

True that.

Thanks - didn't think I needed to fact check Reuters.

[Marcus Bryant]

Well, at some point tax rates will have to increase, along with the reduction or elimination of other tax breaks. The federal government cannot continue to rely solely on the kindness of strangers to finance the growth of its bipartisan spending orgy.

[Marcus Bryant]

So it'll start with HHs with AGI above $250K, and then creep down over time.

[Winehole23]

Trust, but verify.

[Winehole23]

That said, Reuters' fact-checkers should have caught it.

At least they had the balls to admit they screwed up. The bluntness is refreshing.

[Marcus Bryant]

Naturally the citizenry will concern itself with who the political winner will be, rather than realizing that they are the losers.

[Winehole23]

In a sense, that's what political agonism (http://www.britannica.com/EBchecked/topic/9376/agonismb) is for. To get people personally invested in the process that screws them over.

And gets them thinking that they scored a touchdown, because they were a flea on the back of the political machine that crossed the goal line.

The powerless identify with the powerful and fiercely protect their good names.

(agonism more simply (http://www.thefreedictionary.com/Agonism).)

[ChumpDumper]

I think there are other tax breaks that will expire for the middle class in Obama's budget, but that error was glaring enough to pull the whole story.

[CosmicCowboy]

But procedurally CAN he just let PART of the tax cuts expire? It will require a new vote by Congress.

[ChumpDumper]

Any budget will require a vote by congress. The article was about Obama's proposed budget.

[CosmicCowboy]

Any budget will require a vote by congress. The article was about Obama's proposed budget.

No, the beauty of letting the Bush tax cuts expire was that it was essentially going to be a tax increase that congress didn't have to vote on. The only way a vote would be necessary was if they extended the tax cuts. Now, to extend the cuts for the middle class he has forced congress to actually vote on a tax increase (even if it is for "richers")

[ChumpDumper]

No, the beauty of letting the Bush tax cuts expire was that it was essentially going to be a tax increase that congress didn't have to vote on. The only way a vote would be necessary was if they extended the tax cuts. Now, to extend the cuts for the middle class he has forced congress to actually vote on a tax increase (even if it is for "richers")No, all they have to do is vote for a "new" tax cut that matches the old one for filers under $250k.

[DarrinS]

Reality Check on Taxes


http://blog.american.com/?p=10105





The Drudge Report today played up this article about coming middle-class tax hikes. Although Reuters has pulled the article, many people are still reading it at various websites, so it is important to note and correct its appalling inaccuracies:

– The article asserted that the Obama budget would allow the 10 percent, 25 percent, and 28 percent brackets to expire, boosting those rates to 15, 28, and 31 percent, respectively. In reality, the budget would permanently extend the lower rates.

– The article asserted that the Obama budget would raise the dividend tax rate to 39.6 percent. In reality, the budget would raise the rate only to 20 percent.

– The article asserted that the Obama budget would allow taxpayers’ option to deduct state and local sales taxes to expire. In reality, the budget would extend that option through 2011.

President Obama would permanently extend the Bush tax cuts for households with incomes below $200,000 ($250,000 for couples); statements that the president would allow the Bush tax cuts to expire are true only for households above those income levels. The president has also proposed some additional middle-class tax cuts.

Should this make us happy about President Obama’s budget? Quite the opposite. As Arthur Brooks, Alex Brill, and I have pointed out, the middle-class tax cuts that the president would extend have large revenue losses and do relatively little to promote economic growth. The tax cuts at the top that the president would allow to expire would significantly lower marginal tax rates on saving and investment and promote long-run growth. Letting those tax cuts expire would ultimately harm the middle class by lowering their wages.

Evaluation of the administration’s policies must be based on facts, not fabrications and false rumors. The Obama budget wouldn’t raise income taxes on the middle class. But it would increase marginal tax rates, threatening the long-run growth that sustains the well-being of Americans in all income groups.

[coyotes_geek]

Sounds like a pretty error-filled article. Reuters was right to pull it and print a retraction. Some reporter also needs to get a talkin' to.

[coyotes_geek]

That being said, the AMT is still something that's going to burn a lot of people if nothing is done about it.

[Marcus Bryant]

So let's not worry about tax rates creating a disincentive for investment, but higher interest rates instead?

Taxes will have to be increased and spending will have to be cut to have a shot at heading the latter off.

[Marcus Bryant]

So let's not worry about tax rates creating a disincentive for investment, but interest rates instead?

Taxes will have to be increased and spending will have to be cut to have a shot at heading the latter off.

[Drachen]

Interesting. I wonder why they did that?

They did this because Obama has stated (and assumed in his budget) that he wants the Bush tax cuts to expire for the richest, and to be made permanent for the middle class. This story was probably taken down because it was disingenuous.

edit: looks like I was late to the explanation party. Oh, and just let all the tax cuts expire. Use that money to not borrow from the Chinese. While you're at it cut some damn spending and make paygo a reality for ALL budget items.

[smeagol]

Do you see anyone here saying they did?

No.

But it is funny how conservatives criticize Obama for running deficits.

Maybe my comment was off-topic. I just wanted to point it out and not start a whole new thread.

[spursncowboys]

Should have thought of this when Congress passed Medicare Part D and didn't explain how it was going to be paid for... Same for Iraq/Afghanistan... Same for the TARP...

It's easy to bitch now that we got the bill...
It's a good thing the Dems didn't do the medicare part d since they all were pushing bush to cost way more than it did.

[Marcus Bryant]

Hey, W's socialism cost less. Whoopdefuckingdo.

[ElNono]

It's a good thing the Dems didn't do the medicare part d since they all were pushing bush to cost way more than it did.

Whatever. This is not about parties. They're both just as guilty.

[spursncowboys]

Whatever. This is not about parties. They're both just as guilty.
True but it should be put into context.

[EVAY]

Politically, there is no way that allowing the tax cuts for folks under $200 or $250K to expire would have doable. Plus, the chance that it would actually hurt the recovery to increase taxes on folks already tightening their belts is a reasonable position. But personally, I'm not opposed to the increase in taxes for some folks, and I'm not opposed to the increase in taxes for dividends. It is not a huge increase, and I don't believe that folks who are making investment decisions are going to find an increase at the margins sufficiently significant to alter their decisions.

I agree with the position expressed here by those who say that tax increases AND spending cuts are going to be required. It is a real indictment of the American educational system that the basic arithmetic of budgeting is so difficult to accept for so many.

[ElNono]

True but it should be put into context.

What needs to be put into context? That Bush ran deficits like no Republican before him, and was too chicken shit to budget all his wars?

I think everyone is well aware of that...

[mogrovejo]

"Keynesians" say this is good for the economy. When the government spends $1 it miraculously becomes $2. Sometimes more, sometimes less, they don't put much stock into exactitude. Or numbers. So, as a consequence of this, everybody will become a millionaire. It's called the multipliers. With any luck, everybody will be a billionaire.

[ElNono]

"Keynesians" say this is good for the economy. When the government spends $1 it miraculously becomes $2. Sometimes more, sometimes less, they don't put much stock into exactitude. Or numbers. So, as a consequence of this, everybody will become a millionaire. It's called the multipliers. With any luck, everybody will be a billionaire.

If you don't believe there is a Spending Multiplier (http://en.wikipedia.org/wiki/Spending_multiplier) you can always go read Robert Barro's (http://en.wikipedia.org/wiki/Robert_Barro) work.

[mogrovejo]

If you don't believe there is a Spending Multiplier (http://en.wikipedia.org/wiki/Spending_multiplier) you can always go read Robert Barro's (http://en.wikipedia.org/wiki/Robert_Barro) work.

I believe in multipliers, I just don't believe in miraculous multipliers - or in the miraculous gift that politicians somehow acquire after being elected which allows them to invest others people money more wisely and successfully than the people that actually own the money. If you have prove of the existence of above 1 multipliers, than I'd like to hear it.

I've read a big part of Barro's work - I don't disagree with him on this, I'm not sure what you meant with this particular suggestion.

[spursncowboys]

What needs to be put into context? That Bush ran deficits like no Republican before him, and was too chicken shit to budget all his wars?

I think everyone is well aware of that...
What needs to be put into context is that the dems voted for both wars, not just bush. they also voted for the budgets to pay for the wars. Furthermore, they wanted to spend more on bush's bailout and part d.

[mogrovejo]

What needs to be put into context? That Bush ran deficits like no Republican before him, and was too chicken shit to budget all his wars?

I think everyone is well aware of that...

Bush was a deficit hawk compared to Obama.

[Winehole23]

How misleading and dishonest. Bush was the biggest deficit dove ever, until Obama.

[DMX7]

This is the one good thing about congress not being able to get shit done. Now they can't renew the stupid Bush tax cuts for people making 250+k.

[DMX7]

Also interesting that this article has been retracted by Reuters... maybe because...

Obama's 2011 budget calls for the Bush tax cuts to be extended for individuals making $200,000 or less and couples making $250,000 and for the AMT patch to be extended at its 2009 parameters through 2020.

[DarrinS]

This is the one good thing about congress not being able to get shit done. Now they can't renew the stupid Bush tax cuts for people making 250+k.

We really need to put the screws to people that hire other people. It's good for job growth.

[ElNono]

I believe in multipliers, I just don't believe in miraculous multipliers - or in the miraculous gift that politicians somehow acquire after being elected which allows them to invest others people money more wisely and successfully than the people that actually own the money. If you have prove of the existence of above 1 multipliers, than I'd like to hear it.

I've read a big part of Barro's work - I don't disagree with him on this, I'm not sure what you meant with this particular suggestion.

I missed the part where you quoted politicians talking about "miraculous multipliers"... I did see you ranting about spending multipliers. I was under the impression you didn't think they existed or worked.
BTW, Spending Multipliers are not merely a construct of Keynes economics.

[ElNono]

What needs to be put into context is that the dems voted for both wars, not just bush. they also voted for the budgets to pay for the wars. Furthermore, they wanted to spend more on bush's bailout and part d.

Dems didn't vote for budgets to pay for the war because the wars were not budgeted. They did approve supplemental spending packages which is how the wars were funded back then.

You're missing the point though... I'm not defending the democrats. But you simply can't defend Bush's socialist spending spree either.


Bush was a deficit hawk compared to Obama.

Talk about revisionist history. Bush ran the largest deficit of any president before him. Democrat or Republican. Some hawk he was.

[mogrovejo]

How misleading and dishonest. Bush was the biggest deficit dove ever, until Obama.


Talk about revisionist history. Bush ran the largest deficit of any president before him. Democrat or Republican. Some hawk he was.

Bush was horrible - but compared to Obama, he was a deficit hawk.

[Winehole23]

Even if your comment was intended as a witticism, it could hardly be more misleading. It is true in no objective sense that Bush was a deficit hawk.

[Winehole23]

Tendentious comparisons, lame appeals to authority, fiat reasoning, name-calling, circumlocution, talking down to posters, flat out incoherence twinned with overbearing arrogance -- it sure is impressive what you bring to the table, mogrovejo.

Keep up the good work. :tu

[mogrovejo]

I missed the part where you quoted politicians talking about "miraculous multipliers"... I did see you ranting about spending multipliers. I was under the impression you didn't think they existed or worked.
BTW, Spending Multipliers are not merely a construct of Keynes economics.

I think I even used the word miraculously. I think it's obvious multipliers exist by definition, the contention is if and when they actually promote growth.

Keynes was a man of his time. What worries me are politicians and economists who seem to believe we're still in 1936. Btw, Keynes wasn't even the pioneer of spending multipliers.

And the idea that spending multipliers are virtuous and promote long-run economic grown (or stuff like the Hansen-Samuelson model) is essentially Keynesian and supported by neo-Keynesians.

[ElNono]

I think I even used the word miraculously. I think it's obvious multipliers exist by definition, the contention is if and when they actually promote growth.

I think you have problems reading and/or comprehending. This is what I wrote:

I missed the part where you quoted politicians talking about "miraculous multipliers".

I asked quotes of politicians because eventually they are the ones that institute the economic model we're using (Keynesian or not). I don't think anybody claimed that multipliers work, or factually disproved that they do not work. Much less that they're miraculous. So I was wondering who you were specifically bitching about.


Keynes was a man of his time. What worries me are politicians and economists who seem to believe we're still in 1936. Btw, Keynes wasn't even the pioneer of spending multipliers.

And the idea that spending multipliers are virtuous and promote long-run economic grown (or stuff like the Hansen-Samuelson model) is essentially Keynesian and supported by neo-Keynesians.

Well, the Keynes model has certainly been applied before and successfully spurted growth, not merely in the US, but in other countries as well, such as Japan or Brazil. It's a proven model in the real world. It's efficiency is certainly debatable, and I've criticized before the fact that most governments that applied it, did so only halfway, neglecting to pay off debt accrued once the economy was growing again.

It's easy to criticize Keynes economics, but critics don't really have or offer any other real world tested alternative to spur growth in a depression/recession. Monetarism only takes you as far as you can adjust the interest rates. Once they hit virtually zero, there's no other button to push.

[mogrovejo]

I think you have problems reading and/or comprehending. This is what I wrote:

I missed the part where you quoted politicians talking about "miraculous multipliers".

I asked quotes of politicians because eventually they are the ones that institute the economic model we're using (Keynesian or not). I don't think anybody claimed that multipliers work, or factually disproved that they do not work. Much less that they're miraculous. So I was wondering who you were specifically bitching about.

Really?? That's... extraordinary , to say the least. You don't think anybody claimed that the multiplier mechanism works? I'm not even sure what to say. What's your basic bibliography on the multiplier-accelerator model and growth?

Bitching? I was mocking the voodoo economics and everybody who believes in that spending multipliers exceed one. You can include every politician that voted for the stimulus package in that one. If I get really specific, I'd need to cite thousands of politicians.




Well, the Keynes model has certainly been applied before and successfully spurted growth, not merely in the US, but in other countries as well, such as Japan or Brazil. It's a proven model in the real world. It's efficiency is certainly debatable, and I've criticized before the fact that most governments that applied it, did so only halfway, neglecting to pay off debt accrued once the economy was growing again.

It's easy to criticize Keynes economics, but critics don't really have or offer any other real world tested alternative to spur growth in a depression/recession. Monetarism only takes you as far as you can adjust the interest rates. Once they hit virtually zero, there's no other button to push.

Challenging the critics of the neo-Keynesian model to offer an alternative to spur growth via government intervention is a "when have you stopped beating your wife?" trick.

[ElNono]

Really?? That's... extraordinary , to say the least. You don't think anybody claimed that the multiplier mechanism works? I'm not even sure what to say. What's your basic bibliography on the multiplier-accelerator model and growth?
Bitching? I was mocking the voodoo economics and everybody who believes in that spending multipliers exceed one. You can include every politician that voted for the stimulus package in that one. If I get really specific, I'd need to cite thousands of politicians.

Let's see the quotes. Don't be shy.


Challenging the critics of the neo-Keynesian model to offer an alternative to spur growth via government intervention is a "when have you stopped beating your wife?" trick.

In other words, you don't have any real world tested alternatives to the Keynesian economic model to spur growth during recession. That's what I thought.

[spursncowboys]

All presidents have had a keynsian type model except for reagan. Of course politicians like a model that says if we take money that we don't have and spend it - you will create jobs. That's a no brainer. However when has the keynsian model worked?

[coyotes_geek]

All presidents have had a keynsian type model except for reagan. Of course politicians like a model that says if we take money that we don't have and spend it - you will create jobs. That's a no brainer. However when has the keynsian model worked?

Delete "except for Reagan" and you'll have made a good point.

[mogrovejo]

Let's see the quotes. Don't be shy.

Quotes of what? That are multipliers above 1? Is this serious? Why the heck do you think people defend it? The entire point of anyone who defends "stimulus packages" and keynesians policies is that spending multipliers are above 1. I mean, that's Keynes point.

Are you really familiar with the fiscal spending and growth theory?

Here, the study by Christina Romer, chair of the President's Council of Economic Advisers, and Jared Bernstein, the Vice President's chief economist: http://otrans.3cdn.net/45593e8ecbd339d074_l3m6bt1te.pdf

Page 13, Appendix 1 - they have the valus for multiplier for government spending and for tax cuts.


In other words, you don't have any real world tested alternatives to the Keynesian economic model to spur growth during recession. That's what I thought.

What the heck is "real world"? As opposed to the "unreal world"? It's not only that I haven't tested alternatives, it's that I simply don't agree with the premise.

The most "tested" method of promoting growth has been around for millenniums, well before Keynes and even the modern government.

[mogrovejo]

Y = F(K, H, L), or Y/L = F(K/L, H/L, 1)

[mogrovejo]

Delete "except for Reagan" and you'll have made a good point.

Besides many pre-Roosevelt presidents, like Harding, Eisenhower is a classic example of an Administration (or 2) that consistently refused to adopt the Keynesian crazyness to "cure" the economy of recessions.

[Wild Cobra]

Impressive deficit... unimpressive president and congress.

TARP, when passed, on the loans, when paid back, was suppose to be used to pay down the deficit. Therefore, except if some money wasn't recovered, it wasn't suppose to be a big hit on the deficit. The democrats now, rather than using the money paid back to reduce the current deficit, want to spend it as well!

This is flat out illegal by the law they passed. They claim they will rewrite the law. I really doubt TARP would have passed without that provision. Even if the democrat congress passed it, I think president Bush would have vetoed it without that provision.

Shame on you democrats.

[mogrovejo]

TARP is now Axelrod's personal slush fund. The spending powers used to rest with the Congress, now they rest with the President's boss.

[Winehole23]

Y = F(K, H, L), or Y/L = F(K/L, H/L, 1) http://www.jstor.org/pss/2118477?cookieSet=1

[Winehole23]

TARP is now Axelrod's personal slush fund. The spending powers used to rest with the Congress, now they rest with the President's boss.Very provocative. Can you back that up, or is that more big talk?

Have Paulson, Bernanke and Geithner got anything to to with it anymore?

Just curious, Profe. it is sometimes hard to follow the twists and turns of your mind.

[Winehole23]

You say that David Axelrod, has all the money and power now?

[Winehole23]

http://angrywhitedude.com/wp-content/uploads2/2009/05/david-axelrod.jpg

[Winehole23]

Did I mishear?

[Winehole23]

Wrong Axelrod?

[mogrovejo]

Not even trying to make sense of this stuff. If you're trying to talk to me about the issues on topic, write a post in plain, clear English, please.

[Marcus Bryant]

All presidents have had a keynsian type model except for reagan.

Wha?

[Winehole23]

Not even trying to make sense of this stuff. If you're trying to talk to me about the issues on topic, write a post in plain, clear English, please.You don't use it. Why should I?

[Winehole23]

One needs to complete an extensive bibliography to understand your foolish nonsense.

[Winehole23]

Maybe that's why you keep handing out reading assignments.

[Winehole23]

You can't make yourself understood.

[Winehole23]

Pobrecito.

[mogrovejo]

You don't use it. Why should I?

I try. English isn't my native language though. Feel free to ignore anything I write or to ask for clarifications.

[Winehole23]

I try. English isn't my native language though. Feel free to ignore anything I write or to ask for clarifications.Look, my own attainment in Spanish is only intermediate, so I can sympathize.

It's quite enough for me that you so regularly undertake to lecture US natives about US politics, lecturing us also about the importance of plain, clear English...

... is just too conceited. Sorry.

[mogrovejo]

Whatever... another issue where you have nothing of substance to add, it seems.

[Winehole23]

More self quotation. You could at least come up with some new lines, mojojojo.
http://www.rowdyruff.net/images/fanart/sniper/mojo.png

[Winehole23]

http://www.grave-diggers.com/images/dosmojo.jpg

[Winehole23]

http://www.futurama-madhouse.com.ar/hacker/hack262.png

[Winehole23]

http://th09.deviantart.net/fs8/300W/i/2005/310/5/e/MOJO_JOJO_by_Monkey_Cosio.jpg

[Winehole23]

http://fc03.deviantart.net/fs24/f/2007/319/8/c/Mojo_Jojo_Taunts_The_Girls__by_blackhellcat.jpg

[Winehole23]

http://3.bp.blogspot.com/_1uxuRr2KvS4/S0UFR9jgeWI/AAAAAAAAALU/SP2Er0WjHFo/s320/mojo+jojo+yo%21.jpg

[Winehole23]

http://fc02.deviantart.net/fs43/f/2009/056/7/c/Mojo_jojo_by_mARTu_Mandy.jpg

[mogrovejo]

1.


Markets Fall Sharply Amid Fears on Debt and Jobs (http://www.nytimes.com/2010/02/05/business/05markets.html?hp)


Worries about Europe’s persistent debt troubles spilled into United States markets on Thursday, bringing stocks to new lows for the year amid fears that more countries would fall victim to crippling deficits.

Adding to the anxiety was a bleaker-than-expected report on the United States labor market. The Labor Department said the number of people filing first-time claims for unemployment increased by 8,000 (http://www.nytimes.com/2010/02/05/business/economy/05econ.html?ref=business) to 480,000 last week, far above Wall Street’s estimates of 455,000.
The downward momentum on Thursday grew out of Europe, where nervousness about the fiscal health of three countries — Greece, Portugal and Spain — prompted concern that governments might be headed for default, and that the euro (http://topics.nytimes.com/top/reference/timestopics/subjects/c/currency/euro/index.html?inline=nyt-classifier) would continue to deteriorate. By day’s end, the major indexes had dropped about 3 percent, and the Dow was knocked within spitting distance of the 10,000 threshold, its largest loss since April.
After years of debt-fueled expansions, many European nations are only now confronting the realities of their budget woes. How Europe emerges from its mountain of debt will likely determine how fast the rest of the world recovers from the steepest economic downturn in decades.
“The question now is, ‘How big is this fire going to be?’ ” said Uri D. Landesman, head of global growth at ING (http://topics.nytimes.com/top/news/business/companies/ing_groep_nv/index.html?inline=nyt-org). “What is panic, and what is legitimate, we don’t know at this point.”
On Thursday, investors were once again talking about the possibility that global markets could be in the midst of a steep decline, after months of roaring ahead even as the economic recovery faltered. As the toll on stocks worsened, investors began drawing up lists of countries that could be next to founder: they looked to Hungary, Poland, and Bulgaria, and began eyeing the Baltics.
The cost of insuring debt rose sharply as investors scrambled to protect their investments. Policy makers face tricky decisions in coming months as countries like Greece, Portugal and Spain wrestle with grave economic problems and others, like Britain, Germany and France, show signs of modest recovery. Spain is suffering from 19 percent unemployment and a budget deficit equal to 11.4 percent of gross domestic product, rivaling Greece’s 12.7 percent shortfall.
Investors have hoped that Greece’s problems were extreme and largely contained. But new alarms were set off on Thursday after Spain said its deficit might be worse than previously thought and officials in Portugal reported difficulty in selling treasury bills. Investors in Portugal demanded a higher interest rate, seeking compensation for taking a risk on the country’s debt.


2.
(http://www.realclearpolitics.com/news/ap/politics/2010/Feb/04/house_agrees_to__1_9_trillion_more_debt.html)
House agrees to $1.9 trillion more debt (http://www.realclearpolitics.com/news/ap/politics/2010/Feb/04/house_agrees_to__1_9_trillion_more_debt.html)


3.
All the President's Budget Assumptions (http://reason.com/archives/2010/02/04/all-the-presidents-budget-assu)

The 2011 budget contains more rosy scenarios than a romance novel.

Veronique de Rugy (http://reason.com/people/veronique-de-rugy)

“Another manifestation of irresponsibility is the large budget deficits we are inheriting," wrote President Barack Obama in last year's budget message for fiscal year 2010 (which runs from October 2009 through September 2010). "These deficits, over time, will harm economic growth and impose burdens on our children and grandchildren," he continued. "For the past eight years, in a time of economic growth, the government spent recklessly on tax cuts for the few and hand-outs for the well off and well-connected, mismanaged billions of dollars in taxpayer money, and failed to honor the responsibilities we have to future generations."
Given his firm grasp of the consequences of the situation, you would have thought that the president would cut government spending and try to reduce the deficit. Sadly, the table below shows that you'd be wrong.
Indeed, contrary to the promises Obama made last year, the deficit grew by over 10 percent between FY2009 and FY2010. And spending, which was projected to go down in FY2010 (http://reason.com/archives/2009/02/27/the-era-of-even-bigger-governm) to $3,552 billion from its $3,938 billion FY2009 level, will actually climb by an estimated 6 percent. In total dollars, the deficit for FY2010 is projected by the government to reach $1.56 billion (last year, Obama projected it would be $1,171 billion (http://www.gpoaccess.gov/usbudget/fy10/pdf/budget/summary.pdf)).


And what did President Obama request in his recently released budget for FY2011? In his latest budget message (http://www.whitehouse.gov/omb/budget/fy2011/assets/message.pdf) he writes:

To help put our country on a fiscally sustainable path, we will freeze non-security discretionary
funding for 3 years. This freeze will require a level of discipline with Americans’ tax dollars and a number of hard choices and painful tradeoffs not seen in Washington for many years. But it is what needs to be done to restore fiscal responsibility as we begin to rebuild our economy.
Here's the rough plan in table form.


http://reason.com/assets/mc/jtaylor/verotable2.png


Expressed as a percentage of Gross Domestic Product (GDP), that means total government outlays will equal 25.1 percent of GDP, the second highest rate since 1945 (the highest was 25.4 percent for FY2010). Federal revenues will amount to 16.8 percent of GDP (up from its 14.8 percent level in FY2010). And the budget deficit will come to 8.3 percent of GDP, down from its FY2010 level. To put that number is perspective, remember that during the 1980s, a decade known for high deficits, the deficit average was 4 percent of GDP.
The only sector where spending might decrease is the area subject to the spending freeze (that area covers 13 percent of the budget, but the freeze won't take effect until next year). Since the budget came out, I have spent a long time trying to figure out how the freeze will work and exactly what it entails. Based on the budget data just released, however, there wasn’t enough information available to answer that question as of this writing.
So much for transparency. As economist and former Congressional Budget Office Acting Director Donald Marron put it on his blog (http://dmarron.com/2010/02/02/initial-thoughts-on-the-presidents-budget/#comments) after the budget numbers were released on Tuesday: "To fully understand the trajectory of non-security discretionary spending, you need to consider such obscure bits of budget arcana as the obligation limitations used for transportation funding (ob lims, to the initiated), the proposed conversion of Pell grants from discretionary to mandatory spending, the reassignment of bioshield from security to non-security spending, and the fact that Census spending is particularly high in fiscal 2010 because of the decennial census. I haven’t actually crunched the numbers, but that’s not my point tonight. Instead, my point is simply how hard it can sometimes be to match budget reality to budget communications."
It is also important to note the increase in defense spending (4.1 percent). Such an increase is not surprising, given that Obama is increasing troop levels in Afghanistan without withdrawing troops in Iraq any faster than President Bush would have done. But anyone who thought that Obama would be less of a hawk than his predecessor should have realized by now that this is a myth. In fact, this year the defense budget is the biggest in total real dollars in U.S. history.
So spending is going up. And yet the president predicts the FY2011 deficit will shrink from its FY2010 level of $1.56 trillion to $1.2 trillion. Better yet, the president projects that by 2014 the deficit will decrease by more than half to reach $706 billion.



How does Obama hope to get there? He pencils in an 18.5 percent increase in revenue between FY2010 and FY2011.
http://reason.com/assets/mc/jtaylor/verotable3.png
Where will all this new money come from? First, the president assumes revenue from letting the Bush tax cuts expire on income earners making more than $250,000 per household. Then he assumes revenue from closing “loopholes” on the corporate income tax sides. (What he calls loopholes are just exemptions that were built into the corporate income tax system to help U.S. companies competing on the international market.) If Obama succeeds in repealing these exemptions without reforming the corporate tax code, however, there is no doubt that American companies will have a harder time (http://reason.com/archives/2009/07/14/destroying-jobs-in-order-to-sa) making a buck and that the revenue stream they bring in will shrink.
Finally, the president's revenue estimate relies on optimism. His projected GDP growth and unemployment numbers are very rosy. In FY2011, the president assumes that the economy will growth by 5.1 percent (see Table S-13 of the Summary Tables (http://www.whitehouse.gov/omb/budget/fy2011/assets/tables.pdf)). He assumes that the economy will grow by 6 percent in 2012. And he expects the unemployment rate to decline. While his jobs programs have failed miserably (http://reason.com/archives/2009/12/11/did-the-stimulus-create-jobs) so far, he anticipates that next year the unemployment rate will drop to 9.2 percent. Better yet, in 2012 it will drop to 8.2 percent and will reach 6.5 percent in FY2014.
Given how unrealistic these projections are, relying on an 18.5 percent increase in revenue this year is simply not credible. Which puts the other numbers in President Obama's budget—which is already nothing to write home about—in an even harsher light.

[coyotes_geek]

And Obama continues the time honored tradition of adopting the "cross your fingers and hope the economy grows faster than the government" approach to defecit reduction.

[mogrovejo]

Paul Krugman:
(http://www.nytimes.com/2010/02/05/opinion/05krugman.html)

Let’s talk for a moment about budget reality. Contrary to what you often hear, the large deficit the federal government is running right now isn’t the result of runaway spending growth. Instead, well more than half of the deficit was caused by the ongoing economic crisis, which has led to a plunge in tax receipts, required federal bailouts of financial institutions, and been met — appropriately — with temporary measures to stimulate growth and support employment.


The point is that running big deficits in the face of the worst economic slump since the 1930s is actually the right thing to do. If anything, deficits should be bigger than they are because the government should be doing more than it is to create jobs.


Well, as his hero used to say, "in the long run, we're all dead", so I can see his point.

[coyotes_geek]

If you're running large defecits to spend money on things that will actually put people to work, then that's one thing. But not all spending falls into that category. So much of the stimulus bill went to things like extending health coverage for the unemployed, food stamps, and other welfare programs. Now I'm not saying those aren't worthy causes, but they're not things that are going to stimulate the economy.

[mogrovejo]

Reading Krugman today reminded me of the Portuguese and Spanish governments and their comical disorientation with the current budgetary/funding crisis. Like Krugman, they also though they could just keep spending other's people money - especially "in the face of the current economic slump". They still don't know what have hit them. The Spanish government wants to nationalize the... rating agencies. According to these peculiar minds, they're the ones to blame because they cut Spain's debt rating. So, in their idea, the solution is to outlaw them and to create an European Union sponsored agency that would rate the credit of the EU governments. The Portuguese Finance Minister, blames the lenders - accusing them of being possessed by "animal spirits" (sic). Apparently he believes that insulting the guys you need is the best course of action. It's been a long time since I've been this amused with politics.

[mogrovejo]

If you're running large defecits to spend money on things that will actually put people to work, then that's one thing.

What are those things? Who's in the best position to decide as correctly as possible what are those things?

I'm extremely sceptical about the ability of a few politicians and bureaucrats to make that decision. Not because they're dumb, but because it's a problem way too complicated for centralized decisionmaking to solve it.


Now I'm not saying those aren't worthy causes

Yes, they are. More people should do philanthropy.

[coyotes_geek]

What are those things? Who's in the best position to decide as correctly as possible what are those things?

If the goal is to stimulate the economy then those things need to be things that require somebody to perform some kind of task, also known as a job. That's different than just handing out money. Most of the people who I see that have become trendy Keynsians over the last year or so seem to think that as long as the government has a big defecit then they must be stimulating the economy. That's not true. How the money gets spent makes a difference.


I'm extremely sceptical about the ability of a few politicians and bureaucrats to make that decision. Not because they're dumb, but because it's a problem way too complicated for centralized decisionmaking to solve it.

I'm skeptical about the ability of politicians to do anything other than worry about getting re-elected.


Yes, they are. More people should do philanthropy.

Agreed.

[Winehole23]

It's been a long time since I've been this amused with politics.

http://www.smh.com.au/business/warning-of-greek-crisis-spreading-across-eu-20100205-nil2.html

[Winehole23]

How funny that you think it's funny.

[MannyIsGod]

Krugman >>>>>>> Powder puff girls villain.

I see Mojo ranting about how wrong he is but I don't see a why.


Also, true deficit hawks better come to love taxes because anyone planning to shrink the debt needs to under stand it manes higher taxes.

[Winehole23]

Makes?

[mogrovejo]

As Lady Thatcher put it, "the problem with socialism is that you eventually run out of other people’s money".

[Winehole23]

Epigrammatic.

[Winehole23]

You are studded with epigrams, Maestro.

[Winehole23]

Krugman >>>>>>> Powder puff girls villain. If you agree with Krugman, I can see that. My own beef with mogrovejo was more aesthetic than technical.

[ChumpDumper]

If you're running large defecits to spend money on things that will actually put people to work, then that's one thing. But not all spending falls into that category. So much of the stimulus bill went to things like extending health coverage for the unemployed, food stamps, and other welfare programs. Now I'm not saying those aren't worthy causes, but they're not things that are going to stimulate the economy.How are food stamps and unemployment benefits not stimulative?

[TeyshaBlue]

How are food stamps and unemployment benefits not stimulative?

Seems to me like those programs are designed to be more palliative rather than stimulative.

I know you didn't ask me. Sue me.:lol

[ChumpDumper]

Seems to me like those programs are designed to be more palliative rather than stimulative.If a goal is increased economic activity, those benefits are spent almost immediately.

[TeyshaBlue]

If a goal is increased economic activity, those benefits are spent almost immediately.

Ok. In a strict sense, I suppose that would qualify.

[MannyIsGod]

As Lady Thatcher put it, "the problem with socialism is that you eventually run out of other people’s money".

But of course, yet capitalism never does.

:lol

[Nbadan]

...especially when you can just print more...

[Nbadan]

that said, gas prices are on the decline because the dollar is strengthening against foreign currencies, given the current state of emergency in foreign debt..