Congress had the opportunity to fix the financial mess we are in with a couple bills lately. The Fiscal Cliff and the funding bill for the devastation of Hurricane Sandy were opportunities that Congress missed on taking real measures to fix the financial problems facing this country. However, they punted away the chance and instead loaded each bill with pork. These guys just don't get it and we, for one, are tired of it.
It is time to unload the entire batch from Speaker, Majority Leader down to the janitor. Throw the entire bunch out and make them go and make a living and stop leaching off us.
Conservative Tom
It is time to unload the entire batch from Speaker, Majority Leader down to the janitor. Throw the entire bunch out and make them go and make a living and stop leaching off us.
Conservative Tom
Congress Sticks It To Us Again
January 4, 2013 by Chip Wood
PHOTOS.COM
The Federal government will collect more payroll taxes this year.
Happy New Year, everyone! Weren’t you inspired to see how our elected representatives worked late into the night, even on New Year’s Eve, to keep this country from plunging over the fiscal cliff?
And what a great deal they got for us! Taxes are guaranteed to go up for the vast majority of Americans. Spending cuts will be postponed. Government is going to get bigger. So will the deficit. Barack Obama can gloat that he forced Republicans to accept higher taxes. In fact, an anonymous “official close to the talks” told FOX News’ Ed Henry that getting the GOP to break their tax pledge is “one of the most consequential policy achievements of the last couple of decades.”
My, doesn’t that make you feel better?
Conservatives in the House made a last-ditch effort to include some mandatory spending cuts in the legislation. But that effort failed when Democratic leaders in the Senate said they would refuse to consider any changes in the legislation they had approved the night before. When the final tally was taken, the measure passed the House 257-167, with about a third of the Republicans voting in favor of it.
The margin of approval was even bigger in the Senate, where it passed by a vote of 89-8. Among the tiny minority that voted nay were such Tea Party favorites as Marco Rubio (R-Fla.), Rand Paul (R-Ky.) and Mike Lee (R-Utah).
And even though everyone is sick of all the politicking and posturing, we’re going to go through all of it again over the next couple of months. That’s when we run smack into the debt ceiling, have to deal with mandatory budget cuts and are supposed to come up with some sort of budget for the next fiscal year.
Treasury Secretary Timothy Geithner added fuel to the fire when he said last week that the United States would reach its debt limit on Dec. 31 and, thus, presumably run out of money. But then he piously proclaimed that he could use some “extraordinary measures” to find the funds to keep government going for another couple of months. So the rhetoric to raise the debt ceiling from $16.394 trillion, where it is now, will get a lot hotter between now and March 1.
There is no rest for the wicked — or for the big spenders in Washington.
In a classic example of premature congratulations, the stock market celebrated the new accord. The Washington Post reported: “The Dow soared 308 points, or 2.4%, on Wednesday, the biggest point to start a year in history, after posting the biggest ever year-end point gain of 166 points on Monday.”
But don’t expect the euphoria to last for long, as the realities of what this new agreement does and doesn’t do begin to strike home.
Just how bad is this Frankenstein’s monster? The bill is packed with pork for many of the Administration’s pet projects, including subsidies for plug-in electric vehicles, special deductions for film and television productions, a $12.1 billion tax credit for wind energy and even first-time home buyers in the District of Columbia. Numerous subsidies, tax credits and other goodies are buried in the legislation. You can be sure that the more we learn about what’s in the bill, the less we will like it.
Although Barack Obama campaigned on promises to raise taxes for anyone making more than $200,000 a year and couples earning $250,000, the final legislation raised the base a bit higher. The new limit is families and small-business owners earning $450,000 a year. They will see their personal income tax rate go from 35 percent to 41 percent.
But that’s a fraction of the hit that income from investments will take. Thrifty seniors who lived within their means all of their lives will see the taxes on their investments go up dramatically, while the incentive for anyone to invest in productive businesses will go down. That’s because taxes on dividends and capital gains will go from 15 percent to 23.8 percent. (The final number includes an Obamacare investment income surtax of 3.8 percent.)
In addition to those higher tax rates, couples earning $300,000 or more a year will see their deductions and exemptions phased out. The more they earn, they less they will be able to deduct.
One of the few pieces of good news in the measure is that the estate tax won’t be quite as bad as was feared. If we had gone over the fiscal cliff, the death tax would have been 55 percent on all estates worth $1 million or more. The new number is 40 percent for estates valued at $5 million.
But there is another tax increase that will hit every wage earner in America. That is the payroll tax collected for Social Security, which will rise from 4.2 percent to 6.2 percent. This is because a temporary reduction in payroll taxes that Congress approved two years ago, ostensibly to help stimulate the economy, expired on Jan. 1.
So every person earning $50,000 a year or more will pay an additional $1,000 in payroll taxes. So much for the myth that only “millionaires and billionaires” will have to ante up to help pay for Obama’s additional spending.
Taken all together, the Congressional Budget Office says this compromise legislation will add $4 trillion to the national debt over the next 10 years. And even that estimate assumes that the budget cuts required by sequestration actually do take effect this year. I wouldn’t bet on it. Although the sequestration cuts were supposed to begin on Jan. 1, the fiscal cliff compromise kicked that can down the road for another two months.
The bottom line is that this legislation raises income taxes, capital gains taxes, dividend taxes, death taxes and payroll taxes. It is a huge victory for Obama and his big-spending buddies in Congress and a big setback for everyone who believes that Washington has a spending problem, not a revenue problem.
In effect, we’ve given some chronic alcoholics the keys to the liquor cabinets. And now we hope they will somehow sober up? Don’t count on it.
Until next time, keep some powder dry.
Here is what this guy writes…
ReplyDelete"Taken all together, the Congressional Budget Office says this compromise legislation will add $4 trillion to the national debt over the next 10 years. And even that estimate assumes that the budget cuts required by sequestration actually do take effect this year. I wouldn’t bet on it. Although the sequestration cuts were supposed to begin on Jan. 1, the fiscal cliff compromise kicked that can down the road for another two months.
The bottom line is that this legislation raises income taxes, capital gains taxes, dividend taxes, death taxes and payroll taxes. It is a huge victory for Obama and his big-spending buddies in Congress and a big setback for everyone who believes that Washington has a spending problem, not a revenue problem."
He has the same blind spot as Conservative Tom. Yes, there are all the tax increases in the fiscal cliff deal that he notes. He has 20-20 vision on all of them. His blind spot is the TAX CUTS for 99.9% of tax-payers caused by making the Bush tax cuts permanent. These tax cuts offset ALL the tax increases listed (except payroll) and thereby create a $4 trillion "revenue problem" over 10 years, according to CBO. It is almost hilarious that he cites the CBO study which concludes that the government will lose a (net) $4 trillion because of this legislation, while whining about the comparatively small revenue enhancers in the law! We have a "deficit problem", and spending is only half of the equation.
--David
Okay Tom, test your knowledge…
ReplyDeleteWhich of the following cost the federal government the most in 2010?
A. Tax expenditures
B. Medicare and Medicaid combined
C. Social Security
D. Defense Discretionary
E. Non-Defense Discretionary
Data from Office of Management and Budget (OMB)
--David
Tax expenditures means nothing--is that the IRS? Where is government operations?
DeleteObviously the highest cost is Medicare and Medicaid along with Social Security.
The Joint Committee on Taxation crunched all the tax provisions of the fiscal cliff law in exhaustive detail…
ReplyDeletehttps://www.jct.gov/publications.html?func=startdown&id=4497
Their bottom line is that it is a net TAX CUT of $3.915 trillion dollars from 2013-22 compared to if Congress had done nothing on January 1, 2013. Their analysis is independent of CBO and yet came to virtually the same number. Facts are facts, even when contrary to the "we don't have a revenue problem, just a spending problem" view of the world.
Again, it is a simple mathematical fact that the deficit is the gap between revenue and spending, and since 2000, revenue as percentage of GDP has dropped to its lowest level in 60 years at the same time spending as a percentage of GDP has increased to its highest level in 60 years. Thus, it is undeniable that they have both significantly contributed to the gap. You are never going to resolve the budget deficit by ignoring half of the problem. Spread the word.
--David
Correction (fact-checking against myself!):
ReplyDeleteThe CBO did rely on the estimates of the Joint Committee on Taxation, so their conclusions are not independent. Sorry about that. So you go ahead and mistrust CBO all you want, because they are just reporting the JCT numbers.
--David
The big numbers in the JCT report are keeping the 10, 25% brackets and the AMT. In other words, the major effect is against the lower brackets.
ReplyDeleteThat's my point. Everybody got a TAX CUT on all income up to $400,000. Those tax cuts add up to nearly $4 trillion net loses in revenue in combination with all the other tax provisions in this legislation.
ReplyDeleteMeanwhile, what is your answer to my little quiz below...
Which of the following cost the federal government the most in 2010?
A. Tax expenditures
B. Medicare and Medicaid combined
C. Social Security
D. Defense Discretionary
E. Non-Defense Discretionary
Data from Office of Management and Budget (OMB)
--David
Look back and you will see my answer!
ReplyDeleteTax cuts should not be an increase in taxes. A person earning $50,000 has a $1000 increase in taxes plus the increase in Medicare and Obama Care--that is a 5% increase at a minimum. The economy is going to stall and we WILL fall into a major recession if not depression.
There is no net increase in taxes. There is a net DECREASE of nearly $4 trillion dollars in taxes over 10 years as a result of the law passed January 1, 2013. It is all spelled out there in black and white by JCT.
ReplyDeleteYou did not answer my question. It was a multiple-choice quiz with choices A,B,C,D,E. So stop dancing around the question, and reply A,B,C,D, or E, please. I'd like to move on to my next point, but would first like have some agreement on facts.
--David
The largest expenditures are Social Security, Medicare and Medicaid followed closely by defense. check out the numbers here:
ReplyDeletehttp://www.usgovernmentspending.com/year_spending_2010USbn_13bs1n_1000#usgs302
Um, did you notice choice "A" -- tax expenditures? That was the right answer.
ReplyDelete(From a budget deficit standpoint, it makes no difference whether the money is transferred from the government to an individual or corporation by a direct spending (e.g. Social Security payment) or a tax expenditure (e.g., a tax credit or deduction). Either way, exactly the same amount of money is lost to the Treasury.)
--David
Updated for 2012…
ReplyDelete"Certain major tax expenditures total more than $800 billion in 2012—or 5.3 percent of GDP, equal to about one-third of the federal revenues projected for 2012 and greater than projected spending on Social Security, on defense, or on Medicare.
That set of tax expenditures will total nearly $12 trillion over the 2013–2022 period—or 5.8 percent of GDP—including the effects on both payroll and income taxes."
http://www.cbo.gov/publication/42919
------------
So, since tax expenditures will account for $12 trillion in the budget deficit over the next decade, if we just cut them in half, we would get about 3% increase in revenue as percentage of GDP. That puts us at my revenue target of 20% of GDP. Let the sequester kick in and add the saving from Obamacare, and we could get spending down to around 20% of GDP. Result: balanced budget. This works mathematically, but not politically, because of lobbyists and campaign financing.
--David
Maybe you will believe me when I tell you that on January 1, 2013 Congress passed -- and Obama signed -- a net $4 trillion TAX CUT over the next 10 years if I stop citing sources like CBO and JCT and simply refer you to one of your comrades over at redstate.com….
ReplyDeletehttp://www.redstate.com/2013/01/17/liberals-dont-need-revenue-to-grow-government-anymore/
He should have added that Reagan and Bush decided they didn't need revenue to grow government, either, but then that was the comment that got me banished from posting on the redstate.com website.
I think (and hope) he is wrong that nobody in Congress will EVER want to raise another dime in revenue, although we obviously remain in gridlock until at least the 2014 midterms.
--David