The lame-duck Senate today is voting for cloture on two Democratic proposals, one to extend the Bush era tax cuts for all individuals with income under $200K and all married couples under $250K and another to do the same for all earners under $1 million. The votes seem assured to fail as all 42 Republicans (because the election in Illinois was a special election, Mark Kirk is already seated for the lame duck session) vowing to hold out for a bill that extends all Bush era tax cuts.
Here is the honest truth that neither party is telling you...we simply cannot afford to extend ANY of the tax cuts to earners at ANY level. The cost of extending to those under $200/$250K is approximately $4 trillion over the next 10 years. The cost of extending to those above that level is an incremental $700 billion.
I like a tax cut as much as the next person. But we can't afford any of them. Not with red ink spilling as far as the eye can see. It's time for all of us citizens to grow up and realize that you can't have huge government spending on two wars, Social Security and Medicare as it exists today AND have low taxes for everyone.
But neither party will tell you that. On 85% of the cost of the extension measure, the parties are in violent agreement. On the other 15% (the tax cuts for high earners), I suspect that the GOP will ultimately get its way, at least for 2011. What a shame that we continue to borrow from China because we aren't grown up enough to pay our bills.
By the way....isn't it ironic that the Bush Tax Cuts were passed under reconciliation so as to prevent a Democratic filibuster but that the Democratic changes in the rules of reconciliation now prohibit them from using this tactic to get their version of the extension? Democrats tightened reconciliation rules when they came to power to limit reconciliation to appropriations bills and deficit-reducing bills. Since the base case is that all the tax cuts expire on Jan 1, this clearly does not meet either of those criteria. The net effect of not being able to pass a deficit-increasing bill under reconciliation is likely to be that an even more deficit-increasing bill is ultimately passed.
Where is Ross Perot when you need him? Or even John McCain from a few years ago, a man who opposed the Bush Tax Cuts on the basis of their impact on the deficit.
Some Reason to Be Encouraged
While the bi-partisan deficit reduction panel didn't reach the 75% bar it set for itself (14 out of 18 members voting for the proposal), it did ultimately get 11 out of 18 members to back a very tough set of spending cuts and tax increases that would reshape the course of our nations budget.
I've written previously about why I support many of the key provisions of their plan, including raising the Social Security retirement age, eliminating or severely curtailing the home mortgage interest deduction and making meaningful cuts in defense spending. At the time, I lamented that it would probably quickly fall by the wayside as spineless Republicans and Democrats, who have seemed unwilling to ask even the most basic sacrifices of the population to balance our budget, would all find something to hate in the bill.
Maybe I was too hasty in my judgement.
On the deficit panel, liberal Senator Richard Durbin voted for the plan. So did conservative Senator Mike Crapo. So did conservative former Senator Alan Simpson. So did moderate Democrat Erskine Bowles.
Since the release of the report, 13 additional Senators, 12 Democrats and Independent Joe Lieberman have all urged support for the proposal.
I'm encouraged, but obviously we are a long way from passage. I strongly urge President Obama to work with the new GOP leadership in the House and Democratic leadership in the Senate to build support for key elements of this proposal early in the new year.
The best thing that we could do for the nation's long-term prosperity is to deal with the structural issue of the deficit. This is an issue that will require sacrifice and needs Presidential leadership. Let's hope the President can show some.
Showing posts with label Deficit Reduction Commission. Show all posts
Showing posts with label Deficit Reduction Commission. Show all posts
Saturday, December 4, 2010
Saturday, November 13, 2010
Murkowski Poised to Make History, A Very Good Start on Deficit Reduction That is DOA
Tea Party to Lose Showdown in Alaska
They are a little more than two thirds of the way through counting write-in ballots in the Alaska showdown between write-in moderate Lisa Murkowski and Tea Party Republican Joe Miller. Here are the facts on the ground as of today:
In the "final" tally (less a few military overseas ballots that have a few days left to show up) of electronically counted votes the totals were as follows:
Votes for Joe Miller: 87,517
Write-In Votes: 98,565
The math is pretty simple...Lisa Murkowski needed 87,518 of the write-in votes to be counted for her or 88.8% of the total write-in count.
There is legal wrangling over the exact rules in play in Alaska. The Alaska Division of Elections is applying a "voter intent" standard, citing a long history of court precedents that when a voter's intent is clear for a candidate, the vote should be counted. The Miller campaign is suing, citing the Alaska statute which states that a write-in candidates name must either match the name on their application or match the last name on the application. The Miller campaign appears to be disputing not only ballots that contain minor misspellings (Mirkowski is by far the most prevalent of this type of ballot), but also ballots that are spelled correctly but have sloppy handwriting and some ballots that appear to be perfectly spelled for Murkowski.
As of now, a good chunk of the ballots have been counted and its pretty clear that Miller's legal challenge is likely to be irrelevant. The tallies thus far are as follows:
Write-In Ballots Assessed So Far: 69,249
Undisputed for Murkowski (perfect spelling, unchallenged by Miller campaign): 62,434 (90.2%)
Awarded to Murkowski But Disputed by Miller Campaign (minor misspellings, poor hand writing or other): 5,291 (7.6%)
Not Awarded to Murkowski But Disputed by Murkowski Campaign (major misspellings, etc.): 1,047 (1.5%)
Write-In Votes for Candidates Other Than Murkowski or Miller: 472 (0.7%)
Write-In Votes Awarded to Joe Miller: 5 (0.0%)
So, even assuming total victory for the Miller campaign on the legal front, which is highly unlikely, given that the disputed number contains some ballots that appear to be perfect for Murkowski, we have a vote total of:
Joe Miller: 87,522
Lisa MurkowskI: 62,434
Ballots Left to Count: 29,316
Awarding Murkowski 90.2% of the remaining votes (the current percentage of her undisputed ballots), would yield a final projected result of:
Joe Miller: 87,522
Lisa Murkowski: 88,877
Murkowski's final total is likely to be higher than this as it is likely that substantially all of the votes awarded to her but disputed by the Miller campaign will eventually be counted. Lisa Murkowski will win her term in the US Senate, becoming only the second candidate ever to win a Senate seat by write-in campaign and the first since the 1950s. Pretty historical stuff. And a pretty strong statement on the weakening influence of long-time Murkowski rival Sarah Palin, who strongly backed Miller and has often been critical of Murkowski. Palin may help candidates win GOP primaries, but her influence in winning general elections has been pretty poor.
Just a word on the Miller campaign. There is no doubt that when you are in an election, you are going to interpret the rules in a way most favorable to the campaign. So, unlike many commentators, while I have always favored an "intent of the voter" standard, I can certainly understand the Miller campaign's push for a strict interpretation of the law. But challenging people with bad hand writing? Challenges ballots that ARE perfect? That's a bit of a bridge too far. Miller should let the recount finish and then quickly concede in the spirit of Republican unity.
With Respect to Paul Krugman, A Very Good Set of Ideas
President Obama's appointed bi-partisan deficit reduction commission has come back with its preliminary set of recommendations and the energy from the left has been to blast the plan. The UAW, Paul Krugman, Nancy Pelosi and all of the usual suspects on the left have been firing away at the plan as an assault on working and elderly Americans. With respect to those noted liberal thinkers, I completely disagree.
The deficit reduction commission did its job. It came back with a sober, honest look at the state of our nation's finances and presented the very real choices that we are going to have to make over the next decade. Key recommendations include:
(1) Phasing in an Increase in the Social Security Retirement Age to 69 and reducing benefits for higher income Americans
(2) Eliminating many tax deductions such as home mortgage interest, replaced by a lowered series of tax brackets
(3) Eliminating the tax break on employer-provided health care, with an offsetting reduction in corporate tax rates and an elimination of the "tax trap" for foreign-earned income
(4) A 15 cent increase in gas taxes
(5) Major reductions in agricultural subsidies
(6) Major reductions in defense spending
Let me tackle these one at a time:
(1) Social Security Age
It is simply a matter of fact that with rising life expectancy, Social Security will be insolvent over the next half century. The two choices are simple...raise payroll taxes, reduce benefits or raise the retirement age.
I actually favor an all-of-the-above approach. The payroll tax cap should be removed as the current tax structure is regressive (Americans pay the tax on their first $106K of their income and nothing after that, meaning that high earners pay a far smaller percentage of their income) and that places a high burden on working Americans. Unfortunately, the panel did not recommend this change.
Benefits reductions is another way to make the system solvent. But taking grocery income from a low-income American would be very cruel. So the way to impact benefits is to reduce them for high earners, who currently receive greater benefits than low earners. Most in high income brackets can finance their retirement just fine with less social security, as they generally do or at least should have other assets to tap.
Now, the retirement age. Krugman was highly critical of this proposal because he notes that blue collar workers life expectancy has not risen with those of white collar professionals. This is actually factually wrong, as Krugman looks only at the past couple of decades and ignores the huge surge in life expectancy from the 30s to the 80s. Still, it is a fair point that life expectancy is lower in lower income brackets than in higher ones. But negating benefit differences addresses this issue. The fact remains, under this proposal, higher income Americans will pay in more than they take out and the reverse will be true for low income Americans. Seems fair to me.
(2) Home Mortgage Interest and Charitable Contribution Deductions
I could not be more in favor of this plan. Some say it will block the "American Dream" of home ownership to many Americans. But the whole notion that we should be subsidizing ownership versus renting is flawed. There is nothing magical about own versus rent...it is an economic decision. And over the long-run, allowing mortgage interest to be deducted simply inflates home values by a proportional amount, making them no more affordable to middle-income Americans. All it does is sap the treasury and create the risk of asset bubbles.
To be fair, existing home owners should have the rules changed on them mid-course. To prevent someone who has budgeted based on the deduction from being unfairly hit, I would grandfather in existing mortgages, but apply the rule to new mortgage applications.
As far as charitable contributions are concerned, my view is simple...if the government wants to subsidize contributions to charitable organizations, it should do it directly and our elected representatives should have a say in where it goes. By subsidizing private contributions, we are indirectly subsidizing churches and psuedo-political organizations that manage to stay tax-exempt. Let's end this bad law once and for all.
(3) Employer-Provided Health Care
I have long been on record as favoring a form of single payer, at least for catastrophic coverage. It is clear that is not going to happen anytime soon in this country. But employer-provided health care is the worst of all worlds. It ties people's insurance to their job and creates huge risks for individuals and families when unemployment happens and also acts as a barrier to people moving between employers.
By eliminating the subsidy, it would shift health care purchases to the individual. This would create a more efficient market place, especially with the onset of the health insurance exchanges and subsidies for low and middle income Americans in Obamacare. Separating employment from health care is a good step.
Lower the corporate tax rate is a little more onerous. Our marginal tax rate is much higher than the rest of the developed world, but our system of loopholes around how we account for capital expenditures and how we allow companies to account for overseas income leads to a system where we have an allegedly high tax rate, but highly profitable companies, such as Exxon Mobile last year, paid no tax. I favor lowering the state rate, but not the actual rate. Couple with any rate decrease would be the need for a more comprehensive system for closing all the loopholes. One way to do this would be to eliminate the "two books" system whereby companies can claim earnings based on one set of accounting rules in their financial reports to Wall Street and another set in their accounting to the government.
(4) Gas Taxes
I favor a 15 cent increase, but it isn't nearly enough!
I'd like to see a massive increase in gas taxes to encourage more fuel efficient living and drive innovation to wean us off fossil fuels. Something on the order of magnitude of a $2/gallon increase, phased in over 8 years would be needed to drive the change we would need. To mitigate the impact to low-income Americans, this could be partially offset by reductions in payroll taxes or increases in the Earned Income Tax Credit.
(5) & (6)
Agricultural subsidies are the ultimate form of wasteful corporate welfare. There is no reason for the government to be chronically subsidizing huge farm corporations on an ongoing basis. Eliminate them all.
Defense spending is out of control. Finish winding down Iraq, develop an exit strategy in Afghanistan and close many of the myriad of homeland bases that are cold war era relics. We spend more as a percentage of GDP on defense by many multiples than any other developed country on earth. It's time to get real about what we need for national defense.
Having said all this, there is something in this proposal for both parties to hate and neither party has shown any real spine in making hard choices about the deficit, so I suspect, regrettably, that this largely good proposal will be DOA in Congress. What a shame. We can debate the exact choices we make, but my question for every person who has come out opposed to this plan is simple...what is your detailed alternative that makes up for the provisions you don't favor, dollar for dollar? Don't just say spending is out of control. If you won't cut THIS spending say exactly what spending you would cut. If you don't favor THESE tax changes, tell me what other tax changes you would make that would produce the same revenue.
Until we can debate this like adults, I'm tuning out all the wingnut talking heads.
If you like this site, tell your friends.
They are a little more than two thirds of the way through counting write-in ballots in the Alaska showdown between write-in moderate Lisa Murkowski and Tea Party Republican Joe Miller. Here are the facts on the ground as of today:
In the "final" tally (less a few military overseas ballots that have a few days left to show up) of electronically counted votes the totals were as follows:
Votes for Joe Miller: 87,517
Write-In Votes: 98,565
The math is pretty simple...Lisa Murkowski needed 87,518 of the write-in votes to be counted for her or 88.8% of the total write-in count.
There is legal wrangling over the exact rules in play in Alaska. The Alaska Division of Elections is applying a "voter intent" standard, citing a long history of court precedents that when a voter's intent is clear for a candidate, the vote should be counted. The Miller campaign is suing, citing the Alaska statute which states that a write-in candidates name must either match the name on their application or match the last name on the application. The Miller campaign appears to be disputing not only ballots that contain minor misspellings (Mirkowski is by far the most prevalent of this type of ballot), but also ballots that are spelled correctly but have sloppy handwriting and some ballots that appear to be perfectly spelled for Murkowski.
As of now, a good chunk of the ballots have been counted and its pretty clear that Miller's legal challenge is likely to be irrelevant. The tallies thus far are as follows:
Write-In Ballots Assessed So Far: 69,249
Undisputed for Murkowski (perfect spelling, unchallenged by Miller campaign): 62,434 (90.2%)
Awarded to Murkowski But Disputed by Miller Campaign (minor misspellings, poor hand writing or other): 5,291 (7.6%)
Not Awarded to Murkowski But Disputed by Murkowski Campaign (major misspellings, etc.): 1,047 (1.5%)
Write-In Votes for Candidates Other Than Murkowski or Miller: 472 (0.7%)
Write-In Votes Awarded to Joe Miller: 5 (0.0%)
So, even assuming total victory for the Miller campaign on the legal front, which is highly unlikely, given that the disputed number contains some ballots that appear to be perfect for Murkowski, we have a vote total of:
Joe Miller: 87,522
Lisa MurkowskI: 62,434
Ballots Left to Count: 29,316
Awarding Murkowski 90.2% of the remaining votes (the current percentage of her undisputed ballots), would yield a final projected result of:
Joe Miller: 87,522
Lisa Murkowski: 88,877
Murkowski's final total is likely to be higher than this as it is likely that substantially all of the votes awarded to her but disputed by the Miller campaign will eventually be counted. Lisa Murkowski will win her term in the US Senate, becoming only the second candidate ever to win a Senate seat by write-in campaign and the first since the 1950s. Pretty historical stuff. And a pretty strong statement on the weakening influence of long-time Murkowski rival Sarah Palin, who strongly backed Miller and has often been critical of Murkowski. Palin may help candidates win GOP primaries, but her influence in winning general elections has been pretty poor.
Just a word on the Miller campaign. There is no doubt that when you are in an election, you are going to interpret the rules in a way most favorable to the campaign. So, unlike many commentators, while I have always favored an "intent of the voter" standard, I can certainly understand the Miller campaign's push for a strict interpretation of the law. But challenging people with bad hand writing? Challenges ballots that ARE perfect? That's a bit of a bridge too far. Miller should let the recount finish and then quickly concede in the spirit of Republican unity.
With Respect to Paul Krugman, A Very Good Set of Ideas
President Obama's appointed bi-partisan deficit reduction commission has come back with its preliminary set of recommendations and the energy from the left has been to blast the plan. The UAW, Paul Krugman, Nancy Pelosi and all of the usual suspects on the left have been firing away at the plan as an assault on working and elderly Americans. With respect to those noted liberal thinkers, I completely disagree.
The deficit reduction commission did its job. It came back with a sober, honest look at the state of our nation's finances and presented the very real choices that we are going to have to make over the next decade. Key recommendations include:
(1) Phasing in an Increase in the Social Security Retirement Age to 69 and reducing benefits for higher income Americans
(2) Eliminating many tax deductions such as home mortgage interest, replaced by a lowered series of tax brackets
(3) Eliminating the tax break on employer-provided health care, with an offsetting reduction in corporate tax rates and an elimination of the "tax trap" for foreign-earned income
(4) A 15 cent increase in gas taxes
(5) Major reductions in agricultural subsidies
(6) Major reductions in defense spending
Let me tackle these one at a time:
(1) Social Security Age
It is simply a matter of fact that with rising life expectancy, Social Security will be insolvent over the next half century. The two choices are simple...raise payroll taxes, reduce benefits or raise the retirement age.
I actually favor an all-of-the-above approach. The payroll tax cap should be removed as the current tax structure is regressive (Americans pay the tax on their first $106K of their income and nothing after that, meaning that high earners pay a far smaller percentage of their income) and that places a high burden on working Americans. Unfortunately, the panel did not recommend this change.
Benefits reductions is another way to make the system solvent. But taking grocery income from a low-income American would be very cruel. So the way to impact benefits is to reduce them for high earners, who currently receive greater benefits than low earners. Most in high income brackets can finance their retirement just fine with less social security, as they generally do or at least should have other assets to tap.
Now, the retirement age. Krugman was highly critical of this proposal because he notes that blue collar workers life expectancy has not risen with those of white collar professionals. This is actually factually wrong, as Krugman looks only at the past couple of decades and ignores the huge surge in life expectancy from the 30s to the 80s. Still, it is a fair point that life expectancy is lower in lower income brackets than in higher ones. But negating benefit differences addresses this issue. The fact remains, under this proposal, higher income Americans will pay in more than they take out and the reverse will be true for low income Americans. Seems fair to me.
(2) Home Mortgage Interest and Charitable Contribution Deductions
I could not be more in favor of this plan. Some say it will block the "American Dream" of home ownership to many Americans. But the whole notion that we should be subsidizing ownership versus renting is flawed. There is nothing magical about own versus rent...it is an economic decision. And over the long-run, allowing mortgage interest to be deducted simply inflates home values by a proportional amount, making them no more affordable to middle-income Americans. All it does is sap the treasury and create the risk of asset bubbles.
To be fair, existing home owners should have the rules changed on them mid-course. To prevent someone who has budgeted based on the deduction from being unfairly hit, I would grandfather in existing mortgages, but apply the rule to new mortgage applications.
As far as charitable contributions are concerned, my view is simple...if the government wants to subsidize contributions to charitable organizations, it should do it directly and our elected representatives should have a say in where it goes. By subsidizing private contributions, we are indirectly subsidizing churches and psuedo-political organizations that manage to stay tax-exempt. Let's end this bad law once and for all.
(3) Employer-Provided Health Care
I have long been on record as favoring a form of single payer, at least for catastrophic coverage. It is clear that is not going to happen anytime soon in this country. But employer-provided health care is the worst of all worlds. It ties people's insurance to their job and creates huge risks for individuals and families when unemployment happens and also acts as a barrier to people moving between employers.
By eliminating the subsidy, it would shift health care purchases to the individual. This would create a more efficient market place, especially with the onset of the health insurance exchanges and subsidies for low and middle income Americans in Obamacare. Separating employment from health care is a good step.
Lower the corporate tax rate is a little more onerous. Our marginal tax rate is much higher than the rest of the developed world, but our system of loopholes around how we account for capital expenditures and how we allow companies to account for overseas income leads to a system where we have an allegedly high tax rate, but highly profitable companies, such as Exxon Mobile last year, paid no tax. I favor lowering the state rate, but not the actual rate. Couple with any rate decrease would be the need for a more comprehensive system for closing all the loopholes. One way to do this would be to eliminate the "two books" system whereby companies can claim earnings based on one set of accounting rules in their financial reports to Wall Street and another set in their accounting to the government.
(4) Gas Taxes
I favor a 15 cent increase, but it isn't nearly enough!
I'd like to see a massive increase in gas taxes to encourage more fuel efficient living and drive innovation to wean us off fossil fuels. Something on the order of magnitude of a $2/gallon increase, phased in over 8 years would be needed to drive the change we would need. To mitigate the impact to low-income Americans, this could be partially offset by reductions in payroll taxes or increases in the Earned Income Tax Credit.
(5) & (6)
Agricultural subsidies are the ultimate form of wasteful corporate welfare. There is no reason for the government to be chronically subsidizing huge farm corporations on an ongoing basis. Eliminate them all.
Defense spending is out of control. Finish winding down Iraq, develop an exit strategy in Afghanistan and close many of the myriad of homeland bases that are cold war era relics. We spend more as a percentage of GDP on defense by many multiples than any other developed country on earth. It's time to get real about what we need for national defense.
Having said all this, there is something in this proposal for both parties to hate and neither party has shown any real spine in making hard choices about the deficit, so I suspect, regrettably, that this largely good proposal will be DOA in Congress. What a shame. We can debate the exact choices we make, but my question for every person who has come out opposed to this plan is simple...what is your detailed alternative that makes up for the provisions you don't favor, dollar for dollar? Don't just say spending is out of control. If you won't cut THIS spending say exactly what spending you would cut. If you don't favor THESE tax changes, tell me what other tax changes you would make that would produce the same revenue.
Until we can debate this like adults, I'm tuning out all the wingnut talking heads.
If you like this site, tell your friends.
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