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Congress and the President are at loggerheads on how to avoid the spending cuts and tax increases that come into effect Dec. 31.
Heidi Przybyla, Washington reporter for Bloomberg, discusses what is on the table and what is off the table in the "fiscal cliff" negotiations.
The whole "fiscal cliff" discussion is disingenuous.NO - we don't need to slash spending. NO - the middleclass and poor don't need to sacrifice EVEN MORE, YET AGAIN.
There's a fast and simple solution that even Ronald REAGANagreed with : MAKE THE TAX RATE ON CAPITAL GAINS THE SAMEAS THE TAX RATE ON EARNED INCOME.
This would generate massive amounts of revenue and would beprogressive. It would improve BOTH tax fairness and tax simplicity.
NO - people do NOT have to give up their mortgage or healthcaredeductions. NO we don't need to slash R&D, education, food stamps,basic medical care or defense.
It's time for investors to pay their fair share.The argument that this is "double taxation" is alsoa sham - most large companies pay almost NO Tax (viashelters and offshore techniques)- they also tend toget massive direct or indirect goverment subsidies(ex : government granted Intellectual property monopolies,drilling rights, govt contracts, etc).
Tax Rate Equalization - it's simple, fair and effective.
Why is Pres. OBAMA to the RIGHT of REAGAN ?
"As Americans face a fiscal cliff, the Obamas make do with 54 Christmas trees" INVESTORS BUSINESS DAILY
"In fact, the Obamas' 54 trees this year are almost 50% more Christmas trees than last year. Now, how much carbon do you suppose those 54 trees could be sequestering had they not been chopped by this green president?"
LOL .... THE COMMUNITY ORGANIZER LIVING LARGE ON THE PUBLIC'S MONEY.
When the trust funds cash their bonds, the interest & principal will be used to pay benefits.
The wage/salary cap must be removed, not just raised. CPI-E must be used as the COLA measure for retirement. And "carried interest" & other questionable income must be treated as normal income.
After all, one + to the fiscal slope is that the bond rating firms will raise the rating for US bonds & the yield will fall again, thus angering Pete Peterson & his paid PR flacks & "grassroots organizations."
Heidi Przybyla suggests that since the Democrats have made clear they will not be touching Social Security, the compromise to make the Republicans feel that they've gotten something out of the negotiations will be in raising the Medicare eligibility age from 65 to 67. Maybe she was feigning reporter impartiality, but her tone indicated that such a compromise would be reasonable. The idea that "Entitlements" must take a hit to reduce deficits is certainly the inside-the-beltway conventional wisdom.
But raising the Medicare eligibility age is anything but reasonable. As commenter Katherine Jackson points out, echoing this morning's Krugman column, it doesn't save the Federal Government much money. More importantly, in terms of the economy as a whole, it doesn't save *any* money. It doesn't lower costs, it just shifts costs to the people aged between 65 and 67, who would have to obtain private insurance to cover what Medicare would have covered. Effectively, it's a partial privatization of Medicare. Further, since Medicare is more efficient than private insurance,it actually increases total costs.
That policy suggestions such as this one are treated as reasonable by people in power in the government and the media is a clear sign of how out of touch they are with reality and with other Americans. Polling shows that 69% are opposed to raising the eligibility age, including 68% of Republican voters!
'trillions' is not quite accurate. About a trillion - give or take - and going down. The biggest deficit was 2009 at $1.5T and going DOWN ever since. If we go back into recession because the GOP wanted to protect the high earners from a 4.6% increase in rates, THEN the deficit will go up. If the GOP had paid for what they spent on - Tax cuts, wars, entitlements - we wouldn't be talking about this.
For Amy - Agreed. The PAYROLL tax cap needs to go or at least increase significantly. The rates should go DOWN!! and small business owners - I am one of them - need some form of relief from having to pay the employee and employee halves of the payroll tax. 38 cents of the next dollar I earn goes to Uncle Sugar...25% income, 13.3 percent FICA. After January - if the Congress does nothing - that would go up to 43 cents...28% income tax, 15.3 FICA.
The nervous-making part of the discussion is that payroll deduction is going from a net revenue to a net expense on the Treasury over the next generation. All of those T-bonds that the Social Security owns ($5T-$7T) will need to be cashed in to cover SocSec payouts. Where will the government get the money to 'pay back' these bonds? Taxes, of course. Kind of ironic that taxes will need to go up to pay back the borrowed tax money that they already paid in, eh? Al Gore is having the last laugh over that one.
we spend trillions more than we take in...
Would somebody please explain that raising the Medicare age would NOT help the deficit appreciably since people in their 60's do NOT create the big health expenses, people in their 80's do. Also, lower income people would be disproportionately hurt by such an age raise since they are more likely to have health compromising jobs. Third, MEDICARE WORKS MUCH BETTER THAN PRIVATE INSURANCE!
What about taking the cap off the payroll tax, which pays for Social Security? Barack Obama, Mitt Romney, Warren Buffett, & Bill Gates don't pay any more for this tax than someone making $110,000 a year--not just the same rate, the entire *amount*. This is the most regressive tax in the U.S. tax system. Not only that, but when they collect Social Security, the payout *is* based on their salaries, so they get far more out than they put in. Why aren't Democrats publicizing this & pushing for removal of the cap?
Tax rate increases are automatic if Congress and the President do nothing.$1.6T in spending is automatic if Congress and the President do nothing.
The GOP have to wake up and smell the coffee...Their bargaining position is weak. Their only leverage is to threaten another government shutdown via the debt ceiling. Even their gerrymandered district maps will not help them in 2014 should they go that route.
The President and the Democrats just have to keep the formula -- 2/3 cuts, 1/3 revenue increases.
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