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Title: Obama's Deficit Panel: $4 Trillion in Deficit Reduction
Source:
Consumer Reports
URL Source: http://blogs.consumerreports.org/mo ... ding_cuts_government_jobs.html
Published: Nov 11, 2010
Author: staff
Post Date: 2010-11-11 12:17:45 by jwpegler
Keywords: None
Views: 9826
Comments: 38
President Obama's panel on reducing the federal debt released a proposal today aimed at reducing $4 billion in projected deficits through 2020, achieving those savings through deep cuts in defense and domestic spending. It would affect everything from Social Security, to medical spending, to tax rates. It's just a proposal, with ideas that could be taken separately or as a whole. Members of the bipartisan deficit-reduction panel are expected to hold discussions aimed at ironing out differences until Dec. 1, the date of the commission's last public meeting. The panel would need 14 of 18 votes to send the plan to Congress, which would put it up for a vote. Here's a breakdown of how it would affect government, business and consumers. How it would affect government: - Cuts 10% of the federal work force by 2015 through attrition, and eliminates 250,000 contractor jobs - Freezes salaries and bonuses of federal employees for 3 years bans earmarks - Cuts Pentagon spending through closing one-third of overseas military bases and - Freezing noncombat pay for three years, among other cuts How it would affect consumers: - Raises the full retirement age for collecting Socal Security from 67 to 68 by 2050; rising to 69 by 2075, but adds an exemption for hardship cases at age 62 and creates new benefits to reduce elderly poverty. - Lowers individual income tax rates to as low as 8 percent on the lowest income bracket (now 10%) and to 23 percent on the highest bracket (now 35%) - Abolishes the alternative minimum tax (AMT) - Eliminates mortgage interest deduction on second homes, home-equity loans, and mortgages over $500,000 - Caps exemption from taxes for employees’ health benefits How it would affect business: - Reduces corprate tax rates to as low as 26%, from the current 35% - Slashes farm subsidies by $3 billion annually
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#1. To: All (#0)
(Edited)
LOL. Pelosi is already declaring it unacceptable, but of course she has no way to stop it. I agree with Virginia Governor Bob McDonnell that it may be a good start but it isn't enough. Cutting projected deficits by $4 trillion over 10 years is not enough when the U.S government is running trillion annual deficits. The tax side of the proposal looks rational and reasonable. They are lowering everyone's income tax rates. They are abolishing the alternative minimum tax. They are lower business tax rates. They are "paying for it" by eliminated deductions for wealthier people, e.g., mortgages over $500K. The GOP used to argue for a simpler tax system with lower rates. This is a good step in the right direction.
EVERYONE is declaring it unacceptable, Republicans refuse to consider any tax hikes and they've already said that Medicare, SS, and Defense are off the table. So how do they close a $1.2 trillion deficit when only $421 billion is left to cut?
That is not what I heard from several GOP Senators and Governors this morning. They all said it's a good start. Some said it doesn't go far enough. One Senator didn't like the military cuts. No one mentioned taxes. Why? Because economically literate Republicans want to lower marginal tax rates to stimulate growth. This proposal lowers the top margin rate from 36% (or 39.6% when the Bush tax cuts expire) to 23%! It also eliminates the AMT, which is snaring more middle class people all of the time. In addition, it lowers the top corporate tax rate from 36% to 26%. They pay for it by eliminating some deductions, for example deductions for jumbo mortgages over $500K. This is exactly that type of proposal that Ronald Reagan and Bill Bradley agreed to in 86. In the 80s and 90s, many Republicans wanted to eliminated all tax deductions and further lower and flatten the rates. This is a rational and reasonable tax proposal. I think you'll see a lot of Republicans and Senate Democrats taking this very seriously. However, the spending cuts aren't enough. They need to be broader, deeper, and implemented more quickly.
A few Republicans have said that Social Security and Medicare are off the table. All of the ones interviewed on Fox Business this morning said unequivocally that they have to be dealt with. This proposal deals with them in a timid way that should be acceptable to everyone. The retirement age is already scheduled to go from 65 to 67. This would take it to 69 in 2075! Life expectancy will likely increase more than 2 years by 2075. No one in their right mind would challenge their Social Security proposal. Pelosi already has. So what does that tell you?
All of the ones interviewed on Fox Business this morning said unequivocally that they have to be dealt with. I'll believe it when I see a plan from them Meanwhile, speaker-to-be Boehner has already pledged that there will be no cuts to Medicare.
Can you point me to any Republican other than Mitch Daniels who said they would consider tax hikes? Do you really think Republicans will vote to raise taxes?
We have a serious gap in our definitions. No, there isn't a single Republican with a brain anywhere that would accept an increase in tax rates. This proposal dramatically lowers tax rates. The top tax rate would be cut to 23%. That's a 36% cut from the current 36% top rate and a 42% cut from 39.6% (where the rate will be if the Bush tax cuts expire). This is what Reagan did, twice -- once at the beginning of 80s when the top rate was cut from 70% to 50% -- and again in 86 when it was cut from 50% to 28%. This proposal would cut the top rate to 23%. It would also collapse the current 6 rates (10, 15, 25, 28, 33, 36) to 3 rates (8, 14, and 23). Plus it eliminates the AMT and cuts the corporate tax rates. It is magnificent. This is what we need to get the economy growing. They "pay for it" by eliminating deductions. The GOP has wanted to flatten rates and eliminate deductions for 30+ years. One deduction to go is the deduction for jumbo loans. No, subsidizing the purchase of million dollar homes is not the right thing to do to stimulate the economy. People certainly should be able to buy a million home if they can afford it, but the code shouldn't subsidize consumption over production. I like the tax proposal as a start. However, the spending cuts aren't deep enough. They are not even close to being deep enough. They didn't touch Obamacare because the members had "healthcare fatigue" after the debates of last year. They are waiting too long (2075) to make minor changes to Social Security. They don't do much about the Departments of Agriculture, Commerce, Eduction, and Labor. The proposal will NOT balance the budget in 10 years.
it lowers rates, but it ends deduction so at the end of the day it's a net increase in taxes. One of the proposals is to treat capital gains as ordinary income, a huge tax increase for investors. They also propose ending deductions on state/local taxes and capping property tax deductions at $500k. And they proposed increasing the SS cap. Go back and look at the Reagan tax plan of 1986, at the end of the day it was the largest tax increase in U.S. history.
One of the proposals is to treat capital gains as ordinary income I certainly don't agree with that. They also propose... capping property tax deductions at $500k. You mean mortgage deductions. I certainly DO agree with this.
Yeah, that'll get the economy moving!
that's not a goal nor an aim of the plan, the goal they set was to reduce the deficit to a manageable level of less than about $250 billion a year.
Even if it the net effect is that wealthier americans pay more in taxes then they do no (and before you answer remember that the current talking point from the right is that we need the Bush tax cuts on all income because wealthier earners create the jobs)
Go back and look at the Reagan tax plan of 1986, at the end of the day it was the largest tax increase in U.S. history. I am going to have a hard time keeping my response under 5,000 words. First, the original tax reduction mantra came from a study by Art Laffer. Laffer demonstrated that there are two rates that will produce the same revenue. A tax rate of 0% will produce the same revenue of a tax rate of 104% or higher, namely ZERO revenue. However, a 10% rate and a 90% are not inequivalent. Imagine a skewed bell curve. A 10% rate might produce the same revenue as 80% or 90% or 95% or some other high rate. It depends on a lot of things. Reducing rates can produce higher revenue by stimulating economic activity, but it depends on where the rate is in the context of the condition of the economy. Second, there are a lot of serious people who believe that the current tax code severely distorts economic activity to the detriment of the U.S. Should we give people a tax break for buying a big house? Probably not. Should we give them a break for taking a risk and investing in a new business? If we care about the long-term competitiveness of the U.S. economy then the answer has to be yes. Again, the GOP was almost in complete agreement under Reagan and Clinton that we needed radical tax reform in this direction -- either a flat rate income tax with limited deductions or completely replacing the income tax with a national sales tax. Jerry Brown agreed with this in 1992 too (Art Laffer was his economic advisor.) All discussion of radical tax reform died under Bush. The idea of radical tax reform is making a comeback. It's even making a comeback on the Obama Deficit Commission. Again, there are brain idiots like Hannity who will piss and moan for no reason at all. Generally, the left-wing of the Democrat Party are the ones who will have the biggest problems with this proposal. They are already out in force.
You are confusing tax revenues with tax rates. The are not directly linked. Read post #13.
If my taxes go up why do I care how?
I know who Laffer is, but he's often wrong (check the unemployment rates in states with income taxes versus those that don't have them - Nevada, Texas, Florida). In 2006 Laffer prediced that there would be no recession the following year and that the housing bubble wouldn't burst.
You care because high tax rates destroy economic activity. You care because it's the difference between having a job and no job. There are 220+ countries in the world. 5 countries tax foreign earnings on domestic corporations. The U.S. is one of those five. As a result, U.S. high tech companies like Microsoft, Google, Oracle and others have $1 TRILLION in capital parked overseas. They aren't going to bring the money home and invest in America because they will face huge taxes. How does this help us? "Oh those big evil corporations have to punished and pay." THEY ARE NOT PAYING on this revenue because they aren't bringing it home. How does this help us?
Laffer was certainly wrong on the recession (Peter Schiff was right and Laffer made fun of him. I don't like Laffer because of this). However, Laffer is right in that there is a high and low tax that produces approximately the same revenue because the differing rates create different economic incentives.
Even assuming the Laffer curve is real (it's such a broad idea it almost has to be) it is very possible the tax rates are under the rate at which maximum revenue occurs. Republicans like to say that the laffer curve says tax cuts raise revenue, but it doesn't. It says if taxes are overly high they can increase revenue. With a 15% long term Capital gains tax I'm guessing that we could raise taxes and still raise revenue significantly.
It's really not even an issue of opinion; it's the mathematical concept of continuity. The difficulty is determining exactly where the diminishing rate of return occurs.
You don't have to make an exact determination. You can approximate based on trial and error. That would be close enough.
Fair enough, but we don't know where we are on the curve. Again, my point is that if you lower my rate and take away my deductions, and I end up paying more in taxes, you've raised my taxes regardless of how you want to frame it.
There are 220+ countries in the world. 5 countries tax foreign earnings on domestic corporations. The U.S. is one of those five. As a result, U.S. high tech companies like Microsoft, Google, Oracle and others have $1 TRILLION in capital parked overseas. They aren't going to bring the money home and invest in America because they will face huge taxes. How does this help us? You are preaching to the choir - remember I support replacing income taxes with a NST (and eliminating all corporate taxes).
Well, the problem is that there are so many other variables in the mix that it makes the correlation between taxation and revenue almost impossible to discern. Hence why the libtards want to claim the Clinton tax hike boosted the economy. There is no logical reason to believe that tax cuts will do anything else than boost the economy in the short term.
And why Conservatives have no explanation for the tax cuts of early 2009 having little effect.
I think Conservatives have offered a lot of explanations for the failures of the Kenyan, and it appears the American public has listened.
Art Laffer would disagree. Austrian economists over at LewRockwell.com would completely agree, but of course you hate them.
Maybe or maybe not. That may be true for the supper rich and lower middle class. It is certainly not true for many of us. Stephen Spielberg, who made $350 million last year, paid a much smaller percentage of his income in federal taxes than I did. ditto for Oprah and Lloyd Blankfien (CEO Goldman Sacs). These people are paying 6% to 8% of their incomes in taxes. I'm paying 25% +. It's not right. Lower the rates. Get rid of deductions. The Obama panel agrees!
Not really. Austrian economists over at LewRockwell.com would completely agree, but of course you hate them. For the most part, I agree with their economic philosophies. But the fact Lew was playing "hide the sausage" with Cindy Sheehan goes a long way to explaining any animosity I might have with them.
Ok, so this is the first thing that we may agree on. That's good. It doesn't explain your worship of the Bush family as some sort of deities.
Stephen Spielberg, who made $350 million last year, paid a much smaller percentage of his income in federal taxes than I did. ditto for Oprah and Lloyd Blankfien (CEO Goldman Sacs). These people are paying 6% to 8% of their incomes in taxes. I'm paying 25% +. It's not right. that's the argument for letting the Bush cuts expire on income over $250k, but then the GOP responds that those are the folks who create the jobs. FWIW, here's a visual showing the impact of the Bush tax cuts vs. letting the $250k and above income expire: We could try cutting things like Obama's 800 BILLION foreign aid to Palestinians. Add a few more like it and pretty soon it becomes REAL MONEY! That might go a long way to helping CITIZENS of THIS nation.
Got a legitimate source for that figure?
The US military operates on less than 800 billion dollars a year. Do you mean 800 million?
$800 billion? What on earth are you talking about?
Looks like she's run back to LP.
was that Goldi?
out damned spot, I think.
"To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves is sinful and tyrannical." -- Thomas Jefferson
#2. To: jwpegler (#1)
LOL. Pelosi is already declaring it unacceptable, but of course she has no way to stop it.
On January 3, 2011 the GOP assumes responsibility for deficit spending.
#3. To: go65 (#2)
(Edited)
EVERYONE is declaring it unacceptable, Republicans refuse to consider any tax hikes
"To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves is sinful and tyrannical." -- Thomas Jefferson
#4. To: go65 (#2)
they've already said that Medicare, SS, and Defense are off the table.
"To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves is sinful and tyrannical." -- Thomas Jefferson
#5. To: jwpegler (#4)
A few Republicans have said that Social Security and Medicare are off the table.
On January 3, 2011 the GOP assumes responsibility for deficit spending.
#6. To: jwpegler (#3)
That is not what I heard from several GOP Senators and Governors this morning. They all said it's a good start. Some said it doesn't go far enough. One Senator didn't like the military cuts.
On January 3, 2011 the GOP assumes responsibility for deficit spending.
#7. To: go65 (#6)
(Edited)
"To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves is sinful and tyrannical." -- Thomas Jefferson
#8. To: jwpegler (#7)
No, there isn't a single Republican with a brain anywhere that would accept an increase in tax rates. This proposal dramatically lowers tax rates.
On January 3, 2011 the GOP assumes responsibility for deficit spending.
#9. To: go65 (#8)
"To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves is sinful and tyrannical." -- Thomas Jefferson
#10. To: go65 (#8)
One of the proposals is to treat capital gains as ordinary income, a huge tax increase for investors.
#11. To: jwpegler (#7)
The proposal will NOT balance the budget in 10 years.
On January 3, 2011 the GOP assumes responsibility for deficit spending.
#12. To: jwpegler (#9)
You mean mortgage deductions. I certainly DO agree with this.
On January 3, 2011 the GOP assumes responsibility for deficit spending.
#13. To: go65 (#8)
(Edited)
it lowers rates, but it ends deduction...
"To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves is sinful and tyrannical." -- Thomas Jefferson
#14. To: go65 (#12)
(Edited)
remember that the current talking point from the right is that we need the Bush tax cuts on all income because wealthier earners create the jobs
"To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves is sinful and tyrannical." -- Thomas Jefferson
#15. To: jwpegler (#14)
You are confusing tax revenues with tax rates. The are not directly linked. Read post #13.
On January 3, 2011 the GOP assumes responsibility for deficit spending.
#16. To: jwpegler (#13)
First, the original tax reduction mantra came from a study by Art Laffer. Laffer demonstrated that there are two rates that will produce the same revenue. A tax rate of 0% will produce the same revenue of a tax rate of 104% or higher, namely ZERO revenue. However, a 10% rate and a 90% are not inequivalent. Imagine a skewed bell curve. A 10% rate might produce the same revenue as 80% or 90% or 95% or some other high rate. It depends on a lot of things. Reducing rates can produce higher revenue by stimulating economic activity, but it depends on where the rate is in the context of the condition of the economy.
On January 3, 2011 the GOP assumes responsibility for deficit spending.
#17. To: go65 (#15)
(Edited)
If my taxes go up why do I care how?
"To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves is sinful and tyrannical." -- Thomas Jefferson
#18. To: go65 (#16)
"To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves is sinful and tyrannical." -- Thomas Jefferson
#19. To: go65 (#16)
I know who Laffer is, but he's often wrong (check the unemployment rates in states with income taxes versus those that don't have them - Nevada, Texas, Florida). In 2006 Laffer prediced that there would be no recession the following year and that the housing bubble wouldn't burst.
#20. To: jwpegler (#18)
Laffer is right in that there is a high and low tax that produces approximately the same revenue because the differing rates create different economic incentives.
#21. To: no gnu taxes (#20)
The difficulty is determining exactly where the diminishing rate of return occurs.
"To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves is sinful and tyrannical." -- Thomas Jefferson
#22. To: jwpegler (#18)
However, Laffer is right in that there is a high and low tax that produces approximately the same revenue because the differing rates create different economic incentives.
On January 3, 2011 the GOP assumes responsibility for deficit spending.
#23. To: jwpegler (#17)
You care because high tax rates destroy economic activity. You care because it's the difference between having a job and no job.
On January 3, 2011 the GOP assumes responsibility for deficit spending.
#24. To: jwpegler (#21)
You don't have to make an exact determination. You can approximate based on trial and error. That would be close enough.
#25. To: no gnu taxes (#24)
Hence why the libtards want to claim the Clinton tax hike boosted the economy.
On January 3, 2011 the GOP assumes responsibility for deficit spending.
#26. To: go65 (#25)
#27. To: no gnu taxes (#24)
Well, the problem is that there are so many other variables in the mix that it makes the correlation between taxation and revenue almost impossible to discern.
"To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves is sinful and tyrannical." -- Thomas Jefferson
#28. To: go65 (#22)
(Edited)
my point is that if you lower my rate and take away my deductions, and I end up paying more in taxes,
"To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves is sinful and tyrannical." -- Thomas Jefferson
#29. To: jwpegler (#27)
Art Laffer would disagree.
#30. To: no gnu taxes (#29)
For the most part, I agree with their economic philosophies.
"To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves is sinful and tyrannical." -- Thomas Jefferson
#31. To: jwpegler (#28)
Maybe or maybe not. That may be true for the supper rich and lower middle class. It is certainly not true for many of us.
On January 3, 2011 the GOP assumes responsibility for deficit spending.
#32. To: go65 (#2)
#33. To: borntoweardiamonds (#32)
We could try cutting things like Obama's 800 BILLION foreign aid to Palestinians.
#34. To: borntoweardiamonds (#32)
We could try cutting things like Obama's 800 BILLION foreign aid to Palestinians. Add a few more like it and pretty soon it becomes REAL MONEY! That might go a long way to helping CITIZENS of THIS nation.
#35. To: borntoweardiamonds (#32)
We could try cutting things like Obama's 800 BILLION foreign aid to Palestinians
On January 3, 2011 the GOP assumes responsibility for deficit spending.
#36. To: go65 (#35)
#37. To: Skip Intro (#36)
On January 3, 2011 the GOP assumes responsibility for deficit spending.
#38. To: go65 (#37)
was that Goldi?
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