The Fiscal Cliff

[Uncle Ted]

I heard the "loopholes for corporations that don't need them". My guess is they figure the "millionaires and billionaires" thing while useful may have folks going, I thought we got those bastards.

So I wouldn't be surprised if the "demon" they go after this time with the catchy slogan is, "loopholes for corporations that don't need them". Of course just like it wasn't just the millionaires and billionaires he nailed, it won't just be those evil corporations he nails the next time.

I also like the ground work he is laying for his good judgement will determine the corporations that need them and those that don't. I hear in the bill signed at the last minute green energy and the movie industry got some huge tax breaks. LOL, the movie industry needs breaks.

Yes, it is pretty ironic that the so-called fiscal cliff bill created loopholes and tax breaks for corporations and wall street financial firms but Obama is calling for closing loopholes for individuals.

[Joe Public]

I wonder if BYU, Ricks and other "non-tithing" contributions are going down due to new limitations on itemized deductions.

I doubt it will affect tithing much because it is more of a requirement or duty.

However, there could be an affect on "non-tithing" contributions made by the big income earners.

For instance someone earning $5,300,000 will have the first $150,000 of his/her donations non deductible if he/she gives $150,000 or above. It may even go higher than that.

Maybe after paying $500,000 in tithing and being able to only deduct $350,000, they won't worry about amounts above that because those amounts aren't affected.

Unless the 80% rule comes into effect and I haven't figured that out yet.

This is what I'm hearing anecdotally, except replace "$500,000 in tithing" with "$500,000 in state/local taxes" in the rationale.

[byu71]

This is what I'm hearing anecdotally, except replace "$500,000 in tithing" with "$500,000 in state/local taxes" in the rationale.

Yea I think about it occasionally. Guy pays roughly $1,920,000 in income taxes. Another $16,000 in PR taxes. Throw in 4-5 grand in health care taxes. Maybe another $20,000 in property taxes. Donates $500,000 to charity.

Then after seeing his taxes go up and his itemized deductions reduced, he sees President Obama on the screen saying we have to reduce the debt in a balanced way. We have to make the millionaires and billionaires pay their fair share.

I wish he would just once thank the millionaires and billionaires for all the money they pay and how it helps others.

[Goatnapper'96]

I read today that most folks are now of the opinion that the sequester needs to go through without being ammended. It appears that the Republicans want cuts bad enough that many, or at least not enough, are not upset at the Defense cuts. Democrats know cuts are neccesary and at while this will hit discretionary spending, entitlements are intact. I think the Democrats know that entitlements will be the target when they ever get around to a deficit reduction package and they will be looking for more revenue by limiting deductions for millionaires/billionaires/thousandaires. So if you are keeping score at home like I do this is how the fiscal cliff is going to end up:

Increased taxes mostly on those with incomes above $450,000 that result in about $75 billion a year increased government revenues.

Cuts to spending of roughly $200 billion/yr split 50/50 to defense and discretionary spending.

Together this closes the current deficit 25%. If you are keeping score for winners and losers politically this for every dollar of increased revenues it is about 3.5 dollars in spending cuts. But since 50% of spending cuts go to Defense, Democrats are happy with that.

However, the current deficit situation while slowly backing off the largest it has ever been and certainly still a fact that demonstrates the US's complete lack of fiscal discipline is nothing compared to what it will be if the US does not reform entitlements.

My recommendation to this is:

1.) Reform entitlements by increasing retirement ages and means testing.

2.) Another sequester of similar size in cuts to both Defense and discretionary spending.

3.) More tax revenues by increasing taxe rates on all income groups - but the tax rate increases to the top, those above $450,000 will only be for debt retirement purposes and if not used for that purpose will stop being levied they also would be sunset and only a supermajority in Congress could be used to continue to levy them. I am not sure if any of that is legal, but by damn it sounds good!

[Uncle Ted]

Paul Krugman solution to the fiscal cliff...

So we should avoid that damage by kicking the can down the road. It’s the responsible thing to do.

Why?

The point, again, is that now is very much not the time to act; fiscal austerity should wait until the economy has recovered, and the Fed can once again cushion the impact.

But aren’t we facing a fiscal crisis? No, not at all. The federal government can borrow more cheaply than at almost any point in history, and medium-term forecasts, like the 10-year projections released Tuesday by the Congressional Budget Office, are distinctly not alarming.

But didn't the debt hurt USA's credit rating? What happens when the government can't borrow?

[il Padrino Ute]

Paul Krugman solution to the fiscal cliff...



Why?



But didn't the debt hurt USA's credit rating? What happens when the government can't borrow?

There should be no longer be any doubt to anyone that Krugman is a dumbass.

[Uncle Ted]

Taxes go up, government revenues plummet...

Despite big tax hikes as part of austerity measures demanded by international lenders, tax revenues fell precipitously in January, with the Greek Finance Ministry reporting a 16 percent decrease from a year earlier, and a loss of 775 million euros, or $1.05 billion in one month.

The government took in only 4.05 billion euros ($5.47 billion) in tax revenues in January, far short of its target of 4.36 billion euros ($5.89 billion), a $420 million shortfall in one month, and during an annual holiday sales period for shops who are bleeding customers and shutting down by the thousands.

Yet another example that simply raising tax rates doesn't always mean more tax revenue.

[U-Ute]

I heard the "loopholes for corporations that don't need them". My guess is they figure the "millionaires and billionaires" thing while useful may have folks going, I thought we got those bastards.

So I wouldn't be surprised if the "demon" they go after this time with the catchy slogan is, "loopholes for corporations that don't need them". Of course just like it wasn't just the millionaires and billionaires he nailed, it won't just be those evil corporations he nails the next time.

I also like the ground work he is laying for his good judgement will determine the corporations that need them and those that don't. I hear in the bill signed at the last minute green energy and the movie industry got some huge tax breaks. LOL, the movie industry needs breaks.

Just because you don't like him, doesn't mean it isn't true:

In 2010, Bank of America set up more than 200 subsidiaries in the Cayman Islands (which has a corporate tax rate of 0.0 percent) to avoid paying U.S. taxes. It worked. Not only did Bank of America pay nothing in federal income taxes, but it received a rebate from the IRS worth $1.9 billion that year. They are not alone. In 2010, JP Morgan Chase operated 83 subsidiaries incorporated in offshore tax havens to avoid paying some $4.9 billion in U.S. taxes. That same year Goldman Sachs operated 39 subsidiaries in offshore tax havens to avoid an estimated $3.3 billion in U.S. taxes. Citigroup has paid no federal income taxes for the last four years after receiving a total of $2.5 trillion in financial assistance from the Federal Reserve during the financial crisis.

[byu71]

Just because you don't like him, doesn't mean it isn't true:

I guess the you know the guy Obama is nominating to be the Treasury Secretary worked for Citi Corp and I think was instrumental in setting up the Cayman Island stuff. I guess he thought it was such a good idea that he had some of his money in the Cayman's.

I am of the opinion when you see the proposed loophole changes you won't find many of them cut off for the banking industry.

[U-Ute]

I guess the you know the guy Obama is nominating to be the Treasury Secretary worked for Citi Corp and I think was instrumental in setting up the Cayman Island stuff. I guess he thought it was such a good idea that he had some of his money in the Cayman's.

I am of the opinion when you see the proposed loophole changes you won't find many of them cut off for the banking industry.

Yes. I am aware of that. The whole banking/lobby/Treasury revolving door is bad.

[byu71]

Yes. I am aware of that. The whole banking/lobby/Treasury revolving door is bad.

I would put banking/lobby/treasury/politicians. The politicians are bought and paid for. What is surprising is how few people realize that the dems are as bought and paid for as the republicans.

I still would like to know when taxes were raised on the rich, why was "carried interest" not done away with? Actually I know why and would like someone to tell me where I am wrong.

It is amazing to see how many cronies work for hedge funds and make a lot of money for a couple of years and have no financial expertise. Like for instance, Chelsea Clinton, John Edwards and Rohm Emanuel.

[U-Ute]

I would put banking/lobby/treasury/politicians. The politicians are bought and paid for. What is surprising is how few people realize that the dems are as bought and paid for as the republicans.

So true. Goldman Sachs gives the same amount to both parties.

I still would like to know when taxes were raised on the rich, why was "carried interest" not done away with? Actually I know why and would like someone to tell me where I am wrong.

I think you answered your own question up above

[byu71]

So true. Goldman Sachs gives the same amount to both parties.



I think you answered your own question up above

Yea and it is too bad the independent press won't inform the average Joe that both the democrats and republicans are in the pockets of the financial institutions. Instead they not only do not debunk the myth, they promote it.

[Color Me Badd Fan]

Here's something I just read.

If empires are complex systems that sooner or later succumb to sudden and catastrophic malfunctions, rather than cycling sedately from Arcadia to Apogee to Armageddon, what are the implications for the United States today? First, debating the stages of decline may be a waste of time -- it is a precipitous and unexpected fall that should most concern policymakers and citizens. Second, most imperial falls are associated with fiscal crises. All the above cases were marked by sharp imbalances between revenues and expenditures, as well as difficulties with financing public debt. Alarm bells should therefore be ringing very loudly, indeed, as the United States contemplates a deficit for 2009 of more than $1.4 trillion -- about 11.2 percent of GDP, the biggest deficit in 60 years -- and another for 2010 that will not be much smaller. Public debt, meanwhile, is set to more than double in the coming decade, from $5.8 trillion in 2008 to $14.3 trillion in 2019. Within the same timeframe, interest payments on that debt are forecast to leap from eight percent of federal revenues to 17 percent.


These numbers are bad, but in the realm of political entities, the role of perception is just as crucial, if not more so. In imperial crises, it is not the material underpinnings of power that really matter but expectations about future power. The fiscal numbers cited above cannot erode U.S. strength on their own, but they can work to weaken a long-assumed faith in the United States' ability to weather any crisis. For now, the world still expects the United States to muddle through, eventually confronting its problems when, as Churchill famously said, all the alternatives have been exhausted. Through this lens, past alarms about the deficit seem overblown, and 2080 -- when the U.S. debt may reach staggering proportions -- seems a long way off, leaving plenty of time to plug the fiscal hole. But one day, a seemingly random piece of bad news -- perhaps a negative report by a rating agency -- will make the headlines during an otherwise quiet news cycle. Suddenly, it will be not just a few policy wonks who worry about the sustainability of U.S. fiscal policy but also the public at large, not to mention investors abroad. It is this shift that is crucial: a complex adaptive system is in big trouble when its component parts lose faith in its viability.

http://www.informationclearinghouse....ticle24874.htm

So, to answer clowns like Paul Krugman who says we should be borrowing more because it's so cheap, that kind of shit works until it doesn't. In other words, once the dollar fails to be the reserve currency in the world and China stops wanting to stockpile dollars, then we're going to be in a world of hurt unless the spending is under control.

[byu71]

Here's something I just read.



http://www.informationclearinghouse....ticle24874.htm

So, to answer clowns like Paul Krugman who says we should be borrowing more because it's so cheap, that kind of shit works until it doesn't. In other words, once the dollar fails to be the reserve currency in the world and China stops wanting to stockpile dollars, then we're going to be in a world of hurt unless the spending is under control.

It continues to amaze me what a dumbass Krugman is. Also that on these talk shows there is no one that calls him on his assinine statements.

Fed borrowing is basically a variable rate and not a fixed rate. Sure if you could borrow at the cheap rates and have them forever, that would be one thing, but you can't.

When rates go up 1-3 percent, which they surely will do at some time, the hurt is going to be very bad. Market forces such as the economy and inflation can push them up despite the Fed's intentions.

What a weisal looking guy anyway. The fact the media pulls him out to back spending shows how few economists agree with the media and Obama.