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God I love reading your posts!

Right on.

Worrywort............

posted by worrywort on February 8, 2004 at 11:12 PM | link to this | reply

GDP growth in January was 4%

Dum & Evil is usually a day late and hundreds of billions of dollars short, but in this instance about the US GDP  he is a month late and he fails to point out that even in December of 2003 when the GDP did hit 8%, there were only a net of 1,000 new jobs created according to the Labor Dept., when in fact, we need 250,000 new jobs/month to keep up with population growth and recapture the 3 million jobs lost during Bush's first three (horrible) years!!!

posted by spyinthesky on February 5, 2004 at 6:07 AM | link to this | reply

Dum & Evil

I did give my tax cut back Dummy. I gave it all back to the DNC to help them fund a campaign against the greatest domestic enemy of the American people since the British were driven out in the Revolutionary war. And even you know it's Bush & the Republicans who are bankrupting the US Treasury while conducting unnecessary war that heightens the terrorist threat against us.

We realize that the GOP is mobilizing it's robots to make horrible noises about John Kerry since he has a war record of heroics and medals, while Bush has a record of cowardice and deceit but in the end, all the money of the Republican party and all the rightwing cyborgs such as yourself may prove to be futile if all of the truth comes out.

posted by spyinthesky on February 5, 2004 at 6:04 AM | link to this | reply

GDP

Well let's see now, what was the GDP just recently reported?

+8.2 percent. The biggest gain in over 20 years! Jobs are being filled now and dems are going down!

Rubin? Krugman? Oh puleeese!

posted by DEMSareEVIL on February 4, 2004 at 10:07 PM | link to this | reply

Give it back!

Yo, Spy,

Did you get tax cut? If so, why did you cash it and not send it back?

It's the governments money, not yours, right?

If you "feel" the government needs the money more than you do, why don't send more in? They'd sure be happy with you if you did that, don't you 'feel'? After all, "feeling happy and being a part of the "group" is what it's all about right?

The big-wig congressmen really want your money, so why not give it them? They'll create some really neat social programs for you, as long as you let them keep taking more money out of your paycheck to "help" pay 'em.

Sounds good huh? So ahead, send 'em all your money, what the hell, you don't need it right?
The government will take care of you, won't they?

posted by DEMSareEVIL on February 4, 2004 at 10:00 PM | link to this | reply

Dum & Evil

Methinks that D&E studied economics at Bob Jones University where they specialize in racism and religious bigotry. The fact is that Bush's tax scheme is bankrupting the US Treasury. Just yesterday he revealed a budget for 2005 that has over $520 billion of deficit which sets a new record, which is what Bush has been doing ever since he got into office (illegally).

The reality is that corporations are paying the lowest taxes as a  % of GDP since 1930. The rich are cheating their way out of billions in taxes each year because Bush & the Republicans have defanged the IRS and the Accounting Firms are setting up phony tax shelters that scam the US Treasury for billions more.

People who know finance and economics (Robert Rubin, Paul Krugman, etc.) are ringing the warning bell that a day of reckoning is coming if Bush's reckless tax cuts are not repealed and budget deficits aren't brought down to reasonable levels.

Some people never get the message or just don't want to hear it!

posted by spyinthesky on February 4, 2004 at 6:02 AM | link to this | reply

Myths About the President's Tax Plan

The President's tax plan has many strengths, but one overriding virtue is this: it moves the federal tax system inexorably toward a single flat rate consumption tax system. Eliminating the double tax on dividends, abolishing the death tax, lowering income tax rates, and expanding tax free savings accounts are all big steps toward the promised land of a flat rate tax system that ends doubled taxation of saving and investment—the building blocks of a rapidly growing economy. Whatever modifications or additions to the Bush tax cut that Congress enacts should be consistent with the principles of a tax system that taxes all income at the same rate, once, and only once.


THE MYTHS

1. The Bush tax cut "benefits only the rich."

The media continues to report, as The New York Times has, that "90% of Americans…will get little or nothing from the dividend tax cut." Wrong. The Tax Foundation's recent examination of IRS tax return data finds just the opposite. Fully 34 million American tax filers reported some dividend income in 2000 and these returns represent 71 million people. That is a whole lot more than 10% of the population who will directly benefit.

The income tax cuts are even more widely distributed. Anyone who pays income taxes and dreads the coming of April 15th will get an income tax cut under the Bush plan. The typical working family with 2 incomes and an income of $60,000—and I suspect very few of these households regard themselves as "rich"—would get a $1,200 a year tax cut from the Bush plan. If the income is $40,000 the family gets a $600 tax cut —and not just for one year, as under the Democratic alternative plan, but forever.

Proportionately, the rich get a smaller share of the Bush tax cut pie, not a bigger slice than the middle class. For example, the Treasury Department reports that for Americans who make more than $100,000 a year, the share of all federal income taxes paid would rise from 72% to 73%. For those who make less than a six-figure income a year, their overall share of the tax load goes down.

2. The Bush tax cut will blow a hole in the deficit.

The Bush tax cut provides $670 billion in tax relief for Americans over the next 10 years. This will hardly bankrupt the federal treasury. Over the next ten years the IRS will collect some $25 trillion in taxes from Americans. So the tax cut comes to less than 3 cents on the dollar, hardly a massive giveaway.

Nor is it accurate to say that the national debt will rise by the amount of the tax cut, unless one believes that tax cuts result in absolutely zero change in economic behavior. The truth is that for every action in the economy, as in physics, there is a reaction. If we cut income tax rates and eliminate the double tax on dividends, surely workers, and businesses, and investors will behave differently. If the tax on work and hiring goes down, surely we will get more of both. If the tax on investment goes down and the after-tax rate of return goes up, surely we will get more of that too. If the tax on dividends is eliminated and the capital gains tax falls as well, surely we will get more business investment and higher stock values.

Opponents of the tax cut continue to tout the results of economic models that have a perfect batting record of being wrong in predicting the future. For example, in 1997, when the capital gains tax rate was cut from 28% to 20%, the crystal ball gazers inside and outside government predicted a multi-billion dollar "cost" to the Treasury. In fact, the capital gains receipts doubled in 4 years. These are precisely the same defective models that are now telling us the Bush tax cut will lead the nation into bankruptcy.

Bill Beach, the economist and forecaster at the Heritage Foundation, reports that the dividend tax cut alone is such potent medication for the economy that the Treasury Department should recapture about 50 to 70% of the supposed tax revenue loss from the tax cut. Beach finds that the real world cost to the government of the Bush tax cut is probably at most half the reported "cost." I'd put my money on Beach's estimates, which have a far more accurate track record of accuracy.

But let us assume the worst-case scenario: no economic response from the Bush tax cut whatsoever. We could still have the Bush tax cuts and a balanced budget. If Congress were to modestly control its appetite for new spending, the tax plan could be implemented fully and the budget returned to balance by 2006. In a study for the Cato Institute I found that if overall federal spending were restrained to 2% annual growth over the next four years (which shouldn't be too difficult in this era of almost no inflation), the federal government would start running surpluses by 2006 even if we assume that the Bush tax cut incited no economic feedback and we include the costs of the war. If the tax cuts do generate growth, the budget would be balanced by 2006 or sooner.

Another reason to suspect that the Bush tax cut will not run up the deficit is that if the taxes aren't cut, it is much more likely that Congress will spend the money than save it. In other words, taxes cause spending, and the lack of taxes impose at least some spending discipline. Ohio University economist Richard Vedder has documented this relationship between tax revenues and spending and has found that each additional dollar of taxes available for Congress to spend leads to nearly a dollar of added spending. Nobel prize winner Milton Friedman notes that one of the strongest arguments for the Bush tax cut is that it will discourage a stampede of congressional spending over the next several years.

3. The Bush tax cut won't stimulate economic growth or jobs.

All we can really rely upon to judge the economic value of tax rate reductions is the economic reaction to tax cuts in the past. Fortunately, Bush has history firmly on his side. The 1964 Kennedy income tax rate reductions spurred a bull market expansion and budgets in near balance through the 1960s. The 1981 Reagan tax cuts ushered in 7 consecutive years of prosperity and 15 million new jobs. The 1997 capital gains cut corresponded with a bull market rally in the stock market and a surge of investment spending and venture capital funding for new businesses.

The critics argue that the 2001 Bush tax cut has failed to provide any juice for the economy. But there's a good reason for that. Seventy percent of the tax cuts haven't taken effect yet. All the more compelling reason to speed up the tax cuts so they can provide immediate economic aid. Especially critical is to chop the highest and most economically punitive tax rates. Roughly two-of-every-three Americans who pay the top income tax rate are business owners or sole proprietors. If you want jobs, you need financially healthy and confident employers with dollars to invest.

The dividend tax cut will have the same salutary effect on larger businesses. For example, John Rutledge, a respected Wall Street economist, has estimated that ending the double tax on dividends increases stock values by roughly 10% or an $800 billion increase in wealth, reduces businesses cost of raising investment capital by 25%, and helps stimulate a recovery in the battered high technology and telecom industries most. Many stock analysts, including economist John Rutledge of Kudlow and Co., believe that passing the dividend tax exemption and the acceleration of income tax rate reductions could add another 5 - 10% or so to equity values. That's the equivalent of a $500 billion to $1 trillion instant boost in wealth.

Clearly, even Americans who do own stocks that do not pay dividends or who own stocks in tax free 401k plans or IRAs will benefit from the dividend tax cut because of the increase in the valuation of stocks.

The Case for Growing the Bush Tax Cut

To maximize the positive job and wealth-creating impact of the Bush tax plan, it should not be shrunk, as some in the House suggest, it should be expanded to perhaps twice the size that the White House has recommended. I am pleased that Rep.s Paul Ryan of Wisconsin and Pat Toomey of Pennsylvania have teamed up to craft such a plan.

President Bush's plan will incentivize supply side growth by eliminating the dividend tax elimination and speeding up income tax rate cuts. But it omits tax policy changes that would improve the tax code, help the economy immediately, and cost the Treasury little or nothing in terms of lost revenues. This strategy would lift the tax drag that is still impeding growth and hasten the economy's recovery to the 4% to 5% real GDP growth that the United States is uniquely capable of achieving. It is worth reminding the members of the Committee that even in the first year of the plan, the tax cut amounts to less than 1% of the entire GDP. The Reagan tax cuts of 1981 and the John F. Kennedy tax cuts of 1964 were about 3 to 4 times larger in size than what President Bush has proposed.

Growth is the key to balancing the budget. A balanced budget will require at least a 3% to 4% economic growth rate to generate the revenues to pay for expected federal spending over the next decade. Every 1 percentage point increase in sustained economic growth generates an extra $1 trillion of tax receipts over ten years. The best way to produce tax receipts is to put people back to work; to get the stock market growing again; and to return American businesses to robust profitability. Tax cuts aren't then only way to make higher growth achievable, but history repeatedly shows they can sure help.

As such, here are the additions to the Bush tax plan that are worth consideration:

1) Consolidate the income tax rates down to three: 10, 20, and 30. Getting the top tax rate down to 35% is good, but 30% would be even better. For those who argue that this would lower the top tax rate too much, we would remind critics that in the late 1990s Reagan got the top tax rate down to 28%. Lowering the top income tax rate back down to 30% would help attract trillions of dollars of foreign investment capital back to the U.S. and would help reverse the decline in the dollar. Also, because 2 of every 3 taxpayers in the highest tax bracket today is a sole proprietor of a small business, lower tax rates will mean more business expansion and more jobs.

2) Cut the capital gains tax to 10% on all new investment. The last capital gains tax cit in 1997 increased stock values, increased business investment and venture capital funding, and helped spur a huge stock market rally. That has been the economic reaction to virtually every capital gains tax cut over the past 40 years. The capital gains tax cut is the goose that lays the golden eggs. Keep cutting until we eventually get down to zero.

3) Expand tax free IRAs and 401k super-saver accounts. This will help create larger individual pools of household savings and wealth accumulation. The latest Fed report shows that 52% of households now own stock and that this mass democratization of the U.S stock market has caused impressive increases in average household wealth in the U.S. - from $50,000 on average in the mid 1980s to almost $75,000 today (adjusted for inflation). IRAs and 401ks help build financial self-sufficiency and less reliance on the government programs. Moreover, we should stop double-taxing Americans' savings. IRAs and 401k's should be dramatically liberalized by raising limits by $5,000 per year. The goal should be to eventually create unlimited supersaver IRAs, where any money that is saved out of income is not taxed, until the funds are taken out of the savings account to be spent. The income limits for IRAs should be repealed too.

One last, but crucial point. Republicans need to adopt dynamic, real-world scoring of tax policy changes. Stop using a tax referee that is biased against the President's program and that consistently produces discredited predictions of the future. For 30 years economic models in Washington have over-estimate the revenue gains from tax hikes, and overstated the tax losses from tax rate cuts.

President Bush deserves great credit for proposing a tax plan that has the potential to increase economic growth and create jobs. The economy needs a jolt of tax cut adrenaline given the recent discouraging financial numbers that have been released. The fact that we are on the eve of war, is an argument for revving up our economic engine of industrial might, not hindering its productive capacity with a dysfunctional tax system.

 

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posted by DEMSareEVIL on February 4, 2004 at 12:02 AM | link to this | reply

Public financing.

I agree that "Public Financing" of elections would be a huge step forward in promoting democracy in the US, instead of the plutocracy we have now. However in addition to that we need to make it so that anyone who takes private money becomes "suspect" and a pariah in the political arena.

Right now there is public financing for presidential elections and yet Bush & Dean & Kerry have all rejected it because they all can raise more money from the private sector. Even though Bush is raising money from the rich in checks of $2000 each and Dean is raising money on the Internet at an average contribution of $75 each, the fact is that until or unless we can make it shameful for any politician to accept private contributions, and force all of them (not by law but by morals) to only accept public money, the "buying of the presidency" and other offices will continue.

TV and radio also get virtually free use of public airwaves. They all should be required to "give something back" to the public for this privilige. An hour a night for a month or two before an important election, where all the top rival candidates can debate or put on their own arguments should be the minimum expected from the broadcast media. This would cut the cost of campaigns dramatically.

posted by spyinthesky on February 1, 2004 at 6:12 AM | link to this | reply

I agree...

that Republican tax policies are atrocious, but the Democrats are only slightly less bad. The Democrats don't try to pass any new loopholes for the rich, but I don't notice them doing much to get rid of the old ones either. The only way we'll ever get a fair tax system is if we get public campaign financing. That's the only way to get the politicians to listen to the taxpayers instead of the zillionaires.
Jeff

posted by jollyjeff on January 31, 2004 at 3:04 PM | link to this | reply

freerain

I agree with you. Since Reagan and the Republicans led a march backwards, we have seen the middleclass and poor class suffer from stagnant incomes and higher unemployment, while the richest among us have had double digit annual increases in their incomes and their wealth. Executives pay themselves tens of millions of dollars in salary and benefits each year even if the companies they lead are going down in performance!!!

The class distinctions are getting worse and worse and the middleclass and poor are finding it harder and harder to meet all their obligations. The Republican absurd battle cry of "Class Warfare!" reminds me of Marie Antoinette saying, "Let them eat cake!" before the French Revolution.

posted by spyinthesky on January 29, 2004 at 10:11 AM | link to this | reply

Empire

is always structured on class distinction--and mobility is NOT an option.  In America, we have an illusion of mobility, but in reality, the structure makes it nearly impossible to do it legitimatly.  The small business owner is the "opportunity" that is offered, but getting to that stage is requisit on having some money to invest.  I didn't hear GWB offer incentives for folks to go into small business--I heard alot about "workers" and it smacked of class distinction to the max.  There is a very strong incentive to reduce the living standards and income of the working class in America, so that means small businesses, the back bone of our economy, will also be reduced.  This adds to the grim picture of opportunity and advancement into the higher class society.  All this does is divide us further and add fuel to the fire of oppression and leads to worker uprising and eventual revolution, ex. Russian Marxism, German Naziism, French peoples revolution, Roman Sparticus slave rebellion---

FR

posted by freerain on January 29, 2004 at 9:20 AM | link to this | reply