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By Floyd and Mary Beth Brown
Obama debt commission member, Republican Sen. Judd Gregg of New Hampshire, launched a scary
trial balloon on ABC News. Gregg suggested the debt commission will likely recommend a massive
$26.7 trillion tax increase. Here are Gregg’s actual words:
“Everything has to be on the table – there’s no question about that… Erskine Bowles, one of the
co-chairmen of the commission, has suggested a 75-25 split — 75 percent of the savings being
in spending, and 25 percent in revenues… I think it’s likely that there will have to be a
revenue component, but it should be significantly, dramatically — and a 3-1 ratio is pretty
dramatic — dramatically less than the initiatives in the spending side of the ledger.”
According to an analysis by Americans for Tax Reform if Bowles wants $3 in spending cuts for
every $1 in tax hikes then the tax increases will be larger than anyone expects:
“Bowles and Gregg can only be talking about cutting $3 in promised Social Security and Medicare
benefits in exchange for $1 in tax increases. In other words, 1/4 of the unfunded liabilities
of Social Security and Medicare would be paid for with tax hikes. So how big is that? According
to the 2009 Social Security and Medicare Actuaries’ Report, the long-run insolvency of the
Social Security and Medicare systems is $106.8 trillion (with a “t”) over the infinite horizon.
To close this gap with one-quarter tax hikes is, therefore, to raise taxes by $26.7 trillion.
Of course, this number is undoubtedly higher since the Obama Administration is sitting on
(read: hiding) the 2010 version of the report (it’s nearly six months overdue).”
On the heels of a huge tax increases included in the over-2000-page ObamaCare package, together
with over-2000-page so-called “Financial Reform Package,” together with the expiration of the
Bush tax cuts, Obama’s economic policies have guaranteed a double-dip recession.
Strap on your safety belts, because the anemic economic recovery of 2010 is about to become a
government-induced second recession or double-dip in 2011. This outcome is baked in the cake
even before any tax increases from the Obama debt commission are enacted.
If they are so greedy as to also try — by passage of a climate control bill — increases in
energy taxes then this second recession will likely lead to deflation and a collapse into a
government-sponsored depression. The economy cannot afford more money being redirected from
investments toward government spending.
Clearly from this evidence alone it is plain to see that Obama isn’t judging his success based
on a record of economic growth, but instead he is pursuing a program of economic redistribution. The administration has no focus on expanding the economic pie; instead, they are concerned with devouring every piece of the pie.
Grover Norquist, the president of Americans for Tax Reform, has been watching the Obama debt
commission closely, and he concluded after hearing reports of Sen. Gregg’s comments:
“It’s been clear from the beginning that the purpose of this Commission was to put GOP
fingerprints on a tax hike, likely a VAT… Gregg seems to be giving them all ten fingers… The
true agenda of this commission has always been to hide the ball on a tax hike until after the
November elections – hence the December reporting date. Gregg’s gaffe today tips their hand,”
Higher taxes are never the answer. With the economy so weak, Congress should be making the Bush
tax cuts permanent. Taxes on capital formation and investment should be eliminated all together. America should be encouraging small business, individual investors and entrepreneurs to be taking risks to increase economic growth in the private sector. Instead, Obama and the socialists in Congress are embarked on a dangerous expedition to punish success. This will end badly.
By Terence P. Jeffrey
Middle-class Americans — not the rich or the poor — pay the majority of annual tax revenues
taken in by the federal government, according to data released in a new Congressional Budget
Office (CBO) study. Households earning less than $34,300 per year, meanwhile, actually pay a
negative average federal income tax rate.
According to the CBO:
- Middle-class households that earned between $34,300 and $141,900 paid 50.5 percent of all
federal tax revenues in 2007 (the most recent year analyzed).
- Households that earned between $34,300 and $352,900 paid 66.7 percent of all federal taxes.
- Households in the top 1 percent for annual income (those earning more than $352,900) paid a
healthy 28.1 percent of all federal taxes.
- Households in the lower income brackets paid relatively little; those earning less than $34,300
paid only 5.2 percent of all federal taxes, and those earning less than $20,500 carried almost
none of the federal tax burden (just 0.8 percent of the total) in 2007.
Other findings:
- The average overall federal tax rate (including income, Social Security, Medicare, excise and
other taxes) for all American households was 20.4 percent in 2007.
But the average rate rose dramatically as household income rose.
- Households earning less than $34,300 paid an average overall federal tax rate of 10.6 percent,
while households earning more than $74,700 paid an average overall federal tax rate of almost
two and a half times that much — 25.1 percent.
- The average federal income tax rate for households earning less than $34,300 was -0.4 percent
in 2007, and the average federal income tax rate for households earning less than $20,500 was
6.8 percent.
Over the past three decades, according to the CBO data, taxation has been getting more
progressive, as the tax burden has lightened on lower income households while increasing on
higher income households. During those three decades, Presidents Ronald Reagan and George W.
Bush signed laws cutting the top marginal income tax rates, but Presidents George H.W. Bush
and Bill Clinton signed laws increasing the rates.
The CBO divided the 116.9 million American households of 2007 into five roughly equal parts
(quintiles) graded by income. The income range for the lowest quintile was $0 to $20,500; the
second quintile, $20,500 to $34,300; the third quintile, $34,300 to $50,000; the fourth quintile,
$50,000 to $74,700; and the fifth quintile, $74,700 and above. The share of overall federal
taxes paid by each of the first four quintiles decreased from 1979 to 2007, while the share
of overall federal taxes paid by the highest-income quintile increased, meaning the overall
tax burden was shifting away from that class of Americans making less than $74,700 per year
in 2007 toward those earning more.
Visit The Source.
Heidi is the proprietor of a bar in Detroit. She realizes that virtually all of her customers
are unemployed alcoholics and, as such, can no longer afford to patronize her bar. To solve
this problem, she comes up with a new marketing plan that allows her customers to drink now,
but pay later.
Heidi keeps track of the drinks consumed on a ledger (thereby granting the customers’ loans).
Word gets around about Heidi’s “drink now, pay later” marketing strategy and, as a result,
increasing numbers of customers flood into Heidi’s bar. Soon she has the largest sales volume
for any bar in Detroit .
By providing her customers freedom from immediate payment demands, Heidi gets no resistance
when, at regular intervals, she substantially increases her prices for wine and beer, the most
consumed beverages. Consequently, Heidi’s gross sales volume increases massively.
A young and dynamic vice-president at the local bank recognizes that these customer debts
constitute valuable future assets and increases Heidi’s borrowing limit. He sees no reason
for any undue concern, since he has the debts of the unemployed alcoholics as collateral.
At the bank’s corporate headquarters, expert traders figure a way to make huge commissions,
and transform these customer loans into DRINKBONDS, ALKIBONDS and PUKEBONDS. These securities
are then bundled and traded on international security markets.
Naive investors don’t really understand that the securities being sold to them as AAA secured
bonds are really the debts of unemployed alcoholics. Nevertheless, the bond prices continuously
climb, and the securities soon become the hottest-selling items for some of the nation’s leading
brokerage houses.
One day, even though the bond prices are still climbing, a risk manager at the original local
bank decides that the time has come to demand payment on the debts incurred by the drinkers at
Heidi’s bar. He so informs Heidi.
Heidi then demands payment from her alcoholic patrons, but being unemployed alcoholics they
cannot pay back their drinking debts. Since Heidi cannot fulfill her loan obligations she is
forced into bankruptcy. The bar closes and the eleven employees lose their jobs.
Overnight, DRINKBONDS, ALKIBONDS and PUKEBONDS drop in price by 90%. The collapsed bond asset
value destroys the banks liquidity and prevents it from issuing new loans, thus freezing credit
and economic activity in the community.The suppliers of Heidi’s bar had granted her generous
payment extensions and had invested their firms’ pension funds in the various BOND securities.
They find they are now faced with having to write off her bad debt and with losing over 90% of
the presumed value of the bonds. Her wine supplier also claims bankruptcy, closing the doors on
a family business that had endured for three generations, her beer supplier is taken over by a
competitor, who immediately closes the local plant and lays off 150 workers.
Fortunately though, the bank, the brokerage houses and their respective executives are saved
and bailed out by a multi-billion dollar no-strings attached cash infusion from their cronies
in Government.. The funds required for this bailout are obtained by new taxes levied on employed,
middle-class, non-drinkers who have never been in Heidi’s bar.
Now, that wasn’t hard to understand was it?
By Annalyn Censky, CNN
NEW YORK (CNNMoney.com) — Fannie Mae requested another $8.4 billion from the federal government
on Monday, saying that it expects its losses to continue because of trends in the housing and
financial markets.
The government-controlled mortgage giant said it lost $11.5 billion in the first quarter of
2010, its 12th consecutive quarterly loss. In addition, Fannie paid out $1.5 billion dividend
to the Treasury, which received stock after the government took it over in September 2008.
In the year-earlier quarter, Fannie suffered a $23.2billion loss, but an accounting change
makes comparing the year-over-year losses difficult.
Fannie’s request for more federal funds comes just four days after Fannie’s twin Freddie Mac
also asked for a handout – to the tune of $10.6 billion – after posting an $8 billion quarterly
loss.
In using Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) to prop up the mortgage
market, the government in December lifted a $200 billion limit on their bailouts, essentially
giving the twin housing lenders a blank check. Before their latest requests, Fannie Mae had
already received $76.2 billion from the federal government and Freddie had gotten $50.7
billion.
The Obama administration has used the companies to support its foreclosure prevention efforts,
have led to about 94,000 loan modifications by Fannie in the first quarter, compared with about
42,000 in the quarter before.
“We made solid progress in our ongoing efforts to keep people in their homes,” Fannie Mae
President and CEO Mike Williams, said in a press release.
Because they buy and guarantee mortgages, Fannie and Freddie are an important source of funding
to banks and other home lenders, and their financial results are a key indicator of the housing
market.
Fannie saw an increase in both delinquencies and foreclosures in the first quarter, which
translated to big hits on its bottom line. The percentage of single-family homes delinquent on
their mortgages increased to 5.47%, up from 5.38% in the previous quarter. The single-family
foreclosure rate rose to 1.36%, compared with 1.03%.
The company blamed a weak economy, a prolonged decline in home prices and the still-high
unemployment rate, which sits at 9.9%, for the rise in delinquencies and foreclosures. The same
factors significantly reduced the value of the foreclosed properties Fannie already holds.
As for the future, Fannie said it expects to continue to post losses and ask for government
help in upcoming quarters.
“Due to current trends in the housing and financial markets, we continue to expect to have a
net worth deficit in future periods, and therefore will be required to obtain additional
funding from Treasury,” the company’s press release said.
Last week, teachers in the San Francisco area planned to take their students out of school
in order to attend a protest about proposed cuts in education spending. According to a piece
in the SF Public Press, children as young as five years old were slated to attend under the
auspices of their schools, until the superintendent quashed the idea because of safety concerns.
Aside from the disturbing specter of children being used as political props by their teachers,
the spectacle is ludicrous. Reportedly, the rally’s “big slogan” was supposed to be “save our students, save our teachers, save our schools, save our future.” Ironically, that’s what the spending cuts are designed to do – even as state government employees continue to stand in the way.
It’s an ugly fact of life in California. Public sector unions are slowly, painfully and
inexorably choking the life out of the (once) Golden State. Fully 54% of state government
workers – that’s almost 1.8 million people – are unionized. And the unions’ primary reason
for existence is maintaining the privileges that state employees enjoy, at any cost to the
rest of the state.
According to Certification Map (a site devoted to explaining the teacher certification process across the country), a California teacher’s salary is 145% that of an average worker in the state (who works 12 months per year!). What’s more, California teachers are the most highly paid in the entire nation, even as the state teeters on the brink of fiscal collapse. And yet, the prospect of any cuts to state government spending elicits nothing but a storm of protest.
It’s an ugly pattern that’s repeated again and again. In response, Democrats in the state
legislature simply vote for tax increases. (Perhaps that’s because they received almost $17
million in contributions from California public sector unions, according to the Institute on
Money in State Politics, 2004-2006, compared to a paltry $1.22 million to Republicans during
the same period.)
But raising taxes isn’t the answer. California has already endured an exodus of talented, productive taxpayers – and along with New Jersey, the state imposes the heaviest tax burden per capita in the country. Hard-working Californians need a tax cut, instead.
Don’t count on any relief coming from a state bureaucracy that has become completely enmeshed
in the culture of government spending. Just last month, a left-wing judge decreed that the
governor could not impose simple 3-day furloughs on state employees who belonged to three
powerful public sector unions. In other words, a sensible, much-needed method of cutting
spending was taken entirely off the table by judicial fiat.
It’s becoming increasingly clear that the system, as it exists, is unsustainable. The state’s fiscal crisis is reaching proportions that will require real and significant cuts to avoid an economic meltdown. Making the changes necessary to save the state will necessitate resisting the destructive influence of public sector unions. And that’s fine. It’s long past time that public sector unions start working to serve Californians, rather than demanding that
Californians work ever harder to serve them.
by Carol Platt Liebau
When Obama takes to the podium for the State of the Union, one of the things he is allegedly going to push is a
wholesale federal take over of the student loan industry.
Already, his plans are causing a lot of students, particularly of private higher ed colleges and universities,
problems with getting financing for education. Obama intends to shut out the usual third party lenders and put
everything within the federal government – under a program that has been shown repeatedly to be highly inefficient
and burdensome for academic institutions.
More troubling, by putting everything under the Department of Education, universities and colleges will be forced
to adhere to federal rules, some of which conflict with the values of sectarian institutions that presently use the
third party student loan system for their students.
The feds controlling the student loan industry means the feds get to tell academic institutions what values they
can and cannot promote among the selection and disciplining of their students.
Brigham Young, etc. better watch out.
More troubling, Secretary of Education Arne Duncan sent out a letter recently to colleges and universities telling
them to get on board the federal program right now. There’s just one problem — the Congress has not passed the program.
Likewise, the Department of Education is encouraging outside groups to lobby for the legislation, a clear violation
of federal law.
In other words, Duncan is trying to get schools that have expressed real apprehension over the program to get into
the program now so Congress will believe the expressed concerns have been ameliorated.
The wholesale take over of education funding by the feds will, like a wholesale take over of healthcare, drive up
prices through decreases in competition and, more troubling, allow the feds a backdoor into higher education learning
and indoctrination.
Visit RedState
It’s a slow day in a small Vermont town and streets are deserted. Times are tough, everybody is in debt, and everybody is living on credit.
A rich tourist drives through town, stops at the motel, and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs to pick one for the night.
As soon as he walks upstairs, the owner grabs the bill and runs next door to pay his debt to the butcher.
The butcher takes the $100 and runs down the street to retire his debt to the pig farmer.
The pig farmer takes the $100 and heads off to pay his bill to his supplier, the Farmer’s Co-op.
The guy at the Farmer’s Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her "services" on credit.
The hooker rushes to the hotel and pays off her room bill with the hotel owner.
The hotel proprietor then places the $100 back on the counter so the rich traveler will not suspect anything.
At that moment the traveler comes down the stairs, states that the rooms are not satisfactory, picks up the $100 bill and leaves town. No one produced anything. No one earned anything. However, the whole town is now out of debt and now looks to the future with a lot more optimism.
And that, ladies and gentlemen, is how the United States Government is conducting business today.
America Can Only Work if Americans Are
Working
For the first time in 26 years, we have
reached 10% unemployment. In fact, we’ve surpassed it. Back in June the Federal Reserve
predicted that it would likely take 5 years before we are
creating a substantial number of net new jobs. That could mean 9-10% unemployment for the next
5 years.
We have a severe jobs crisis in America. If we are to get back on the right track in
America, we must concentrate on Jobs First.
Presidents Bush and Obama tried to fix our economy through bailouts of big companies and
big government stimulus packages. This approach has failed.
We must propose a plan for job creation aimed specifically at those who create jobs – small
businesses and entrepreneurs.
A Jobs First Approach: 3 Key Steps We Can Take Right Now
- 1. Reduce Spending and Reform Government to Achieve a Balanced Budget.
While Newt Gingrich was Speaker, federal spending rose by an average of 2.9% per year, the
lowest increase since the 1920s. We can apply the same principles that worked from 1995 to
1998 to create jobs and four straight balanced budgets through smaller government, less
spending, lower interest rates, and less debt.
- 2. Five Tax Reforms to Reward Job Creation, Entrepreneurship, Savings, and
Investment.
a. Immediate Payroll Tax Relief. Allow workers and employers to keep
more of their hard earned money through an immediate, two-year, 50% reduction of the payroll
tax. This step would immediately boost the take home pay of every worker, and dramatically
free up cash for every employer to hire and invest. This tax relief could be paid for with
unspent TARP and stimulus money. (Calculate how much money you would save).
b. Incentives for Small Business Investment. Allow small businesses to expense
100% of new equipment purchases each year to help them invest in new, more productive
technologies.
c. Abolish Taxes on Capital Gains. Match the Chinese capital gains rate of zero.
Federal Reserve Chairman Alan Greenspan testified in the 1990s that this was the best rate for
economic growth.
d. Reduce the Business Tax Rate. America has the second highest business tax
rate in the world. We should match the Irish business tax rate of 12.5%. Combined with a zero
rate of taxation on capital gains, America would become the most desirable country in the world
in which to invest and start a business.
e. Abolish the Death Tax. Inheritance is the most powerful accumulator of
capital. Studies show that eliminating the death tax would create hundreds of thousands
of new jobs.
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3. American Energy Plan to Create American Jobs and Keep American Money at
Home.
Developing more American energy while protecting the environment would mean the creation
of millions of new American jobs and the generation of billions of dollars in new federal
tax revenues, largely without the need for any new federal spending.
- More Oil and Natural Gas
- Shale Development
- More Nuclear
- Less Frivolous Litigation
- More Science for Alternatives
- More Prizes for Breakthroughs
- 21st Century Electric Grid
- More Clean Coal Projects
- Incentives, Not Taxes
By Adam Waldeck
Visit American Solutions Website.
These steps can be achieved only after ridding ourselves of the present liberal Congress.
In the Senate, the Republicans are likely to hold all their vacant seats with the possible
exception of New Hampshire. Incumbent Democrats Dodd (Ct), Specter (Pa), Lincoln (Ark),
Reid (Nev), and Bennett (Col) are the low hanging fruit. Among the open seats, Delaware
seems ripe for the Republicans. Add to these six seats, two more if Rudy Giuliani
challenges Kristin Gillibrand in New York and if North Dakota governor Hoeven takes on Dorgan.
Mark Kirk could be the ninth pickup in Illinois. And, in a Republican sweep,
you have to respect GOP chances in California and New Jersey.
Let’s do our part and vote the incumbents OUT!
It is time to cast aside all remaining doubt. President Obama is not trying to lead America forward to recovery, prosperity and strength. Quite the opposite, in fact.
In September of last year, American Thinker published my article, Barack Obama and the Strategy of Manufactured Crisis. Part of a series, it connected then-presidential candidate Barack Obama to individuals and organizations practicing a malevolent strategy for destroying our economy and our system of government. Since then, the story of that strategy has found its way across the blogosphere, onto the airwaves of radio stations across the country, the Glenn Beck television show, Bill O’Reilly, and now Mark Levin.
The methodology is known as the Cloward-Piven Strategy, and we can all be grateful to David Horowitz and his Discover the Networks for originally exposing and explaining it to us. He describes it as:
The strategy of forcing political change through orchestrated crisis. The “Cloward-Piven Strategy” seeks to hasten the fall of capitalism by overloading the government bureaucracy with a flood of impossible demands, thus pushing society into crisis and economic collapse.
Richard Cloward and Frances Fox Piven were two lifelong members of Democratic Socialists of America who taught sociology at Columbia University (Piven later went on to City University of New York). In a May 1966 Nation magazine article titled “The Weight of the Poor,” they outlined their strategy, proposing to use grassroots radical organizations to push ever more strident demands for public services at all levels of government.
The result, they predicted, would be “a profound financial and political crisis” that would unleash “powerful forces … for major economic reform at the national level.”
They implemented the strategy by creating a succession of radical organizations, most notable among them the Association of Community Organizations for Reform Now (ACORN), with the help of veteran organizer Wade Rathke. Their crowning achievement was the “Motor Voter” act, signed into law by Bill Clinton in 1993 with Cloward and Piven standing behind him.
As we now know, ACORN was one of the chief drivers of high-risk mortgage lending that eventually led to the financial crisis. But the Motor Voter law was another component of the strategy. It created vast vulnerabilities in our electoral system, which ACORN then exploited.
ACORN’s vote registration scandals throughout the U.S. are predictable fallout.
The Motor Voter law has also been used to open another vulnerability in the system: the registration of vast numbers of illegal aliens, who then reliably vote Democrat. Herein lies the real reason Democrats are so anxious for open borders, security be damned.
It should be clear to anyone with a mind and two eyes that this president and this Congress do not have our interests at heart. They are implementing this strategy on an unprecedented scale by flooding America with a tidal wave of poisonous initiatives, orders, regulations, and laws. As Rahm Emmanuel said, “A crisis is a terrible thing to waste.”
The real goal of “health care” legislation, the real goal of “cap-and-trade,” and the real goal of the “stimulus” is to rip the guts out of our private economy and transfer wide swaths of it over to the government to control. Do not be deluded by the propaganda. These initiatives are vehicles for change. They are not goals in and of themselves except in their ability to deliver power. They and will make matters much worse, for that is their design.
This time, in addition to overwhelming the government with demands for services, Obama and the Democrats are overwhelming political opposition to their plans with a flood of apocalyptic legislation. Their ultimate goal is to leave us so discouraged, demoralized, and exhausted that we throw our hands up in defeat. As Barney Frank said, “the middle class will be too distracted to fight.”
These people are our enemies. They don’t use guns, yet, but they are just as dangerous, determined, and duplicitous as the communists we faced in the Cold War, Korea, Vietnam, and bush wars across the globe, and the Nazis we faced in World War II.
It is time we fully internalized and digested this fact, with all its ugly ramifications. These people have violated countless laws and could be prosecuted, had we the political power. Not only are their policies unconstitutional, but deliberately so — the goal being to make the Constitution irrelevant. Their spending is off the charts and will drive us into hyperinflation, but it could be rescinded, had we the political power. These policies are toxic, but they could be stopped and reversed, had we the political power. Their ideologies are poisonous, but they could be exposed for what they are, with long jail sentences as an object lesson, had we the political power.
Every single citizen who cares about this country should be spending every minute of his or her spare time lobbying, organizing, writing, and planning. Fight every initiative they launch. It is all destructive. If we are to root out this evil, it is critical that in 2010 we elect competent, principled leaders willing to defend our Constitution and our country. Otherwise, the malevolent cabal that occupies the government today will become too entrenched.
After that, all bets are off.
Businessman and Examiner.com columnist Jim Simpson is a former White House staff economist and budget analyst. You may read more of his articles on his blog, Truth and Consequences.
Original article: The American Thinker.
If you are a fan of Ayn Rand you will love this article.
The book, "Atlas Shrugged" by Ayn Rand which was published in 1957, pretty much predicts what occurs when the thinkers go on strike.
The Book Of The Month Club placed Atlas Shrugged second only to the Bible as the most influential book among American readers.
The book answers the question, "what would happen if economic freedom were lost?"
Entrepreneurs go on strike
By C. Edmund Wright
Can Barney Frank Dunk on Lebron? No, he cannot. Nor can anyone else in Washington. Nor can they catch passes from Ben Rothlisberger in the Super Bowl or strike out Derek Jeter in the World Series. They are not equipped to do so. So what? This ridiculous visual image speaks to the business malaise infecting the economy since Obama took office. The point is that politicians are equally ill equipped to run the auto industry or the health industry or the lending industry or the insurance industry — and their determination to do so is sucking all the dynamism from the… Read the Full Article
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