There it was, that thing that could not be killed. A vampire was staring directly at me. In the full glory of a New York Times headline it glared at me through my computer screen: "Republicans Pledge New Standoff on Debt Limit."
Speaker John Boehner is promising a rematch of last summer's debt ceiling fight. You remember. The brawl that shook the financial markets and caused a downgrade in the debt rating of the United States of America is up for a rematch. Once again, the hapless Speaker is playing the mouthpiece to his Tea Party irredentists. His stand? Unless the amount of the debt ceiling increase is more than covered by cuts in spending, defaulting on the debt is an acceptable option. And it must be solely by cuts. No revenue increases need apply.
We have seen this movie before, but the outcome may not be so predictable. The Democrats in the Senate will balk. The GOP will filibuster. The impotence of the "world's greatest legislative body" will be on display for all to see. And Congressional favorable rating will sink to another new low (as well it should). But this time, there may not be a short-term fix. Mr. Obama would have to play a key role in any compromise and the GOP will be loathe to give him an opportunity to act presidential during the election. And the hard positions of congressional candidates will not likely be eased during the electoral jousting. So, fasten your seat belts, or don't. We are heading off a cliff.
And this is but one of several fiscal hurdles we need to face and overcome if we are not to fall off that cliff at the end of the year. Others include the forty or fifty items known as the Bush tax cuts, the payroll tax relief extension, the "Doc fix" and, the granddaddy of them all, the looming sequester. Combined, they pose a one trillion dollar threat to the U.S. (and perhaps world) economy starting in January. Businesses and government contractors are already making moves to prepare and those moves themselves will soon show up in further diminished economic growth. Any solution will require bipartisan cooperation and Mr. Boehner has put the first bullet into that illusion.
Conventional wisdom in our nation's capital is that the two sides will read the election results the same way, and come to a compromise. Nonsense, each side will have enough victories to proclaim their views validated. The GOP never acknowledged that President Obama won a mandate in 2008 and set about trying to delegitimize him and his administration. His defeat -- not the economy, not national security, was their top priority. What will be different if he wins again? Should they lose control of the Senate, why should Democrats not follow the GOP obstructionist model? And after what promises to be a series of bitter, bloody and brutal campaigns, does anyone think that the wounds will be healed and comity will flourish between November and January? The current occupants of the White House and the Congress will have to reach an agreement to accomplish anything. And if that seems difficult now, it is likely to be near impossible after the election. Our economy is not in the sad shape of Greece, but our political system surely is.
Is there a way out? Probably not. But if there is, it lies in the only national office on the November ballot. President Obama and Governor Romney should each be required to outline a detailed plan as to how they propose to meet the multiple economic and financial threats we face. Present specific answers as to their position on the debt ceiling, the Bush tax cuts, the payroll tax and the sequester. Present a five-year budget in a format designed by the Congressional Budget office (CBO) so it can be scored. Then take their case to the people and let the people decide. Is this likely to happen? No.
What can we do to protect our savings, IRAs and retirement investments? Buy a bigger mattress.
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Christopher Arterton: Hoosier Heresy or Wisdom, 2012 Style?
Peter S. Goodman: Republicans Keep Pandering On Taxes
In 2010 the Simpson Bowles Commission studied income tax expenditures and some spending programs but were not permitted to explore a value added tax (VAT) or net wealth tax due to the constraints of the Executive Order that set up the commission.
The US is the only developed country without a VAT and that is why our business tax rates (35%) are so high. The only rational reason for eschewing a net wealth tax is the sacred cow of avoiding “double taxation”. This common knee jerk reaction fails to appreciate the potential benefits of very low rates and delayed taxes (i.e. much better to tax 8% of income now and 2% of retention for each of the next 10 years than to tax 28% now).
Consider the 2-4-8 Tax Blend which can be described in one sentence. Tax individual and corporate income at a flat 8% rate (with no deductions, credits or loopholes), tax individual net wealth at 2% (excluding $15,000 cash and retirement funds) and impose a 4% Value Added Sales Tax (VAT) on business. The 2-4-8 Tax Blend has the lowest rates and will produce about $500 billion more than current federal revenue with no need for payroll, estate, and capital gains taxes or deferral of foreign income.
Eugene Patrick Devany, JD, MPA
www.TaxNetWealth.com
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As stated above, as long as we keep a focus on a right v left fight, nothing will ever get done. When We the People understand the fight is 1% v 99%, then things will change in Washington. Corporate America, and their puppet-masters understand that gridlock is good for business. Gridlock gets nothing changed. Gridlock keeps the Bush tax cuts in place. It keeps the DOD financed to the tune of $700B per year. It keeps subsidizing Big Oil, Big Ag, and Wall St. It continues the status quo. So, they pool their money, throw in a few billion in ad campaigns (pennies on the dollar), and let the drama play out as if it means something. The Sunday morning talk show fights are a ruse to keep the flame lit, and keep interest going in their fake fight. Its better than WWF! The big government v small government fight only becomes relevant if the government actually supports the people. As it stands, government supports corporations and the 1%. If big government wins, Corporate America wins by getting corporate subsidies, welfare, and tax breaks. If small government wins, corporate America wins with low taxes and gutted regulation. Sorry America, heads you lose, tails you lose. When we change this dynamic, Americans may actually win.
The fix is in, folks. These phony fights that break out on Sunday morning talk shows are for your viewing pleasure or displeasure only, much like the WWF. Arguing the merits of more v less government makes no sense when the government we have represents corporate America and its 1% owners. Less government helps them because they can run roughshod over regulation. More government helps them because they have their noses at the trough raking in billions in subsidies and tax credits. To the American people, heads you lose and tails you lose. Until we understand this, we're just a bunch of rubes being taken by 535 carnival barkers and snake oil salesmen, also known as congressmen and senators. Your federal government at work.