On this weekend's talk shows, Mitt Romney could not say which tax loopholes he would close to offset tax cuts for the wealthy. No surprise given the vagueness of the Republican strategy for fixing our economy, but the real issue here is much bigger than just Romney's cluelessness. The principal danger in a Romney presidency is in the reckless and contradictory Republican plan for deficit reduction, most of which is pure ideological nonsense.
Three weeks ago, the Congressional Budget Office predicted that unless we avert the "fiscal cliff," a $500 billion basket of tax hikes and spending cuts scheduled to go into effect in January, 2013, the U.S. will face a significant recession and higher unemployment. That in itself is bad but the larger problem is that a prolonged recession could lead to chronic unemployment, decimate our productivity, erode our market share and competitive edge in global markets, push businesses into bankruptcy, and cause investors to withdraw their money from the U.S. and put it elsewhere. These hits to the system would not just be painful in the short term but would likely cause irreversible damage that could haunt us for many years to come.
But the Republicans' antidote to our economic problems does not take any of this into account. In their lopsided view of the fiscal universe, government spending is a bigger evil than even systemic damage, and free markets can solve all problems through trickle-down economics; and even though that theory worked so well in 2008, they continue to flog the same dead horse.
While government spending does need to be curtailed, any cuts must be phased in gradually to avoid unnecessary shocks to the system, including to the existing paychecks of millions of Americans, a fragile small business sector, an economy driven by consumption (which will be impacted by unemployment and recession), and the very infrastructure of our country that makes fruitful commerce possible. Europe just finished its ill-conceived experiment with austerity, and the loss in the continent's business credibility, as well as the harmful effects of excessive belt-tightening, are still being felt. Do we really want to go down the same track?
Respected economists like Paul Krugman have made compelling cases for a careful and gradual approach to deficit reduction -- one that would adopt the best of Keynes and Friedman and create real long-term benefits for our economy without a gratuitous short term bloodbath and permanent damage to our system -- and that is the blueprint that we should follow. The draconian cuts advocated by fiscal conservatives would just be myopic and counter-productive.
On the tax side of the equation as well, the Republicans are way off base -- as Romney demonstrated this weekend. The tax cuts they advocate run contrary to the goal of deficit reduction; in fact, the only way that their math would work is if the IRS closed most loopholes that enable corporations and wealthy individuals to pay unfairly low taxes, but clearly the Republicans have no idea how to do that -- or perhaps they have no intention of doing it. As it stands, the tax code simplification that Romney wants consists only of cutting taxes and not actually reforming the system, which is a dangerous proposition.
So, while it may be tempting to attack Romney personally, President Obama would do well to keep his eye on the ball and make the Republican plan for deficit reduction the centerpiece of his campaign. On the dinner table of political fodder, Romney's Bain Capital experience and even his offshore bank accounts are the equivalent of side dishes while the schizophrenic and self-destructive Republican ideas for our country's economic future are the main course.
Sanjay Sanghoee has worked at leading investment banks and hedge funds and is also the author of two novels. Please visit www.sanghoee.com for more details and to sign up for updates.
Follow Sanjay Sanghoee on Twitter: www.twitter.com/sanghoee
 |
 |
|
| Obama | Romney | |
|---|---|---|
| Electoral Votes (270 to win) |
332 | 206 |
| Obama | Romney | |
|---|---|---|
| Total | 65,899,660 | 60,932,152 |
| Percent | 51.1% | 47.2% |
| Democrats* | Republicans | |
|---|---|---|
| Current Senate | 53 | 47 |
| Seats gained or lost | +2 | -2 |
| New Total | 55 | 45 |
| Democrats | Republicans | |
|---|---|---|
| Seats won | 201 | 234 |
Can we please stop the charade that there's any kind of fiscal crisis, long term or otherwise?
What we have an unemployment crisis that needs more, not less spending, right now. And we have a longterm healthcare costs crisis, which primarily affects family budgets, not the federal budget. Thanks to PPACA we are finally beginning to address that.
http://www.epi.org/blog/long-term-budget-outlook-improved-dramatically/
The long-term budget outlook has improved dramatically over the last three years
By Ethan Pollack
"Yesterday, the Congressional Budget Office (CBO) released its annual Long Term Budget Outlook (LTBO), which projects federal spending, revenues, deficits, and debt over the next 75 years. There are many points of controversy with regards to the LTBO, not the least of which is that it’s pretty ridiculous for CBO to pretend it knows what health care costs will look like in 2087. Personally, I think that CBO’s LTBO provides a lot more heat than light, and I would be the first to applaud if CBO decided to only release ten-year budget projections (in themselves subject to a huge margin of error).
Nevertheless, there is still value in looking at the change in projections from one year to the next. The figure below clearly shows that over the past three years CBO’s extended current law budget projections—which assumes no changes are made to the law—have improved drastically.
http://www.epi.org/blog/long-term-budget-outlook-improved-dramatically/
It is also a travesty that the American people are so apathetic in their approach to the politics of our country. The mainstream media is also criminally irresponsible by being of minimal help in presenting content for the public which educates them in a way so that all Americans can understand the consequences of their political decisions...Oh, but sensationalism and the drama of a close election is so much better for advertising revenue. Argh!
Japan isn't doing too well and China has problems.
If things goes sour here in America, it will just add to the world's economic woes.
And I can't even guess which country or countries are in good enough shape to take over as the major economic world power.
All I can see if the American politicians do not change course is another great depression in the U.S. with the rest of the world in the same or worse shape.
You're obvously too young to remember the days when the top marginal rate was at 91% under Ike, and the capital gains taxes were confiscatory. When they decreased them, it was to 51%.
Under the next five administrations of both parties, the top marginal rate was 70%. It was during those years from Ike up until Reagan that we grew the greatest middle class the world has ever seen. It was only when Reagan began slashing tax rates that wages stagnated and have remained flat for 30 years.
That's because when rates are high, businesses achieved tax breaks by paying their employees more, by increasing their benefits, and by hiring more employees, even those they didn't specifically need. And they invested in their businesses.
When tax rates are so low, there's no particular reason for businesses to invest like that, nor to pay their employees more or increase their benefits.
Furthermore, when employees are paid more, that means more disposable income in their pockets with which to purchases discretionary items, increasing demand and causing businesses to grow and succeed and hire more workers. It's what's called a virtuous cycle.
did you know that if you make only one hundred dollars on the resale of a house flip its called a capital gain, that would mean when it was 51% I would only take 49 dollars away from the deal, well suppose I used my own time fixing it up, maybe 100 hours that would mean I would be taxed 51% on .49 cents per hour. this does happen every day, your time is not deductible, but isn't our time worth something, oh by the way it 28% if you don't hold the investment a year or more. and in this day and age a lower capital gain will spur new investments at a greater rate, causing the volume to increase significantly, allowing the government to collect higher revenues by getting more people in the game. and yes depending on the investment greater prosperity for all that were touched by the investment, weather it be stock to help a company buy more capital equipment to be more competitive, everything is connected and goes in the mix, we are in 2012, competition is fierce, long term companies are going under at a most alarming rate, they cant compete in the markets the old way, they need to act and think differently, Ben said if you do tomorrow what you did today, then you will only get what you got today tomorrow.
But what the hell...when they get tired of selling to each other they'll realize some things.By then of course we'll have a whole new game.
There is nothing wrong with reasonable gain.But gouging and greed break whole economic systems a piece ata time.And rebuilding isn't necessary if you avoid breaking it in the first placeTake a look around you.Know whose policies are in play.
Google "Who's the Lowest Spending Pesident Since Eisenhower" on Forbes. I'd post a link but don't seem to be able to. That's where you'll find the truth about spending, not the lies told by Fox and the GOP.
Do we absolutely need to cut government spending, on whole? YES!! Absolutely! But not drastically overnight! We need to rein in spending, spur revenue growth and work on entitlement reforms. Republicans think we can fix everything JUST by cutting spending (which is also their idea of entitlement "reform"). It's just not possible.....