Middle Class under attack

Bernie Sanders has referred to the Pew Report on Income Inequality as a factor that must be addressed in the deficit reduction argument.  He observed that the Middle Class in the US is disappearing due to the lack of middle class jobs, thus depriving the bottom 93% of any of the economic progress made since 2008.  All of the progress has gone to the top 7% at the expense of everybody else.  He observed that the Walton family (WalMart founders) own more wealth than the bottom 40% of Americans.  Tax policy that doesn't recognize that poverty is growing amidst a rising economy (and a much richer Walton Family) gives lie to the notion that a rising tide lifts all boats.  Spending reductions at the expense of the 93% will only make the problem worse.

Pier Carlo Padoan, Chief Economist and Deputy Secretary-General of the OECD says,

The situation is grave. According to current consolidation plans, most governments aim to improve the budget primarily via restraining spending. Social security transfers are planned to decline in cyclically-adjusted terms in about half of all OECD countries, while adjusted household income taxes will increase in most of these countries. The net redistributive effect of all measures combined is likely to be negative. This has to be avoided.

In other words, austerity at the expense of the 93% is class warfare and will result in increased poverty and resentment.

To clarify, Bernie Sanders and Pier Carlo Padoan did not mention Class Warfare directly, in fact they studiously tiptoe around the term, it is my conclusion and I believe it is recognized but unspoken on their part.

See my previous comment on the Pew Report.

Peter DeFazio Tax Proposal

Wall Street is unrepentant for wrecking our economy, but they may have to finally ante up some cash in taxes if the DeFazio bill proposing a Financial Transaction Tax (based on .03% on the value of stock trades) becomes law.  Based on the principle of taxing something you have too much of, it makes sense to tax the extreme short-term thinking that rules wall street.  A group of 1,000 economists from all the major countries in the G20 proposed just such a tax last year.

Saving Social Security

The two politicians I admire most, Bernie Sanders and Peter DeFazio have introduced legislation to extend the Social Security tax to rich people, who only pay the tax on the first $113,700 of income, they skate free of the tax on anything they make above that, thus the richest 1% pay a miniscule contribution to Social Security.  They don't contribute anything at all to Social Security or Medicare on Capital Gains income, yet another loophole for the rich.  Somehow, investment income is deemed to be privileged and not taxed the same as wages.  There has been discussion on remedying this, but the rich have hordes of lobbyists to prevent it.

"Only earned income (wages, self-employment income) is subject to social security and medicare tax. Passive and investment income (interest, dividends, capital gains, rents and royalties) are only subject to federal and state income tax."

Your taxes at work

Congress doesn't work very hard, they do not even work 5 days a week.  They do not have a single week of 5 days scheduled, and no weekends either.  Pretty cushy schedule for someone earning $174,000 / year.  On the other hand, here is a list of what we're about to lose in Oregon and all across the US.

The Impacts of Sequestration

A press release from the US Senate Committee on Appropriations.  It has links to documents of all agencies affected.

Republicans declare victory on taxes

As the New York Times reports, Republicans are elated about the automatic cuts about to take place.  Representative Jim Jordan, Republican of Ohio, said that on the whole, he thought the spending cuts were a welcome development for which Mr. Boehner deserves credit. 

Now we know who should get the credit.

Massive US Government failure

The word "Sequestration" doesn't evoke visions of widespread calamity today, but it is a disaster in the making.  This will be a worst-case outcome if it isn't reversed soon.  The Obama administration hasn't made a strong enough statement on what effects will be on the poor and disabled.

Homelessness will be more widespread than it already is as HUD's estimate is that approximately 125,000 individuals and families could lose assistance, people living on the edge of homelessness will fall over the edge.  HUD has sent letters to municipal housing authorities, telling officials to expect less funding for Section 8 rental assistance all across the country.    FHA mortgage assistance and housing will also be affected, with a wide ripple effect in the future.

Education programs will be shredded, in Oregon, Head Start preschool, full-day kindergarten and special education are all at risk, officials said.  Crater Lake, forestland firefighting, child immunizations and air traffic controllers at small airports are also likely to be affected.

Up to 766,000 - Number of health care-related jobs that could be lost or eliminated due to 2% cuts in Medicare spending under sequestration.

 The reaction from Republicans is predictable.  "I don't like the sequester. I think it's taking a meat ax to our government, a meat ax to many programs that will weaken our national defense," House Speaker John Boehner, R-Ohio, said Wednesday. But, he added, "Americans do not support sacrificing real spending cuts for more tax hikes."

We'll see, Mr Boehner, we'll see.

Death and Taxes

The only for-sure things you can count on are death and taxes, right?  Wrong if you're a corporation, they can live indefinitely and do a pretty good job of not paying taxes.

Taxes, Taxes and jumping off cliffs

The NY Times has published a flurry of articles on the evolution of US tax policy, and just as importantly, tax rates actually paid over the 30 year stretch between 1980 to 2010.  It is a fascinating piece of work which concludes that the actual taxes paid by nearly most Americans are lower in 2010 than they were in 1980, so I guess we're not overtaxed today.  As expected, the more you make, the more benefit you got from falling rates.  Today the deficit (how much more we spend than take in) is growing which pushes the US national debt to scary levels. 

Their analysis suggests the top tax rate could be extended on incomes above $250,000 without harming economic growth, while admitting nobody knows exactly how much it could be raised before the 1% would start moving to Switzerland or stashing more cash in the Cayman Islands.

 The tax debate today is more about ideological dogma than practicality.  Maybe we need a better democracy, how about if the alternatives were put to a popular vote?  Or maybe the whimsical Warren Buffett solution, It was July 2011 when Warren Buffett joked on cable TV that he could end the federal government's spending “in five minutes. You just pass a law that says that any time there's a deficit of more than 3 percent of GDP, all sitting members of Congress are ineligible for re-election.”  Well, I guess it was just a joke.