April 18, 2011

The S&P’s Downgraded Outlook: Hopefully a Pre-Tipping Point Tipping Point

Filed under: Economy,Taxes & Government — Tom @ 2:55 pm

6433A-downgradeFrom CNN:

Standard & Poor’s lowered its outlook for the nation’s long-term debt Monday, based on the uncertain political debate around the nation’s fiscal problems.

The outlook means that there is a one-in-three likelihood that it could lower the long-term rating on the United States within two years, S&P said.

Larry Kotlikoff’s 6-1/2 years of breathing space referenced last week seems optimistic now, doesn’t it?

Here’s Treasury’s reax in the CNN item:

“We believe S&P’s negative outlook underestimates the ability of America’s leaders to come together to address the difficult fiscal challenges facing the nation,” said Mary Miller, the Treasury’s assistant secretary for financial markets.

Miller argued that dealing with the current fiscal challenges is “well within our capacity as a country.” She noted that Obama has called on Congress to begin developing a deficit plan next month, with the aim of reaching a legislative framework by June.

We have done nothing in the past two-plus years to demonstrate the existence of that capacity.

James Pethokoukis:

Washington types keep telling me that Americans really don’t care about the debt issue. But I think this warning — not to mention an actual loss of the AAA rating — is yet another data point that will sink into our collective head — right along with a trillion-dollar deficit, the EU debt crisis and our financial meltdown which shows too much debt can cause wealth to disappear in a flash.

It’s already sunk in — almost everywhere but Washington.

WSJ: ‘Where the Tax Money Is’ — And Isn’t

Filed under: Economy,Taxes & Government — Tom @ 8:50 am

Though less entertaining than the Iowahawk-inspired Bill Whittle video posted here a few weeks ago, the Wall Street Journal’s tax-the-rich exercise in an editorial this morning is nonetheless more instructive, as it deals with real numbers released by the IRS (bolds are mine throughout):

… imagine that instead of proposing to raise the top income tax rate well north of 40%, the President decided to go all the way to 100%.

… The mathematical reality is that in the absence of entitlement reform on the Paul Ryan model, Washington will need to soak the middle class—because that’s where the big money is.

Consider the Internal Revenue Service’s income tax statistics for 2008, the latest year for which data are available. The top 1% of taxpayers—those with salaries, dividends and capital gains roughly above about $380,000—paid 38% of taxes. But assume that tax policy confiscated all the taxable income of all the “millionaires and billionaires” Mr. Obama singled out. That yields merely about $938 billion, which is sand on the beach amid the $4 trillion White House budget, a $1.65 trillion deficit, and spending at 25% as a share of the economy, a post-World War II record.

Say we take it up to the top 10%, or everyone with income over $114,000, including joint filers. That’s five times Mr. Obama’s 2% promise. The IRS data are broken down at $100,000, yet taxing all income above that level throws up only $3.4 trillion. And remember, the top 10% already pay 69% of all total income taxes, while the top 5% pay more than all of the other 95%.

We recognize that 2008 was a bad year for the economy and thus for tax receipts, as payments by the rich fell along with their income.

2008TaxChartLet’s stop there for a moment, because wasn’t quite as bad as the Journal indicates. Let’s never, ever forget that fiscal 2008 (I know, not the same as calendar 2008) was the highest year ever for tax collections, which included strong receipts during January-June 2008. Collections in April reached a single-month record of over $400 billion. About $95 billion in IRS stimulus checks should have been treated as outlays. When added to the $2.523 trillion listed in September 2008′s Monthly Treasury Statement, that yields a true total of $2.618 trillion. That’s the high-water mark for fiscal year collections. Individual income tax collections in fiscal 2008 (again adding back the stimulus payments) also reached an all-time record of $1.23 trillion. By contrast, individual income tax collections in fiscal 2010 were just under $900 billion, or over 25% lower than fiscal 2008.

I did look at 2007′s IRS info (accessible here), which showed $5.94 trillion in taxable income, so calendar 2008′s taxable income of $5.65 trillion was about 5% lower. If you think that dip is bad, wait until you see 2009, which won’t come out until later this year.

Skipping ahead to later paragraphs in the editorial:

… in 2008, there was about $5.65 trillion in total taxable income from all individual taxpayers, and most of that came from middle income earners. The nearby chart shows the distribution, and the big hump in the center is where Democrats are inevitably headed for the same reason that Willie Sutton robbed banks.

… Mr. Obama is turning as he did last week to limiting tax deductions and other “loopholes,” such as for mortgage interest payments. We support doing away with these distortions too, and so does Mr. Ryan, but in return for lower tax rates. Mr. Obama just wants the extra money, which he says will reduce the deficit but in practice will merely enable more spending.

Keep in mind that the most expensive tax deductions, in terms of lost tax revenue, go mainly to the middle class.

… Mr. Obama’s speech was disgraceful for its demagoguery but also because it contained nothing remotely commensurate to the scale of the problem. If the President had come out for a large tax on the middle class, like a VAT, then at least the country could have debated the choice of paying for the government we have or modernizing it a la Mr. Ryan so it is affordable.

Instead the President will continue targeting the middle class for tax increases to pay for an entitlement state on autopilot, while claiming he only wants to tax the rich.

The best ways for the administration to raise tax revenue — even better than the long-term multitrillion-dollar bonanza available if we would just “drill baby drill” — would be to puncture the pervasive business-uncertainty overhang by promising (and keeping the promise) to stop micro-meddling in the economy, and to repeal Obamacare. Sadly, neither are going to happen.

Lucid Links (041811, Morning)

Filed under: Lucid Links — Tom @ 7:34 am

Michael Barone, who first coined the term “Gangster Government” almost two years ago to describe the administration being run by our Punk President, correctly characterizes the Obamacare waiver regime of HHS Secretary Kathleen Sebelius (bolds are mine):

(The recent budget deal) requires the General Accountability Office to conduct an audit of the waivers from the Democrats’ health care bill that are being issued in large numbers by the secretary of Health and Human Services Department.

This will raise an uncomfortable question. If Obamacare is so great, why are so many trying to get out from under it? And, more specifically, why are so many Democratic groups trying to get out from under it?

The fact is that HHS Secretary Kathleen Sebelius has granted more than 1,000 waivers from Obamacare. Many have been granted to labor unions. Some have been granted to giant corporations like McDonald’s. One was granted to the entire state of Maine.

By what criteria is this relief being granted? That’s unclear, and the GAO audit should produce some answers. But what it looks like to an outsider is that waivers are being granted to constituencies that have coughed up money (or in the case of Maine, four electoral votes) to the Democrats.

If so, what we’re looking at is another example of gangster government in this administration. The law in its majesty applies to everyone except those who get special favors.

The GAO has also been ordered to produce audits on the effect of Obamacare on health insurance premiums. This is likely to reveal that the president did not keep his promise that you could keep your current health insurance if you want to.

What Barone describes as “another example of gangster government” also fits the definition of tyranny (“arbitrary or unrestrained exercise of power; despotic abuse of authority”).

Additional thought: GAO will also need to shed light on why, if it’s indeed the case, certain entities may NOT have received waivers.
_______________________________________________

You can’t make this up, via Bryan Preston at the PJ Tatler (bold is mine; internal link is in original):

Retired Gen. Ricardo Sanchez looks set to join the campaign for the Texas Senate seat being vacated by KBH, as a “progressive on social issues, fiscally conservative” Democrat.

… not too long ago Sanchez was linked with the worst scandal to come out of the US-led war in Iraq: Abu Ghraib. Sanchez was found to be derelict in his oversight duties, a dereliction that led to one of the most significant public relations defeats for the US in the entire war. He left the military in some disgrace.

The Democrats seriously want to run the highest ranking officer who was connected to Abu Ghraib, whom the Army found to be derelict in his duties, for Senate? Apparently, they do.

The New York Times, in devoting 32 consecutive front-page stories (HT Ed Driscoll) to Abu Ghraib, thought the scandal could bring down George W. Bush in the 2004 election. Now the person held primarily responsible for the scandal is the Democrats’ candidate for the U.S. Senate. Someone ought to make it their work to look up and post every comment made by a Democratic politician during that time frame.

_______________________________________________

Georgia Senator Saxby Chambliss is all ready to sell out on tax increases (HT Erick Ericksen), and he may have more GOP Senatorial allies (bold is mine):

“I hear my critics; I pay attention to my constituents,” he said in an interview. “But you’ve got to do the right thing and what’s best for the country.”

And Mr. Chambliss has been increasingly outspoken in arguing that additional revenues must be part of a debt-reduction plan, given the scale of the problem.

“I’m taking arrows from some on the far right,” he told the Rotary Club of Atlanta in an appearance with Mr. Warner on Monday. “Are some people going to pay more in taxes? You bet.”

A bolt came in February from Grover Norquist, a Republican antitax activist, who wrote to Mr. Chambliss, Mr. Coburn and Mr. Crapo to say they would violate his group’s “Taxpayer Protection Pledge” if they supported raising revenues for deficit reduction.

Et tu, Coburn and Crapo?

If you guys in Washington want revenues, there’s a real easy and economically contributory solution: Drill baby drill.

_______________________________________________

Eric Holder’s Justice Department should be renamed “DOOMED” (The Dhimmis of Obama’s Obstructionist and Meddling Extraconstitutional Deployment). While I work on refining the acronym, I call readers’ attention to Patrick Poole’s two recent Pajamas Media columns, which concentrate on the “dhimmi” element:

  • April 14Obama Administration Scuttled Terror Finance Prosecutions. “High-level source concedes DOJ let off CAIR co-founders and others for political reasons.”
  • April 18DOJ Source: Gov’t Muslim ‘Outreach’ Jeopardized Active Terror Investigations. “An explosive, must-read interview brings sunlight to our counterproductive “outreach” programs.”

If these clear compromises of national security keep up, “doomed” will also describe this nation. In failing to prosecute drop-dead obvious and serious violations of the law which jeopardize national security, the DOOMED Department is failing to carry out its sworn constitutional duties. There are constitutional sanctions for that, in case anyone in Washington still pays attention to the Constitution.

_______________________________________________

Doug Ross, who has a damning John Boehner budget-deal timeline, asks: “Can someone send a copy of Negotiating for Dummies to Speaker Boehner?” He adds:

We need a new Speaker of the House. Someone who understands that we’re up against true sixties radicals. These are people who want to see the whole society burn down. Because that’s where we’re headed without a major course correction.

I’m not ready to go as far as Doug, but Mr. Boehner needs to understand that there is no goodwill on the other side, and no interest in preserving this country in a recognizable form — none — and carry through on that understanding. There’s still time, but, as noted here last week, not much. We cannot afford to fail to seriously bring down spending.

I think he’s up to the task, but if John Boehner doesn’t think he can do it, he should step aside now and find someone who can. Because if he fails, he won’t be the only one crying for what we’ve lost.

Positivity: Virtual pilgrimage opened at St. Francis of Assisi’s tomb

Filed under: Positivity — Tom @ 5:56 am

From Rome:

Apr 14, 2011 / 06:10 pm

Officials at the shrine of St. Francis of Assisi have installed two video cameras in the crypt of the basilica so Catholics worldwide can make a “virtual pilgrimage” to the saint’s tomb.

The installation of the cameras, which can be accessed at www.sanfrancesco.org, coincides with the re-opening of the crypt of St. Francis, which closed on Feb. 25 for renovation and maintenance.

The crypt has been the resting place of the saint’s remains since 1230.

Devotees of St. Francis, the founder of the Franciscans, can also send their prayer requests to latuapreghiera@sanfrancesco.org.

The president of the Italian Bishops’ Conference, Cardinal Angelo Bagnasco, presided at the re-opening of the crypt on April 9.

The general custodian of the Convent of Assisi, Fr. Guiseppe Piemontese, told L’Osservatore Romano, “The preparation and expectations for Pope Benedict XVI’s visit next Oct. 27” were motivators for restoring “the original splendor of this place, which is the center and heart of Assisi and of Franciscans all over the world.”

Thanks to the work of Sergio Fusetti, the walls of the crypt – which were blackened from candle smoke – were restored to their original red color. A new lighting system was also installed. …

Go here for the rest of the story.

Popular Media Description of Coffee Party and Similar Tiny Lefty Groups: ‘Small But Vocal’

Whoever is compiling a list of what journalists really believe when they put forth certain vague but commonly used phrases (e.g., using “some people believe” instead of truthfully saying “in my opinion”) should consider adding the following: “small but vocal group” really means “a tiny bunch of people I agree with.”

That’s my assessment as I look at two uses of the term this past weekend, each referring to pathetically small gatherings of people using tax-filing weekend as a excuse to protest “corporate tax loopholes.”

The first comes to us via David Roeder of the Chicago Sun-Times (HT JammieWearingFool via Instapundit), where the paper’s headline writers cooked up something that would give those who didn’t read the underlying report the impression that the city’s Tea Party Tax Day protest was small:

Small but vocal group protests taxes

“Thank you for paying your taxes” is a seldom-heard phrase, but it was the calling card Sunday for a few citizens angry about federal loopholes for corporations.

They had a serious point to make with humor. With some dressing the part, they pretended to be high-class moguls walking Michigan Avenue and thanking people “for paying your fair share of U.S. taxes, so we don’t have to.”

… They included members of the Coffee Party, which is positioning itself as a nonpartisan alternative to the Tea Party, and U.S. Uncut. Last week, U.S. Uncut took credit for a hoax press release saying that General Electric was returning to the treasury its $3.2 billion tax refund.

Participants said they hope to convince others that wiping out corporate loopholes will save critical programs facing the budget ax. “The corporate tax situation in Europe is so much simpler,” said Jim Netter, a music producer from Chicago. “Nominal rates are much lower, but corporations actually have to pay them.”

The headline obviously should have read that the group opposes “tax loopholes.”

Anyone even remotely familiar with federal fiscal figures knows that closing all the alleged loopholes would barely make a dent in the government’s $1.5 trillion annual deficit. Additionally, closing the alleged loopholes without lower overall corporate tax rates (the average effective rates in the U.S. is currently the second-highest in the world behind Japan) would only work to make American companies less competitive, cause them to create more jobs overseas instead of here, and lead some of them to move their headquarters out of the U.S.

Another similar report comes out of St. Augustine, Florida:

Small but vocal group protests outside rally

As Tea Party members enthusiastically cheered politicians at Saturday’s Tea Party rally at the St. Johns County Fairgrounds, a small but vocal group gathered at the State Road 207 entrance.

As many as three dozen people — including teachers from at least three counties — held signs that said “Pink Slip Rick,” and “Fight Truth Decay.”

… St. Johns County Education Association president Debby Etheredge said the group was protesting cuts to education spending “and the fact that (state Sen. John Thrasher) wants to take away our political voices.”

Etheredge was referring to Thrasher’s introduction of a bill that the Associated Press reports would no longer allow union dues to be automatically deducted from employees’ paychecks and would require members to give written approval before their dues are used for political purposes.

… Once we collect the dues dollars, it’s up to the members where the money goes,” Said Liz Crane, president of the Clay County Education Association. “It’s not up to the Legislature, which is saying we can’t use (the money) for political purposes.”

…. Gloria LeBlanc, coordinator for the local Coffee Party, said she was holding the “Fight Truth Decay” sign to protest misinformation the current government is dispensing.

“I’m not here to protest the Tea Party,” she emphasized. “The Tea Party is welcome in the Coffee Party.

… The Coffee Party is a nonpartisan group committed to civil dialogue about problems facing the nation, state and local community.

“I’m protesting cutting programs for the poor and middle class while giving tax cuts for the rich,” LeBlanc said. “I don’t want controversy. I want to have a dialogue.”

Oh yeah, they’re nonpartisan. The last four excerpted paragraphs are so laugh-out-loud funny that it should have come with a “don’t read this if you have any liquids in your mouth” warning.

As to the use of dues for political purposes, there was a Supreme Court ruling about that over two decades ago: Beck vs. Communication Workers of America. The Court said that unions can’t use dues for political purposes without a worker’s consent. The problem is that until states codify Beck into law, the only way individual union members can stop this from happening is to take legal action themselves. They should ultimately win, but most will be deterred due to the costs and personal ostracism involved. As far as I can tell, all Florida is merely doing is what all 50 states should have done long ago, and the quoted Liz Crane is dead wrong.

There was one other Coffee Party-related event I found, but it was written up in advance in Oregon (bold is in original):

… Even though taxes are not due today, there are still Tax Day Tea Parties being held across the country, meant to bring attention to concerns with too much government spending and high taxes.

There are also rallies against the tea party today…

NewsWatch 12′s Danielle Craig was live at Alba Park in Medford, where some have gathered for a so-called “Coffee Party.”

The people who attended the “Coffee Party” say they’re tired of the Tea Party, blaming it for growing hate speech in politics.

… The Coffee Party is hoping today’s rally will unite minority groups in the community.

I would suggest that “some” in the third excerpted paragraph might really mean the following: “a really small and not very vocal group I agree with.”

Cross-posted at NewsBusters.org.