Obama only backing Gang plan because GOP on the offensive

Suddenly we’re using the argument that Social Security and Medicare are self-funding, and not part of our long-term fiscal problem?

I will have to take some time to process this sudden turn in the conservative argument. It’s possible that I just got whiplash.

I think, with job losses and an increase in early retirements, Social Security’s income is now less than program payouts.

Offhand, I don’t know about the current Medicare cash flow situation.

Presumably republicans realize that the economic situation has aggravated the cash flow problem, and that weakening the economy even further would make this still worse. I know they know that there’s no piggy bank stuffed with $2 trillion. That’s not the way the system is designed.

re: Social Security. It’s my understanding SS has $2.7 trillion in T Bills, which is basically imaginary money.

Everyone knows that Reagan cut taxes, but he also raised the (regressive) payroll tax at the same time that progressive income and estate taxes were massively cut. To mollify critics, the administration agreed to put SS receipts on budget and the SS administration received T bills in the amount of the SS surplus. This last is from fuzzy memory — gotta look it up. The point is, though, that the country has a moral obligation to pay out the SS T Bills, just as it has an obligation to pay out T Bills held by China and Goldman Sachs.

– Larry Weisenthal/Huntington Beach CA

@Hard (#58): I’ve already admitted that you guys were probably correct in your economic assessment of the CfC program. At least your views are congruent with those of the economists I’ve read. On the other hand, the program was conceived at a time when the economy was in total free fall and the auto industry was about to be swept over Vernal Falls. The articles I’ve read just looked at the macroeconomic impact of the program, over the whole economy, and glossed over the much needed, immediate shot in the arm it gave to an industry on the brink. i.e.

http://www.clevelandfed.org/research/trends/2009/1009/03ecoact.cfm

In any event, I do agree that, in retrospect, the money might have been better spent on something else (or saved), but, again, at the time it was conceived it wasn’t a totally crazy idea. There are lots of ideas which look good, at the time of conception, but which don’t pass the test of time.

With regard to the issue of used cars, I’m curious about your own used car tale. Did you buy a used car which would have qualified as a “clunker” (i.e. in order to get the $4,000 junk the clunker allowance, the vehicle had to have an EPA rating of 15 mpg or less)? My point is that the used cars in demand today are not the sort of low fuel efficiency clunkers which were junked via CfC.

– Larry Weisenthal/Huntington Beach, CA

Apparently Obama wants to count almost all the cuts that were already scheduled – as if they are NEW cuts – to balance with his tax raises (on top of his already-in-the-pipeline taxes) so as to LOOK like he is taking a ”balanced approach” to this debt ceiling issue.

The Senate “Gang of Six” proposal would raise taxes by another $3.8 trillion over ten years.
Since the CBO scores relative to current law, he can make the claim that the Gang’s plan would ”only” raise taxes $2.3 Trillion.

But, if you remember, the alternative minimum tax applies to more and more taxpayers as their raises bring them up to the bottom of the level for it.
Therefore more and more people will be taxed at higher and higher rates under this Gang’s plan.
This fact is NOT included in the CBO’s scoring, btw.
But it will happen.
So, the REAL tax increase will be $3.8 Trillion over the 10 years.

And all of the cuts will be imaginary.
They are cuts that were already set to occur.

Brilliant!

@openid.aol.com/runnswim:

The CBO figure of $3.8 trillion includes all of the tax increases that will occur if current law (including the AMT) is not changed.

Here’s how complicated it is via Napp Nazworth:

About $1 trillion would come from additional revenue generated by reforming the tax code by eliminating deductions and credits while lowering overall tax rates.
……

The Gang of Six proposal’s main sticking point, however, will likely be the elimination of the Alternative Minimum Tax (AMT).

Congress originally passed the AMT out of concern that wealthy taxpayers were able to take advantage of so many deductions and credits in the tax code that they were often able to pay less in taxes (as a percentage of their income) than middle-class taxpayers.
The AMT put a cap on the amount of deductions that upper class taxpayers could declare.
The problem with the AMT, though, is that it was not indexed to inflation.
So, over time, the AMT began to hit middle class taxpayers as well, causing them to pay more in taxes.

Congress, then, would pass a “fix” to the AMT so that middle class taxpayers were not effected. Congress was never able to pass a permanent fix, however, because it never had the votes. Instead, it would pass the fix once a year in a separate bill.

Since Congress always fixes the AMT, but never accounts for the fix in their budget, deficits end up larger than they budget for.
This year, the Congressional Budget Office offered two different budget scenarios.
One, the “alternative fiscal scenario”, that included the AMT fix, along with other measures that Congress usually pass but don’t account for in their budgets, such as increasing Medicare payments to doctors and extending the Bush tax cuts,
and
another that did not include these measures.

Eliminating the AMT altogether would, by itself, increase taxes.

The AMT elimination would not be by itself, though.
It would be part of a package that eliminates many of the deductions and credits that made the AMT necessary in the first place.

The question for many Republicans, therefore, will be whether the elimination of the AMT along with many tax deductions combined with a lowering of tax rates amounts to a net tax decrease.

The answer to that question will depend, in part, on whether these Republicans are comparing the Gang of Six proposal to an alternative in which the Bush tax cuts will expire and the AMT would stay the same. Compared to this alternative scenario, the Gang of Six proposal could be sold a net tax decrease.

Since there is NO actual Gang of Six bill for the CBO to score we are just conjecturing right now.
Let’s see the legislation.

Note to Peggy Noonan:

Flawless CAN happen if only the GOP had a backbone.

But then, what can one expect from another RINO. Peggy (of whom I was a big fan before she sold out in the last election) is now the “female version” of RINO David Brooks.

Larry I suggest if you want to hear a real conservative POV, tune in to Mark Levin, or listen to a few of his opening monologues this past week.

Sooner or later, we have to pay the piper and face the music, better now than later IMO. There’s pleny of money to cover the debt, the poor, the military, and other government essentials. This whole “crisis” is just another big political showdown. The reality is, we are in DEEP financial trouble which only worsens with every “compromise.”

Let the chips falls! Any pain (and there will be plenty), will be good for us, at least in the long run. Honestly, I think most reasonable Americans are ready for it.

Bernard Goldberg:

You know who doesn’t pay their fair share? The bottom 50 percent, who pay only 2.7 percent of all federal income tax collected. I know, I know. These people aren’t rich. I don’t care. They need to pay something, just so they have some skin in the game.
……….
I’m all for helping people who are really trying to get by. I grew up in a lower-middle-class family. I got a state scholarship to go to college. But remember the kid in high school who never paid attention in class, who was too busy goofing off to do his homework, who thought school was a great big waste of time? Sure you do. We all know jerks like that. Sorry if I sound cruel, but I don’t want to help him now that he’s middle aged and can’t pay his mortgage.

You know who else I really don’t want to help? Stupid fifteen-year-old girls — or younger — who have babies figuring they can always get welfare to pay the bills. I want them to be a burden, not on the government, but on their relatives, on their neighbors, on their church — on anybody they actually know who they’ll have to look in the eye and say, “Give me money.” That’s a lot harder, and a lot more humiliating, than looking a bureaucrat in the eye and saying “Give me money.”

…………

Obama ends his op-ed saying, “This debate offers the chance to put our economy on stronger footing, restore a sense of fairness in our country, and secure a better future for our children. I want to seize that opportunity, and ask Americans of both parties and no party to join me in that effort.”

You might first want to stop vilifying successful people, Mr. President. When you tell over-taxed Americans that they’re not paying their fair share, when you suggest that they’re the ones who are freeloading on the backs of everyone else, there’s a tendency for them — and me — to want to tell you to GO FLY A KITE!

————–

Obama in that same Op-Ed Obama also claimed that Bill O’Reilly is for new government revenues in any debt-ceiling deal.

So…..
O’Reilly added this:

“Well, I mean, I don’t know what President Obama’s referring to when he uses my name, but we’ve been pretty consistent in telling everyone that the tax code has to be reformed. …
It’s not accurate in the sense I’m advocating tax rate hikes. …
They are parsing.
They’re basically saying that many people – and the polls show this as well, 66 percent – say, yeah, if you do it the smart way, the federal government should plug some loopholes and try to raise more revenue without directly taxing Americans in the income-earning capacity.”

“Nah, he [Obama] didn’t write it. Somebody wrote it and they ran it by him.”