All Things Reform: taxes

Showing posts with label taxes. Show all posts

Sunday, March 27, 2011

Plutocracy in this nation is an ungrateful bastard to us, we, the people

From a Constitutional Accountability Center PAY 2 PLAY article, which offers reader commenting -- for details, please read the entire article.

"As our country migrates from democracy to plutocracy, we more and more see tax cuts for the wealthy few, tax breaks and subsidies for the big corporations that operate as fronts for those wealthy few, and budget cuts for the things We, the People (government) do to empower and protect each other. Just a few weeks ago we watched as an extension of the Bush tax cuts and a huge cut in the estate tax rate was pushed through. Now we watch as the discussion turns to cuts in Social Security and the rest of the so-called 'safety net.'"

The rich and multinational corporations get free handouts, while most of we, the people of the USA pay taxes for the stuff. Now Washington, DC doesn't want to touch our defense budget, yet is cutting already insufficient social programs. This is a grave situation for a democracy.

Remember, "voting turnout and activism means spreading the word!"

Monday, May 18, 2009

Social Security cash flow deficits are projected to begin in 2016

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From: The Concord Coalition

WASHINGTON BUDGET REPORT: May 18, 2009

Trustees Report Projects Social Security Deficit in 2016

Last week, the Trustees of the Social Security Trust Funds (Old-Age, Survivors, and Disability) released their annual report. In a nutshell, following is the status of the trust funds, based on the Trustees' findings:

Social Security is a pay-as-you-go program where incoming payroll tax revenue revenues (6.2% each from employers and employees) pay for benefits disbursed to retirees and disabled Americans.
Cash flow deficits are projected to begin in 2016, as opposed to last year's estimate of 2017.
Cash deficits will continue and worsen as the baby-boom generation retires.
The assertion that "social security surpluses" will keep the program solvent until 2037 is misleading, because the surpluses do not actually exist except on paper. The surpluses consist of IOU's from the Treasury Department to the Social Security Trust Funds (Treasury Bonds) and can be redeemed only if taxes are raised, spending is cut, or the Treasury borrows the money.
Dedicated tax income (including taxation of benefits) projected for 2016: $986 billion. Benefit payments projected for 2016: $1,005 billion

Who are the Trustees? Secretary of the Treasury Geithner; Secretary of Labor Solis; Secretary of HHS Sebelius; and Commissioner of Social Security Astrue. The two public trustee positions are vacant.

2009 Social Security Trustees Report

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Medicare Part A Hospital Insurance Trust Fund is already running a cash deficit

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From: The Concord Coalition

WASHINGTON BUDGET REPORT: May 18, 2009

Trustees Report Shows Medical Hospital Fund Already in the Red

Medicare is a national health insurance entitlement program for Americans 65 and older. The program also covers workers who have become disabled. The program has four parts:

Part A Hospital Insurance, financed primarily by current workers' payroll taxes (1.45% payed by current employers and employees), covers hospital services, post-hospital services, and hospice care.
Part B Supplementary Medical Insurance, financed primarily by general tax revenues (as well as premiums and copayments), provides optional coverage for physician services, outpatient hospital care, home health care and medical equipment.
Part C "Medicare Advantage" provides managed care options for beneficiaries enrolled in Parts A and B.
Part D Prescription Drug Coverage, financed by general tax revenues and premiums, provides optional drug coverage for the elderly and disabled.

HI Trust Fund already running a cash deficit.--The 2009 Trustees Report found that Medicare's Hospital Insurance Trust Fund already paid out more in benefits last year, than it received in cash income.

Moreover, cash deficits will continue to grow due to the rapid increase in health care costs and the retirement of the baby boom generation.

Part A Trust Fund Income in 2008*: $215 billion. Outgo during 2008: $236 billion.

SMI Trust Fund: Medicare Part B and Part D comprise the Supplementary Medical Insurance (SMI) Trust Fund. However, since general revenues are automatically pumped into this "trust fund" to cover expenditures not paid for by premiums and copayments, it is not a trust fund in any meaningful sense. This stands in contrast to the HI Trust Fund, which is financed by a dedicated revenue source (primarily payroll taxes).

*(Excluding interest from the Treasury, which is simply an intragovernmental transfer)

2009 Medicare Trustees Report

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Wednesday, April 22, 2009

Has any leader in Congress or the White House taken the 'Naked CDS' deals history seriously?

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From: Huffington Post

Cenk Uygur: The Real Crime in the Bailout -- Naked CDS Deals

The size of our national economy this year is roughly $15 trillion. The size of the Credit Default Swaps (CDS) market is $64 trillion. The whole world GDP is about $56 trillion. How could the CDS market be larger than the world GDP combined? That doesn't make any sense.

The minute I read that many months ago, I realized that there was something unreal going on in the CDS market. By "unreal" I mean something that is given value even though it is not attached to real assets. And the more I researched, the more I realized that was true.

CDS are basically supposed to be insurance on a group of assets. So, if you have a collection of mortgages, loans and other assets, and you would like to insure their value, you get a CDS. This makes sense since some of these underlying assets turned out to be quite risky.

What doesn't make sense is for the insurance market to be many times larger than the value of all of the underlying assets combined. Well, it turns out there is a reason for that. It's called the "naked" CDS. These deals are not attached to any underlying asset. They are not collateralized. They are not attached to anything of real value. They are simply bets. As in wagers. As in gambling.

For example, one bank will bet another bank that a group of mortgages will go under, and the other one will say they won't. Neither one owns the mortgage; they're just "insuring" it in theory. The reality is they are gambling -- pure and simple. Now, the numbers make sense. The CDS market got to be so large because people were making bets in ways that were not attached to the value of the underlying assets at all. So, they were free to bet as much as they liked.

And, of course, the more money they bet, the more money they made. And if they ever lost those bets, they knew didn't have the money to pay it anyway. So, they had all the incentive in the world to keep multiplying their bets.

So far, this is crazy enough, but here comes the really crazy part -- the American taxpayer is now paying off these bets. The people who bet that the housing bubble wouldn't burst or that the assets would retain their value, well, they lost -- but they don't have the money to pay off all of these theoretical bets since they never put any collateral down on them. So, they're turning to the government and saying they're out of money. And we're paying them. That's insane.

It's one thing to pay off mortgages that went bad. It's another to pay off insurance for a collection of bad debts. But it's another thing all together just to pay off gambling debts that otherwise have nothing to do with the economy. We, as the taxpayers, would have to be utter fools to provide the money for these inane bets. And, of course, that's exactly what we're doing now.

AIG was the epicenter for the naked CDS. If you care about this topic at all and want to understand how everything went down, you must read this excellent article by Matt Taibbi in Rolling Stone. As he explains, AIG started this madness and never had the money to back up their bets.

But what really drives me crazy is that I never hear anyone in government talk about this. I've never heard Tim Geithner or Ben Bernanke or any congressman or senator talk about what we should do with the naked CDS. They talk about all of the assets and obligations as if they are all the same. But some of the debts are based on underlying assets and some are not. Is that not an enormous distinction?

The only person who used to be in government who has raised this issue recently is Eliot Spitzer. He said what I have been wondering for a long time now - do we even have to pay these things? Since they are simply gambling wins, if the counterparties who won the bets don't get paid, nothing really happens. They didn't really actually have anything on the line, so it's not like they are going to suffer heavy losses. They are only going to suffer theoretical losses on money that never existed.

Why is Tim Geithner still paying off these debts? If he doesn't understand this phenomenon, he should be fired immediately. If he does understand it, and he thinks it is the obligation of the US taxpayer to pay off the gambling binges of the large financial institutions in the country, then I would seriously question his judgment, to say the least.

The argument they trot out every time is that we must have these financial institutions survive. I don't think that's true, but even if I did believe that, it would be important to shore up the real assets. But under no scenario is it important to pay off debts on imagined assets.

At the very least, can we please have this conversation? I would love for Tim Geithner or anyone else in the administration or Congress to explain why they think these naked CDS must be paid off. Can someone please ask them the question already, before more of our money is funneled over to the "counterparties" who won these bets?

[Original Huffington Post article accepts comments]

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Saturday, April 18, 2009

In 2008, only 15% of financial services corporations were audited by the IRS, and those less thoroughly

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From: TRAC

New Data Show IRS Downgraded Large Financial Services Audits

(09 Apr 2009) Newly released data from the IRS show that only 15% of large financial services companies -- those with $250 million or more in assets -- were audited in 2008, compared with 64% of all other similar sized corporations. And when they were performed, these financial service audits appear to have been less thorough than those in other industries.

In addition, fewer of these audits were being performed by the IRS agency group with special expertise in large financial service corporations, while the number performed by other IRS groups more than doubled since 2004.

These latest findings on the IRS, based on documents and data obtained by TRAC under the Freedom of Information Act, are available at

http://trac.syr.edu/tracirs/latest/207/

TRAC is self-supporting and depends on foundation grants, individual contributions and subscription fees for the funding needed to obtain, analyze and publish the data we collect on the activities of the US Federal government. To help support TRAC's ongoing efforts, go to:

http://trac.syr.edu/sponsor/

Wednesday, April 15, 2009

Stay up-to-date on the federal bailouts from ProPublica

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From: ProPublica

About 'Eye on the Bailout'

Where do these numbers come from?

Our lists of recipients and programs deal only with expenditures by the Treasury Department – in other words, taxpayer money. We've included all such money allocated by Congress, both the broader $700 billion TARP bill and the separate $400 billion bailout of Fannie Mae and Freddie Mac: a total of $1.1 trillion.

But the Treasury hasn't been working alone – it's been putting up big money alongside the Federal Reserve and the Federal Deposit Insurance Corporation. Our entries for individual financial institutions and programs indicate when the Treasury has committed funds in conjunction with the Fed and/or FDIC, but for a complete accounting of the Fed's and FDIC's spending so far, see Subsidyscope.

Most of the data shown in our project comes from the Treasury Department. But in a few cases, we've gathered information from other government agencies or press releases and regulatory filings from bailout recipients.

If you've got more questions about how we do this, please drop us a line.

What You Can Do Here:

See a complete list of where the money's going, from AIG to the smallest community bank.

A map that charts all the bailed out companies.

See a timeline of major bailout events.

Plain language descriptions and graphical breakdowns of the Treasury Department's bailout programs without confusing government acronyms.

Get the latest on the bailout from our blog and our links to the best bailout reporting.

Steal Our Data

All of the data in this section is available for download – and you're free to reuse it so long as you give ProPublica credit, don't change any data, and don't sell it for money. (We're licensed under Creative Commons, which provides the legal details.)

You can download the data using the XML and CSV download links on all pages with tables. If there's sufficient interest we'll do a programmer's API. E-mail us if you're interested in the API and to let us know how you're using the data.

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Tuesday, April 14, 2009

2009 Pig Book on federal government earmark spending released today

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From: Citizens Against Government Waste

CAGW releases the 2009 Pig Book!

At 10:00 a.m. EDT today, Citizens Against Government Waste (CAGW) President Tom Schatz released the 2009 Congressional Pig Book at a Washington press conference alongside CAGW's mascot, "PigFoot."

Despite all the promises of "change," CAGW’s “little pink book” exposes how Congress continues to waste vital taxpayer dollars on parochial and non-essential projects. The 2009 Congressional Pig Book profiles such outrageous examples of pork-barrel spending in the fiscal 2009 appropriations bills as $4,545,000 for wood utilization research; $1,900,000 for a water taxi service in Connecticut; and $237,500 for the restoration of the Rialto Square Theater in Joliet, Illinois.

As always, we will name the names of those responsible for this waste!

To get your own copy of the 2009 Congressional Pig Book Summary, make a tax-deductible contribution of $25 or more to CAGW today.

And please help us put a stop to the politics of pork by spreading the word about the Pig Book to as many of your friends, family, and colleagues as possible. Thanks!

Join the April 15 (Wed.) Taxpayer's Tea Party

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From: National Taxpayers Union

A Taxpayer's Tea Party Is Happening Near You!

If you're fed up with the perpetual growth of government taxes, spending, and regulation, you have a great opportunity to make your voice heard this coming Wednesday!

A couple months ago, CNBC reporter Rick Santelli sparked the birth of a nationwide grassroots movement in opposition to government bailouts with his call for a "Chicago Tea Party" protest. Organizations including the National Taxpayers Union and its local allies have run with the idea, and "Tea Parties" have been scheduled in hundreds of locations around the country for this Wednesday, April 15. Angry citizens will be able to unite against reckless federal, state, and local fiscal policies that could ruin this great nation and condemn future generations to poverty.

If you haven't made plans to attend a Tea Party already, please visit the following Web site, www.teapartyday.com/Locations.aspx.

You'll be in the good company of thousands of National Taxpayers Union supporters who are committed to participating in these rallies.

In the National Taxpayers Union's 40-year history, we have rarely seen such an outpouring of spontaneous activity from communities of taxpayers throughout America. If all of us do our best to attend a local Tea Party and encourage others to do the same, we may very well be launching the beginning of a taxpayer revolt that will rival the American Revolution itself!

Please, take an hour or so this coming Wednesday, April 15, to stand up and be counted among millions of modern-day patriots who want to take back the government that once served taxpayers rather than special interests. See you there, and let's raise a ruckus politicians won't be able to ignore!

Sincerely,

Your Grassroots Action Team at NTU

Tuesday, March 24, 2009

Washington must be clear about what taxpayers deserve in return for their investments to the finance industry

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From: Taxpayers for Common Sense

Congress Strikes Out

Volume XIV No. 12 - March 20, 2009

The recent contortions Congress and the Administration are going through over lucrative bonuses to executives at American International Group (AIG) are a predictable result of the failure of Congress and the Department of Treasury to be clear about what taxpayers deserve in return for their investments. And unless lawmakers and the Administration step up to the plate it won’t be the last of the outrages.

If there is any recipient of bailout funds with whom Treasury should have laid down clear, unambiguous standards, it’s AIG. After a $182.5 billion investment taxpayers own roughly eighty percent of the company. Further, AIG just reported a $61 billion loss for its most recent financial quarter.

For the last week we have heard a litany about how the $165 million in bonus payouts were contractually obligated. But contracts can be renegotiated, revised and rewritten, particularly when there is a major change in circumstances. Say … for example … the federal government provides a significant cash injection into a company. Hmm, sounds kinda like AIG. But Treasury did not suggest AIG alter bonus contracts as a condition of their receiving a massive public investment. Strike one.

Not only did Treasury fail to demand the renegotiation of these contracts, but Congress may have added an extra hurdle to making changes. A last-minute addition to the stimulus bill purported to limit future bonus payments but may have actually added legal protection to those already paid. Strike two.

Now there are efforts to create a special tax scheme to claw back some of the bonus payments. Politically seductive as that may be, micro-targeting the tax code to punish specific contracts is the wrong way to make tax policy. Strike three.

Congress and the Administration screwed up and they need to take their lumps and learn from their mistakes. The “Good Cop” routine has failed.

Instead of pleading with executives to do what is in the national interest, those executives need to be given a dose of tough medicine. If you want our money, you’ll have to become a good citizen. Otherwise, you are not going have a job. Every step of the way, Congress and the administration have given the financial industries flexibility to respond to this crisis. The failure to set clear, tough standards has left us with little ability to hold banks accountable.

As Bob Dylan sings, “steal a little and they throw you in jail, steal a lot and they make you king.” The kings of AIG and other Wall Street titans are working hard to abscond with as much taxpayer money as possible, while refusing to take any responsibility for the financial mess that is bringing the U.S. and world economy to its knees. AIG is the most glaring and stupefying example of questionable spending. But hundreds of other financial institutions and a couple of major car companies have also received billions from taxpayers. The outrage of AIG bonuses – small potatoes in dollar terms – should reinvigorate Congress and the Administration to do their constitutionally appointed duties and hold recipients of taxpayer dollars accountable.

Let us know what you think.

[Original TCS article accepts comments]

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Tuesday, March 03, 2009

National Taxpayer Union weekly Internet radio program and social networking

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From: National Taxpayers Union

NTU Launches Weekly Program

At last -- a voice for those who pay big government's bills, not those who create them. NTU has begun a weekly Internet radio program called "Speaking of Taxpayers" on gmmy.com. GMMY (Golden Music Memories of Yesteryear) Radio is an online destination dedicated to providing music and other entertainment from the 30s, 40s, and 50s.

Every Sunday from 3 to 3:30 p.m. Eastern time, NTU's on-air personalities provide news and views of interest to taxpayers -- not just from Washington, DC, but from all 50 states and thousands of cities and towns from across the nation. Sponsored and produced by NTU, "Speaking of Taxpayers" will feature special guest interviews with NTU's policy experts, along with lawmakers, citizen activists, and other figures in the movement for limited government. The show also offers up an "Outrage of the Week" -- a ridiculous example of wasteful government spending modeled after the popular feature in NTU's research arm's award-winning newsletter, Capital Ideas.

In addition to online radio, NTU & NTUF are online whenever you connect to the Internet. We have RSS feeds for our home page, ntu.org, and for our blog, governmentbytes.com. You can also follow us on Facebook, Twitter, and YouTube.

Wednesday, February 18, 2009

Please support independent federal finance watchdog Taxpayers for Common Sense

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From: Taxpayers for Common Sense

[TCS has been an integral watchdog of our federal government's fiscal activities. The below letter from them reminds us of how critical they are during this time of economic crisis. If you can, please financially support this independent taxpayer's friend in bringing to light these momentous days in Washington. Thank you.]

about : contact : TCS home : donate

Dear Fellow Taxpayer,

The price tag for the government's response to the economic crisis keeps growing.

As you've probably heard, the $787 billion stimulus was signed into law on Tuesday. This afternoon a $75 billion Homeowner Stability Initiative was unveiled by the Obama Administration. GM and Chrysler are back in Washington asking for $22 billion more in taxpayer help. And we're still looking for details on the Treasury's plans for the second half of the $700 billion bank bailout program.

The need for an independent, experienced, fiercely dedicated budget watchdog is growing by-the-minute.

If you have not done so yet, and can support our work, please consider making a donation today.

Donate Here

We need your support to hold the federal government, state agencies, and government contractors accountable for the billions being directed from Washington. Many people have asked me what role TCS can play in bringing oversight and transparency to the spending of our tax dollars? With a new administration vowing to be more transparent and www.recovery.gov on-line, what does TCS add?

Well, we add a lot:

100% Independence

We take no money from political parties, the government, corporations, or labor unions. The only person we work for is you, the taxpayer. We don't pull punches out of fear of upcoming elections, Wall Street's reaction, or having our budget cut by some political boss. Non-partisan, objective, and speaking the truth—whether you are going to like what you hear or not.

Experience

We've been down this road before. Our budget specialists have plumbed the depths of the federal budget for years. We have an intimate knowledge of dozens of waste-prone programs and agencies (post-Katrina FEMA contracts, the Army Corps of Engineers, Iraq contracting, etc.) and have seen nearly every trick in the legislative book.

Unmatched Commitment

My staff has been called a lot of things: hard-working, efficient, dogged, even scrappy…and that's just by our allies. But one thing we've never been called: lazy. Nearly every day someone fires-up their computer before dawn. The oil in our office burns well past midnight. And weekends—they're a great time for kids' soccer matches and made-from-scratch pancakes, as well as earmark databasing and catching-up on archived C-Span hearings.

For fourteen years, TCS has been a crucial voice for taxpayers on Capitol Hill. We have exposed the big spenders and fought for greater transparency. In the midst of a financial crisis and an unprecedented federal response, taxpayers need a strong and independent voice in Washington now more than ever.

Please help strengthen the voice of taxpayers in Washington and support our work today.

Sincerely,

Ms. Ryan Alexander
President

P.S. We depend on the support of people like you. Please make a donation in support of our work today. And to stay on top of breaking news concerning the management of your tax dollars, visit us at www.taxpayer.net.

Make a Donation Today: DONATE

Friday, February 06, 2009

Tell your US Senators 'NO' on the economic stimulus

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From: National Taxpayers Union

Join in the stimulus fight! It's not too late!

NTU worked hard during the fall of 2008 to stop a $50 billion "stimulus" package. We were outraged that the House's legislative scheme gave priority to projects that "can award contracts based on bids within 120 days of enactment." In other cases, it favored "those activities that are labor intensive." Speed and make-work shouldn't be the primary drivers of how taxpayer dollars are spent. Thankfully, enough Senators agreed with us to defeat the plan.

Taxpayers are now facing a spending spree of a far greater magnitude. President Barack Obama, along with Congressional Democrats, want to bail out state governments and dump money into questionable infrastructure projects with the hope that the economy will somehow respond.

But keep in mind that bloated government budgets don't make economies soar. They certainly didn't work here in the 1970s, the last time Washington tried spending its way out of a slump. It hasn't worked in Japan either, where they've poured huge sums into public works projects over past decades, helping to boost their national debt level to 150 percent of Gross Domestic Product -- the highest in the industrialized world. Japanese citizens are still waiting for the boom.

The reason for these failures is simple -- pumping money into the inefficient public sector means taking it out of the private sector through taxes or borrowing, which can reduce or stall growth overall.

Many state and city governments, some of whom are experiencing deficits of their own making, are also looking for a bailout via a "stimulus" bill. On the whole, state outlays have grown 124 percent over where they were 10 years ago, and debt has increased by 95 percent. Clearly, some states and localities allowed themselves to be caught up in the borrow-and-spend mania. Now that the economy has soured, they want Uncle Sugar to finance their habits. This just isn't fair to taxpayers.

The better way to jump-start the economy and keep it going is through tax relief. How about locking into place the 2001 and 2003 tax cuts that are set to expire after 2010? If families can count on current tax rates, many will be more comfortable investing today instead of fearing the tax man's bigger bite in 2011. Or what about allowing full and immediate expensing for small businesses? This would encourage firms to invest in the assets such as equipment and real estate that could help expand and invigorate operations.

Pro-growth tax policy can best lay the groundwork for a sustainable economic expansion -- one that will provide the solid foundation for tomorrow's tax revenues.

Action Alert

Outraged taxpayers across the country are calling their Senators and asking them to vote "NO" on the "stimulus" hoax.

In fact, many NTU supporters have told us they get a busy signal or a full voicemail box after placing a call to their Senators.

You can still be heard by sending your Senators an e-mail message today.

Time is running out, as the Senate is trying to cram this awful bill through today.

E-mail your Senators right now -- it will only take a moment!

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Sunday, November 02, 2008

Fiscal Voter Guide to the 2008 Presidential Election

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From: Committee for a Responsible Federal Budget

Promises, Promises: A Fiscal Voter Guide to the 2008 Election

Promises, Promises: A Fiscal Voter Guide to the 2008 Election presents a summary of the major
policy proposals and the costs of the policies forwarded by Senator McCain and Senator
Obama’s presidential campaigns. Each candidate’s policies are broken into four categories:
tax, health care, energy, and other spending/savings. Policies that would enlarge the deficit
(or reduce the surplus) are shown as negative numbers, and those that would reduce the
deficit (or increase the surplus) are shown as positive numbers. The guide is not intended
to express a view for or against either candidate or any specific policy proposal.

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Tuesday, October 14, 2008

National Taxpayer's Guide to 2008 election day ballot measures

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From: National Taxpayers Union

Your Taxpayer's Guide to 2008 Ballot Measures

Election season is well underway, but candidates shouldn't be your only focus right now. Many taxpayers will have the opportunity to vote on important tax and spending questions further down the ticket.

To help you sort out fact from fiction, your team at the National Taxpayers Union has put together a Ballot Guide that covers more than 100 initiative and referendum measures in 34 states. Among the proposals highlighted:

Arizona's Proposition 100 would prohibit new property transfer taxes;
Colorado's Amendment 59 could permanently kill certain tax rebate checks;
Maine's Question 1 would repeal new beverage taxes;
Massachusetts' Question 1 would completely eliminate state income taxes;
Minnesota's constitutional amendment could increase the state sales tax;
Oregon's Measure 56 could gut the "double majority" protection against tax hikes;
And, many more!

Your state or locality could be an important battleground for fiscal measures this year, with possible implications for other fights across the nation. Please take a moment to review the information we've compiled about major proposals up for consideration this November 4.

We'd like to note that NTU's Ballot Guide is for informational purposes only; it is not intended to provide endorsements or recommendations to voters. We hope it will serve as a useful resource for additional research.

Election Day is November 4, 2008. Remember to vote!

Monday, September 29, 2008

How to bailout the bailout

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From: Taxpayers for Common Sense

Financially Bailing out the Bailout

Pub Date: Sep 26, 2008

Missing in the debate over whether taxpayers should bailout Wall Street is any plan or attempt to explain how to pay for the $700 billion bailout.

It is not news to say that Congress and this Administration like solving problems by spending money. And in the case of the Wall Street mess, it is looking inevitable that taxpayers will be forced to fork over an unprecedented level of cash. But what is frustrating to us is that piling up more debt will cost our nation even more than the current price tag if we don't start to make some hard decisions on spending priorities now. We may never see the full extent of our nation's budgetary problems, but our kids certainly will.

Some are saying that if Uncle Sam is able to sell at a fair price the bad debt that we are planning to buy, the bailout will likely cost us well below $700 billion. That would be great. But it is just as likely that the costs of the bailout plan could balloon to well over a trillion dollars.

The Administration and Congress have already blown a $400 billion deficit hole in the current budget, so the budgetary deck is stacked against us. Hoping that the bailout costs a "modest" $250 billion or so should not delay our cutting wasteful and unnecessary spending from the federal budget. We need to start today figuring out how to save some money, and all proposals should be on the table. Here are a few ideas to get us started:

Cut Defense Spending – Spending items in the Defense budget should not escape scrutiny simply because some lawmaker said it is important to the national defense. Defense spending has become the third rail in spending cuts, and very few lawmakers even consider touching it. But just the very fact that non-emergency defense spending now makes up half of all discretionary spending in the budget makes it a critical place to start. Our nomination: start with the F-22 and other weapons systems not necessary to fight the Global War on Terror.

Social Security, Medicare and other entitlements – In order to shore up our credit rating internationally, we need to consider ways to reduce the long-term budgetary impact of these important programs sooner rather than later. Right now, Medicare spends more than it brings in. That day looms for Social Security. Enacting reforms to ensure these programs do not depend on deficit spending would send an important signal to international financial markets that the U.S. is getting serious about our long-term budgetary liabilities.

Stop Wasteful Contracts - The government wastes tens of billions of dollars on failed contracts where the government gets nothing. A recent report estimated the cost of failed contracts with the Department of Homeland Security at $15 billion. We have seen similar results in Iraq. Let's end these contracts earlier and stop wasting our hard-earned tax dollars.

Lead by Example - There are also small but symbolic acts lawmakers can take. For instance, at a time when lawmakers are asking taxpayers to fork over $700 billion, all 535 lawmakers should say no to their annual pay raise. They should also say no to the $6.6 billion in earmarks just passed for this year.

Nobody expects Congress to find $700 billion in spending cuts to pay for this massive bailout package. But what has to change is that taxpayers need to pressure Washington to adopt the same fiscal discipline that they are now demanding of Wall Street. Uncle Sam just cannot keep spending money without figuring out a way to pay for it.

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Wednesday, September 24, 2008

Republicans want to pay for Wall Street bailout with tax cuts?

{{w|Jeb Hensarling}}, member of the United Sta...

US Rep. Jeb Hensarling (R-TX).
Image via WikipediaGovernment reform orgs. deliver news on major events within their areas of expertise. From: OMB Watch

Shockingly, Republicans Want to Bailout Wall Street with Tax Cuts

Budget afficionado Stan Collender says that a $700 billion Wall Street bailout will define the budget and, ultimately, the next president's spending priorities for several years.

That would increase the deficit to $1 trillion or more. (My apologies for the italics, but it's hard not to use them in this situation.) If what's left of the $700 billion is spent in 2010 and activities in Iraq and Afghanistan continue that year, the deficit for two consecutive years could be close to that level.

[...]

But it's also hard to see how the 2001 and 2003 tax cuts, which expire at the end of 2010, get extended as easily or completely as they might have before. In fact, nothing else that might be considered in the next few years has the potential to reduce the dramatically increased deficit by as much as quickly as scaling back on these cuts or letting them expire.

Some provisions, like marriage penalty relief and the $1,000-per-child tax credit, might still be a slam dunk. But others, like the top marginal tax rate, capital gains, dividends, estate and gift taxes, and small business expensing, are clearly in jeopardy now.

I don't know, Stan. One should never underestimate the appetite Republicans have for tax cuts. In their world, there's never a bad time for a tax cut. From a BNA email:

A group of House Republicans proposed Sept. 23 temporarily suspending the capital gains tax as a way to coax capital back into sluggish lending markets and offset the cost of a proposed government bailout of the U.S. financial system.

"We have a liquidity crisis and this would bring as much as a trillion dollars in capital sitting on the sidelines, we believe, back into the market," Rep. Jeb Hensarling (R-Texas), chairman of the Republican Study Committee, told reporters at a press conference.

At least Hensarling just skipped the "tax custs pay for themselves" nonsense and went straight for a bold new baseless assertion.

It strains the imagination to believe that investors are "sitting on the sidelines" because the capital gains tax rate is too high. They didn't seem to mind it in the late 90s when capital gains rates were nearly twice what they are today and the stock market saw a 34% increase from 1997 to 2000. It is my understanding, however, that the stock market has been declining the past year, which means the average investor has been paying nothing in capital gains taxes. In fact, because investors can claim capital losses as an income tax deduction, they have an incentive to gamble on the market as their actual losses will be reduced by the amount their income taxes are reduced. Cutting the cap gains rate to zero might induce even more people to wait until market conditions improve, because the average investor would see his tax bill increase.

Image by Flickr user sea_bass used under a Creative Commons license

Posted by Craig Jennings

[Original article doesn't accept comments]

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Thursday, September 18, 2008

Tell Pres. Bush and your Congress members NO to company bailouts

WASHINGTON - JULY 11: U.S. Secretary of En...

US Sec. of Energy Bodman, US Sec.
of Treasury Paulson, Pres. Bush
and VP Cheney.
Image by Getty Images via DaylifeGovernment reform orgs. deliver news on major events within their areas of expertise.
From: National Taxpayer Union

No More Bailouts!

Are you tired of hearing about how your tax dollars are going to bail out government-sponsored enterprises and private institutions? We are.

Did you send your hard-earned money to the IRS to cover the fiscal mismanagement at Fannie Mae, Freddie Mac, Bear Stearns, and AIG? We didn’t.

Do you like the sound of a new $25 billion bailout for big auto companies? We don’t.

It’s time to say “enough is enough!” Sign our “No More Bailouts” petition to Congress and the President today.

Unless people like you speak out, there’s no end in sight to this abuse of taxpayer dollars. Act today!

Sign this petition and notify:
President George W. Bush
Your Congressperson
Your Senators

As a taxpaying American, I demand an end to the public bailouts of government-sponsored enterprises and private institutions.

America's economic success is largely due to our free-market system, in which risk is a fundamental element. Some businesses succeed tremendously, some fail spectacularly. But they should do so on their own, not with the backing of millions of reluctant citizens' paychecks.

If troubled institutions seek relief, they should restructure their businesses the way millions of families have had to restructure their budgets, rather than bellying up to Congress' trough.

Bailouts that keep mismanaged organizations afloat delay natural corrections to unsound business practices. In the long run, bailouts do not "rescue" anyone because they stall the adoption of necessary reforms that would prevent future repeats of bad choices.

Enough is enough. No more bailouts. Not with my tax dollars.

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