…how, exactly, did a deficit-cutting commission become a commission whose first priority is cutting tax rates, with deficit reduction literally at the bottom of the list?So, now that this ridiculous exercise is over – and you know it will generate nothing but Repug attack ads against Number 44 two years from now or earlier…”Obama wants seniors to work longer with less of a retirement nest egg,” and of course “DEATH PANELS!!” – I’d like to hear our president try to answer this question.
Actually, though, what the co-chairmen are proposing is a mixture of tax cuts and tax increases — tax cuts for the wealthy, tax increases for the middle class. They suggest eliminating tax breaks that, whatever you think of them, matter a lot to middle-class Americans — the deductibility of health benefits and mortgage interest — and using much of the revenue gained thereby, not to reduce the deficit, but to allow sharp reductions in both the top marginal tax rate and in the corporate tax rate.
It will take time to crunch the numbers here, but this proposal clearly represents a major transfer of income upward, from the middle class to a small minority of wealthy Americans. And what does any of this have to do with deficit reduction?
Let’s turn next to Social Security. There were rumors beforehand that the commission would recommend a rise in the retirement age, and sure enough, that’s what Mr. Bowles and Mr. Simpson do. They want the age at which Social Security becomes available to rise along with average life expectancy. Is that reasonable?
The answer is no, for a number of reasons — including the point that working until you’re 69, which may sound doable for people with desk jobs, is a lot harder for the many Americans who still do physical labor.
But beyond that, the proposal seemingly ignores a crucial point: while average life expectancy is indeed rising, it’s doing so mainly for high earners, precisely the people who need Social Security least. Life expectancy in the bottom half of the income distribution has barely inched up over the past three decades. So the Bowles-Simpson proposal is basically saying that janitors should be forced to work longer because these days corporate lawyers live to a ripe old age.
Still, can’t we say that for all its flaws, the Bowles-Simpson proposal is a serious effort to tackle the nation’s long-run fiscal problem? No, we can’t.
…analysts agree that the president’s moment of maximum leverage — his meeting with (South Korean President Lee Myung-bak) — has come and gone. The changed political landscape in Washington could give the deal new momentum. Yet, even with Republicans, who are more favorable toward free trade, controlling the House, Mr. Obama will still have to deal with a Democratic Senate, as well as a Republican Tea Party caucus whose members might be hostile to working with him and who are skeptical of trade deals.If our media absolutely ignored the teabaggers, they would be seen as nothing more than a bunch of essentially cranky, overweight, elderly white people wearing funny hats and carrying racist signs and yapping about “big gumint” as they await their reimbursement for their Medicare copays and their Social Security checks.
(And by the way, in a recent interview with Rachel Maddow, Jon Stewart chided people of the left over our derogatory usage of the term “teabagger” to describe these people. I’ll make a deal – I’ll stop that when I no longer see the word “Democrat” used as a supposed adjective.)
Returning to Stolberg…
(Obama) is also under intense pressure from the auto industry. Just last week, the Ford Motor Company, the only one of the big three Detroit automakers to have survived the economic downturn without resorting to a government bailout, placed newspaper advertisements calling the deal unfair.Oh, and speaking of GM and Chrysler, read this to learn about how they’ve returned to profitability and are planning to actually add jobs!
I just thought I should point that out in response to all the wingnut harrumphing about “government motors,” as well as the opposition Obama once faced from the individuals noted here (Dame Blanche Lincoln and Bob Bennett ended up paying a political price for fighting the automaker funding, as well as Norm Coleman – looks like the rest of the ones that faded away did so on their own).
I ended what I said in the bullet above with a question, so allow me to end this with a question also…
How about giving Obama a little credit? (Too late for the congressional Dems, though – once again, heckuva job, “moderates” and independent voters).
RUSH: What was the objective of that legislation? What were you trying to accomplish with your comprehensive immigration reform because many people thought it was amnesty and that he they opposed it.God, what an out-of-touch, narcissistic boob this man is and probably always will be (hard to choose here, but I’m referring to Dubya).
PRESIDENT BUSH: No, I know, and that’s what happens a lot of times these issues get labeled and people react poorly. I couldn’t have said it more plainly: I was against amnesty. I don’t know many people who were for amnesty when it comes time for comprehensive reform. … I was trying to basically recognize that our economy required immigrants to work. I mean, there’s a lot of jobs Americans won’t do and therefore there needed to be an orderly, legal way for people to come and work on a temporary basis and that if you’d paid your taxes and had been here for a while and were a good citizen you had a chance to become a citizen, but you had to get at the back of the line.
In response to our former preh-zee-dint’s claim about “jobs Americans won’t do,” I give you this once more, from “back in the day.”
The deficit commission has taken a whack at a plan to deal with the deficit, and we can quibble with those proposals (I think getting rid of the mortgage interest deduction causes a whole lot of pain with not much corresponding gain, for example), but they are at least letting us all know that we have some big problems we have to deal with, and soon.Oh, so it’s the fault of “Americans” that the catfood commission engaged in this bogus exercise as cover to raid entitlements at the expense of the “pay no price, bear no burden” investor class?
That Americans are so delusional about the problems facing this country is clear from the name of the commission. The big problem facing the country isn’t the deficit, although that problem is significant. The big problem is the debt, which is now stretching beyond $13 trillion.
When you get to trillion, what comes to my mind is the inflation that afflicted the Weimar Republic. These are silly numbers, beyond comprehension.
(And by the way, as noted here, inflation is at its lowest level "in decades.")
And I wonder why Feehery mentioned the “Weimar Republic”? Any idea?
Any idea at all?That isn’t what I wish to highlight primarily, though; instead, let’s look at Feehery’s claim about inflation. As noted here…
…a little inflation would be good for the economy right now. If shoppers expect prices to rise in the future, they would buy now to lock in today's lower prices. This would stimulate demand, and that would stimulate economic growth. The economy is growing at around 2% right now, and it needs to grow at a 3% rate to create jobs.Actually, what we have to worry about mainly now is deflation – as noted here…
Of course, the bad news is higher prices, but they won't be THAT much higher, since the Fed's target for the core inflation rate is only 2%, and it's .8% now. It would be well worth it, if it were enough to stimulate economic growth and reduce the 9% unemployment rate.
The risk is rising that the U.S. will enter a prolonged period of stagnant growth combined with a risk of outright deflation -- similar to the environment that Japan entered in the 1990s," (PIMCO head of global portfolio management Scott) Mather wrote. "The last 20 years in Japan have seen continuously deflating real estate and equity prices."Returning to Krugman (here), he believes the Fed is taking the threat of Japanese-style deflation seriously – this also tells us the following…
"Outright deflation" would occur if large swathes of the economy experienced negative price pressures over a long period of time, which then fed into expectations that prices would continue to fall broadly, Mather said.
Mild deflation, by contrast, would occur if prices fell briefly in some sectors of the economy, but consumers did not begin to expect broad, sustained price declines, he said.
Pimco has over $1 trillion of assets under management.
"It is likely that the poor employment picture will pin the (Fed's) policy rate for a long time," Mohamed El-Erian, co-chief investment officer at Pimco, told Reuters in an interview on Friday.
US inflation is currently at it lowest rate in 44 years. Consumer prices dropped 0.1pc month-on-month in June, following a fall of 0.2pc in May. The core consumer price index, which excludes volatile energy and food prices, increased 0.2pc in June, but is well below the 2pc growth targeted by the Federal Reserve.Sorry this isn’t more upbeat for the end of the week, but there you are (and on the matter of partisan punditry, here is more Feehery hilarity).
Concerns over deflation has already led some major investment funds to hedge against stock falls while buying more interest-bearing assets.
The rush to safety saw two-year US Treasury yields fall to a record low of 0.51pc on Tuesday. The 10-year Treasury yield dropped to a 15-month low of 2.85pc in July.
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