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04 January 2013

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r whitman

Good. Thats the only way we get a handle on the debt problem is to do it generically rather than item by item. Let the agencies figure it out. On social security, medicare and medicaid, set a limit on disbursements tied to the GDP and let the agencies do the allocation. It absolves the politicians from making real choices which they do not want to make anyway.

Charles I

Its too true. All this did was lock in the Bush era tax cuts under the $400k cap, ensuring the further starvation of your government and the ensuing "necessary" reduction of social spending whilst protecting defense and the markets that most benefit your plutocrats.

Too big to fail means all the little folks pay while their services are gutted.

William R. Cumming

Agree with PL's analysis and predictions!

Nightsticker

Colonel Lang,

I am reminded that ultimately
all debts are paid...either by
the borrower or the lender...
one way or another.

Nightsticker
USMC 65-72
FBI 72-96

Richard Armstrong

Contrary to the widespread myth, Social Security is neither going broke nor causing our federal deficits. It never contributed and, unless the law is changed, never will contribute a penny to the debt. It is self-financing, has no borrowing authority, and cannot pay benefits unless it has the income on hand to cover the entire cost.

Alba Etie

Col Lang
I agree with your analysis- President Clinton for all his faults was pretty good on budget & taxes - we should return to Clinton era rates for everyone . I do hold out some hope that we will find additional savings in tax reforms - One such tax reform would be to discontinue the tax subsidizes for the Oil Companies. Another might be to close the "Cayman Island "corporate tax shelter -.

turcopolier

Richard Armstrong

You are right. I meant to write "medicare." I will fix that. pl

Cieran

Colonel:

Good post, but as long as you are in a "fixing" mode, please consider your statement that the working poor don't pay income taxes. Social Security and Medicare withholding are taxes levied on income, so even though the punditry attempts to avoid the obvious interpretation of "taxes on income" as "income taxes" by inventing the term "payroll taxes", the simple reality is that the working poor and the middle class do pay a substantial part of their income via this tax on income.

And the issue is even more interesting, because (as one learns in the first week of an introductory economics course), there's arguably no such thing as an "employer share" of any tax on income, i.e., wages are the return on labor, and that return should be viewed comprehensively, e.g., taxes withheld, benefits purchased, etc. In other words, the personnel cost to the firm of an individual employee is a good approximation to their real wages.

So now that the "payroll tax" holiday has been lifted, all wage employees making less than about $114,000 per year (2013) will pay 6.2% (worker share) + 6.2% (employer share) of their income, and by the time that Medicare deductions are tossed in (and after remembering to rebaseline the overall wage by including the employer share), most wage earners end up paying an actual income tax rate of nearly 13% for payroll taxes alone.

Given that Mitt Romney paid only a slightly higher rate according to those returns he made public, it's certainly reasonable to stop asserting that the working poor don't pay income taxes. They do indeed pay taxes on their income, and the fact that we choose to refer to these deductions as payroll taxes doesn't change the fact that most Americans who earn wage income do pay taxes on each dollar of that income that they earn.

turcopolier

Cieran

OK, but they don't pay direct income tax. How do you want me to re-phrase it? pl

Cieran

Colonel:

How to re-phrase it? Well, hopefully, I just did!

But perhaps replacing "I speak not of the working poor because they do not pay income taxes" with "I speak not of the working poor because while they may pay a substantial rate of payroll taxes, they do not pay regular income taxes" or somesuch.

Though given how well you write (especially when compared to my fractured prose), that's likely just gilding the lily, so I'd be inclined to leave it as it is. As always, your thoughts are a pleasure to read, so thanks for sharing them!

turcopolier

Cieran

What did you think of "Hiawatha?" pl

twv

"Starvation" of a government that is already taking 24% of the GDP and borrows 40% of what it pisses away?
Sarcasm, right?

turcopolier

twv

What do you think of my characterization of the GOP as a hyper-nationalist party? pl

Laura Wilson

I agree, if by hyper-nationalist you mean fascistic. About BHO's strategy, I have thought for a long time that he is actually (as a conlaw guy) trying to get Congress to go back to do its job of originating legislation as appropriate, owning the process, and governing as one of the three branches of government in a positive sense. That's why he doesn't respond when they whine that "the President hasn't told us what to do yet." As the originating branch of government, THEY are supposed to make some legislative progress.

Am I way off?

turcopolier

Laura Wilson

"fascist?" No. I do not mean that. Do you know what the word means or are you just locked into some wretched coffee-house 70s nonsense? hyper-nationalists are just as likely to exist on the left. what would you csall these wilsonians who want the US to rule the world as much as the GOP right does? Is BHO not a hyper-nationalist with his wars in pursuit of a more perect world modeled on the US? What would you say of Hillary and Madeleine Albright with their prattling of "the indispensable nation?" pl

Charles I

Those are choices, as are these. They are not calculated to benefit anybody but capital, and the shifting of risk from capital to you and yours, at the cost of your services, rather than those services - endless money supply and credit guarantees to capital - your government deems untouchable.

In this case, the services starved are those gutted to pay the debt, and those permanently disassembled and privatized after that. The debt was spent on the wars and now floating the stock markets, rather than medicare. No wars and a bit o tax you'd of had medicare and the JF 35.

These are decisions. They explicitly redistribute wealth.

Its a great time to have loadsadough and no debt. It has not been a great time to be in the middle class since the end of double digit interest rates a couple of decades ago, unless you're one of the few with no debt who sold real estate before 2006.

And now the citizenry is up to 167% average debt/income ratio, as the siphoning goes on whatever the sequester.

Who got that fat? The voters? The troops? The middle class?

If you were in control of your government, you could control your economy on a far more rational and equitable basis, but your FIRE sector has gotten a hold of the cash flow and they are not going to let go. They are going to drain your government, and then they are going to foreclose on that 167% with a lifetime offer of one time one term consolidation.

Your corporations are uncontrllable; I hold out hope for my government.

twv

And the Obama "story" continues.
He taught (part-time) Public Service Law at Chicago.
Never taught Con Law, but the media missed that:
Deliberate or just incompetent?
Probably half and half.

twv

Sir:
I'm not clear as to what "hyper nationalist" means as applies to the current Republican empty shell.
This is a bunch of people what can't decide when to have lunch.
Whig, or stupid party would be a better name.

turcopolier

twv and laura W.

And then there are the BHO memes for the "pivot to the Pacific" and "containing China." How do you both thinks about that? pl

Charles I

I just came across this in an article about "The Making of Global Capitalism" by Leo Panitch and Sam Gindin

"Oddly enough for anti-capitalists, their analysis of U.S. strength is remarkably close to that of those on the right who preach American triumphalism. The U.S., they argue came to its position through a set of historical circumstances unique to that country, which allowed it to take command in a manner unlike that of any previous imperial power.

The DNA of American capitalism, they write, was there from its 18th century beginnings. It gave rise to a state apparatus uniquely qualified to act both as umpire and player in a globalized market economy.

To Panitch and Gindin, the state is central. They side with those who argue that the alleged dichotomy between free markets and “government interference” is largely false — that from the beginning of the American republic, the state has played a key role in assuring the success of business.

What makes these authors different from classic left historians like Charles and Mary Beard is that they say the American state has gone beyond promoting just U.S. business. To Panitch and Gindin, Washington is now the champion of global capital wherever it is domiciled.

The strength of this book lies in the detail of that story. The authors follow the intricacies of American economic and financial policy-making, particularly within the treasury and state departments.

The importance of Franklin Roosevelt’s New Deal, they write, is not that it alleviated the Depression of the 1930s (indeed, to a large extent it didn’t). Rather it is that Roosevelt put in place a set of government institutions dedicated to promoting long-term financial interests, precisely at the time when those interests were about to expand globally.

The focus on finance means that other areas are played down. There is little attention paid to American’s many post-1945 military adventures or to the Cold War. The Soviet Union makes only a cameo appearance, mainly as originator of the Eurodollar market.

So, too, labour plays a strangely minor role. Usually, it is being duped — first by the purveyors of the welfare state, later by the banks who, ironically, use workers’ own pension funds to help foment the very crisis that now threatens to deliver the coup de grace to organized labour."

http://www.thestar.com/news/canada/politics/article/1310736--walkom-end-of-american-empire-maybe-not

Tyler

Sir,

I personally like the complete silence in regards to Obama's drone war that states everyone killed is a terrorist myself.

And then there's the self delusion with the NDAA, and all the other Big Brother government threats to our civil rights, but its okay because the dude in charge has a D next to his name.

Fred

Got mine, all in the generations to follow get less, except for the bill. Sounds like the 2010-2012 legislature in Michigan. They keep their life-lime health care benefits, all future legislators get to pay their own way. Some 'sacrifice'. But then many were of the 'greatest' generation. Like teenagers who've done their 'chores' we owe them - and can expect nothing from them but demands.

Bobo

Our government is broken. They could not pass anything prior to midnight 12/31 they are not a responsible entity. With the world looking on they eventually passed a quasi tax increase but still had to pack the bill with PORK and the guy we call President jaunts off to vacation leaving the signing of the bill to a mechanized Pen. We now deserve Sequestration and when it comes to the
Defense cuts maybe someone will think about dumping the Marines as the answer.

Our out will be an across the board 1 percent annual increase in income taxes until the debt is dealt with. Hopefully they can understand that.

Fred

Laura, you said "About BHO's strategy, ...that he is actually ... trying to get Congress to go back to do its job of originating legislation as appropriate,"

So BHO can't call Nancy Pelosi, fellow democrat, and say X Y or Z legislation is good for the people of the Republic? Why he'll just sit on his ass until all those other democratic party members in congress introduce some legislation? While that sounds like an accurate explanation of the separation of powers found within the Constitution we all learned in middle school it sure doesn't sound like effective leadership on BHO's part; or Minority Leader Pelosi's nor of any other senior Democratic Party member in office.

Cieran

Colonel:

I loved it!

I wish I had more time to enjoy both TA and SST -- for a couple years, I managed to read every word on each, but between the demands of my work and the sheer size of the committee of correspondence, I cannot keep up any more... *sigh*

But I still read each of your posts, and especially enjoy the stories. And I am very much looking forward to your autobiographical novel!

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