Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: DuckTapeSunroof who wrote (45972)	9/18/2010 8:51:20 AM
From: Peter Dierks	Read Replies (2) \| Respond to of 71588

Senate Tax Showdown Five Democrats have already said no. (to raising tax rates) SEPTEMBER 15, 2010. While Nancy Pelosi can probably pass whatever she wants in the House—she's already written the Blue Dogs off as losers in November—the real tax action this fall will be in the Senate. That's where Minority Leader Mitch McConnell is working to gather enough votes to block a tax increase on capital gains, dividends and anyone making more than $200,000 a year. .So far Mr. McConnell has corralled all 41 Republicans to commit to extend all of the 2001 and 2003 tax rates beyond their current expiration date of December 31. That includes Maine's Olympia Snowe, who told reporters yesterday that "Where we start is to extend all the tax cuts. I think that's important." She added that she may entertain a tax increase on some people down the road, but not before a two-year extension because "to send any other message is going to have serious impact" on the tepid economic recovery. Meanwhile, the list of Senate Democrats in favor of an extension is now up to five. Evan Bayh (Indiana), Kent Conrad (North Dakota) and Ben Nelson (Warren Buffett) were already on board, and this week Connecticut Independent-Democrat Joe Lieberman and Virginia's Jim Webb came around. "The more money we leave in private hands, the quicker our economic recovery will be. And that means I will do everything I can to make sure Congress extends" the lower rates for another year, Mr. Lieberman said. That makes 46 votes against a tax increase, which ought to be enough to maintain a filibuster. That leaves 54 Senate liberals either favoring the tax increase or remaining silent. Nearby we list nine of those incumbent Democrats who are running this year, most of them in tight races. The irony is that many of these Senators hail from relatively well-to-do states that would be hardest hit by the tax increase on investment income and upper-middle-income earners. In New York and California, tens of thousands of middle-class couples make $250,000 a year during their peak earning years. Yet Kirsten Gillibrand, Chuck Schumer and Barbara Boxer seem delighted to sock it to their own constituents, much as they did on financial reform and ObamaCare. Ms. Boxer is struggling to win her fourth term against Republican Carly Fiorina, who is making the economy, jobs and taxes her major issues. Ms. Gillibrand, an appointed Senator who is under 50% support in the polls, could also have a tougher race than expected if the GOP nominee who emerged from last night's primary can raise enough money. Wisconsin's Russ Feingold, another three-termer who has spent his entire adult life in politics, could also be making a career decision if he votes to raise taxes. It's going to be fascinating to see how these Democrats respond. On the one hand, they can vote to help the economy and their careers. On the other, they face the ideological demands of their President and union supporters whose priority is to stick it to "the rich" and spread the wealth. Voters will be watching. online.wsj.com

To: DuckTapeSunroof who wrote (45972)	9/20/2010 12:56:28 AM
From: Peter Dierks	2 Recommendations Read Replies (2) \| Respond to of 71588

Why Democrats Can't Win on Taxes Many Democrats up for re-election do not want to vote for any tax increases, but Obama has drawn a line in the sand against tax cuts "for the rich." By KIMBERLEY A. STRASSEL SEPTEMBER 17, 2010. To listen to Senate Majority Leader Harry Reid and Speaker Nancy Pelosi, Democrats are fired up for a tax debate. Republicans are holding "hostage" the "middle class" with their insistence that the Bush tax cuts be extended for all. Democratic leaders claim they can't wait to bring this line to voters this fall. There comes a point in Washington debates when the losing side has little left but bluff, and here's a good example. What Democrats know, but won't say, is that the party has walked itself into a lose-lose-lose tax fight. Their choices now range from bad to worse to problematic. They are in this fix because the tax debate they are having is not the tax debate they had planned. By now, the $800 billion "stimulus" was supposed to have the economy roaring back and unemployment well below 8%. The administration was supposed to be resting on its legislative laurels, the public showing growing appreciation for its agenda. The economy and polls firmly in hand, President Obama would then pivot to the deficit to argue that it was now responsible for a once-again-prosperous nation to pay its bills by letting some tax cuts expire. The majority stuck to this vision despite all evidence it was imploding. At any point Democrats could have pre-emptively embraced the tax question, perhaps intelligently enough to help the economy, and take credit. They didn't. Tax hikes looming, they must now confront this debate on the back of 9.6% unemployment, a teetering economy, an unpopular agenda, an angry business community, and an emboldened GOP. Which brings us back to options. Option No. 1 is for congressional leaders to plunge once again into the legislative breach, this time to threaten and bribe their caucus into passing the Obama plan, which extends tax cuts only for those making less than $250,000. This is a heavy lift, partly because it is hard to find a Democrat who likes the Obama plan. Mrs. Pelosi's liberals are unenthusiastic, since most would prefer to let all the tax cuts expire. Mrs. Pelosi's Blue Dogs are petrified, since a vote to retain only some cuts will be turned by the GOP into ads explaining that what Democrats in fact voted for was a $700 billion tax increase on small businesses and capital at a time of economic difficulty. For the 75-plus House Democrats whose seats are in danger, having to defend that vote, in addition to health care, stimulus or cap and trade, would be ghastly. As the election approaches and Democrats find themselves with more seats to defend with limited cash, party moneymen also worry such a vote would alienate businesses and further dry up campaign donations. There's also the small problem of the Senate, where Minority Leader Mitch McConnell wields a potential filibuster. Option No. 2 is to do nothing and kick the issue beyond the election. This approach allows the leadership to avoid the headaches of Option 1, and it may explain why neither Mr. Reid nor Mrs. Pelosi has bothered to introduce a bill. This option is, however, not so popular among many rank-and-file Democrats. Perhaps the only thing worse than being accused of voting for $700 billion in tax increases is being accused of doing nothing and allowing $4 trillion in tax increases, most of them on average Americans. Democrats will blame Republicans, but that will be hard to do if Democrats don't even go through the vote motions. Option No. 3 is for the congressional leadership to give in to the growing pressure and allow members to vote with Republicans to extend all the 2001 and 2003 tax cuts. That pressure is already notable: No fewer than 31 House Democrats signed a letter this week demanding that all the cuts continue, and five Senate Democrats now support that position. Democratic leaders are clearly worried those numbers will grow, one reason Mrs. Pelosi yesterday refused to rule out a full extension. This option would not only help vulnerable Democrats, it'd be great for the economy and taxpayers. The political problem Democrats have is self-created. Rather than embrace the winner of full tax relief, President Obama has chosen to draw an ideological line and to motivate his liberal base with his position against tax cuts "for the rich." Democrats are now fearful that if they cave it will demoralize that base, and further handicap them in midterm races. And so, the bluff. It's a weak hand, but the GOP shouldn't underestimate it. The Democrats' best shot is procedural, to somehow allow only one vote—on extending rates for just the "middle class"—and dare Republicans to vote against it. Democrats might then peel off GOP support and provide themselves cover this fall. If the majority senses fear—like what emanated from Minority Leader John Boehner this past weekend when he suggested he wouldn't take that dare—it'll take this shot. Republicans should call and raise. If Mr. Obama has such a winner tax position, it isn't clear why his leaders are ducking tax bills and his members are running for cover. And if the GOP can't run on universal tax relief in this of all years, it's not clear when it ever can. Write to kim@wsj.com online.wsj.com

To: DuckTapeSunroof who wrote (45972)	9/21/2010 7:19:19 PM
From: TimF	1 Recommendation Respond to of 71588

Paul Krugman alleges that rich opponents of tax hikes are gripped by “a belligerent sense of entitlement” (“The Angry Rich,” Sept. 20). Well, yes: save for corporate-welfare kings and queens, rich people earn their riches. They are, in fact, entitled to their money, and entitled to be angry when government tries to take more of it. What Mr. Krugman derisively calls a “sense of entitlement” is what sensible people call “property rights.” In fact, I’ll bet that Mr. Krugman himself retains traces of this pre-”Progressive” possessiveness: if government tried to take credit for 40 percent of his scholarly output – allowing him to sign his name to only 60 percent of his articles, books, and columns – I’ll bet that he, too, would exhibit “a belligerent sense of entitlement.” Sincerely, Donald J. Boudreaux cafehayek.com

To: DuckTapeSunroof who wrote (45972)	9/21/2010 7:23:12 PM
From: TimF	Read Replies (1) \| Respond to of 71588

Meanwhile, it circumvented Senate rules intended to prevent irresponsible fiscal actions — rules that would have forced it to find spending cuts to offset its $1.3 trillion tax cut — by putting an expiration date of Dec. 31, 2010, on the whole bill. Rules that had a built in tilt towards bigger government. Tax cuts have to be "paid for", but the biggest category of government spending (entitlements) can increase without any offsets, and no offsets are needed for extra spending on interest either (not that interest should be held hostage to such offsets, but it is extra spending and if your primary concern is not expanding the deficit than you need to offset increases here as well). That’s an extraordinary step. Almost everyone agrees that raising taxes on the middle class in the middle of an economic slump is a bad idea, The extraordinary step is raising taxes at all in a recession. And then using the political tactic of allowing tax hikes to go through for everyone, if tax hikes on the most productive and highly taxed are not allowed to go through.

To: DuckTapeSunroof who wrote (45972)	9/21/2010 10:38:01 PM
From: TimF	Respond to of 71588

Krugman: Republicans Are Fiscally Irresponsible for Pushing Smaller Tax Cut, Threatening Much Larger One Sep 17 2010, 8:24 AM ET \| Comments (351) This is sort of impressive: Paul Krugman simultaneously castigates Republicans for the fiscal irresponsibility of wanting to extend tax cuts for the rich that cost about $700 billion--and for irresponsibly threatening the extension of tax cuts for the middle class which cost three times as much. Yet you could read the entire column and not realize that it's the middle class tax cuts which are the really expensive, budget-busting bit. I can construct a coherent argument about why you should extend one and not the other (though I favor letting both end), and Paul Krugman offers some of these as well, but the budget club happened to be available, so he grabbed that too. Unfortunately, it undercuts the rest of his argument. If you think the deficit's a pressing problem, as I do, then all the tax cuts should be ended. If you don't, then this argument is opportunistic, not serious. Update: Just to be clear, my objection is that Krugman doesn't mention the size of the middle-class tax cut--indeed, he seems to imply that its cost is smaller than that of the tax cuts for higher earners: So, about those tax cuts: back in 2001, the Bush administration bundled huge tax cuts for wealthy Americans with much smaller tax cuts for the middle class, then pretended that it was mainly offering tax breaks to ordinary families. He then goes on to castigate Republicans for their fiscal irresponsibility in wanting to extend the tax cuts for the wealthy: On the economics, the answer is a clear no. Right now, fears about budget deficits are overblown -- but that doesn't mean that we should completely ignore deficit concerns. And the G.O.P. plan would add hugely to the deficit -- about $700 billion over the next decade -- while doing little to help the economy. On any kind of cost-benefit analysis, this is an idea not worth considering Nowhere does he mention that the Obama plan would add to the deficit even more hugely, or indeed say anything at all about the cost of that part of the plan. You could say "the benefit of the tax cuts is not worth the $700 billion we'll lose", but once you drag in the deficit, you're talking about something subtly different--our need to get our long term spending and revenue in balance. At that point, I think you have to mention that the Obama plan increases the deficit by $2 trillion over ten years. Especially since that "much smaller" in the earlier paragraph might otherwise mislead people into believing that the actual cost--rather than the per-capita benefit--of the tax cuts for the middle class was smaller than that of the tax cuts on high earners. theatlantic.com I think the the calculations of the "cost" of avoiding the tax increases are both not technically measuring an actual cost, and are also too high. The economic harm from the higher taxes will reduce the revenue realized by the tax increase.