Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: CBO

Obama’s New Budget Raises Taxes and Increases the National Debt

OBAMA: COMMUNIST PRESIDENT OF THE UNITED STATES

(Photo credit: SS&SS)

This article first appeared at the McAlvany Intelligence Advisor on Monday, April 29, 2014:

The Congressional Budget Office, in introducing its latest analysis of President Obama’s proposed budget, could just as easily have quoted Robert Welch, the founder of the John Birch Society, who said back in 1974 that the future would bring:

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CBO report: the rich pay most of the taxes while the poor get checks

Jane Wells, a business news reporter for CNBC, after reviewing the latest report from the Congressional Budget Office (CBO) on who pays income taxes in America, claimed that the rich pay them all. The CBO, wrote Wells, showed that the top 20 percent pay nearly 93 percent of all income taxes, while the top 40 percent

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Deficit down, national debt up, more taxes needed say two “nonpartisan” groups

Two government reports issued in the last few days show that despite higher tax revenues, thanks to the tax increases signed into law by the president earlier this year, deficits are still sky-high and the national debt continues its inexorable climb into the stratosphere.

Although the deficit for the first eleven months of the 2013 fiscal year was down slightly compared to last year at this time, real progress towards a balanced budget remains elusive. Through August the federal government spent

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Another Obamacare Delay Admitted by the White House

On Monday the New York Times quoted an unnamed White House official that another piece of the labyrinthine healthcare law is going to have to be delayed until 2015, which will wind up costing vast numbers of citizens with severe illnesses potentially thousands, perhaps even hundreds of thousands, of dollars. This flies in the face of the promise that President Obama made back in September 2009 that Obamacare

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CBO Cost Estimates on Senate Immigration Bill Celebrated, Challenged

When the Congressional Budget Office’s cost estimate of S. 744 – the Gang of Eight’s controversial immigration bill – was published on Tuesday, there was celebrating on both sides of the issue. Said Senator Charles Schumer (D-N.Y.), one of that gang and the original sponsor of the bill:

Simply put, this report is a huge

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S&P Issues an Upgrade of US sovereign debt along with a warning

In the announcement by credit rating agency Standard & Poor’s on Monday that affirmed its AA+ rating of United States sovereign debt while revising upward its outlook from “negative” to “stable,” the agency explained that in the short run there has been some perceptible improvement in the country’s fiscal situation but in the long run

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Social Security to Run Out of Money Much Sooner Than Estimated

The latest report from the Congressional Budget Office (CBO) about the inevitable insolvency of Social Security is discouraging enough without checking the CBO’s assumptions. A closer look at the report and those assumptions reveals a

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The Gloomy Report from the CBO is Too Optimistic

On its face the latest report from the Congressional Budget Office is gloomy enough, but careful sifting through it reveals

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Fiscal Cliff Funny Numbers: Taxpayers Pay More Yet Deficits Rise

Uncle Sam is Broke

Uncle Sam is Broke (Photo credit: Infrogmation)

Now that the House of Representatives has virtually rubber-stamped the Senate bill to avoid going over the fiscal cliff – the so-called American Taxpayer Relief Act of 2012 (ATRA) – which President Obama is expected to sign shortly, commentators have been working feverishly to determine exactly what is in the 157-page bill that no one had time to read before being rushed to completion at the very last minute.

The analysis by the Congressional Budget Office (CBO) measured the impact of ATRA against its baseline assumption that the congress would do nothing and let all the pieces and parts of the fiscal cliff occur automatically. In that baseline, annual government deficits would have been cut in half, from $1.1 trillion to about $640 trillion. But under the new law, the national debt will increase by

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Where Are the Spending Cuts?

Cutting your Spending

Cutting your Spending (Photo credit: Tax Credits)

The fiscal cliff “deal” about to be signed into law by President Obama is all about tax increases. This is what The One has wanted since he got into office. He wanted to overload the system so much that taxpayers would be forced to pay more. It’s more of the “leveling” required to push the US down relative to other deadbeat nations who also can’t pay their bills. The easier to be “absorbed” into the new world order run by non-elected elites. But I digress…

According to the Congressional Budget Office (CBO), the “deal” consists of $15 billion in spending cuts (over the next ten years, mind you) compared to $620 billion in new taxes – a ratio of 41:1. What a deal!

“We’ll address spending cuts later” is now the cry from sycophants like Grover Norquist. “We got a deal we can live with,” they say. “Now let’s get down to business.”

Sorry. Business is already done. That window of opportunity to hold the government accountable is closed. Obama got what he wanted. Boehner caved in. End of discussion.

I’m biased (!). But I think the fiscal cliff turned out to be a speed bump on the road to more

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CBO: Balancing the Budget Will Be “Formidable”

We need to get this to the Fiscal Cliff! What ...

(Photo credit: DonkeyHotey)

Within days of issuing its report on the impact the fiscal cliff would have on the economy, the Congressional Budget Office (CBO) released another report full of suggestions on how to close the deficit. They might not have bothered. The gap is too big and their suggestions are too small.

The CBO tried to put things into perspective:

Federal debt held by the public currently exceeds 70 percent of the nation’s annual output (gross domestic product, or GDP), a percentage not seen since 1950. Under the current-law assumptions embodied in CBO’s baseline projections, the budget deficit would shrink markedly—from nearly $1.1 trillion in fiscal year 2012 to about $200 billion in 2022…

Simply put, if nothing changes, come the first of the year the deficit will begin to come down, but not by very much, and certainly not enough to bring the budget into balance by 2022. But, warns the CBO:

Those projections depend heavily on the significant increases in taxes and decreases in spending that are scheduled to take effect at the beginning of January.

Aside from the gridlock now being witnessed in Washington as the conflicting interests of the taxpayers versus the beneficiaries of the welfare state are working themselves out, there is simple

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Solving the Fiscal Cliff Crisis: Extend and Pretend

English: Peter Schiff speaking

Peter Schiff speaking (Photo credit: Wikipedia)

Peter Schiff, hard-money advocate and former candidate for the Senate from Connecticut, wrote in Townhall.com that he expects the congress to punt on the fiscal cliff.

I am doing a lengthy print article for The New American magazine on what congress ought to do to save the government from bankruptcy. I also wrote that the congress can’t kick the can down the road any farther – we’ve run out of road.

Schiff thinks they can. First he explains what the fiscal cliff is all about:

Stripped of its rhetorically charged language the fiscal cliff is simply a legal trigger that will trim the deficit in 2013 by automatically implementing spending cuts and tax increases. In other words, the government will spend less, and more of what it does spend will be paid for with taxes rather than debt…

The fiscal cliff means that the federal budget deficit will be immediately cut in half, shrinking to approximately $641 billion in 2013 from the approximately $1.1 trillion in 2012.

That of course assumes that congress does nothing. But congress will do something, even if it’s

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CBO All But Guarantees Fiscal Cliff Gridlock

(fear) the Fiscal Cliff...

(fear) the Fiscal Cliff… (Photo credit: MyEyeSees)

In its latest 14-page report on the impact the “fiscal cliff” would have on the economy in 2013 and beyond, the non-partisan Congressional Budget Office (CBO) provided enough ammunition to both sides of the debate to guarantee a standoff in Washington. It would have simplified matters greatly if Doug Elmendorf, the CBO’s director, had simply said: “Pay me now or pay me later. You decide.”

The “fiscal cliff” is a convergence of tax increases and spending cuts scheduled to become effective on January 1st 2013 that are complex enough to, in the words of Tevye in the film Fiddler on the Roof, “cross a Rabbi’s eyes.”

There are the Bush tax cuts from 2001 and 2003 which are due to expire, representing a tax increase that would affect most taxpayers, hitting higher earners especially hard. There are the mandatory spending cuts to military and domestic programs that resulted from the failure of Congress in August 2011 to make hard decisions about the deficit and national debt.

There is the expiration of the Alternative Minimum Tax (AMT) “patch” which would effectively raise taxes on some 27 million people. There is the scheduled ending of the payroll tax “holiday” which temporarily reduced employees’ contributions to Social Security from 6.2% to 4.2%. There is the Medicare “Doc Fix” legislation which, when it expires, would cut Medicare providers’ fees by 27 percent. And there’s the Medicare surtax of 3.8 percent that would apply to high income earners along with the expiration of the Bush tax cuts.

Put altogether, if the congress does nothing, the impact on the economy would mean a significant decrease in

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Marching Towards the Fiscal Cliff

John Boehner - Caricature

John Boehner (Photo credit: DonkeyHotey)

This article from the Washington Times perfectly illustrates how Washington is going to deal with the “fiscal cliff,” which means that nothing much will happen to bend the trajectory away from inevitable bankruptcy.

First, the inevitable warnings from the Congressional Budget Office (CBO) which focuses only on the immediate:

Even if all of the fiscal tightening was eliminated, the economy would remain below its potential and the unemployment rate would remain higher than usual for some time.

If the fiscal tightening was removed, and the policies that are currently in effect were kept in place indefinitely, a continued surge in federal debt during the rest of this decade and beyond would raise the risk of a fiscal crisis … and would eventually reduce the nation’s output and income below what would [otherwise] occur.

This certainly isn’t the galvanizing language that would motivate congress to do something significant about the real debt: the $222 trillion debt the government currently owes.

House Speaker Boehner is holding firm against tax increases, for the moment. While Obama is giving indications that he might soften a little about

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Bond Fund Manager Says Only Gold Will Survive the Coming Disaster

 

Bill Gross

Bill Gross (Photo credit: jdlasica)

In his October newsletter to clients of Pacific Investment Management Company (PIMCO), founder Bill Gross summarized the coming disaster that faces the country, and noted that “only gold and real assets would thrive…” Noting that America is considered the “cleanest dirty shirt” among the major economies, he says that the country’s debt-to-GDP ratio, its excellent credit ratings, and its currency being the world’s reserve currency appear to stand it in good stead:

We have world-class universities, a still relatively mobile labor force and apparently remain the beacon of technology — just witness the never-ending saga of Microsoft, Google and now Apple.

Obviously there are concerns, especially during election years, but are we still not sitting in the global economy’s catbird seat?

As far as America’s imminent demise is concerned, he comments:

Armageddon is not around the corner. I don’t believe in the imminent demise of the U.S. economy and its financial markets. But I’m afraid for them.

Gross manages the world’s largest bond fund along with CEO Mohamed El-Erian, with nearly $2 trillion of assets under management. His clients include individual retirees, pension plans, educational institutions, foundations, and endowments, each seeking safety of principal along with reasonable returns. Accordingly he must temper his words not to frighten away the very people he serves. But he’s courageous enough to tell the truth.

After reviewing reports from the International Monetary Fund (IMF), the Congressional Budget Office (CBO), and the Bank of International Settlements (BIS) on the state of the American economy, he says that the United States is no “clean dirty shirt” after all. It is, instead, 

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Reagan Budget Director Blasts Paul Ryan Budget

David Stockman

David Stockman (Photo credit: The Aspen Institute)

Calling potential Republican vice-presidential candidate Paul Ryan’s “Path to Prosperity” budget plan a “fairy tale,” David Stockman, President Ronald Reagan’s budget director from 1981 to 1985, took Ryan’s plan to task for not recognizing reality and for leaving behind the legacy of the GOP’s glory days when it reveled in touting small government.

Stockman said that Ryan’s plan to give tax cuts to “job creators” will do nothing to help create jobs, but instead will only put additional pressure on the middle class to come up with more revenues to fund the yawning federal deficit. Stockman conjured the images of “the true conservatives of modern times” like Herbert Hoover and Dwight Eisenhower who, if they were here, would decry the present GOP’s infatuation with what he calls “neoconservative imperialism” and the spending that goes along with it.

Ryan’s plan to push more of the Medicaid responsibility back onto the states through a voucher system is “hypocrisy,” according to Stockman, and merely postpones the reality of

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Taxing the Rich Would Not Slow Economy, Says White House

Logo of the United States White House, especia...

Logo of the United States White House (Photo credit: Wikipedia)

When President Obama’s tax plan was revealed, international accounting giant Ernst & Young (E&Y) was asked to analyze it by the National Federation of Independent Business and the U.S. Chamber of Commerce. When the firm announced its conclusions that his plan would slow the weak economy even further, the White House attacked the study as containing “major flaws, errors and misleading statements.”

Obama’s tax plan is more than just “taxing the rich”—it contains a mixture of tax credits for hiring new employees, a mortgage credit, an “American Opportunity Tax Credit” to entice more young people to get into debt to fund their college educations, an increase in the child and dependent care tax credits, and an extension of and increase in the earned income tax credit.

It would also eliminate all income taxes for seniors with incomes less than $50,000 per year, and would temporarily eliminate income tax on unemployment insurance benefits—both clear political plays for the senior and unemployed vote in the November elections.

It also reinstates the estate tax and would eliminate “loopholes” for oil and gas firms, while providing tax credits for green “renewable” investments. It would create a watch list of international tax havens in order to force “greater financial disclosure” to discourage the use of tax shelters by the wealthy trying to avoid taxes.

But the centerpiece of Obama’s plan is allowing the Bush tax cuts on incomes, capital gains, and dividends for those making over $250,000 a year to expire—essentially a huge tax increase on those with capital. And that’s what the report’s authors, Drs. Robert Carroll and Gerald Prante, focused on: What impact would the imposition of those new taxes have on

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Only Tax Cuts Can Stop Trillion-Dollar Deficits

President Kennedy delivers radio and televisio...

The U.S. Treasury Department announced on Thursday that the federal government’s deficit for the first nine months of its 2012 fiscal year exceeded $900 billion and that the country is on target for another $1 trillion annual deficit for the fourth year in a row. And this was despite the fact that revenues for the same period actually increased by five percent.

In simple terms, government is growing more quickly than the economy can generate the revenues to feed it. And if the status remains quo, the economy will continue to stagnate. At present it is informally in recession, there is gridlock in Congress, elections are four months away, and Taxmageddon—the “fiscal cliff”—awaits taxpayers on January 1. All of this is sufficient to cause even the hardy to tremble.

What the president and a compliant Congress have managed to do over the last four years is to increase government spending, compared with what the economy generates—the gross domestic product, or GDP—to the highest level since WWII. James Glassman’s study of deficit spending under the last five presidents shows that President Obama’s ratio of deficit to GDP is 8.9 percent, compared to George Bush senior’s 4.2 percent, Ronald Reagan’s 4.2 percent, George Bush junior’s 2.7 percent, and Bill Clinton’s 0.5 percent. Putting that into perspective, Obama’s deficits are running between two and fifteen times greater than his predecessors, with no end in sight.

In fact, if the economy’s output declines as many economists are predicting, revenues will fall, resulting in even higher

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The Robin Hood Tax Scam Is Back

robinhood_june19_DSC_1766

In a burst of uninformed enthusiasm, William La Jeunesse, writing for Fox News, announced that the bill offered by Senator Tom Harkin (D-Iowa) and Representative Peter DeFazio (D-Ore.)—the “Wall Street Trading and Speculators Tax Act”—was the Robin Hood tax.

If he knew better, La Jeunesse would have called it by its correct name: the Tobin Tax, first offered 40 years ago by a Keynesian economist, following the collapse of the Bretton Woods agreement when President Nixon took the United States off the gold standard. That bit of information would no doubt have helped to curb his enthusiasm.

La Jeunesse wrote:

The measure would impose a tiny three-hundredths-of-a-penny tax on financial trades. Supporters say the bill would cost the average investor just $1 per year, but could raise up to $35 billion annually.

This painless way of extracting funds from its owners would then allow further spending to stimulate the economy, according to DeFazio:

It’s .03 percent. But it will still generate about $35 billion a year in income—income that could be used to rebuild the real economy, infrastructure [and make] other investments.

Any proposal to increase taxes, direct or indirect (the Tobin tax qualifies as an indirect tax), can be examined at least three ways. Who is proposing it and what is his agenda? Who has analyzed its impact impartially and has the intestinal fortitude to tell the truth about the bill? And are taxes in general moral, and indirect taxes specifically? 

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PBGC, Another Government Agency, is Under Water

Logo of the United States Pension Benefit Guar...

When the Pension Benefit Guaranty Corporation (PBGC)’s president, Josh Gotbaum, announced that the bankruptcy of AMR (the parent company of American Airlines) wouldn’t impose additional demands on PBGC’s already flimsy financial statement, his relief was nearly audible:

It is great progress and good news that American recognizes that can reorganize successfully and preserve its employees’ pension plans.

We’re also glad the company is willing to work with us to preserve their pilots’ plan too.

Flimsy doesn’t describe adequately the condition of PBGC’s financial statement. According to its annual report for 2011 it already has more than it can handle. Designed as a backstop for failing pension plans back in 1974, SBGC now has promised more than 1.5 million retired and soon-to-be-retired pensioners $107 billion as a result of pension plans that were underfunded or were the residue of company bankruptcies. Unfortunately SBGC only has $81 billion in the bank, leaving the agency with its worst deficit in 37 years: $26 billion. If the AMR bankruptcy had required PBGC to step to the plate to rescue its plans, CBGC’s deficit would have

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.