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: Taxmageddon

Don’t Tax Me; Don’t Tax Thee; Tax That Fellow Behind the Tree!

Tax

Tax (Photo credit: Tax Credits)

So said Russell Long, the Senator from Louisiana who served 39 years and whom the Wall Street Journal once called “the fourth branch of government,” so great was his influence. He got it right. The citizens are so dependent upon their government goodies that the entire discussion in Washington over the fiscal cliff is about increasing taxes and not cutting spending. The writer at Marketwatch.com got it exactly right:

As lawmakers negotiate to avoid the so-called fiscal cliff, the combination of tax increases and spending cuts that are due to take place on Jan.1, 2013, the silence on spending cuts is deafening. (my emphasis)

Some Republicans have tried, by outlining various cuts in spending that would bring the budget back to 2008 levels. But no one is listening:

House Republicans, both in the budget committee and in the Republican Study Committee, have outlined potential cuts that will bring spending back down to 2008 pre-recession levels. However, all Washington negotiators can do is talk about raising taxes, or not, and how much revenue can come from limiting deductions on one hand and economic growth on the other.

She says that Washington considers spending cuts as “poisonous.” We’ve heard this before. Cuts to Social Security was considered for years to be the third rail in politics: touch it and you die. George Bush trotted out a plan to modify Social Security with private accounts. Remember them? Didn’t think so. Down the memory hole.

Biden can’t believe the Republicans even want to

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How Do Liberal Republicans Keep Their Pledges? They Don’t!

Honest Abe

Honest Abe (Photo credit: jeff_golden)

In a public display of candor that illustrates their moral incapacity, some well-known Republicans are now breaking their promise made to taxpayers when they signed Grover Norquist’s Taxpayer Protection Pledge.

First was Georgia Senator Saxby Chambliss. According to Wikipedia, Chambliss is a “conservative,” having been blessed by the Washington Post as one of the “gang of six” trying to craft some kind of way around the fiscal cliff impasse. When in doubt, I check the man’s Freedom Index rating (FI) to see how closely their actual voting record hews to the limits of the Constitution. With Chambliss, it appears to be: not very often, with a paltry rating of just 69. Translation, one-third of his votes are unconstitutional.

Next on the list of pledge-breakers is Lindsey Graham, senior Senator from South Carolina. His FI rating is scarcely better than Chambliss’, at 73. Then comes John McCain, senior Senator from Arizona, the ultimate establishment conservative, with a FI rating of 78. Finally, House member Peter King, from the 3rd Congressional District of New York, with a FI rating of a dismal 62. That’s awfully close to a

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Pro Teams Losing Games and Fans

Miami Dolphins fan / Torcedor do Miami Dolphins

Miami Dolphins fan / Torcedor do Miami Dolphins (Photo credit: marciofleury)

In an interesting study, 247Wallst.com counts 13 professional sports teams that are losing games, fans and money, and that many appear to be in a death spiral: they don’t have the money to hire the best players, so the players they are able to hire don’t play as well, so they lose games, and the fans lose interest, and so the owners have less money to hire the best players, and down and down they go.

Since this is football season, let’s look at the Miami Dolphins. During the 2001-2002 season, the team won 11 games and lost 5, putting them in first place in the AFC East.  The beat the Colts in the first playoff game but were shut out by

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Self-Fulfilling Recession: Big Companies Cut Back

double dip cones

(Photo credit: mark e dyer)

There has been much talk for many months about the “second” recession facing the US economy. I’ve written about it as well, noting the prediction from ECRI last year that we were headed for a double dip. The prediction was defended again in September by ECRI.

And many have predicted, including the Congressional Budget Office, that the fiscal cliff will cause another recession.

Now, those with money to spend, have decided to cut back:

U.S. companies are scaling back investment plans at the fastest pace since the recession, signaling more trouble for the economic recovery.

Half of the nation’s 40 biggest publicly traded corporate spenders have announced plans to curtail capital expenditures this year or next, according to a review by The Wall Street Journal of securities filings and conference calls.

It’s what they’re not spending on that is unnerving: the very

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Al Gore is SO 20th Century

English: Al Gore's Hearing on Global Warming

Al Gore’s Hearing on Global Warming (Photo credit: Wikipedia)

I’m nearly certain that you missed this: Al Gore was being interviewed by a “greenie” and made some simply amazing comments about how he sees our world. I bring it to your attention for your enjoyment and for your elucidation about how Gore thinks. It’s quite a trip.

First of all, Gore had been up all night and so wasn’t thinking clearly. At least that’s a plausible excuse:

On Nov. 14-15, the Climate Reality Project held its second annual “24 Hours of Reality” marathon, spending an entire day and night live-streaming events and panels around the globe to highlight various aspects of the climate crisis…

I caught up with Climate Reality founder Al Gore around hour 18 of his all-nighter and asked him about current U.S. climate politics, carbon taxes, and natural gas.

I’ve picked out, at random, some questions, and Ol’ Al’s responses. I’ll try to restrain myself from

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Kicking the Fiscal Cliff Can … Again

John Stossel is a favorite of mine. I watch his show whenever I can. He is fearless, even when faced with that intimidating buffoon Bill O’Reilly.

Stossel not only thinks Congress will kick the can on the Fiscal Cliff, he even explains how it is likely to happen:

Will Congress act?

It will! I see the future: The politicians will meet and fret and hold press conferences and predict disaster. Then they’ll reach a deal.

It will just postpone the reckoning, but they’ll congratulate themselves, and the media will move on.

Ron Paul sees what’s

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Harry Reid Refuses to Let Reality Interfere

Harry Reid Bubble Boy

Harry Reid: Bubble Boy (Photo credit: absentee_redstate)

According to the Washington Times, Senate Majority Leader Harry Reid is threatening to create the gridlock that many fear will push the country over the fiscal cliff. He refuses to recognize reality, continuing to make statements that most people consider absurd and ill-informed:

Senate Majority Leader Harry Reid said Wednesday that he will not allow changes  in Social Security to be part of the negotiations to avoid a federal budget  fiscal cliff…

“Social Security is not part of the problem, That’s one of the myths the  Republicans have tried to create,” he said. “Social Security is sound for the  next many years. But we want to make sure that in the outer years people are  protected also, but it’s not going to be part of the budget talks, as far as I’m  concerned.”

This is the immovable object: Social Security is fine, just fine, leave it alone, we must protect the seniors, we promised…, etc., etc., etc. But Senate Minority Leader Mitch McConnell isn’t buying any of it. He is the irresistible force – he has

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Keynesian Economists Nervous About Fiscal Cliff

DAVOS/SWITZERLAND, 25JAN07 - Maria Bartiromo, ...

Maria Bartiromo, Anchor, CNBC’s Closing Bell, and Host and Managing Editor, Wall Street Journal Report, CNBC, USA; (Photo credit: Wikipedia)

Maria Bartiromo is the majorette domo of television investment broadcasting. She is also a Keynesian. From her bio:

She is a member of the Board of Directors of the Young Global Leaders of the World Economic Forum, a member of the Council on Foreign Relations [and] the Economic Club of New York… (my emphasis)

Bartiromo graduated from New York University, where she studied journalism and economics.

Rest assured good friends that NYU doesn’t teach Austrian School economics. And membership in the CFR guarantees that anything she says or writes will be the elite Anglo-American establishment’s view.

And she is getting nervous about the fiscal cliff:

The ongoing fight over the “fiscal cliff” may overshadow everything else as we get closer to the new year. Sadly, compromise seems hard to come by, even though the consequences of going over the cliff — hundreds of billions of dollars of spending programs that are set to expire, along with the largest tax increase since World War II for virtually all income levels — was specifically designed to force compromise.

Obama has dug in his heels: no deal unless

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Guerrillas in the Freedom Fight

Israel's Special Forces in Camouflage

(Photo credit: Israel Defense Forces)

Kurt Schlichter is a free-lance writer whose articles have been published in many national publications, liberal and conservative. Here he gives conservatives a much-needed boost:

Right now, there is one strategy that offers us hope of turning the leftward tide. Insurgency…

Insurgents survive and win by avoiding decisive engagements until a time and place of their choosing…

First, we need some perspective on the freedom fight:

The first thing we need to do is get out of our head the notion that this fight will be over if we just pull off a victory in 2014 or 2016.

This is not just a single political battle but a political and cultural campaign. America did not go from a nation of stalwart, self-reliant achievers to a country full of couch-dwelling moochers in just four years, and we won’t change it back in the next election, or the one after that, or even the one after that.

Our role models, the patriots of 1776, didn’t drive the redcoats out until 1783.  Our strategic end is long-term – an America where free market values prevail, where all of our liberties are respected, and where a limited government spends within its means and only within the bounds set forth in the Constitution.

He treats the freedom fight as a war, and rightly so. Some of Sun Tzu’s tactics are

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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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The Fiscal Cliff: What Really Needs to Be Done

Piggy Bank

(Photo credit: Images_of_Money)

Now that the national elections are history, attention in Washington is firmly focused on the “fiscal cliff”: the day of reckoning created by the congress during the budget ceiling debate in the summer of 2011. When the Super Committee failed in its mandate to create a plan to address the deficits and the national debt, the result was the misnamed Budget Control Act of 2011 which, in current parlance, kicked the can to December 31, 2012. All that act did was to raise the debt limit immediately by $400 billion, thus averting a government shutdown, while allowing further increases in the debt limit without another congressional confrontation with the White House. The tradeoff was the promise of spending cuts in the future.

That future is now.

If nothing is done, and the economy runs off the so-called fiscal cliff, the impact will be a combination of $7 trillion worth of tax increases and spending cuts over the next decade.

There will be automatic spending cuts of $120 billion annually in both defense and non-defense spending, there will be increases in income and capital gains tax rates, the reestablishment of the so-called “death tax” (the estate tax), 27 million households will now be subject to the “wealth tax” under the Alternative Minimum Tax (AMT), while those enjoying the payroll tax “holiday” will see their Social Security withholding taxes return to the 6.2% rate from the current temporary 4.2% rate. There would be the confluence of another flurry of other tax increases and spending cuts as well, including 27% cuts to Medicare providers and at least four other tax increases imbedded in Obamacare.

According to the Heritage Foundation, the fiscal cliff will cost families making $70,000 a year more than

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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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Debt Ceiling Likely to be Raised Without Fanfare This Time

English: at CPAC in .

Grover Norquist (Photo credit: Wikipedia)

Near the end of the Treasury Department’s Quarterly Refunding Statement, issued on Wednesday, October 31st, Assistant Secretary Matthew Rutherford included the following ominous paragraph:

Treasury continues to expect the debt limit to be reached near the end of 2012.  However, Treasury has the authority to take certain extraordinary measures to give Congress more time to act to ensure we are able to meet the legal obligations of the United States of America. We continue to expect that these extraordinary measures would provide sufficient “headroom” under the debt limit to allow the government to continue to meet its obligations until early in 2013.

These are the words that triggered the debt ceiling crisis in the summer of 2011 when recalcitrant House members, honoring their Taxpayer Protection Pledge, drew a line in the sand and threatened a shutdown of the government unless the White House caved in and permitted spending cuts in the future in exchange for an immediate raise in the ceiling. Those “spending cuts in the future” are part of the “fiscal cliff” facing the lame duck congress following the election on Tuesday.

Since August 2nd, when the Budget Control Act of 2011 was signed into law, the debt ceiling has been incrementally raised to its current level, $16.4 trillion. With October’s deficit of $195 billion pushing the national debt to $16.2 trillion, the clock is ticking on the inevitable limit being reached well before

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No Defense Spending Cuts

English: Explosive Ordnance Disposal 1st Class...

Nimitz-class aircraft carrier USS Dwight D. Eisenhower (CVN-69) (Photo credit: Wikipedia)

Now that we are focusing on life after the election, the fiscal cliff looms. And if Congress does nothing, the military budget will be “slashed” – by some $50 billion or so a year. That’s about 7 percent of the total military budget.

That will never happen. Congress will not allow it. The New York Times says so. Aaron O’Connell, author of the Op-Ed piece appearing there on Sunday, is a history professor at the Naval Academy and a Marine reserve officer. So he writes from the inside, and with a bias. But he thinks the militarization of the country is permanent. He starts with President Eisenhower‘s warning about the military-industrial complex in 1961:

[Eisenhower] worried that the defense industry’s search for profits would warp foreign policy and, conversely, that too much state control of the private sector would cause economic stagnation. He warned that unending preparations for war were incongruous with the nation’s history. He cautioned that war and war making took up too large a proportion of national life, with grave ramifications for our spiritual health.

He notes that the US spends $700 billion on defense, which is half of all military spending in the world! – but it’s only about 5 percent of

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Fiscal Cliff Causing Flurry of Tax Moves

A portrait of George Lucas, Pasadena, Californ...

A portrait of George Lucas, Pasadena, California, USA (Photo credit: Wikipedia)

Small business owners, some of whom have spent their lifetimes building their businesses, are unloading them before the end of the year in order to save taxes. With taxes on capital gains increasing by almost 60 percent on January 1st, Bert Wolf decided to sell his compressed-gas business, Acetylene Oxygen Company in Harlingen, Texas. It wasn’t in his plan to sell, but the offer from Praxair, and the uncertainty about what congress might, or might not, do during the upcoming lame duck session to avoid the fiscal cliff, made it too good to resist: “It just made more sense for me to take my chips off the table and go do something else.” Besides, the increase is so onerous that, if he had decided to keep the business, it would take him “at least 3 or 4 more years [of building the business] to achieve the same after-tax sales dollar.”

The current capital gains tax rate is 15 percent but in January it is scheduled to increase to 20 percent, plus the Obamacare tax of 3.8 percent added on top brings it to 23.8 percent, a jump of 58 percent. Even if a lame duck Congress extends the present rate of 15 percent, there is no conversation in Washington about repealing the Obamacare tax, so at best capital gains taxes will increase by 25 percent after the first of the year.

John Emerick, one of the owners of IM Solutions LLC, an online marketing company that focuses on the legal profession, calculated that if they waited to sell until 2013, it would cost him $1 million out of his share:

It was pretty clear to us that it made more sense for us to pull the trigger early. For me—I’m 49—I’m thinking I might not earn that much for the rest of my life. The earnings for the rest of my life would be equivalent to the tax I’d be paying by waiting until 2013.

George Lucas, the founder and chairman of Lucasfilm, best known for developing the Star Wars and Indiana Jones franchises, no doubt did the math and decided to

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Taxmageddon Only Part of the Problem

Explosion

Explosion (Photo credit: Freidwall)

The Heritage Foundation went to the trouble of calculating exactly what will happen to the tax liabilities of taxpayers if Taxmageddon stays in place after the first of the year. Accordingly to Amy Payne, “Taxmageddon” is the

horrifying combination of expiring pro-growth tax policies from 2001 and 2003, the end of the once-temporary payroll tax cut, and just a few of Obamacare’s 18 new tax hikes…

Taxmageddon will be the largest tax increase EVER to hit Americans. It’s nearly $500 billion in one year, starting January 1. That’s two months away.

Here is Heritage’s breakdown of Taxmageddon’s impact on Americans:

  • Families with an average income of $70,662: tax increase of $4,138
  • Baby boomers with an average income of $95,099: tax increase of   $4,223
  • Low-income workers with an average income of $24,757: tax increase of $1,207
  • Millennials with an average income of $23,917: tax increase of $1,099
  • Retirees with an average income of $42,553: tax increase of $857

But even this fails to measure the real impact of Taxmageddon starting January 1. It’s that most of the tax increases will be borne by s

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How Many “Fiscal Cliff” Scenarios Are There?

Car off cliff sign

Car off cliff sign (Photo credit: Wikipedia)

In his blog at MarketWatch over the weekend, Robert Schroeder reviewed five possible outcomes to the challenge of the “fiscal cliff” and concluded that only one was truly catastrophic:

Simply letting the Bush-era income tax cuts expire and allowing billions of dollars of spending cuts to kick in would actually be the easiest thing to do, inasmuch as that would amount to following the law.

Despite my cynicism about Congress always taking the path of least resistance, I agree with Schroeder that this isn’t going to happen. Too many conflicting interests are invested in that outcome. Such action would suck $600 billion (or more, depending on who does the calculating) out of the economy, about 4% of GDP. With the economy only growing at 2%, it’s easy to conclude that the economy would “go negative”, pushing us back into recession. And Congress can’t stand the heat if that happens. It also violates the pledge that many in the House and some in the Senate have signed not to raise taxes. Letting the Bush tax cuts expire is

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Fiscal Cliff, Fiscal Gap, Lame Duck Congress

Lame Duck

Lame Duck (Photo credit: Thomas Hawk)

Private congressional conversations about how to keep the country from racing off the fiscal cliff in January are already taking place in Washington, but few are willing to give many details. With the promise of anonymity, congressional staffers from both sides of the aisle are working feverishly to come up with solutions to the onrushing fiscal train wreck.

Investigator Richard Rubin, writing for Bloomberg, said the Republicans are building a “toolbox” of options — including raising taxes — that could be used during the lame duck session following Election Day. Which tools will be used depends on how the elections turn out. Likewise, Democrat staffers are developing their game plans as well, but tax cuts are not in their “toolbox” according to unnamed parties familiar with the discussions.

Which tools each side will be using depends upon if the Democrats retain control of the Senate and the White House, but fail to gain control of the House. If Romney wins, and the Senate goes Republican, then

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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.
Copyright © 2020 Bob Adelmann