Fiscal crisis? Overblown or serious?

[East_TN_Patriot]

I voted for the 3rd option, but it doesn't really reflect what I think needs to be done. I think we need to hold the line on the debt ceiling, make some very significant cuts to spending, AND increase revenue in some way to start paying down the debt. To increase revenue, I think they should do away with the progressive income tax and implement either a fair tax or flat tax so EVERYONE pays their share that is proportional to their income. Obviously, the flat tax still brings up the issue of the tax being the flat percentage of what the government decides is taxable income, thus taking us back down the path we are on now with credits and deductions. That is why I support the Fair Tax. A state sales tax in lieu of an income tax has served states like Tennessee and Florida well, and so would be the case at the federal level.

[mav]

To increase revenue, I think they should do away with the progressive income tax and implement either a fair tax or flat tax so EVERYONE pays their share that is proportional to their income.

I have no problem with that.

In regards to a national sales/consumption tax in lieu of an income tax, I could support it only if the 16th was repealed. I wouldn't want to pay both of them.

[Oh Shoot]

I have no problem with that.

In regards to a national sales/consumption tax in lieu of an income tax, I could support it only if the 16th was repealed. I wouldn't want to pay both of them.

The Fair Tax plan has always had repeal of the 16th as part of it.

- OS

[Guest RobThatsMe]

The top tax bracket for U.S. corporations stands at 35 percent tax bracket, one of the highest rates in the world. So how is it possible that a giant of American business, General Electric, paid nothing in federal income taxes last year, even as it made billions in profit?

[mav]

The Fair Tax plan has always had repeal of the 16th as part of it.

- OS

I could be mistaken but, I have always understood that the Fair Tax Act does not repeal the 16th, it is only through seperate legislation in which the repeal will be pursued. If it isn't repealed within a certain time frame then the act was supposed to eliminate the national sales tax it created. While I haven't read the legislation, it seems to me that it would make more sense that the Fair Tax Act would only be implemented (assuming it was signed into law) after the repeal has occured.

[Guest Lester Weevils]

Regarding the debt limit debate and political sniping, here is a paranoid thought. Haven't seen anyone voice this particular variant--

The admin is working so hard to make republicans the bad guy because Bernanke and admin economic advisors have privately predicted almost certainly a severe imminent double-dip regardless what happens. The only way for the admin to avoid blame for this imminent double-dip which will stretch into the 2012 election cycle, is to create a 'believable' case that the double-dip was the fault of the Republicans' budget bickering. When in fact the coming double-dip was virtually certain regardless of this dog and pony show.

Evidence arguing against such paranoid ideation, is that economists are not especially good at predicting ANYTHING, good or bad. The economists tasked with "fixing" the 2008 recession, and who claimed to know the fix and the results timetable, are the same economists who didn't see the 2008 recession coming (with any realistic detail) and were blindsided as much as anyone else with its severity and exact details.

That is why in 2008-2009 I doubted economists' advice and predictions on the cure. If a prophet can't accurately see a problem coming, then what gives confidence that the prophet can give accurate recommendations or predictions about the cure?

The only economists who "saw it coming" were the Dr Doom types who predict bad things every year for decades. And then boast of their wisdom when occasional bad things happen and fulfill the prediction. The Doctor Doom economic prognosticators are just "broken clock" syndrome, where a stopped-clock is always correct twice a day.

Even so, I still can't shake the paranoid hunch that maybe the admin is working this dog and pony show this way, possibly because they know something we don't.

[Oh Shoot]

....Even so, I still can't shake the paranoid hunch that maybe the admin is working this dog and pony show this way, possibly because they know something we don't.

O's first priority is to get something settled with a time duration that won't rear it's ugly head again until after the election. WHAT the measure is, is secondary.

It doesn't matter, though, as all these plans are not actually cutting one dime from existing spending level. They are all only calling for "less more".

Only Connie Mack's "Penny Plan" actually would have each year's total expenditure less than than that of the previous year.

Spending will still go up 5% per year or more under all the bills that have been offered so far. No "cuts" at all. And hence, no solution at all.

- OS

[kieefer]

They will never change the tax code because it will take a lot more liked minded politicians to agree to it, and that will never happen.

To get a positive change in government it will also take years of voting in more conservatives. We have to run the libs out, plain and simple.

In the mean time, just look at the size if the debt - US debt problem visualized: Debt stacked in 100 dollar bills and these babies running the country have no idea what damage they are doing and have done.

[Oh Shoot]

I could be mistaken but, I have always understood that the Fair Tax Act does not repeal the 16th, it is only through seperate legislation in which the repeal will be pursued. ...

Well, you can't repeal an amendment with a bill, takes 3/4 of the states to ratify, etc. Otherwise we wouldn't have any freedoms left at all. Actually, you repeal an amendment by enacting another one that nukes the previous one.

Was my understanding that it called for that process to be started and completed before the Fair Tax took over. At least that's what I got from listening to Boortz; I don't actually know the fine points of the bill itself.

- OS

Edited July 29, 2011 by OhShoot

[Guest Lester Weevils]

O's first priority is to get something settled with a time duration that won't rear it's ugly head again until after the election. WHAT the measure is, is secondary.

It doesn't matter, though, as all these plans are not actually cutting one dime from existing spending level. They are all only calling for "less more".

Only Connie Mack's "Penny Plan" actually would have each year's total expenditure less than than that of the previous year.

Spending will still go up 5% per year or more under all the bills that have been offered so far. No "cuts" at all. And hence, no solution at all.

- OS

Hi OS

I like the penny plan.

I think BHO could have got a "compromise" from the R's a long time ago that would contain some stupid giant theoretical symbolic cuts that don't take effect until year 10, no tax hikes, and no revisit of the debt limit til after 2012.

That way the R's could have claimed to have cut a zillion dollars (without actually cutting anything) and BHO could have campaigned on having fixed the budget forever. Everybody would win (except the USA people).

BHO would have lost some left-wing support, but who else are they gonna vote for? Dennis Kuchinich?

If the left-wing are not already too mad about 3 wars and all the other broken promises then BHO wouldn't be able to chase em off just by failing to hike taxes on the uber-rich.

That is why I wonder if something else is going on.

[Guest nicemac]

The top tax bracket for U.S. corporations stands at 35 percent tax bracket, one of the highest rates in the world. So how is it possible that a giant of American business, General Electric, paid nothing in federal income taxes last year, even as it made billions in profit?

Blaming the economy, they lost money in the US in 2009 (the numbers for 2010 aren't available yet, but we do know they made estimated payments during 2010). They made money overseas in 2009 (and previous years), and have paid $23 billion in taxes on those earnings in those countries over the past 6 years.

GE: 7,000 tax returns, $0 U.S. tax bill - Apr. 16, 2010

[G27]

The only economists who "saw it coming" were the Dr Doom types who predict bad things every year for decades. And then boast of their wisdom when occasional bad things happen and fulfill the prediction.

Not all - Peter Schiff isn't a 'Dr Doom' type but called the 2008 collapse well before it happened, even predicting why it would happen and what the results would be, all spot-on. And he has spoken openly about how to save the economy, though he'll be ignored by the parties in DC as it doesn't fit their agenda.

And, of course, as Schiff was Ron Paul's economic advisor in his 2008 election campaign, people want to make him out to be a loon, just like they want to do with Paul.

[mav]

Well, you can't repeal an amendment with a bill, takes 3/4 of the states to ratify, etc. Otherwise we wouldn't have any freedoms left at all. Actually, you repeal an amendment by enacting another one that nukes the previous one.

You are absolutley correct. That is the correct procedure for enacting a new amendment (21st repealed the 18th).

That was sort of the point I was unsuccessfully trying to make earlier. The repealing of the 16th is separate legislation from the Fair Tax Act. The reason I stated to Patriot that I that would support such legislation only if the 16th was repealed is I have heard from so many over the last couple of years talk about a national sales tax without mentioning the repeal of the 16th. (putting on my cynical hat) With the way the government operates, if one happened without the other, we would end up with both.

As far as the Fair Tax "plan" goes, I have no idea what that is. I know who Boortz is, but I have never listened to his show. I will look it up today and see what he has to say about it. Additionally, I actually need to read the legislation that was proposed to see if I would really want it. What they have written and what is in my mind might be two totally different things.

[Oh Shoot]

You are absolutley correct. That is the correct procedure for enacting a new amendment (21st repealed the 18th).

That was sort of the point I was unsuccessfully trying to make earlier. The repealing of the 16th is separate legislation from the Fair Tax Act. ...

Correct. But a bill can enact the process of attempting an amendment. The newest GOP bill they're about to pass in the House does that, for example. Puts some date by which a balanced budget amendment process must be begun.

Of course, like any bill, it could be nuked by later Congress before the start date.

- OS

[Guest 270win]

Our country got by just fine without any form of income tax until the early 1900's. The only revenue was from excise taxes and tariffs. Income tax act in the early 1900's, social security tax act in the 1930's, medicare tax 1960's, and now the fed government doesn't have enough money with all these taxes? What a lie, there is plenty of revenue from taxes. DC just has a money management problem and a spending problem. I balance my business checkbook and my home checkbook. I have to make a budget. Businesses make budgets yearly. I cannot take on more debt than I can reasonably afford. DC has done NONE of this and has failed and wasted OUR money and thrown it into the toilet. Those fools need to 1) Make a budget and Balance that budget 2) Cut spending big time just like businesses and households have to do when there is less money 3) Pay off the debt. That is the way to success. Adding more to 14 trillion in debt does not equal success.

The politicians are lying to the people by saying there is not enough money to pay the bond holders, social security, medicare, military, and other essentials. There is more than enough if you cut the fat and lay off like businesses do. Close down bases overseas, stop protecting foreigners overseas, and protect our borders. Cut back on foreign aid. Cut programs here like TSA and other three letter agencies. Dept of Ed, Energy, Homeland Insecurity. The states do a much better job than the feds at many governmental tasks.

Edited July 29, 2011 by 270win

[Guest nicemac]

I have been reading Boortz for several years. The Fair Tax looks like an awesome plan. It has no chance of ever being enacted, but it would be a much better system.

[Oh Shoot]

I have been reading Boortz for several years. The Fair Tax looks like an awesome plan. It has no chance of ever being enacted, but it would be a much better system.

My guess is that eventually, maybe even this coming election, a Republican will get elected with that in platform. Of course, it won't be enacted if elected ...

The biggest reason the DC tyranny doesn't want it -- it's anonymous and does away with any special favors for any demographic, so tax code can't be tweaked for votes or payback to any particular constituency.

Whole IRS could be reduced to a relative handful of 'puter geeks and lawyers, instead of the 100,000 + employees currently. Of course, millions of tax lawyers, accountants, and CPAs would be out of work, so a whole business industry would be nuked.

All research indicates that the gummit would be rolling in dough with the Fair Tax, even during a down economy. Without meaningful spending reform though, same prob as now, as DC will spend every dime it can get, plus borrow more.

- OS

[East_TN_Patriot]

Regarding the debt limit debate and political sniping, here is a paranoid thought. Haven't seen anyone voice this particular variant--

The admin is working so hard to make republicans the bad guy because Bernanke and admin economic advisors have privately predicted almost certainly a severe imminent double-dip regardless what happens. The only way for the admin to avoid blame for this imminent double-dip which will stretch into the 2012 election cycle, is to create a 'believable' case that the double-dip was the fault of the Republicans' budget bickering. When in fact the coming double-dip was virtually certain regardless of this dog and pony show.

Evidence arguing against such paranoid ideation, is that economists are not especially good at predicting ANYTHING, good or bad. The economists tasked with "fixing" the 2008 recession, and who claimed to know the fix and the results timetable, are the same economists who didn't see the 2008 recession coming (with any realistic detail) and were blindsided as much as anyone else with its severity and exact details.

That is why in 2008-2009 I doubted economists' advice and predictions on the cure. If a prophet can't accurately see a problem coming, then what gives confidence that the prophet can give accurate recommendations or predictions about the cure?

The only economists who "saw it coming" were the Dr Doom types who predict bad things every year for decades. And then boast of their wisdom when occasional bad things happen and fulfill the prediction. The Doctor Doom economic prognosticators are just "broken clock" syndrome, where a stopped-clock is always correct twice a day.

Even so, I still can't shake the paranoid hunch that maybe the admin is working this dog and pony show this way, possibly because they know something we don't.

I personally think your scenario is a given fact, which perhaps is why nobody else has really mentioned it. I have been under the distinct impression for a few months now that this "crisis" was looming and everyone in DC was very well aware of it, which is why Obama has stuck with his "I inherited this crisis" rhetoric for over two years. The only way the Dems can keep control over the White House and the Senate is to paint the Republicans as the villains in this debacle. When you listen to the rhetoric, it's clear that all sides are trying to craft a "reality" where the other side is wholly to blame for this mess, when the reality is that both major parties have been working for decades to get us here. Be very certain that every single politician involved will be working this as much as possible to maximize whatever political value they can extract from it.

I am also not so convinced that we are really on the brink of any "crisis" or "default" as the politicians claim. Just like during the bailouts, there is a constant reference to arbitrary dates whereby we will meet a certain and catastrophic economic collapse is drastic action is not taken immediately. Just recall this time one week ago when there were predictions of global economic chaos if nothing was passed by Sunday afternoon when the Asian markets would open again. Nothing passed Congress and the world has not come to a crashing end. Just listening to the rhetoric tells me a lot. Pelosi says they are trying to preserve "life on earth as we know it." The White House says the Republicans are trying to ruin Christmas. The TEA party folks are not willing to compromise at all, which tells me the catastrophe is not as imminent as some would like us to believe. We are seeing politics in action with the 2012 presidential election as the prize.

[UncleJak]

I'd like to think it's not as "crisis like" as I've been hearing, but I took all my cash out of savings and filled up my gas tanks. Just in case...And I put on my tinfoil hat....

[Oh Shoot]

I'd like to think it's not as "crisis like" as I've been hearing, but I took all my cash out of savings and filled up my gas tanks. Just in case...And I put on my tinfoil hat....

FDIC won't "fail", money will simply continue to be printed.

Money is going to worth the same in the bank or in your pocket, meaning less.

- OS

[G27]

Rubio nails it:

[Glock30]

Can we say "monetizing the debt"? If this came to pass, RAMPANT inflation would slap us silly.

Can a giant platinum coin save our credit? - Ezra Klein - The Washington Post

What's interesting is that this has 100% legal traction/plausibility.

[G27]

Can we say "monetizing the debt"? If this came to pass, RAMPANT inflation would slap us silly.

Can a giant platinum coin save our credit? - Ezra Klein - The Washington Post

What's interesting is that this has 100% legal traction/plausibility.

Yah, no doubt, and keep in mind we've been monetizing our debt for a couple of years now through quantitative easing - some thing (larger in scale) just less abrupt. Don't think for a second the clown in the WH won't actually consider this as a viable option.

QE is why inflation has already kicked a lot of folks' butt.

[G27]

Wow, this debt bill truly blows...

Open Letter: Why I Oppose the Debt Ceiling Compromise | Rand Paul 2010 | U.S. Senate

[Guest nicemac]

Wow, this debt bill truly blows...

Open Letter: Why I Oppose the Debt Ceiling Compromise | Rand Paul 2010 | U.S. Senate

He nailed this one!