Financial News

[Balta1701]

Nice changing what you said. Look at my post - I specifically said, they had steadily improved over time, and only recently fell back. That is true.

And it's also true that it recently began plummeting because of a price spike in one particular commodity.

[NorthSideSox72]

And it's also true that it recently began plummeting because of a price spike in one particular commodity.

I am sure that's part of it. I was just pointing out that you were painting a very innacurate picture, surrounding that point.

 

[southsider2k5]

Remember how debt was OK because the interest rates are low... How about when they aren't?

 

http://money.cnn.com/2011/04/18/news/econo...on=money_latest

 

NEW YORK (CNNMoney) -- Standard & Poor's lowered its outlook for the nation's long-term debt Monday, even as it reaffirmed the agency's top-tier rating for the U.S. economy.

 

S&P maintained its 'AAA/A-1+' credit rating on U.S. sovereign debt, saying the nation's "highly diversified" economy and "effective monetary policies" have helped support growth.

 

0Email Print But the ratings agency lowered its outlook for America's long-term credit rating to "negative" from "stable," based on the uncertain political debate around the nation's fiscal problems.

 

The outlook means that there is one-in-three likelihood that it could lower the long-term rating on the United States within two years, S&P said.

 

"The outlook reflects our view of the increased risk that the political negotiations over when and how to address both the medium- and long-term fiscal challenges will persist until at least after national elections in 2012," said S&P credit analyst Nikola Swann.

 

Deficit hawks: Not too bad, Mr. President

The move puts additional pressure on Congress to come up with a plan to bring down long-term deficits, which lawmakers from both political parities say are unsustainable.

 

President Obama unveiled a proposal last week to cut $4 trillion from the deficits over 12 years by enacting a mix of spending cuts and tax increases.

 

 

0:00 /2:35President Obama's debt rewind

Republicans have proposed a competing plan to lower the long-term debt by $4.4 trillion over ten years, in part by shrinking Medicaid and Medicare.

 

"More than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures," said Swann.

 

In a statement, a Treasury official stressed that S&P reaffirmed the nation's pristine rating, adding that the agency assumes lawmakers will begin implementing a long-term debt plan by 2013.

 

Meanest budget cuts

"We believe S&P's negative outlook underestimates the ability of America's leaders to come together to address the difficult fiscal challenges facing the nation," said Mary Miller, the Treasury's assistant secretary for financial markets.

 

On Wall Street, investors reacted to the news by pushing share prices down sharply. The Dow Jones industrial average sank more than 200 points in the first half-hour of trading.

 

Standard & Poor's is one of three major agencies that evaluate public and private debt issues. Their ratings are key to measuring an investor's risk in buying the debt, an important factor in determining interest rates.

 

Moody's, one of the other big ratings agencies, described the two deficit reduction plans currently on the table as "a significant shift in the U.S. fiscal debate."

 

"This potential change in the direction of fiscal policy is credit positive for the U.S. federal government," according to Moody's Weekly Credit Outlook report. "Although it remains uncertain what sort of budget will actually be adopted."

[Balta1701]

I think the response to that action is clear. Cut the top tier tax rate.

[southsider2k5]

Even more fun is this article, which really smashes the idea of the rich paying "just a little more" being the way to cover the deficit.

 

 

http://online.wsj.com/article/SB1000142405...EditorialPage_h

 

A dominant theme of President Obama's budget speech last Wednesday was that our fiscal problems would vanish if only the wealthiest Americans were asked "to pay a little more." Since he's asking, imagine that instead of proposing to raise the top income tax rate well north of 40%, the President decided to go all the way to 100%.

 

Let's stipulate that this is a thought experiment, because Democrats don't need any more ideas. But it's still a useful experiment because it exposes the fiscal futility of raising rates on the top 2%, or even the top 5% or 10%, of taxpayers to close the deficit. The mathematical reality is that in the absence of entitlement reform on the Paul Ryan model, Washington will need to soak the middle class—because that's where the big money is.

 

***

Consider the Internal Revenue Service's income tax statistics for 2008, the latest year for which data are available. The top 1% of taxpayers—those with salaries, dividends and capital gains roughly above about $380,000—paid 38% of taxes. But assume that tax policy confiscated all the taxable income of all the "millionaires and billionaires" Mr. Obama singled out. That yields merely about $938 billion, which is sand on the beach amid the $4 trillion White House budget, a $1.65 trillion deficit, and spending at 25% as a share of the economy, a post-World War II record.

 

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..Say we take it up to the top 10%, or everyone with income over $114,000, including joint filers. That's five times Mr. Obama's 2% promise. The IRS data are broken down at $100,000, yet taxing all income above that level throws up only $3.4 trillion. And remember, the top 10% already pay 69% of all total income taxes, while the top 5% pay more than all of the other 95%.

 

We recognize that 2008 was a bad year for the economy and thus for tax receipts, as payments by the rich fell along with their income. So let's perform the same exercise in 2005, a boom year and among the best ever for federal revenue. (Ahem, 2005 comes after the Bush tax cuts that Mr. Obama holds responsible for all the world's problems.)

 

In 2005 the top 5% earned over $145,000. If you took all the income of people over $200,000, it would yield about $1.89 trillion, enough revenue to cover the 2012 bill for Medicare, Medicaid and Social Security—but not the same bill in 2016, as the costs of those entitlements are expected to grow rapidly. The rich, in short, aren't nearly rich enough to finance Mr. Obama's entitlement state ambitions—even before his health-care plan kicks in.

 

So who else is there to tax? Well, in 2008, there was about $5.65 trillion in total taxable income from all individual taxpayers, and most of that came from middle income earners. The nearby chart shows the distribution, and the big hump in the center is where Democrats are inevitably headed for the same reason that Willie Sutton robbed banks.

 

This is politically risky, however, so Mr. Obama's game has always been to pretend not to increase taxes for middle class voters while looking for sneaky ways to do it. His first budget in 2009 included a "climate revenues" section from the indirect carbon tax of cap and trade, which of course would be passed down to all consumers. Such Democratic luminaries as Nancy Pelosi have often chattered about a European-style value-added tax, or VAT, which from a liberal perspective has the virtue of applying to every level of production or service and therefore is largely hidden from the people who pay it.

 

Now that those two ideas have failed politically, Mr. Obama is turning as he did last week to limiting tax deductions and other "loopholes," such as for mortgage interest payments. We support doing away with these distortions too, and so does Mr. Ryan, but in return for lower tax rates. Mr. Obama just wants the extra money, which he says will reduce the deficit but in practice will merely enable more spending.

 

Keep in mind that the most expensive tax deductions, in terms of lost tax revenue, go mainly to the middle class. These include the deductions for state and local tax payments (especially property taxes), mortgage interest, employer-sponsored health insurance, 401(k) contributions and charitable donations. The irony is that even as Mr. Obama says he merely wants the rich to pay a little bit more, his proposals would make the tax code less progressive than it is today.

 

Mr. Ryan isn't proposing controversial entitlement reforms because he likes pointless political risk, or because he likes being berated to his face from a front row seat, as he was on Wednesday. Medicare and Medicaid spending are consistently growing two to three times faster than the rest of the economy, while Medicare's cash-in-cash-out financing model means that seniors collect far more in benefits than they paid in taxes over their working lifetime. The entitlement state was designed for another era.

 

***

Mr. Obama's speech was disgraceful for its demagoguery but also because it contained nothing remotely commensurate to the scale of the problem. If the President had come out for a large tax on the middle class, like a VAT, then at least the country could have debated the choice of paying for the government we have or modernizing it a la Mr. Ryan so it is affordable.

 

Instead the President will continue targeting the middle class for tax increases to pay for an entitlement state on autopilot, while claiming he only wants to tax the rich. Oh, and we almost forgot: Happy Tax Day.

[Jenksismyhero]

Even more fun is this article, which really smashes the idea of the rich paying "just a little more" being the way to cover the deficit.

 

 

http://online.wsj.com/article/SB1000142405...EditorialPage_h

 

what a f***ing joke

[Balta1701]

Took me a minute but I figured out what the trick is in that plot.

 

The total U.S. GDP and GNP are just over $14 trillion dollars.

 

Take a second and do a Reimann sum (i.e. integrate) that plot. My estimate, with some error, came out that the number totals to $5.5 trillion dollars.

 

Of course you can't balance the budget using taxes when you define 60% of the GDP as untaxable.

 

The reason that peak is where it is, and not shifted strongly to the right, is that most of the income at the upper levels is not counted as income by whatever standard they're using.

 

Furthermore, of course you can't pay for the entire federal budget when you declare that 60% of GDP is untaxable, because when your starting point is

[southsider2k5]

More tax day fun!

 

http://online.wsj.com/article/SB1000142405...1032853554.html

 

In a study published last week by the Laffer Center, my colleagues Wayne Winegarden, John Childs and I estimate that these costs alone are a staggering $431 billion annually. This is a cost markup of 30 cents on every dollar paid in taxes. And this is not even a complete accounting of the costs of tax complexity.

 

Like taxes themselves, tax-compliance costs change people's behavior. Taxpayers, whether individuals or businesses, respond to taxes and tax-compliance costs by changing the composition of their income, the location of their income, the timing of their income, and the volume of their income. So long as the cost of changing one's income is lower than the taxes saved, the taxpayer will engage in these types of tax-avoidance activities.

 

A complete accounting of compliance costs would also include the efficiency losses created when individuals and businesses invest in tax-avoidance activities that lower their tax liability at the expense of creating more jobs and economic growth. These lost opportunities are impossible to measure but could be the largest cost of all.

 

David Keating of the National Taxpayers Union provides a useful perspective on how big the tax compliance industry is. According to his research, as of 2009 the income-tax industry employed "more workers than are employed at the five biggest employers among Fortune 500 companies—more than all the workers at Wal-Mart Stores, United Parcel Service, McDonald's, International Business Machines, and Citigroup combined." Without diminishing in any way the professionalism of tax attorneys, accountants and financial planners, all of these efforts produce nothing other than, well, tax compliance.

 

Citizens should be able to comply with the tax code without having to spend absurd amounts of money to do so. The fact that there is such a large compliance markup in our tax system indicates that the tax system has gone awry. All of these hours could have been used for something a lot more productive than just making sure our taxes are filed and paid correctly.

 

An obvious alternative use is work, either as an employee or an entrepreneur. We will never know how many more businesses could have been started if we did not spend billions of hours on tax compliance. But we do know approximately how much our economy would benefit if we could use our "tax-compliance time" more productively.

 

If we think of the tax-compliance markup as simply another tax, we can also think of a reduction in compliance costs as a tax cut.

 

A tax reform to a simple flat-rate tax with no deductions would significantly reduce the current complexity inherent in our progressive tax system, which is full of loopholes, exemptions and special interest carve-outs. Based on the estimates from our new study, if a static, revenue-neutral flat-tax reform were to reduce the tax complexity in half, the long-term growth in our economy would increase by around one-half of 1% per year.

 

Small increases in our annual economic growth rate make a big difference over time. The unemployment rate would decline and the pay for those jobs would increase faster as well.

 

To see what this means in practice, consider a family that made $40,000 in the year 2000. If their income grew by 3.2% per year, the average long-term GDP growth rate, their income by 2010 would be $53,110. Now imagine that the growth in the family's income was not 3.2% but 3.72% (the impact from halving the costs of our current complex tax system). Under this higher growth scenario, the family's annual income would have been $55,568 in 2010. The slight increase in the economic growth rate raises this family's purchasing power by 4.6%. Not too shabby.

 

Economic growth is the sine qua non for generating prosperity in the U.S. As economic growth increases, the prosperity of families and individuals in the U.S. increases in step. Higher income growth benefits government revenues too. The dynamic impacts created by the increased economic activity will lead to higher tax revenues for the federal government as well as state and local governments.

 

But the potential benefits of reducing tax complexity go well beyond their dollar impact. The U.S. income tax system relies on taxpayers to self-report their income—the system only works if most taxpayers view the outcomes as fair and accurately report their income. As such, excessive tax complexity undermines the very foundations of our current tax code.

 

Simplifying the tax code should be a top priority. Regardless of the reform approach taken, the U.S. economy will be enhanced greatly by significantly reducing the complexity of the current tax code. In a time of global economic competition, we cannot afford the luxury of a Byzantine tax system.

 

Mr. Laffer is the chairman of Laffer Associates and the co-author of "Return to Prosperity: How America Can Regain Its Economic Superpower Status" (Threshold, 2010).

[StrangeSox]

Even more fun is this article, which really smashes the idea of the rich paying "just a little more" being the way to cover the deficit.

 

 

http://online.wsj.com/article/SB1000142405...EditorialPage_h

 

Raise the cap gains tax substantially and add a wealth tax. Cut income tax while you're at it, across the board. Problem solved.

[Balta1701]

More tax day fun!

 

http://online.wsj.com/article/SB1000142405...1032853554.html

Since I got this one when I suggested that constantly and infinitely growing health care costs were a bad thing, I'll throw it at you:

 

Why do you want to cut back one of the only sectors in the economy that is growing?

[kapkomet]

Took me a minute but I figured out what the trick is in that plot.

 

The total U.S. GDP and GNP are just over $14 trillion dollars.

 

Take a second and do a Reimann sum (i.e. integrate) that plot. My estimate, with some error, came out that the number totals to $5.5 trillion dollars.

 

Of course you can't balance the budget using taxes when you define 60% of the GDP as untaxable.

 

The reason that peak is where it is, and not shifted strongly to the right, is that most of the income at the upper levels is not counted as income by whatever standard they're using.

 

Furthermore, of course you can't pay for the entire federal budget when you declare that 60% of GDP is untaxable, because when your starting point is

 

 

So, it's a "trick"... but your "sources" are absolutely unbaised and absulutely truth, as always. Carry on.

[Balta1701]

 

So, it's a "trick"... but your "sources" are absolutely unbaised and absulutely truth, as always. Carry on.

Please, tell me where my math is wrong. If not, then you're either rejecting the concept of "Addition" or you're just arguing to be argumentative.

 

Anyway...note the difference here. I didn't just say "Oh it's from the WSJ, I don't have to believe it"...I actually pointed out why. You attacked...without giving any reason why I'm wrong, because the WSJ is on your side and it must be defended at all costs.

[southsider2k5]

Please, tell me where my math is wrong. If not, then you're either rejecting the concept of "Addition" or you're just arguing to be argumentative.

 

Anyway...note the difference here. I didn't just say "Oh it's from the WSJ, I don't have to believe it"...I actually pointed out why. You attacked...without giving any reason why I'm wrong, because the WSJ is on your side and it must be defended at all costs.

 

Or the way more obvious answer... There is a difference between corporate and individual income.

[Balta1701]

Or the way more obvious answer... There is a difference between corporate and individual income.

Therefore...it makes zero sense to look at whether or not individual income from any particular group can balance the budget, because you're ignoring 60% of GDP.

[southsider2k5]

Therefore...it makes zero sense to look at whether or not individual income from any particular group can balance the budget, because you're ignoring 60% of GDP.

 

And yet, there is our President on TV blaming the Bush tax cuts. Imagine that.

[BigSqwert]

Only Little People Pay Taxes

[StrangeSox]

They're a substantial contributer along with Iraq and Afghanistan.

[mr_genius]

an excellent chart from wsj about where jobs are being created.

 

http://online.wsj.com/article/SB1000142405...s%3Dinteractive

[StrangeSox]

China?

[mr_genius]

China?

 

pfft no

[Balta1701]

China?

China's creating jobs the same way the U.S. was creating jobs in 2006.

[mr_genius]

China's creating jobs the same way the U.S. was creating jobs in 2006.

 

Would you care to go into more detail? I'm not sure where you going with that.

[StrangeSox]

lol love the avatar

 

anyway more evidence we need to nationalize all multinational companies immediately!

 

Not really but I'm not sure how developed countries handle globalization and the free movement of wealth like we have now without reducing wages and living standards to third-world levels for all but a handful of plutocrats.

[Balta1701]

Would you care to go into more detail? I'm not sure where you going with that.

IMO, China is in the middle of an enormous investment-financed private and corporate real estate bubble. They're building giant condo complexes that sit empty, there's a giant Mall somewhere near the Mongolian border that is practically vacant and the owner is now raising capital to double the size of the place because he's decided the problem is it isn't big enough. Etc.

 

They're somewhere close to where we were in 2006. They can't deflate the bubble slowly, it'll cost people politically. The bubble must be kept going at all costs. There's a different ethos there where they haven't looked on real estate as a private investment like this country has, which might slow the bursting of it a bit, but it has all the makings of a bubble about to pop.

[southsider2k5]

IMO, China is in the middle of an enormous investment-financed private and corporate real estate bubble. They're building giant condo complexes that sit empty, there's a giant Mall somewhere near the Mongolian border that is practically vacant and the owner is now raising capital to double the size of the place because he's decided the problem is it isn't big enough. Etc.

 

They're somewhere close to where we were in 2006. They can't deflate the bubble slowly, it'll cost people politically. The bubble must be kept going at all costs. There's a different ethos there where they haven't looked on real estate as a private investment like this country has, which might slow the bursting of it a bit, but it has all the makings of a bubble about to pop.

 

I actually agree with you 100%. the problem is that it will be doubly dangerous because of the utter dependence on government in that country. When that bubble goes, it is going to pop a lot of other sectors there. I really feel that it could be bad enough to take down the government like commodity prices and debt did to the USSR.