Wednesday, January 26, 2011
Bloomberg reporters do a nice job of "fact-checking" last night's SOTU and Paul Ryan's response thereto.
For my part, I did not like the sleight of hand on taxes. Is the proposed 1099 repeal actually only a tweak that applies to "small businesses," or is he willing to sign a genuine repeal? Does he regard deferred taxes on foreign source corporate income a "loophole" that needs to be closed, or an essential feature of the corporate tax regime as long as the United States (ridiculously and uniquely among real countries) insists on taxing global income? Almost alone, these two "details" make the difference between sensible proposals and disingenuous hogwash, and yet the speech was entirely unclear.
TaxProf has a pile o' links on these subjects, but on a hurried pass I saw no definitive answer to these two questions. If you think you find the answer, speak up in the comments.
MORE: This article in the WSJ has a lot on the politics of corporate tax reform without much illumination on the details.
"The bipartisan Fiscal Commission I created last year made this crystal clear. I don’t agree with all their proposals, but they made important progress. And their conclusion is that the only way to tackle our deficit is to cut excessive spending wherever we find it – in domestic spending, defense spending, health care spending, and ....spending through tax breaks... and loopholes."
spending through tax breaks???
More fact checking on the SOTU.
The CBO just released revised budget projections today. The CBO now expects a FY2011 deficit of $1.5 trillion (9.8% of GDP), revised upwards from $1.07 trillion. Reread that last sentence slowly.
Thus, over the next three years we'll need to park at least $5 trillion in new debt somewhere. Big Ben is the only buyer. But how big can the Fed's balance sheet grow? On a basic level, the Fed is just a collection of twelve ordinary banks -- but with certain magical powers. Most notably, they can fund themselves with borrowings that bear no interest expense -- dollar bills! Big Ben can then use these dollars to buy Little Timmy's debt.
So who needs to raise taxes to cover spending, when Big Ben can cover it for us. Why didn't we think of this before? If Big Ben can do a trillion or two, why not five trillion. Why not ten? Why not twenty?
But Obama says in his 2011 SOTU: "Cutting the deficit by gutting our investments in innovation and education is like lightening an overloaded airplane by removing its engine. It may make you feel like you’re flying high at first, but it won’t take long before you feel the impact. (Laughter.)"
Yeah, but once we invest in our new high speed train set we can at least stay busy while that financial shitstorm passes through our lives. As Gabriel Maleor described the President's speech, "we will win the future by investing in trains".
You may safely presume that any money earned by people or corporations that is not paid as taxes, is "Given" by the Government to them according to Obama.
You may optionally add the word "Unjustly" to that, depending on how class-warfare he appears to be feeling at the moment.
Sarah Palin on the SOTU:
“Well, speaking of last night, that was a tough speech to sit through and try to stomach because the president is so off base in his ideas in how it is he believes government is going to create jobs. Obviously, government growth won’t create any jobs. It’s the private sector that can create the jobs. His theme last night in the State of the Union was the WTF, you know, “Winning the Future,” and I thought OK, that acronym, spot on. There were a lot of WTF moments throughout that speech.”
The lady has cojones.