Thursday, September 27, 2012

Taxes are complicated. Lies are simple

Taxation is a complicated issue. Americans seeking to understand it are not helped by false statements and graphics like this one (dating back to at least July).

I checked around, and I see no record in the Wall Street Journal of these tax increases being attributed to President Obama's tax proposal. That's because the Wall Street Journal did not make these statements and would not make these statements, because they are entirely baseless and false. I've run through the statements contained in the graphic below to trace their origin and provide more accurate information.

Some of the numbers in the image come from a projection of what MAY happen to the very top income brackets if CONGRESS allows all the Bush Era tax cuts to expire at the end of the year. Some of the numbers frankly come out of thin air and have no basis in fact. I looked closely at the Wall Street Journal and provide data from a couple of news articles ("More uncertainty for 2013" Feb. 18; "Obama intensifies tax fight" July 9). I also consulted  Forbes ("The Truth about the Obama Tax Hike Proposal" July 20) and the WSJ column written by Michael J. Boskin in July that seems to have triggered a great deal of misunderstanding (and perhaps the graphic itself).

"Income tax rate 35% to 39.6%"
The Bush Era tax cuts are due to expire at year-end. Those cuts lowered the top tax rate to 35%. President Obama wants to retain all the cuts for 98% of Americans (97% of small business owners) and allow the taxes to return to their pre-Bush (strong economy) levels for those earning more than a quarter million dollars a year. BUT, the increased rate would only apply to the dollars earned over the quarter-million-dollar threshold (a $300,000-earning household would pay $199 more than now). A "Buffet Rule" would ensure that Americans earning $1 million or more each year paid a tax rate of no less than 30%, regardless of their income source.

"Income/Payroll 37.4% to 52.2%"
This apparently is some sort of theoretical combination of income tax and payroll deductions for Social Security and Medicare in the year 2016 - apparently a product of Wall Street Journal columnist Michael J. Boskin (he actually went on to add in hypothetical state payroll deductions to come up with a number closer to 70%). For the record, President Obama supported the lowering of federal payroll deductions. Those cuts and other tax reductions have saved typical middle class families $3,600 during his Administration. The "Boskin formula" is based on a hypothetical federal budget for 2016, an expiration of ALL the current cuts in taxes and payroll deductions in addition to an utter neglect of the fact that top income earners DO NOT PAY Social Security on all of their income. Social Security payments are only made on the first $106,000 of income. (So, adding a full Social Security deduction to the top income tax rate of those making hundreds of thousands to millions per year is not only dishonest, it's stupid.)

"Capital Gains 15% to 28%"
The Capital Gains tax will automatically rise with the expiration of tax cuts at the end of this year - if that happens. The highest bracket tax will climb from 15% to 20%. There is no proposal for an increase to 28% The President's proposal would retain the 15% level for taxpayers earning under $250,000 a year in capital gains income and set a 20% rate for higher earnings.

"Dividends 15% to 39.6%"
With the expiration of the tax cuts, qualified dividends will be taxed as ordinary income again. The very top rate of that tax will return to the 39.6% level (the rates would be 15%, 28%, 31%, 36% and 39.6%). The President's proposal would keep the 15% level for everyone except those in the top two income brackets.

"Estate Tax (2010) 0% to 55%"
HOLD ON! The estate tax was 0% in 2010 as a temporary one-year "repeal" of the tax. To compare the 0% in 2010 to a hypothetical 55% is ridiculous. The current (2011) estate tax is 35%, with an individual exemption of $5 million. That means, if the estate is valued at $5 million or less (that would be almost all estates), there is no estate tax and richer estates pay 35% of the value over $5 million. At year-end, that will automatically change back to a pre-Bush level of 55% with an exemption of just $1 million (estates under a million - that's still almost all of them - pay zero and the rest pay 55% of the amount over $1 million). But these numbers have nothing to do with a proposal by President Obama. Under the President's tax proposal, only the 0.3% (three tenths of one percent) most valuable estates - those valued at more than $3.5 million - would be subjected to ANY estate tax at all, and the top rate for the estate tax would be set at 45%.

Monday, September 24, 2012

Romney evolves on healthcare

(In his own words)

GOP Presidential nominee Mitt Romney has been remarkably flexible on a wide variety of issues, depending on the climate of the time and the audience before him. An observer might easily conclude that he actually has no personal position on any issue and is merely a political chameleon, blending in with whatever scenery he feels will best serve his political survival. His evolving theories on health insurance are particularly interesting, as the Affordable Care Act he now strongly opposes was a concept he personally installed in the State of Massachusetts when he was governor there.

Here is a look at Romney's changing views of healthcare for uninsured Americans. I have used the GOP nominee's own documented words - pulling from recorded interviews and his own writings - to illustrate how his opinions have dramatically changed over time. It is important to note that not much time has been required for this evolution of thought. The entire process appears to fit within about five years.

Just a few years back, in 2007, Romney stated that universal coverage accompanied by a government mandate for individuals with the means to acquire their own health insurance is "ultimate conservatism" and the use of emergency room treatment by the uninsured was a form of "socialism": 
   "When they show up at the hospital, they get care. They get free care paid for by you and me. If that's not a form of socialism, I don't know what is. So my plan did something quite different. It said, you know what? If people can afford to buy insurance ... or if they can pay their own way, then they either buy that insurance or pay their own way, but they no longer look to government to hand out free care. And that, in my opinion, is ultimate conservativism."

Also in 2007, he stood by that position with a sensible statement - equating the individual purchase of healthcare with "personal responsibility" - in an Iowa debate: 
   "It doesn’t make sense to have 45 million people without insurance. It’s not good for them because they don’t get good preventative care and disease management. But it’s not good for the rest of the citizens either, because if people aren’t insured, they go to the emergency room for their care when they get very sick. That’s expensive. They don’t have any insurance to cover it. So guess who pays? Everybody else. So it’s not good for the people that aren’t insured. We have to have our citizens insured, and we’re not going to do that by tax exemptions, because the people that don’t have insurance aren’t paying taxes. What you have to do is what we did in Massachusetts. Is it perfect? No. But we say, let’s rely on personal responsibility."

In the summer of 2009, Romney wrote an op-ed article for USA Today that opposed President Obama's proposed "public option" for healthcare and recommended that the federal government look to and follow the Massachusetts example of mandating health insurance: 
   "No other state has made as much progress in covering their uninsured as Massachusetts... Massachusetts also proved that you don't need government insurance. Our citizens purchase private, free-market medical insurance. There is no 'public option.' With more than 1,300 health insurance companies, a federal government insurance company isn't necessary."

Then in 2010, he stated that emergency room care for uninsured is not only "socialist" (see 2007 comment above) and irresponsible but also extraordinarily and needlessly costly: 
   "Look, it doesn't make a lot of sense for us to have millions and millions of people who have no health insurance and yet who can go to the emergency room and get entirely free care for which they have no responsibility, particularly if they are people who have sufficient means to pay their own way."

In May 2011, Romney spoke in Michigan about the primary problem he had to tackle in order to provide effective healthcare for the citizens of Massachusetts: 
   "What we found in my state was that we had a number of citizens who recognized that they could get ... healthcare even though they didn't have insurance. That's actually true in most states. If you don't have insurance and you develop a serious illness of some kind... you can get care, emergency care. You may not get the preventative care you need, you may not get all the followup care you need, but depending upon the state and the circumstances, you can get care without insurance. And many citizens who could afford insurance, having learned that they could get care for free, were saying 'I'm not going to buy insurance...'"

By September 2012, after his Massachusetts mandated coverage plan was put into effect at a federal level and Romney had positioned himself as the champion of Republican conservatism, he opposed the mandated coverage model he earlier urged the federal government to copy and also decided that universal health coverage is not even needed in the U.S. because the uninsured can make use of hospital emergency rooms. In a 60 Minutes interview, Romney dismissed the need for the federal government to provide healthcare to 50 million uninsured Americans: 
   "We do provide care for people who don't have insurance. If someone has a heart attack, they don't sit in their apartment and die. We pick them up in an ambulance, and take them to the hospital, and give them care. And different states have different ways of providing for that care."

Thursday, September 13, 2012

Apple iPhone 5

Well, the new Apple iPhone does appear to be a bit larger. But does it still qualify as a mobile device?
With the announcement of the new iPhone 5 yesterday, Apple also unveiled a number of new accessories for the device, including a twelve-foot stylus, a slick, glass and aluminum step ladder; a wheel-barrow-like carrying case; and a pair of jeans with REALLY big pockets.

Friday, September 7, 2012

Unemployment rate drop looks good but really isn't

So..., what's next?
The unemployment rate fell from 8.3% to 8.1% in August, but there's little reason to cheer. Despite the "look" of the declining unemployment figure, the monthly report contains bad news and worse news.
The bad news is the meager 96,000 jobs created during the month. While most expected August numbers to decline a bit, analysts were predicting something like 120,000 jobs created. With just 96,000 jobs, the unemployment rate should have gone up. About 150,000 jobs a month need to be added just to keep pace with working-age population growth.
The worse news is the reason the unemployment rate dropped. Many Americans - about 368,000 of them - simply stopped looking for work in August. The bulk of those who dropped out of the job market are young people, aged 16-24. We cannot attribute the decline to students heading back to school (as much as we might like to), because the statistics factor in those seasonal changes. This is a strong indicator that the economy currently has nowhere to put young people seeking jobs.
There were some bright spots in the report - or maybe we should just call them "less dark" spots - for adults 25 and older. The unemployment rate for both the "prime" 25-55 group and the over-55 group legitimately dropped due to hiring. The "prime" group unemployment rate fell slightly from 7.2% to 7.1%
However, the message of the report is clear: To get the economy back on track, American jobs will need to grow at far better than the 96,000 jobs per month rate shown in the August report.
My friends on the political Right probably will not be happy about it (Squawk as they do in this election year about the government not doing enough to put people to work, they really don't want government involvement in these matters), but this jobs report should trigger some stimulus measures by the Federal Reserve. Fed Chairman Ben Bernanke, who had previously pledged action only if the economy worsened, recently indicated that action would be taken if the economy did not improve noticeably.
Just what the Fed will do to increase employment remains to be seen. But a likely course seems to be additional "large asset purchases," which would further improve the financial markets. (The Federal Reserve has already done this twice before.) Another option that has been mentioned is a promise by the Fed not to raise interest rates until certain economic objectives are reached.

Tuesday, September 4, 2012

Achievements of the Obama Administration

I know FauxNews  and the leadership of the Republican Party would have you believe that nothing at all positive has happened in the U.S. since President Obama took office. GOP presidential nominee Mitt Romney hopes that voters who felt great admiration for President Obama upon his election victory have felt no special moments since then. With enormous credibility issues and no concrete plan for doing anything other than making his rich friends richer, Romney is counting on a failure of Americans' short-term memory to get him into the Oval Office.

Personally, I have often felt pride in the Obama Administration's efforts and accomplishments. Serious pride. I mean, the lump-in-the-throat, tear-in-the-eye, wow-we're-really-making-a-difference sort of pride. And, while Romney can't (or simply won't) think of anything positive to say about the last four years, I have no trouble producing a list of what I view as the greatest achievements of the Obama Administration.

We may - and some of us probably will - argue about just how positive some of the things in this list are. Representatives of irresponsible oil companies, abusive lending institutions and neglectful insurance companies will certainly find plenty of reason to dislike some of the items. But even the President's detractors must admit that Barack Obama, despite an obstructionist, do-nothing Republican Congress, has been remarkably productive.

  • President Obama passed a stimulus program to get the economy started again and to begin a turnaround in the nation's unemployment problem. He has presided over 29 months - soon to be 30 months - of private sector employment growth. (The U.S. unemployment rate remains high at around 8%, but it is worth noting that the European unemployment rate has been rising and recently reached 11.3%. The jobless rate in Spain is over 25%, and the rate in Greece is at least 23%. France and Poland have 10% of their populations out of work.)
  • He initiated programs for home refinancing and loan modifications to allow about a million financially troubled Americans to keep their homes.Under his administration, home foreclosures have slowed, home sales have escalated and home prices appear to be improving.
  • He started the Cash-for-Clunkers program that not only helped revive the auto industry through hundreds of thousands of new-car sales but also removed inefficient and environment-polluting vehicles from U.S. roads.
  • He created the Consumer Financial Protection Bureau to guard American consumers against abusive and misleading loan and credit practices (Credit Card Bill of Rights). He backed new safeguards on the banking and investment systems in our country. (And, by the way, he did NOT bail out the banking system - that was Mr. Bush. But he did oversee the banks' repayment of 75% of the TARP program investments.)
  • He sat down with Republican opponents of healthcare reform to hammer out a compromise, worked Republican suggestions into his program, and despite continued Republican opposition got the Affordable Care Act approved by Congress and signed into law. And his administration successfully defended the act in the Supreme Court, even winning the support of the Republican-nominated Supreme Court chief justice.
  • He ended the Bush Administration's military operations in Iraq, a war that cost thousands of service men and women their lives and cost the U.S. taxpayers hundreds of billions of dollars while serving no conceivable purpose whatsoever.
  • He dramatically decreased federal government spending and decreased the federal payroll while lowering federal taxes.
  • He saved the U.S. automobile industry and all the countless affiliated jobs when Republicans argued that it would be a useless waste of money and that the industry should be allowed to die.
  • He backed Wall Street reform that will prevent future taxpayer-funded bailouts of investment firms.
  • He supported legislation calling for equal pay for women.
  • He threw out Don't Ask Don't Tell, ending an unjust practice in the military.
  • He ended the torture of prisoners.
  • He provided expanded funding for Head Start and Early Learning programs in our nation's schools and for Internet access in elementary-level schools.
  • He helped to organize volunteerism on a national scale.
  • He drew the government-backed student loan program away from private banks that were doing no more than skimming from it.
  • Following the Gulf oil spill, he ordered a $20 billion escrow fund from BP, removed the cap on oil company liability for spills and created a safety review board for offshore oil drilling.
  • He supported the anti-dictatorship Arab Spring movement, which led to the fall of Libyan terror-supporter Muammar Gaddafi.
  • His administration eliminated the higher subsidies for the failed Bush administration experiment of the Medicare Advantage plans.
  • He provided tax incentives and federal dollars for renewable and clean energy options.
  • He nominated two superb Supreme Court justices, Justice Sonia Sotomayor and Justice Elena Kagan.
  • He dramatically increased federal efficiency standards for auto makers.
  • He halted the deportations of thousands of law-abiding children of illegal immigrants - children who entered the U.S. through no fault of their own and who know no other homeland - and permitted them to obtain work permits. He also asked Congress to pass the DREAM Act, which would grant those young people a path to citizenship.
  • He refused to support in court the discriminatory Defense of Marriage Act, while he personally endorsed the quest for marriage of committed same-sex couples and extended marriage benefits and rights to same-sex partners of government employees.
  • He tracked down and eliminated international terrorist leader Osama bin Laden.

Sunday, September 2, 2012

White House Honey Brown Ale

The Obama Administration has finally released the recipes of the first documented home-brews produced in the White House. Now, I'm wondering if this is a subject that will come up at Presidential news conferences:

"Mr. President, if an American citizen resides in an area with hard water, should he or she omit the gypsum from your home-brew recipe?"

"Mr. President, it is difficult for many Americans to acquire White House honey. Can you tell us if the bees that make it are exposed to clover and dandelion or are they confined to the rose garden?"