clinton era

Home » clinton era

Fiscal Cliff – We got a parachute

Fiscal Cliff

Once again at the 12th hour a deal is reached. Over the next several days we will get more details on this deal. Here’s what I think that we have:

Bush tax cuts: The deal would extend all of the Bush tax cuts for incomes below $400,000 for individuals and $450,000 for families, while reinstating the Clinton-era 39.6 percent tax rate for income above those thresholds. It will also push the capital gains rate on investment income back to 20 percent for income above $400,000 for individuals and $450,000 for families. President Obama had asked for an extension of rates only for incomes below $250,000.

Stimulus tax credits: Three tax credits expanded as part of the stimulus will be extended for one year as part of the compromise. The America’s Opportunity Tax Credit, Child Tax Credit, and Earned Income Tax Credit collectively benefitnearly 20 million Americans each year, and extending them was a priority for Obama and Democrats. Republicans allowed all three to expire in tax legislation earlier this year. (more…)

By |2013-01-01T12:19:12-04:00January 1st, 2013|Budget, Economy, Party Politics|Comments Off on Fiscal Cliff – We got a parachute

Fixing the Budget (Updated)

Many people, mostly conservatives, have been yammering on and on about the budget. The deficit. The deficit. We’ve got to do this and we’ve got to do that. The sky is falling. Death and destruction. (Okay, I’ll admit that I made up that last part but both sides skip reason and go right to the fear/scare arguments.)

The New York Times has a nice budget calculator. You can fix the budget. You can choose the Republican way – cut – or the Democratic way – increase revenue and decrease spending. I have chosen a reasonable approach. Bush tax cuts should expire for those Americans making over $250,000 annually. This saves $54 billion. I’m going to go back to Clinton-era taxes. Life seemed to be okay during the 1990s. Both the rich and the poor made money. This type of taxing saves $32 billion by 2015 and $46 billion by 2030. (I would like to focus on 2015, as projecting to 2030 is crazy.) I would eliminate earmarks, saving $14 billion. Cut government contractors. It may not be popular with the privatize everything crowd but I’m tired of some of these contractors ripping off the government and the American people.  This saves $17 billion. I think that we don’t have good goals in Afghanistan. Bring the troops home. Reduce the size of the military to pre-Iraq War size, cancel or delay some weapon systems and reduce noncombat military compensation and overhead. These changes reduce the debt by $143 billion. This is serious money and Grandma doesn’t have to worry about paying for medications. I think it only makes sense to increase the Medicare age of eligibility to 70 since Americans are living longer. Plus, let’s raise the social security age to 70. Americans who are making more and have significant savings will get reduced payments. Okay, I’m not going to go through all of my proposed changes, but we could fix the problem with 56% with tax increases and 44% from cuts. I save $506 billion by 2015. My projected budget saving for 2030 saves $160 billion. The budget is plenty balanced.

The best thing about the NYT calculator is that it isn’t hard to see what needs to be done. The problem is that our elected officials will not sit down and make reasonable compromises. We don’t need Sarah Palin and her poison tongue talking about NOT compromising. This is about serious government. In our system, you need to compromise to get things done. If you don’t want to get anything done, then you draw a line in the sand, which doesn’t help the American people.

Update from Balloon Juice:

To illustrate just how dishonest the Republican budgets really are, read Jason Kuznicki’s “Return to Normalcy” budget:

It’s got four basic parts:

  1. Return to Clinton-era rates of taxation, or at least something like them. As Ezra Klein has noted, this is very likely to happen in any event, because we’d need sixty Senate votes to extend the Bush tax cuts. We’ll just let them expire. As we’ll soon see, our Senators will be busy enough elsewhere.
  2. Remove the cap on the Social Security payroll tax. Yes, that means raising taxes. Yes, on the rich. Someone call the Koch brothers!
  3. Cap Medicare spending at GDP plus 1%. This is a doozy, I know. Can we do it? We’ll probably have to, like it or not, in any balanced budget plan.
  4. Reduce military spending to 1990s levels. In other words, bring the troops home. From everywhere. Let the force shrink by attrition. Cut spending on new weapons systems. Tell the world — much of it industrialized and friendly — that they will have to pay for their own defense, because we can’t afford it anymore. We’ve been doing way more than our fair share for way, way too long, and they can hardly say otherwise.

More or less, the plan would look like this.

This is similar to John’s do-nothing budget, or the do-nothing budgets of Annie Lowrey or David Leonhardt, or my budget. All these budgets have one thing in common: the end of the Bush tax cuts. To help illustrate where that will put us in the Big Scheme of Things, a chart!

By |2011-04-17T10:37:30-04:00April 17th, 2011|Budget|Comments Off on Fixing the Budget (Updated)
Go to Top