Fiscal Cliff Soap Opera Episode 2 – Standby

Just like “As the World Turns,” The Fiscal Cliff is a soap opera and it’s never over. With that thought in mind a television network ought to provide daily updates with clips of the latest foolish words from the president and the congressional leaders of both parties. This is evident by the news items that the next fiscal events to be confronted are sequestration and the debt ceiling with a backdrop of over spending. However, we know that the settling of those issues will not be the end of the story. Our elected officials seem to take a delight in providing the rolls of the devious, the treacherous, and the good guys. Like a good soap opera you never know what the next installment will bring.

“We are here for you. And we will not forget. We will follow up to make sure that you get all the help you need until you’ve rebuilt,” Obama said at an afternoon news conference.

Sixty Billion Dollars was the proposed federal aid for Sandy Super storm victims. Somehow the Speaker of the House overlooked that spending bill on New Year’s day. N.J.’s governor Chris Christie went on the attack against Speaker John Boehner and the G.O.P. After hugs and hand holding with the president and now this attack is Gov. Christie about to change political parties? To me he seems more like a moderate Democrat than a Republican.

The facts:

Sequestration is $110 Billion out of a Federal budget spending plan of $3.8 Trillion. That would be 110/3800 and that equals less that 3%. The 2013 United States federal budget is the budget to fund government operations for the fiscal year 2013, which is October 2012–September 2013. The sequestration is scheduled to take effect March 1.
The debt limit ceiling will be reached at about the same time as the sequestration. The Federal government borrows approximately 31¢ of every dollar spent. The fiscally responsible are asking how long can America continue this borrowing pattern. I am one of them.
The political parties fight each other even when they know the other group is correct. When the speaker of the House tells the leader of the Senate “Go f*** yourself” you know the political system is in failure mode.

Fiscal Cliff – The Soap Opera Continues

McConnell, Reid point to fiscal stalemate

Tune in to the political programs on television and radio and all you hear is talk about the Fiscal Cliff. It’s been a continuing story where missing one or two episodes really means nothing.

My question is what fiscal cliff?

The U.S. government spent $3.563 Trillion in 2012. The total revenue was $2.435 Trillion. It does not take a mathematical genius to understand that the revenues will have to increase and the spending will have to decrease. Brooking Institute figures are similar to those provided by the Heritage Foundation.

The automatic spending cuts amount to $1.2 Billion in one year. That leaves spending at $3.443 Trillion assuming the budget does not increase one cent in 2013. Why the whining? That is hardly a cut.

From The Center for Public Integrity

http://www.publicintegrity.org/2012/12/05/11891/fact-check-facing-facts-fiscal-cliff

Some facts to consider:

The scheduled tax increases, if allowed to take effect, would net an additional $536 billion in fiscal year 2013, according to the nonpartisan Tax Policy Center, raising more than $5 trillion in 10 years. Nearly 90 percent of Americans would pay more in taxes, TPC says, with the average increase being nearly $3,500.
The automatic spending cuts scheduled to take effect would cut $1.2 Trillion over 10 years, split roughly in half between domestic and military spending. That works out to $1.2 Billion a year.
A temporary payroll tax cut enacted for 2011 was extended through 2012, but is now set to expire at the end of this year.
Tax increases contained in the Affordable Care Act on upper-income taxpayers will go into effect: a 3.8 percent tax on unearned income, 0.9 percent increase in Medicare payroll taxes and a higher income threshold for deducting medical expenses.
The Alternative Minimum Tax, which was designed to make sure wealthy Americans pay a minimum tax, was never indexed to inflation on a permanent basis.

If all that happened, taxes would increase an average of $3,466 per household, according to the TPC. Middle-income households — those earning nearly $40,000 to about $64,500 a year — would see an average increase of $1,984. Is this going to stop all spending? NO!

Once again it’s the whining. It is the result of this thinking. You can cut anywhere you want just don’t impact me.

Consider these four likely impacts listed by The Week magazine.

– Higher cost of lattes because a dairy subsidy will lapse. It appears we have had a dairy subsidy for about 30 years. Starbuck’s will suffer (maybe). Who knew?

– The Transportation Security Administration (TSA) will be laying off thousands of screeners at the airports. That will result in less screening. It is a wasteful program that has never caught a single terrorist.

– If a deal isn’t reached, and the economy creeps back toward recession, demand for fuel will fall (because presumably, Americans won’t have money to go anywhere), slashing gas prices. That is a good thing!

– According to Money Morning, during the debt-ceiling crisis last year, there was a 30 percent increase in the price of gold — a cost-climb we are likely to see again should the latest negotiations fail. Another good thing for all of us that bought gold!

Tough choices are part of life.

Democrats Have the Upper Hand

Tonight John Boehner, Speaker of the House, was unable to obtain a vote in favor of his “Plan B” to avoid the fiscal cliff. This is surprising to me as the only people who would experience a raise in their marginal tax rates would be those with annual taxable incomes of over $1 million.

So Mr. Boehner confirmed to everyone that he does not speak for the Republican Party caucus when it comes to tax and budget legislation. This leaves one slim chance for the Democrats to prevent falling of the cliff. To accomplish this will require some Republican congressmen along with some Democratic congressmen that would result in a majority. It is the opportunity for the President to push through legislation that would be more favorable to him with some compromise.

This can only happen with GOP participation. That is the big “IF.” The consequence of failure will be some sad days in January.

There is one thing we know. This entire situation was caused by our broken political system. Not just American but the rest of the world is wondering, what has happened to the United States?

35 Days to Fiscal Cliff Hell

Some of this posting is based upon an article titled, “Fiscal Cliff Could Cost America 277K Jobs in January” posted on this website.

While addressing the House Financial Services Committee in February of this year, Federal Reserve Chairman Ben Bernanke coined the term “fiscal cliff,” describing, “a massive fiscal cliff of large spending cuts and tax increases” scheduled to occur on January 1, 2013.

Just a few days ago President Barack Obama, House Speaker John Boehner, and Senate Majority Leader Harry Reid and minority leaders were all talking as if an agreement to avoid the fiscal cliff was a realistic possibility.

Today’s news reports are that little progress has been made.

Should Congress fail to act, allowing the tax cuts to expire and budget cuts to take effect, the results could be drastic, increasing the annual federal tax burden on the average family of four by about $2,200, according to the Congressional Budget Office.

The major components of the fiscal cliff are the expiration of the Bush Tax Cuts, federal unemployment benefits, and social security payroll tax cuts, on top of automatically triggered spending cuts associated with the Budget Control Act of 2011.

Cuts associated with the Budget Control Act could result in the loss of 277,000 federal jobs, according to a report from the George Mason University Center for Regional Analysis. The report assesses the impact the Budget Control Act would have on all agencies subject to cutbacks including Agriculture, Commerce, Education, EPA, Energy, Health and Human Services, Homeland Security, Housing and Urban Development, State, NASA, Transportation and Interior. While the cuts would only reduce federal spending from 22.9% of GDP to 22.4% of GDP, according to the CBO, they would cause significant job losses for federal health inspectors, Federal Aviation Administration workers, and FBI agents.

The president does not appear to be willing to write a piece of proposed legislation to avert going over the fiscal cliff. This was my complaint about his management style throughout his first term. It was no Barack Obama who wrote the Affordable Care Act. It was members of the Democratic Party leadership in the houses of Congress.

If the sequestration occurs both political parties deserve blame. The president should not be campaigning as he did during much of his first term. He should be negotiating with congress. His failure to bring this self inflicted event to a satisfactory conclusion will dog his next four year term.

Social Security Now Called ‘Federal Benefit Payment’

Have you noticed, your Social Security check is now referred to as a “Federal Benefit Payment”? It’s not accurate!

Not only did we all contribute to Social Security but our employers did too. It totaled 15% of our income before taxes.

If you averaged $30K per year over your working life, that’s close to $180,000 invested in Social Security.

If you calculate the future value of your monthly investment in social security ($375/month, including both your and your employer’s contributions) at a meager 1% interest rate compounded monthly, after 40 years of working you’d have more than $1.3+ million dollars saved. This is your personal investment.

Upon retirement, if you took out only 3% per year, you’d receive $39,318 per year, or $3,277 per month.

That’s almost three times more than today’s average Social Security benefit of $1,230 per month, according to the Social Security Administration (Google it – it’s a fact). And your retirement fund would last more than 33 years (until you’re 98 if you retire at age 65)!

I can only imagine how much better most average-income people could live in retirement if our government had just invested our money in low-risk interest-earning accounts. Instead, the folks in Washington pulled off a bigger Ponzi scheme than Bernie Madoff ever did.

They took our money and used it elsewhere. They “forgot” that it was OUR money they were taking.

They didn’t have a referendum to ask us if we wanted to lend the money to them.

And they didn’t pay interest on the debt they assumed. And recently, they’ve told us that the money won’t support us for very much longer.

But is it our fault they misused our investments? And now, to add insult to injury, they’re calling it a “benefit,” as if we never worked to earn every penny of it.

Just because they “borrowed” the money, doesn’t mean that our investments were a charity!

Let’s take a stand.

We have earned our right to Social Security and Medicare. Demand that our legislators bring some sense into our government – Find a way to keep Social Security and Medicare going, for the sake of that 92% of our population who need it.

Then call it what it is: Our Earned Retirement Income. 99% of people won’t forward this.

Will you?

You are the 47 Percent

By Joel Mathis in the Los Angeles Daily News, September 23, 2012

Are you married? Have a job? How about a kid or two? Did you get a tax refund last year because your status as a working parent made you eligible for an Earned Income Tax Credit?

Congratulations: Mitt Romney thinks you’re a welfare-addicted bum.

See, when Romney talks about that 47 percent of Americans who don’t pay income taxes, he’s talking about you.

You may not think that’s true, because of course you pay plenty of taxes – there’s the payroll tax that comes out of your check every week, the fee that goes to pay for Social Security. And of course, the world is a maze of taxes for you: Every time you fill up the gas tank or buy a birthday gift for the kid, the price is a little higher because of the extra few cents that goes to the state or local governments.

Surely Romney’s talking about somebody else?

Somebody who sits at home and waits for a government check they didn’t earn?

Nope. He’s talking about you.

See, to get to that 47 percent number, Romney has to include folks who actually work but didn’t officially pay income taxes because they didn’t earn enough, or because they qualified for the Earned Income Tax Credit.

Nearly two-thirds of Romney’s laggardly 47 percent paid payroll taxes.

And to state the obvious: You generally have to be on a payroll to pay the payroll taxes. You have to have a job.

Now: Romney obviously wasn’t taking you into account when he said that 47 percent is “dependent on government” and “entitled to health care, to food, to housing, to you-name-it.”

Which is the problem: Romney wasn’t taking you into account. He and the rest of the Republican Party have been so solicitous of so-called ‘job creators” that they’ve treated job doers rather shabbily. It’s something to think about when you vote in November.

Los Angeles Pension Reform Proposal

Here is a proposal I can enthusiastically support for the city of Los Angeles. The proposal was sent out from Councilman Mitchell Englander’s office.

The Pension Reform Package comes before the City Council next week. To see the LA Times story, click here.

The Basics of the Pension Reform Proposal

1. Moving the retirement ages up from 55 to 65 years to reflect trends that people are living longer and able to work longer.
2. Capping the maximum retirement allowance at 75% of an employee’s final compensation instead of up to 100%.
3. Eliminating pension spiking by setting an employee’s pension on a 3-year salary average rather than one year.

4. Modifying disability retirement benefits to avoid spikes in the number of disability retirements.

5. Eliminating the current 50% survivor continuance benefit and providing employees with an option to purchase a continuance for their surviving spouse or domestic partner.

6. Capping future retiree annual cost-of-living adjustments to 2% with the option for the employee to purchase up to 3%.

7. Controlling retiree healthcare costs by limiting the benefit to retirees only, not their dependents.

The Real Mitt Romney

Wow!

Mother Jones magazine obtained this video clip. It tells what Mitt Romney thinks about 47% of us.

Responding to a question from a donor about how he could triumph in November, Romney replied:

There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that’s an entitlement. And the government should give it to them. And they will vote for this president no matter what…These are people who pay no income tax.

Romney went on: “[M]y job is is not to worry about those people. I’ll never convince them they should take personal responsibility and care for their lives.”

How stupid can this man be?

As reported by the Associated Press;

According to the TaxPolicyCenter study, 38 million — half of those who owe no federal income taxes — escape owing money to the IRS because their income is too low. For them, merely using the standard deduction, personal exemptions and other basic parts of the tax code allow them to avoid income taxes.

Overall, 93 percent of those who owe no federal income taxes earn $50,000 annually or less. But 5 percent of them earn $50,000 to $100,000 and the rest — around 430,000 nonpayers — earn more than $100,000 annually. That includes 4,000 households earning more than $1 million a year, thanks largely to tax exempt interest, reduced rates on capital gains and dividends and other deductions.

This entire event is not going to derail the Romney campaign. Obama made his remarks about some people clinging to their guns in 2008 and it made little impact on his win – but we all know what he really believes and that comment will have an impact on this election.

The question is: what does Romney stand for and what would he do as president? Unless he can provide convincing answers his chances to win the election are considerably diminished.

Can Anyone Fix This Economy?

Read Mitt’s plan then read Barack’s plan. If it’s “the economy stupid” then where is the plan to set the nation on a course to recovery?

The number of new employees added to the job payrolls has been less than breathtaking. With 5 million long term unemployed is anything other than low pay service sector jobs going to be created in the coming years? The number of new June jobs is 80,000. The unemployment rate remains at 8.2% for a second straight month. That is less than the number required to keep pace with our growing population according to most economists. Perhaps the better question to ask is what are the plans of the two candidates for president?

From Mitt Romney’s campaign web site.

Mitt’s Plan

Mitt Romney sees two important objectives that America can pursue immediately to build on the extraordinary traditional strengths of its workforce. The first is to retrain American workers to ensure that they have the education and skills to match the jobs of today’s economy. The second is to attract the best and the brightest from around the world.

Retraining Workers

Mitt Romney will approach retraining policy with a conservative mindset that recognizes it as an area where the federal government is particularly ill-equipped to succeed. Retraining efforts must be founded upon a partnership that brings together the states and the private sector. The sprawling federal network of redundant bureaucracies should be dismantled and the funds used for better purposes. One particularly promising approach that Romney supports and believes states should be encouraged to pursue is a system of Personal Reemployment Accounts for unemployed individuals. These accounts would facilitate programs that place individuals directly into companies that provide on-the-job training—as governor of Massachusetts, Romney helped create just such a program.

Eliminate redundancy in federal retraining programs by consolidating programs and funding streams, centering as much activity as possible in a single agency
Give states authority to manage retraining programs by block granting federal funds
Facilitate the creation of Personal Reemployment Accounts
Encourage greater private sector involvement in retraining programs

Attracting the Best and the Brightest

To ensure that America continues to lead the world in innovation and economic dynamism, a Romney administration would press for an immigration policy designed to maximize America’s economic potential. The United States needs to attract and retain job creators from wherever they come. Foreign-born residents with advanced degrees start companies, create jobs, and drive innovation at an especially high rate. While lawful immigrants comprise about 8 percent of the population, immigrants start 16 percent of our top-performing, high-technology companies, hold the position of CEO or lead engineer in 25 percent of high-tech firms, and produce over 25 percent of all patent applications filed from the United States.

Raise visa caps for highly skilled workers
Grant permanent residency to eligible graduates with advanced degrees in math, science, and engineering

Barack Obama jobs plan is not posted on his campaign web site. Instead his site points to the growth of jobs and offers these successes and plans.

Barack’s Plan

 489,000: Jobs added in the manufacturing sector since January 2010

 233,000: Jobs added in the auto industry since June 2009—the most growth in a decade

 100%: The percent of investment in plants and equipment that businesses could expense under a tax cut extension President Obama proposed, which would spur investment in the United States

 18%: Tax deduction President Obama has proposed for domestic advanced manufacturing technologies—which would double the current 9 percent deduction

 20%: Income tax credit the President has proposed providing to companies on expenses related to moving operations back to the United States

Neither candidate offers any idea to re-employ those middle class wage earners that have faced a devastatingly long unemployment period. As matter of fact no one has offered one sensible plan. If Mitt Romney believes that the independent voters will elect him to office by just saying Obama has failed to re-invigorate the economy he is not likely to gain my support. He should not gain your support either. Vague references to re-training programs when the there are no growing industries are not enough.

If my choice is between just another face and no plan then I will vote for Obama. At least he has the experience that no other job in the world can provide. Then again why should I vote for a leader who has not been able to change our course?

Supreme Court Chief Justice John Roberts Surprises Everyone

ObamaCare Lives

How could Chief Justice John Roberts have voted with the liberal justices in favor of Obama care? Charles Krauthammer has written a piece for the National Review contending that the “Commerce Clause contained, constitutional principle of enumerated powers [has been] reaffirmed.” “Law upheld, Supreme Court’s reputation for neutrality maintained.” He suggests that Roberts was more concerned with the Court’s reputation than the outcome of this case. I disagree.

George Will, also writing in the National Review offered similar analysis.

We may never know Roberts’ thinking. Considering the far reaching consequences of his (Roberts) decision I cannot believe that he would not be more concerned with the impact this law will have on almost every American.

John Roberts said the law was legal under the right of the Federal government’s power to tax. The Obama administration denied the penalty against the non-insured is a tax. Roberts obviously had to search out his justification for voting in favor of the law. It must have come as a great surprise in the White House when they heard Roberts’ reasoning.

One thing is obvious. The media proved that even their smartest commentators could not conjure the outcome nor explain the logic of John Roberts.