Archive for ‘Money!’

September 2, 2011

Tax Cuts as a Form of a Spending Program

by thefulllidvmg

 

 

 

The Republicans who loathe spending programs as a form of anti-Christian reliance in fact worship a program known as tax cuts, ironically a government program in itself:

The other way to look at these credits and deductions is that they’re essentially government spending programs in disguise. After all, if these deductions didn’t exist, then either the deficit would be smaller or everyone else could pay fewer taxes. A tax credit that subsidizes the construction of affordable housing is no different than an explicit grant to do the same thing.

In Washington, however, tax expenditures generally aren’t considered spending programs. They’re considered tax breaks. And, as a new NBER paper by Len Burman and Marvin Phaup details, this view has had enormously perverse consequences over the years. Politicians always prefer tax breaks to new spending programs. So Congress ends up enacting a disproportionate amount of social policy through tax credits and deductions, the paper said, and that, in the end, can actually lead to higher taxes and bigger government than would otherwise be the case.

Burman and Phaup found that total U.S. tax expenditures will amount to $1.2 trillion in fiscal year 2011. That’s much, much larger than non-defense ($671 billion) or defense ($744 billion) discretionary spending. In other words, there’s a huge pool of federal spending that Congress doesn’t even consider to be spending. As the authors noted, “excluding income tax expenditures causes spending to be understated by about one-third.”

(Pictured: the 10 biggest tax expenditure programs for fiscal year 2011)

August 27, 2011

Selectively Doing Away With Pork Spending

by thefulllidvmg


When a politician joins hand in hand with a crusade-type campaign against pork barrel spending (which is believed in some camps as the entire reason we are in debt), wouldn’t you then oppose all pork spending?

Rep. Michele Bachmann has gotten a lot of flak for taking hundreds of thousands of dollars in subsidies from farm assistance programs she has decried as “outrageous pork.” Her opposition was well founded: The subsidies make our food less healthy and more carbon intensive and distort our trade with other countries. But Lindsey Boerma reports that Bachmann’s responding to the criticism by walking back her stance:

Not long ago, Rep. Michele Bachmann viewed farm subsidies as “outrageous pork.” But after a summer of blistering criticism about the nearly $260,000 in government handouts that went to a family farm partially owned by Bachmann and her husband, the archconservative and GOP presidential candidate softened her tone considerably in an interview with National Journal.

While she insisted that “our federal budget needs a complete overhaul, and agricultural subsidies are no exception,” Bachmann would not commit to doing away with them without seeing details of any future legislation. “If all farm subsidies were ended, that would be a complete change of policy over the last 80 to 90 years of American history, and that would be a very interesting vote,” she said. “So, of course, I would have to look at that before I could tell you how I was going to cast my vote.”

The hypocrisy of this “self-made woman” who I bet attests that she relies on no one.

August 27, 2011

Obsessing Over Entitlements

by thefulllidvmg

For those who are obsessed over cutting entitlement spending (strictly speaking – Medicare/Medicaid, Social Security, Welfare, et al) and believe that alone will solve our entire budget mess, Byron York has an interesting piece that looks at where our budgetary woes have come from lately:

Was there a steep rise in entitlement spending? Did everyone suddenly turn 65 and begin collecting Social Security and using Medicare? No: The deficits are largely the result not of entitlements but of an explosion in spending related to the economic downturn and the rise of Democrats to power in Washington. While entitlements must be controlled in the long run, Washington’s current spending problem lies elsewhere.

A lot of the higher spending has stemmed directly from the downturn. There is, for example, spending on what is called “income security” — that is, for unemployment compensation, food stamps and related programs. In 2007, the government spent $365 billion on income security. In 2011, it’s estimated to spend $622 billion. That’s an increase of $257 billion.

Then there is Medicaid, the health care program for lower-income Americans. A lot of people had lower incomes due to the economic downturn, and federal expenditures on Medicaid — its costs are shared with the states — went from $190 billion in 2007 to an estimated $276 billion in 2011, an increase of $86 billion. Put that together with the $257 billion increase in income security spending, and you have $343 billion.

Add to that the $338 billion in decreased revenues, and you get $681 billion — which means nearly half of the current deficit can be clearly attributed to the downturn.

That’s a deficit increase that would have happened in an economic crisis whether Republicans or Democrats controlled Washington. But it was the specific spending excesses of President Obama and the Democrats that shot the deficit into the stratosphere.

There is no line in the federal budget that says “stimulus,” but Obama’s massive $814 billion stimulus increased spending in virtually every part of the federal government. “It’s spread all through the budget,” says former Congressional Budget Office chief Douglas Holtz-Eakin. “It was essentially a down payment on the Obama domestic agenda.” Green jobs, infrastructure, health information technology, aid to states — it’s all in there, billions in increased spending.

As for the Troubled Assets Relief Program, or TARP — it has no specific line in the budget, either, but that is because it was anticipated to pay nearly all of its own cost, which it has.

Spending for Social Security and Medicare did go up in this period — $162 billion and $119 billion, respectively — but by incremental and predictable amounts that weren’t big problems in previous years. “We’re getting older one year at a time, and health care costs grow at 7 or 8 percent a year,” says Holtz-Eakin. If Social Security and Medicare were the sole source of the current deficit, it would be a lot smaller than it is.

The bottom line is that with baby boomers aging, entitlements will one day be a major budget problem. But today’s deficit crisis is not one of entitlements. It was created by out-of-control spending on everything other than entitlements. The recent debt-ceiling agreement is supposed to put the brakes on that kind of spending, but leaders have so far been maddeningly vague on how they’ll do it.

More debate on this here.

August 27, 2011

Where Poverty Comes From

by thefulllidvmg

A very interesting story:

Seth Masket effectively exposed the logical fallacy of French’s argument, but I want to point out the harmful nature of the argument itself.

I worked hard and got a good education, yet I am poor. I have no money and haven’t worked in years, and if it weren’t for my parents letting me stay with them I would be homeless. The notion that poor people are just lazy isn’t new. People have been asserting that Randian trope for years. French adds a claim that religious attendance (if this were true, Nigeria should be an economic superpower) and moral depravity are also to blame.

The problem with this argument is that I believed it.

It may seem obvious to others that someone who completed an undergraduate double major in three years and graduated from a top ten law school can’t really be described as “lazy” but it took *years* of therapy before I could even contemplate the idea that it wasn’t my fault, I am not lazy or a bad person, but that I am suffering from depression. It is still sometimes difficult for me to accept that this isn’t my fault, but French seems to have no problem assigning that blame.

I wonder how this affects other people who are living in poverty. It seems like if you tell people that they are poor because they are lazy and immoral, the message that you’re sending is that there is no hope. Unless you believe that the poor have just decided that they would prefer to be lazy and depraved and they can wake up one day and simply choose to become virtuous hardworking citizens.

I started receiving food assistance last December after hearing about the program from a neighbor. My parents would be struggling financially even if they weren’t paying for my therapy and medication, so I figured it would help a lot if they didn’t have to feed me as well. I get $200 a month which can only be used to buy unprepared food. A few days after I started receiving this I happened to hear my state’s new House Speaker, Jase Bolger, talking about plans to limit the program I had just joined. He made it clear that he was doing this to *help* people on assistance:

“Michigan should help its citizens break the cycle of dependency, not create one for them,” Bolger said.

Really? $200 a month for food is going to create a cycle of dependency? People would go out and get a job but they just don’t want to give up that free six and a half dollars a day of food? The minimum wage in Michigan is $7.40/hr, and you think people are not working because you’re giving them less than that a day in food assistance? If there really are people with such an epic level of laziness I would suggest that the threat of starvation will not magically turn them into hardworking, moral citizens.

I like capitalism. I believe it is very effective and I value the freedom that it brings. But free markets are not bags of pixie dust that can be sprinkled on all of societies problems, and all of the failures of the market cannot be blamed on the moral failings of the less fortunate.

H/T: The Dish

August 21, 2011

Political Cartoon of the Day II

by thefulllidvmg

August 9, 2011

Amazon.com and Paying Taxes

by thefulllidvmg

John Judis at The New Republic has an interesting piece on Amazon’s intentional efforts to avoid taxation in several states that direly need revenue. After all, Amazon’s ability to avoid charging sale’s tax provides you and I opportunities to buy books (as well as plethora of other items) for dirt cheap.

This subject, which has been intensified lately due to Borders declaring bankruptcy, may be a good time for us all to question when to buy books online and when to buy in a store. What logic comes into play when we choose one outlet over the other? For me, if I can find a book for a penny plus ~$4 s&h on Amazon, I will go with that option over a store that may charge anywhere in the upward vicinity of $27 plus tax. If I can find a book in a store for a few dollars more than Amazon, I will go with the store. Judis elaborates on the ripple effects of the latter choice: “local realtors sustain neighborhoods and suburban malls; they fund local newspapers and theater groups. They are part of a community in a way that Amazon or Overstock—its Utah-based partner in fighting state sales taxes—will never be.” It is also worth noting that Amazon would not me Amazon without bookstores or trading houses who originally sell the books that we find online for a low price.

July 29, 2011

Are Recessions All That Bad?

by thefulllidvmg

As I read over Ezra Klein’s post that described the recovery-less recovery (more found here), a few words and phrases stuck out to me.

As Wolfers suggests, these numbers solve the mystery in the labor market. This isn’t about confidence or uncertainty or regulations or any of the other bankshot explanations we’ve been using to explain why unemployment seems stuck even as the economy rebounds. The economy isn’t rebounding. Demand isn’t returning. And without demand, there can’t be jobs.

Emphasis from here on out is from me. In terms of demand, is it all that bad for a country to scale back it’s purchases, it’s expenditures, and possibly live more within their means? Banks, for one, are not giving out loans as easily. I found this out over the past week. With a proposed deal I negotiated with Wells Fargo, I would of been facing a 40% mortgage payment to income ratio. The banks today want that ratio to be between 20% and 30%. Five years ago, I could have easily gotten a loan with a 40% ratio. I speak on this based on friends and family who have in fact received loans before the Great Recession with roughly 40% ratios. Banks are being more careful, people are not selling because the housing bubble has burst, and those willing to make moves have to cross their t’s and dot their i’s to prove that they truly will make x in a given year, not just think or hope they will.

Meanwhile, we’re in an economic crisis in which the main problem is too little spending.

Cutting spending and budgets in a recession does hurt an economy but, again, too little spending is not inherently bad. If anything, this Great Recession has helped us feel the purchases we make (credit cards numb the feeling of purchases. We do not see the actual money come out of our wallets or purses but only flash a piece of plastic. We delay this feeling from hitting us until later on).

I stand by less spending and lower demand as good signs for simplicity and understanding our behaviors. Whether these signals are actually making cognitive connections with fellow Americans, I cannot say for sure.

One final note: yes, over 9% unemployment nationwide (with that 2-3x the case for minorities – cry me a river white America) is bad. I will not deny that reality.

July 2, 2011

Quote of the Day

by thefulllidvmg

“There is a revenue stream called tax cuts,” – Rush Limbaugh.

June 28, 2011

Quote of the Day

by cpmy3rs

“A corporation is a legal person created by state statute that can be used as a fall guy, a servant, a good friend or a decoy…. A person you control… yet cannot be held accountable for its actions. Imagine the possibilities!”

Wyoming Corporate Services, a company which helped over 2,000 other companies incorporate themselves in a small brick house in Cheyenne Wyoming.

June 27, 2011

$20 Billion on Air Conditioning for our two wars

by thefulllidvmg

Doug Mataconis describes this large amount of money:

To power an air conditioner at a remote outpost in land-locked Afghanistan, a gallon of fuel has to be shipped into Karachi, Pakistan, then driven 800 miles over 18 days to Afghanistan on roads that are sometimes little more than “improved goat trails,” Anderson says. “And you’ve got risks that are associated with moving the fuel almost every mile of the way.”

Anderson calculates more than 1,000 troops have died in fuel convoys, which remain prime targets for attack. Free-standing tents equipped with air conditioners in 125 degree heat require a lot of fuel. Anderson says by making those structures more efficient, the military could save lives and dollars.

June 23, 2011

Quote of the Day

by thefulllidvmg

“Tax hikes are off the table,” he said. “First of all, raising taxes is going to destroy jobs….second, a tax hike cannot pass the US House of Representatives — it’s not just a bad idea, it doesn’t have the votes and it can’t happen. And third, the American people don’t want us to raise taxes. They know we have a spending problem. -Speaker of the House John Boehner.

June 16, 2011

Tim Pawlenty’s Proposed Tax Cuts

by thefulllidvmg

Remember this in a year when you are at the polls:

[I]n 2013 the Pawlenty plan would give people in the top one-tenth of 1 percent on the income scale (i.e., people with incomes above $2.7 million) an average annual tax cut of $1.8 million — which is more than four times what they got last year from the Bush tax cuts.

June 11, 2011

Global Military Spending in one graph

by thefulllidvmg

The Economist captions:

ON JUNE 8th China’s top military brass confirmed that the

country’s first aircraft carrier, a refurbishment of an old Russian carrier, will be ready shortly. Only a handful of nations operate

carriers, which are costly to build and maintain. Indeed, Britain has recently decommissioned its sole carrier because of budget pressures. China’s defence spending has risen by nearly 200% since

2001 to reach an estimated $119 billion in 2010—though it has remained fairly constant in terms of its share of GDP. America’s own budget crisis is prompting tough discussions about its defence spending, which, at nearly $700 billion, is bigger than that of the next 17 countries combined.

 

 

June 6, 2011

What the Money Spent on “Defense” Can Buy Us

by thefulllidvmg

AllGov shows what domestic programs we could spend the $7.6 trillion defense budget since 2001 on:

Fill the Medicare Gap: If Congress redirected just one-fifth of the budget increases from 2000 to 2011 for defense spending, it would be enough to eliminate the long-term budget hole in the Medicare program.
 
Fund Head Start for 15 Years: Instead of 10 years of warfare in Afghanistan, the U.S. could have secured 15.6 years of early childhood education and support through Head Start for the same price.
 
Insure the Uninsured: Another way to spend the Afghanistan war chest would be on the uninsured. The budget for fighting the Taliban is enough to cover every American without health insurance for 1.7 years.
 
Help State Capitols: A total of 46 states are facing budget shortfalls this fiscal year. Collectively, they need about $130 billion. Ending the war in Afghanistan and getting entirely out of Iraq would save $170 billion—more than enough to wipe out the red ink from Albany to Sacramento.
 
Instead of Iraq…: Even with the end of combat operations in Iraq, the U.S. is still spending $50 billion annually to maintain a large contingent of troops in the country. For this same amount of money, Washington could ensure a year’s worth of health care for 24.3 million poor children, or salaries for more than 725,000 elementary school teachers or nearly 830,000 firefighters.
June 6, 2011

Too Big To Fail

by thefulllidvmg

In 80 seconds.

June 6, 2011

Legislating Morality in Chambersburg

by thefulllidvmg


Public Opinion columnist Matthew Major writes as if a moral and societal emergency is about to be upon Chambersburg residents. What is he writing about? Out of control yardsales. In his eyes, its worth raising taxes to enforce borough laws about yardsales.

Borough council will consider an ordinance June 13 that would limit residents to one yard sale per month, with a maximum of four per year. Each sale would be limited to three days’ duration, from 7 a.m. to 6 p.m. each day. It would require “all evidence of yard sale activity” to be stored out of sight outside of permitted hours.

It strikes us as an aggressive, but necessary, crackdown on people who effectively run underground commercial operations out of their yards every day of the week. Greencastle, Mont Alto and Washington Township have also had to rein in yard sales with similar restrictions.

Underground commercial operations. Striking use of terms there. Now some more strikingly logical and deep reasoning behind the need to enforce yardsales:

People have always needed to get rid of unwanted stuff that somehow piles up in their homes. But cultural and economic trends have conspired to emphasize the deals over the house-clearing. For example, we now have numerous TV shows glorifying the nation’s pawn shops and junk circuits.

Major finishes with some final words:

And so with the inevitable overreach on the part of yard retailers comes the correction from the authorities. If people cannot conduct yard sales without becoming a nuisance to their neighbors, someone will have to do it for them.

It’s a shame to have to legislate proper behavior and consideration for others, but Chambersburg’s proposed yard sale restrictions should become law as soon as possible.

Is this more important than dealing with local poverty, local runaway educational costs, or local unemployment (which on a Pennsylvania county level, Franklin County is dead last)? Then again, these regulations would employ a few individuals (at the cost of higher taxes, mind you).

June 4, 2011

Quote of the Day II

by thefulllidvmg

Most analyses of the kind of recession we are having—the kind that follows a massive financial crisis and an asset-price bubble that led to too much leverage throughout the economy—indicate that things should be pretty bad right now. They’re correct. The IMF, for instance, warned as far back as 2009 that the “combination of financial crisis and a globally synchronized downturn is likely to result in an unusually severe and long-lasting recession.” Economists Carmen Reinhart and Ken Rogoff, who have studied 800 years of recessions and panics, concur. “I would say we’re right on track,” Reinhart says. “Yes, the recovery looks long, but that’s because we haven’t had a financial crisis this severe since World War II.” –Annie Lowrey on the recession being as bad as the experts predicted.

June 4, 2011

Chris Christie and Helicopters

by thefulllidvmg

I somewhat like the guy so I may be a bit biased on this subject of him using the New Jersey state helicopter twice for family events:

Christie, a Republican, personally paid the state treasury $2,151.50 for his use of the chopper on two occasions in the last week to attend his son’s games in a state baseball tournament.

“Though the superintendent of the State Police noted yesterday the travel does not cost taxpayers additional dollars, the governor understands the sensitivity about this kind of thing and believes he owes it to the public to ensure that this is not a distraction,” Christie spokesman Mike Drewniak said.

His office also provided documentation of 33 times Christie has flown on the state helicopter since taking office in January 2010. Almost all were for official purposes; the final two were listed as family events.

Moving on.

June 2, 2011

So You Think You’re Poor?

by thefulllidvmg

Check out the above chart and read the full run down here. Money quote:

Notice how the entire line for the United States resides in the top portion of the graph? That’s because the entire country is relatively rich. In fact, America’s bottom ventile is still richer than most of the world: That is, the typical person in the bottom 5 percent of the American income distribution is still richer than 68 percent of the world’s inhabitants.

Now check out the line for India. India’s poorest ventile corresponds with the 4th poorest percentile worldwide. And its richest? The 68th percentile. Yes, that’s right: America’s poorest are, as a group, about as rich as India’s richest.

Brankovic notes how much it matters where you are born:

One’s income thus crucially depends on citizenship, which in turn means (in a world of rather low international migration) place of birth. All people born in rich countries thus receive a location premium or a location rent; all those born in poor countries get a location penalty.

It is easy to see that in such a world, most of one’s lifetime income will be determined at birth.

May 31, 2011

Interesting Chart on Home Values by Metro Area

by thefulllidvmg

Can be found here. Check out who at the bottom of the alphabetical list actually had home values increases.

Follow

Get every new post delivered to your Inbox.