WSJ: Obama Eyes $300 billion dollar tax cut.

[EconomicLiberal]

Source: Wall Street Journal

WASHINGTON -- President-elect Barack Obama and congressional Democrats are crafting a plan to offer about $300 billion in tax cuts to individuals and businesses, a move aimed at attracting Republican support for an economic-stimulus package and prodding companies to create jobs.

The size of the proposed tax cuts -- which would account for about 40% of a stimulus package that could reach $775 billion over two years -- is greater than many on both sides of the aisle in Congress had anticipated, and may make it easier to win over Republicans who have stressed that any initiative should rely relatively heavily on tax cuts rather than spending.

The Obama tax-cut proposals, if enacted, could pack more punch in two years than either of President George W. Bush's tax cuts did in their first two years. Mr. Bush's 10-year, $1.35 trillion tax cut of 2001, considered the largest in history, contained $174 billion of cuts during its first two full years, according to Congress's Joint Committee on Taxation. The second-largest tax cut -- the 10-year, $350 billion package engineered by Mr. Bush's in 2003 -- contained $231 billion in 2004 and 2005.

The largest piece of the overall tax relief would involve cuts for people who pay income taxes or who claim the earned-income credit. It would serve as a down payment on the "Making Work Pay" proposal Mr. Obama outlined during his election campaign, providing a credit to offset Social Security and Medicare payroll taxes of $500 per individual or $1,000 per family.

On the campaign trail, Mr. Obama said he would phase out a similar tax-credit proposal at around $200,000 per household, but aides said they haven't settled on an income cap for the latest proposal. This part of the plan is similar to a bipartisan initiative launched in early 2008, which sent out checks worth $131 billion.

As for the business tax package, a key provision would allow companies to write off huge losses incurred last year, as well as any losses from 2009, to retroactively reduce tax bills dating back five years. In effect, this would entitle companies to receive cash from the government that they otherwise couldn't have claimed.

A second provision would entice firms to plow that money back into new investment. The investment write-offs would be retroactive to expenditures made as of Jan. 1, 2009, to ensure that companies don't sit on their money until after Congress passes the measure.

A separate element would offer a one-year tax credit for companies that make new hires or reverse layoffs, which could be worth $40 billion to $50 billion. And the Obama plan also would allow small businesses to write off a broad range expenditures worth up to $250,000 in 2009 and 2010. Currently, the limit is $175,000.

Read more: http://online.wsj.com/article/SB123111279694652423.html

[David Ricardo]

1. Good

Gets money back in the hands of consumers. Might loosen up credit a bit with more dollars on the market as well.

[madrchsod]

2. that`s going to take a lot of accountants making sure there`s no fraud

good luck in doing that

[AwakeAtLast]

3. It's a great headline to read from the WSJ

:kick:

[rsmith6621]

4. Why Not $2500.00 Per Family

If were going try and stimulate the economy lets do it right......I don't want a band-aid I want the healing.

[FrenchieCat]

22. Because that would be too much money to spend?

And plus, that's not what he promised on the campaign trail. He promised a $1,000 tax cut for families. That's what he's now offering. He got 69 million votes running on that platform, and so there is no reason that he should change it just cause you want more. There's other things to do, like Infrastructure investments and job creation...for those who don't have a job currently.

[RC]

5. Aahh, why no mention of what Bill Clinton did to get the ecconomy moving?

Tax cuts remanisint of both bu$h's? How does that help anything or anybody except the rich. Do what Clinton did, raise the tax on the rich. Make them pay their fair share.
This country is already a trillion dollars in the hole and Obama is doing tax cuts without any tax increases to equalize things.

[Jakes Progress]

8. Tax cuts only help those who have jobs.

Those who need jobs need some of the money that bush gave to the millionaires to pay bills, buy food.

We need jobs. Don't just give tax credits for hiring back a dozen of the hundreds laid off. Charge a higher tax on company expenses that are sent to overseas workers.

The old tenet of government is to tax what you don't want to happen and credit what you do want to happen. Tax cuts make good slogans, but they appeal to those that hope for help that the cuts won't give.

Best tax cut? Health care. That's money we can see and use.

[FrenchieCat]

24. He's not only doing tax cuts for the middle class.....

He's also gonna reduce health care cost as well as job creation.

Geeze, 40% of this stimuli is vaguely announced, and folks are already bitching without knowing what the other 60% will entail. :eyes:

[Jakes Progress]

48. I'm responding to the post.

You know. Making a comment about what was posted. Voicing an opinion.

Your pom-poms are showing.

[FrenchieCat]

52. You mean your fangs are showing.

don't you?

[Jakes Progress]

69. Rah, Rah

won't get it. The man I voted for is bigger than your local junior high football team. His decision are more important. He needs your advice and wisdom more than he needs your adulation and worship. He's the best we have to offer in this messy world, but he ain't God. And he isn't benefitted by being your hunka hunka. He will benefit from the reasoned support of those who hope he lives up to what we voted for. When he starts going in a direction that I think is not right, this is one place where I come to voice my opinion. Your contributions appear to be only "Don't pick on my Barack!" and "If you complain, you must hate America." Or do you really have a point about why you thing giving tax breaks to those with $220K incomes is a good idea. bush though it was. Do you?

[Jakes Progress]

6. Why more tax cuts?

We did that. Didn't help. I like the provisions, but don't think they will be enforceable. Tax credits for bringing jobs back to the US sounds good. A CCC for infrastructure sounds good. With both of those we see tangible benefits from the money spent.

Can't we get more creative than tax cut?. Can't we get more creative than the republicans?

[notesdev]

7. It'll make a difference

for people who are treading water and barely holding on, which is a lot of people and is going to be more.

It'll do a hell of a lot more good in peoples' pockets than in some black hole of a financial industry accounting ledger.

[Jakes Progress]

9. How do you get a tax cut if

you don't pay taxes because you don't have a job? A tax cut to people making $200K is just more bushness. We don't need a nation of poor slobs treading water and trying to hang on. We need a revamping of the way the tax structure benefits the wealthy. Because of the way taxes are structured (engineered by the influence of the rich on Congress) any tax cuts will benefit the rich first. It is just another form of trickle down.

[notesdev]

10. That's not necessarily true

Tax cuts can be tailored to those making a certain amount and below, which is what I understand is to happen in this case.

As far as needing a job to benefit, that's not entirely the case, all you need is enough income for EITC, which isn't very much at all.

[Jakes Progress]

13. I understand you points,

but they don't work in the real world. First, the limit mentioned is $200K as an upper income to be eligible. Not exactly suffering at that level. How about $30K? That would help without being a bailout for the well off.

EITC only reaches about 10% of those in need. Even if they qualify, the people that I try to help in my volunteer life lack the skills to apply or to know when. They lack the neat desks and files that we are used to. Most never get near a computer. What they need is jobs. They have been laid off and let go and sacrificed to the alter of higher corporate profit. Usually by the kind of mid level functionaries who will benefit most from the tax cut bailout. Like with healthcare, cut out the middle men. A CCC for rebuilding the infrastructure is the surest way to both get money to the poor and to then have a product like a bridge or road to show for it after the money is spent.

I'm not against spending the money. I just know that if you offer free money, those who are greedy will get it before the needy.

[Turbineguy]

11. Repubs heads will explode.

:nuke:

[thesquanderer]

12. Republicans? Who needs them?

re: "a move aimed at attracting Republican support"

Geez, Obama has majorities in both houses, he only needs a handful of supporters from the other side. Why can't he simply put together a plan that he thinks is best, instead of putting together a plan that is designed to win Republican support?

I'm not questioning the plan, just the motive. It makes it sound like the dems are still in a minority mindset and don't know how to handle being the party in power. Though I don't know if the article is true, or just the WSJ's spin.

[Better Believe It]

14. Because Democrats will undermine Obama's stimulus plan .... they have already started

[rangersmith82]

15. Good

I think everyone making $200k a year or less should get a tax break.

[galileoreloaded]

17. He has to play ball a little bit, I think. It prevents...

the big sucking sound of M1, or money in the system. The majority of money in the system has been taxed already, and is easy to offshore and convert into lets say euro's, completely legally. Deflation is actually decreasing the money supply, and the Fed has some key indicators (notably the M1 multiplier) that are freaking them out right now.



They need the money to stay here and not trigger dollar selling, ergo, Obama has to play ball with the people who control the cash. A little inflation is good, but that kind is quite debilitating.

Not right, not pretty, but reality none the less.

[thesquanderer]

70. Obama answers

While political observers believe the now-added emphasis on business tax cuts as a major part of a stimulus package is one way the Obama team hopes to attract Republican support, that's not how the Obama camp sees it.

"We're working with Congress to develop a tax-cut package based on a simple principle - what will have the biggest and most immediate impact on creating private sector jobs and strengthening the middle class. We're guided by what works, not by any ideology or special interests," an Obama spokesperson told CNNMoney.com in an e-mail.

from http://money.cnn.com/2009/01/05/news/economy/obama_stimulus/index.htm

[PSPS]

16. Those earning less than $50K pay almost no federal income tax now.

The payroll tax accounts for over half the taxes paid by low wage earners, plus there's the horribly regressive "sales tax" levied in most states.

Some kind of tax adjustment is fine so long as it's properly crafted. For example, disallow business tax credits associated with any overseas operations. Remove the cap on income subject to the payroll tax (which, by itself, would eliminate any solvency problems with Social Security for perpetuity.) Bring back full taxation for short-term capital gains, leaving long-term taxed at a lower rate (discourages rampant speculation.)

Probably one of the best "tax cuts" that could be given is to expand Medicare to cover every citizen in the country. The amount of extra tax to fund it is far less than the premiums being charged by the insurance companies and their billionaire CEO's, so that would be an enormous net saving for everyone.

[FrenchieCat]

58. Folks making under $50K would get the EIC....

and so they would still get the money.

Sales Tax as you say are a State issue, and not a Federal issue. The Feds can't really go into that...plus the rates are all over the place depending on the state.

And yes, part of what Obama will do is to close the Tax loopholes for Corporations with overseas operations.

Removing the cap on SS limits is also part of the overall tax plan, but will be enacted at a different time..... It is not a part of the stimulus package, that is.

[Pastiche423]

18. Why did this get 5 recommends?

[Bigmack]

19. I'm hearing more and more....

from people who are getting worried about spending causing the World Lenders to stop backing our loans.

Then again, what else can he do?

[FrenchieCat]

20. This was the centerpiece of his campaign; to provide a MiddleClass tax cut...

I'm not sure why so many now have so much to say about this, when it was the plan all along. :shrug:

[Xenotime]

21. When did Obama talk about tax cuts in his campaign?

[FrenchieCat]

25. Throughout it.

Check out google by typing Obama, Tax cuts, and then read some of the 1,930,000 links provided.

you can also find out what your tax cut will look like via the tax calculator that has been at the Obama-Biden website throughout the general election. http://alchemytoday.com/obamataxcut/

or find out how it works via the video at his website: http://taxcut.barackobama.com/

[OwnedByFerrets]

23. The last thing this fucking country needs if more tax cuts....

shit, we are in a deep enough hole as it is now. This is fucking nuts.:silly:

[FrenchieCat]

27. That's what Obama ran on.

You must not have been listening to him?

Google Barack Obama, Tax Cuts and see the 1,930,000 hits. :shrug:

[Hawkowl]

26. STUPID EFFIN IDEA

We are in a liquidity trap. A crisis of consumer and investment confidence (real investment as in plant and equipment). An old style 19th century full blown economic panic. BORROWING more money from the CHINESE to provide a tax cut is irresponsible and next to useless. You will get a momentary blip of economic activity and then....NOTHING. Think about hiking down your pants and taking a whizz on a forest fire. That felt good didn't it? Now what?

In a crisis in confidence GOVERNMENT has the responsibility of starting the investment ball rolling. Infrastructure, bridges, highways, sewers, power grids, mass transit, hell even NASA and the green economy. Basically we need the government to make a titanic shift to the left: a mixed economy or as some will call it more of a socialistic approach.

All tax cuts will do is deepen the Bush Depression. The graph that was posted above is essentially a graph of money velocity. That is how many times one dollar is spent. Right now the dollars are going to giant corporations which are essentially stuffing them in their vaults. Not helpful in getting the economy moving. A tax cut adds a +1 to the velocity of a dollar, meaning that you get a dollar and then you spend it on reducing your debt which means the bank puts it in the vault. Not much more help.

Now by taking your tax dollar, (essentially the dollar we just borrowed from the Chinese), and using it on building a bridge, you get +1 for hiring a bridge builder, +1 from the wages the bridge worker spends, +1 from the actual benefit from improved commerce from the new bridge, and +1 in increased tax revenue from the increased wages and other economic activity.

So you want a tax cut? Or do you want more jobs? You can't have both. Bush proved it.

[FrenchieCat]

28. OMG!

We will have both Tax cuts and Job creation.

That's what Obama ran on, and that is what he will deliver.

If you didn't want a tax cut, you should have voted for McCain,
cause he wasn't offering one to anyone in the middle class.

I can't believe that folks have been on these boards throughout this election,
and then act like they were just born yesterday.


"doh...what tax cut...we don't need no stinking tax cut"

Just send yours back. :eyes:

[Hawkowl]

29. How about a cogent rebuttal?

Do you have any economic logic, statistics, or historical evidence to back up your hysterical assertions? Yeah he ran a tax cuts for the middle class not the rich. We are also on the precipice of the second Great Depression in 70 years. How about we just continue borrowing money and giving it away to bail out hedge funds? I'm all for giving money to those who make less than 40K a year (I make much more so that rules me out).

IT MATTERS WHAT YOU DO WITH THE MONEY. This is why economic policy can't be trusted to amateurs.

[FrenchieCat]

30. I'm an accountant by profession for 25 years....and what Obama promised is doable,

and will help the economy, and will be 40% of his stimulus plan. That leaves 60% for Infrastructure and green Job Creation and projects.

The details of the tax cuts as of right now according to the WSJ:

The largest piece of tax relief in the new plan would involve cuts for people who pay income taxes or who claim the earned-income credit, a refund designed to lessen the impact of payroll taxes on low- and moderate-income workers. This component would serve as a down payment on the "Making Work Pay" proposal Mr. Obama outlined during his election campaign, giving a credit of $500 per individual or $1,000 per family.

On the campaign trail, Mr. Obama said he would phase out a similar tax-credit proposal at around $200,000 per household, but aides said they haven't settled on an income cap for the latest proposal. This part of the plan is similar to a bipartisan initiative launched in early 2008, which sent out checks worth $131 billion.

Economists of all political stripes widely agree the checks sent out last spring were ineffective in stemming the economic slide, partly because many strapped consumers paid bills or saved the cash rather than spend it. But Obama aides wanted a provision that could get money into consumers' hands fast, and hope they will be persuaded to spend money this time if the credit is made a permanent feature of the tax code.

As for the business tax package, a key provision would allow companies to write off huge losses incurred last year, as well as any losses from 2009, to retroactively reduce tax bills dating back five years. Obama aides note that businesses would have been able to claim most of the tax write-offs on future tax returns, and the proposal simply accelerates those write-offs to make them available in the current tax season, when a lack of available credit is leaving many companies short of cash.

A second provision would entice firms to plow that money back into new investment. The write-offs would be retroactive to expenditures made as of Jan. 1, 2009, to ensure that companies don't sit on their money until after Congress passes the measure.

Another element would offer a one-year tax credit for companies that make new hires or forgo layoffs, which could be worth $40 billion to $50 billion. And the Obama plan also would allow small businesses to write off a broad range expenditures worth up to $250,000 in 2009 and 2010. Currently, the limit is $175,000.
http://online.wsj.com/article/SB123111279694652423.html?mod=special_page_campaign2008_mostpop

[Hawkowl]

34. You are making my point

The article says that last years tax rebates were ineffective because people paid down debt or saved it. Did you read my post at all? Are you familiar with a liquidity trap? How about addressing the precipitous fall of the velocity of money? Meaning once a dollar is spent it is disappearing instead of recirculating through the economy? That's basically what the article said what happened to the rebate. The multiplier effect of a tax cut would be nonexistent! They are "hoping" people would spend it?!?! Hope is a good election slogan, but A BAD ECONOMIC policy.

You just cut and pasted what the right wing rag, WSJ, posted. You are wishing to perpetuate the flawed, supply side economics that republicans have used to cause this crisis.

If you really want a tax cut for the middle class, then pay for it with an increase on the richest 10%. We need 100% of the stimulus package to be effective. Waste 40% and there isn't much left. Do you realize that the total amount of money pumped in by the Treasury and the Fed is approaching $8 TRILLION? There isn't much room for error anymore considering the GDP of the US is $13 trillion per year.

[leftstreet]

36. What you said!

:thumbsup:

You have an excellent way of spelling it all out.

[EconomicLiberal]

39. You nailed it!

:)

[FrenchieCat]

40. The increase on the rich comes in 2010.

and according to most economist, putting money into people's hands will help, and inflation cannot be a concern.

Folks who will be getting this money will spend it, because most of them are broke. These tax cuts are not going to the rich....unlike the bulk of tax cuts Bush gave....so it's not supply side, trickle down economic tax cuts we are talking about.

From my reading of various economists, this will help, as long as this is not all.
http://www.politico.com/news/stories/1108/15909.html
http://www.iht.com/articles/2008/11/07/opinion/edkrugman.php
http://blogs.ft.com/wolfforum/2008/11/obama%E2%80%99s-economic-challenges/
http://www.star-telegram.com/100/story/1112291.html

[EconomicLiberal]

43. Please tell me where Obama said that he would wait until 2010 for the Bush tax cuts to expire

during the campaign.

I would really like to see proof. How about a link?

[FrenchieCat]

51. Here are my links for proof.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3672648&mesg_id=3672960

[Hawkowl]

46. Again you make my point

First I, and virtually all economists are not concerned with inflation at this point. Deflation, as in the Great Depression, is the hobgoblin which is on the verge of taking down the world's economy for maybe 5 -10 years. This is happening because people, businesses, corporations aren't SPENDING money. It's not that they don't have it. It just that why spend it now when the price will be cheaper later? That's deflation in a nutshell. That is what causes depressions. Why invest your money when the interest rate is 0 %? Better to keep it in cash in your mattress because the cash will be worth more later because of DEFLATION.

Now the article on Romer states that they generally dislike tax hikes on the rich in a recession because it discourages investment. However, nobody is investing right now because of the potential deflation, zero interest rates, and the outright fear that Wall Street is a giant Ponzi scheme. So it is better for the government to keep their tax dollars and spend it for them. This generates economic activity and begins to restore confidence.

The Wolf Forum article states: "This means a willingness to accept that the U.S. will need to raise its average tax rate from what it is, by the standards of high-income countries, a very low level". See?!?! Raise not lower taxes.


The rational is stated beautifully in the final article you list from the Star-Telegram which goes into an excellent analysis of infrastructure and the multiplier effects of building a bridge! (Like what I said.)

Did YOU read the article? The following is a direct quote:

"Focus on years ahead

For each $1 invested in infrastructure spending, around $1.60 in economic activity would be generated, according to estimates by some economists.

Put a different way: Peter Morici, economist at the University of Maryland, projects that $100 spent on a bridge or school boosts economic activity by about $200. (That doesn’t count the benefit of improving Americans’ longer-term productivity. For instance, better roads could reduce commuting times or help get goods to customers more efficiently.)

Can tax cuts help rejuvenate the economy? Some are skeptical.

"Most infrastructure spending will create more jobs by year-end 2010 than a tax cut, particularly a temporary tax cut," said Mark Zandi, chief economist at Moody’s Economy.com. "Some of any tax cut will be saved. And some of it will be spent on imported goods, reducing its jobs impact."

Do you see my point that you are making yet?

[FrenchieCat]

49. I read the articles,

and I disagree with your conclusion.

and rereading as you suggested.....

For each $1 invested in infrastructure spending, around $1.60 in economic activity would be generated, according to estimates by some economists.

Put a different way: Peter Morici, economist at the University of Maryland, projects that $100 spent on a bridge or school boosts economic activity by about $200. (That doesn’t count the benefit of improving Americans’ longer-term productivity. For instance, better roads could reduce commuting times or help get goods to customers more efficiently.)

Can tax cuts help rejuvenate the economy? Some are skeptical.

-------------
Some are skeptical, and that would include you.
But skeptical means that they have doubts.....not that they know for sure what will work.

Again, 60% of the stimulus will be put towards job creation via Infrastructure, energy Green technology and Health Care.

This means that Obama is not only fulfilling his promise for Middle Class tax cuts, he will be stimulating the economy, which according to the math, the 60% will do plenty....and the tax cuts will put money into the hands of those who need it, and not the rich.

So I don't know about this "fault" finding mission that is going on here, but I'll trust Obama and his calvary of economic advisors and my own experience in the world of finance over yours. Sorry, but know how to "sound" good, but you are not as good or as sound as you sound.

[Hawkowl]

53. So you concede with the personal attack?

You are hell bent on your tax cut RIGHT NOW! Obama is in office for 4 years, wouldn't it make more sense to use the BORROWED MONEY FROM THE CHINESE to invest and get the economy going again and THEN you can have your $500 miserable dollar tax cut? Did you know that Obama carried the demographic of those who make over $250,000 per year, even though they knew Obama pledged to raise their taxes? Why? Because it's for the good of the country and these people know they'll make more money when the economy improves. It is not a given that we pull out of this recession any time soon. Policies will prolong or decrease this recession.

It's obvious you trust "Obama and his calvary of economic advisors". Unfortunately many of these advisors are part and parcel of those same advisors that precipitated this mess. Now if they want to err on the side of caution and give $500 per worker spread out over a year, fine. Just don't decrease the infrastructure part of the stimulus. The PART THAT WILL ACTUALLY DO SOMETHING.

You say 60% is enough infrastructure stimulus? That translates into about $300 billion dollars. Or about what we spend in Iraq in one year. How's there economy doing? With the population of about Canada it isn't doing squat. So once again it is important to do the proper stimulus and not just piss it away.

Time will tell.

[FrenchieCat]

55. $300 Billion is 40% of 750 Billion. 60% of 750 Billion is 450 Billion left to spend....

and none of it will be pissed away.

This is not supply side economics we are talking about. The tax cuts are not aimed at the rich and the Corporation. It is not trickle down economics. And folks out there are hurting, and need the money.....unlike before, when everyone was living fat off of their Equity Credit lines and their credit cards.

[EconomicLiberal]

31. From what I have seen on this forum.

If Obama told Frenchie to jump, she'd jump.

Obama promised to rescind the Bush tax cuts in his first year in office. That is a fact. Now he is apparently changing his mind. But it doesn't matter. The same members will defend Obama at all costs. He never does anything wrong.

[FrenchieCat]

32. A challenge to you; find the quote.

If you want to provide the source in where Obama is quoted as saying that he would rescind the Bush tax cuts in his first year in office, than I'll apologize and I'll shut the fuck up.

Now if you want to talk about me but not to me....fucking fine, but that's chicken shit.

[FrenchieCat]

33. And I'll add, that you can get personal with me if you so choose,

but I don't see you providing any intelligent substance to the discussion, apart from getting personal with me, and not even being brave enough to address me directly....but rather, talk about me with some other poster. How fucking childlike is that? :shrug:

[EconomicLiberal]

35. I apologize if you were offended.

I was being an ass. I'm sorry.

Back in May of 2007, Obama said he would repeal the Bush tax cuts. He did not say anything about letting them expire.

http://www.nytimes.com/2007/05/14/us/politics/14talk.html?fta=y

[FrenchieCat]

41. Where is the quote? You are offering a vague piece of a quote from May of 2007!

I know that you can do better than that....since you denounce me as an Obama "fan" "apologist" and whatever else you determined was my status here at DU.
.....and of course I was offended. That was your aim afterall, wasn't it?

[EconomicLiberal]

42. The New York Times is a reputable source.

I provided evidence. Sorry that the NYTimes does not meet your approval. Maybe I'll have to find an article in the Moonie Times instead?

As I said, it is a fact that Obama promised to repeal the Bush tax cuts during the campaign. He never said anything about letting them expire.

[FrenchieCat]

47. I'm sorry, but you failed.

Following is a summary of their tax and budget proposals - dated June 4, 2008

TAXES

McCain would continue President George W. Bush's 2001 and 2003 tax cuts that he initially opposed. Those tax cuts are set to expire at the end of 2010. He advocates cutting the corporate tax rate to 25 percent from 35 percent and he would allow businesses to immediately write off capital expenses.

McCain advocates a simpler tax system with two tax rates and a generous standard deduction. He would double the deduction for dependents to $7,000 to help those trying to raise a family, and phase out the alternative minimum tax, which threatens to ensnare millions of middle class taxpayers along with the wealthy.

He has proposed a suspending federal gas tax during the summer.

Obama would let tax cuts for the wealthy expire. For the middle class, he proposes a $500-per-person tax credit, or $1,000 per family, to offset payroll taxes. He would eliminate taxes for elderly people making less than $50,000. He advocates simplifying the tax-filing process.
http://www.reuters.com/article/topNews/idUSN0342387320080604



Obama Would Leave Bush's Tax Cuts in Place for 2 Years
by david mizner
Fri Jul 06, 2007 at 08:00:43 AM PST

"To help pay for all this, we will ask all but the smallest businesses who don’t make a meaningful contribution today to the health care coverage of their employees to do so by supporting this new plan. And we’ll also allow the temporary Bush tax cuts for the wealthiest Americans to expire."
http://www.youchoose08.net/2007/07/obamas-cheap-healthcare-promise.html

http://www.dailykos.com/story/2007/7/6/104726/0056/332/354619

[JanusAscending]

37. After you take

your head out of the sand...........GO SOAK IT !! Seems like you are lost. Sure you're in the right forum???? Dang.......people like you make me :argh: NUTS !!!

[EconomicLiberal]

38. So we should just willingly accept Obama breaking one of his biggest campaign promises?

Sorry, but I am not going to just ignore this. I voted for Obama because of his promise to repeal the Bush tax cuts for the wealthy.

[FrenchieCat]

Until you find the quote in where makes the promise

that you are now accusing him of breaking, then you'll be redeemed.

Thus far, the promise that Obama made was to deliver a tax cut to middle income Americans.....which is what this OP is about. Somehow, you find it fit to criticize me for standing up to the naysayers who want to act like---
1. Obama never promised tax cuts, which he certainly did.
2. That these tax cuts are supply side, which they are not, as they are not targeting the rich or corporations, but middle class earners and small businesses.
3. That he promised to rescind the Bush Tax cuts prior to their expiration, which I do not believe he did, and which I am still waiting for the quote from Barack Obama on this. Hopefully, a quote less than a year old would more appropriate than one from May of 2007.
4. That the treasury is too broke for us to afford tax cuts....which is not what the economists are saying in drove.

[RamboLiberal]

44. And when Obama made that promise this economy wasn't

as in the toilet as deeply as it is now. IMHO the smartest move economically and politically that Obama can make now is just let the Bush tax cuts die their natural death in 2010.

I'd rather give Obama flexibility to tailor to changing situations his solutions than to tie him to every campaign promise he made months and even up to a year or more ago.

And I'd rather we give Dems some flexibility to ensure that they get reelected and even grow the Congress in 2010 and Obama gets reelected in 2012. I don't want another 1994 debacle in giving the Repukes a new platform to run on and win.

[EconomicLiberal]

45. "And when Obama made that promise this economy wasn't as in the toilet as deeply as it is now."

Yes it was. That is revisionist history. And it is yet another excuse for Obama breaking a campaign promise.

What is waiting for 2010 to let the tax cuts expire the smartest move economically?

[FrenchieCat]

50. Show me the quotes.....As I have shown you that he didn't break any promise.

Only what the MSM said he broke his promise, as they did on the story about his "promising" to take public financing when that wasn't what he had stated at that time either. And I guess you buy their Corporate bullshit reporting before you believe anything the Democratic President has said, because you are parroting them now.


AGAIN....Here are my quotes. I'm still waiting for yours.

Following is a summary of their tax and budget proposals - dated June 4, 2008

TAXES

McCain would continue President George W. Bush's 2001 and 2003 tax cuts that he initially opposed. Those tax cuts are set to expire at the end of 2010. He advocates cutting the corporate tax rate to 25 percent from 35 percent and he would allow businesses to immediately write off capital expenses.

McCain advocates a simpler tax system with two tax rates and a generous standard deduction. He would double the deduction for dependents to $7,000 to help those trying to raise a family, and phase out the alternative minimum tax, which threatens to ensnare millions of middle class taxpayers along with the wealthy.

He has proposed a suspending federal gas tax during the summer.

Obama would let tax cuts for the wealthy expire. For the middle class, he proposes a $500-per-person tax credit, or $1,000 per family, to offset payroll taxes. He would eliminate taxes for elderly people making less than $50,000. He advocates simplifying the tax-filing process.
http://www.reuters.com/article/topNews/idUSN0342387320080604



Obama Would Leave Bush's Tax Cuts in Place for 2 Years
by david mizner
Fri Jul 06, 2007 at 08:00:43 AM PST

"To help pay for all this, we will ask all but the smallest businesses who don’t make a meaningful contribution today to the health care coverage of their employees to do so by supporting this new plan. And we’ll also allow the temporary Bush tax cuts for the wealthiest Americans to expire."
http://www.youchoose08.net/2007/07/obamas-cheap-healthcare-promise.html

http://www.dailykos.com/story/2007/7/6/104726/0056/332/354619

[katusha]

59. economic policy can't be trusted to amateurs?

Have the professionals done better? Milton Friedman? Alan Greenspan? Henry Paulson?

[Runcible Spoon]

60. EXCELLENT post!

I don't see why everyone is getting all orgiastic about tax cuts when Obama suggests them, but bashes Bush for using the same flawed approach to economic stimulus. We need JOBS, we need CREDIT/LOANING reform, we need infrastructure, I could go on. Handing out a measly $1,000 makes, what? one mortgage payment? A few months of student loan payments? The people who are REALLY suffering are the ones with no jobs or those who are underemployed and will be ineligible. This does jack shit for them. I recognize Obama wants to pour money into infrastructure, but skip the tax cuts and focus on those in REAL NEED.

[FrenchieCat]

61. What I don't understand is folks who join in the rah rah of falsehoods!

The bash that Bush took in his tax plan was due to the fact that the major portion of his tax cuts went to the rich and to corporations. Obama is not using that flawed supply side approach to his economic stimulus, nor to his tax cut proposals.

A measly $1,000 is relative. To some, it is a good sum of money.

In addition, he will be spending $450 Billion creating jobs. The combination of providing tax cut "for those who need them and will spend the money" and generating jobs in areas that will not only employ folks but provide actual finished products that will be worth more than the money put into them is how the stimulus will work.

I wish folks would stop pretending that they know anything about economics, and then attempt to bash Obama over the head for doing what he'd say he would do. Seems like folks are just looking for a goddamn excuse, and showing their ignorance on the subject in the meantime. :eyes:

In the business of accounting, there is a disclaimer put on all financial statements wich reads..... "Accordingly, this financial information is not designed for those who are not informed about such matters."

[Runcible Spoon]

62. I'm sorry, but spewing WSJ talking points does not indicate your knowledge of economic policy

nor does your rabid, undying devotion to Obama's neoliberal advisory panel on economics. I would think that as an accountant you would take a wider interest in researching globalization and neoliberal economics, but that does not seem to be the case. Regardless of how much goes to the middle class vs. the rich, capital injection in a deflationary economy is a waste of resources. This has been pointed out to you by people with more patience than I. People have gone round and round and round with you on this, it's not worth my time to dig up a bunch of references you will dismiss out of hand without looking at or considering, so I won't bother. Arguing with a spin machine that spits back nothing but baseless assaults on other's education and cut and pastes from change.org is a pointless endeavor. Cheers.

[FrenchieCat]

63. the WSJ only listed what the plan was, and didn't editorialize as far as I could see.

"Regardless of how much goes to the middle class vs. the rich, capital injection in a deflationary economy is a waste of resources." is what you said, right?

There is a reason that the manner in which Obama is going to provide the tax cut is per each paycheck, for two years, as opposed to a lump sum. The extra money will not be enough to save, but will make enough of a difference in the purchase of food, helping pay the mortgage, etc.....

The problem with Bush's tax rebates were that people saved the money rather than spending it as they were getting it in a lump sum. This time around, the tax cuts are not aimed at or structured as they were under Bush.

They are not stupid, the Obama team understand the dangers of deflation.
Look who's he got on his team: http://www.politico.com/news/stories/1108/15909.html

Here, for those who don't:

In more recent economic thinking, deflation is related to risk: where the risk adjusted return of assets drops to negative, investors and buyers will hoard currency rather than invest it, even in the most solid of securities. This can produce the theoretical condition, much debated as to its practical possibility, of a liquidity trap. A central bank cannot, normally, charge negative interest for money, and even charging zero interest often produces less stimulative effect than slightly higher rates of interest. In a closed economy, this is because charging zero interest also means having zero return on government securities, or even negative return on short maturities. In an open economy it creates a carry trade, and devalues the currency producing higher prices for imports without necessarily stimulating exports to a like degree.

In monetarist theory, deflation is related to a sustained reduction in the velocity of money or number of transactions. This is attributed to a dramatic contraction of the money supply, perhaps in response to a falling exchange rate, or to adhere to a gold standard or other external monetary base requirement.

Deflation is generally regarded negatively, as it is a tax on borrowers and on holders of illiquid assets, which accrues to the benefit of savers and of holders of liquid assets and currency. In this sense it is the opposite of inflation (or in the extreme, hyperinflation), which is a tax on currency holders and lenders (savers) in favor of borrowers and short term consumption. In modern economies, deflation is caused by a collapse in demand (usually brought on by high interest rates), and is associated with recession and (more rarely) long term economic depressions.
http://en.wikipedia.org/wiki/Deflation_(economics)

Excerpts of Krugman's column from yesterday:

Fighting Off Depression
By PAUL KRUGMAN
Published: January 4, 2009

...The analysis of John Maynard Keynes, who argued that monetary policy is ineffective under depression conditions and that fiscal policy — large-scale deficit spending by the government — is needed to fight mass unemployment. The failure of monetary policy in the current crisis shows that Keynes had it right the first time. And Keynesian thinking lies behind Mr. Obama’s plans to rescue the economy.
----
This is a problem with which Keynes was familiar: giving money away, he pointed out, tends to be met with fewer objections than plans for public investment “which, because they are not wholly wasteful, tend to be judged on strict ‘business’ principles.” What gets lost in such discussions is the key argument for economic stimulus — namely, that under current conditions, a surge in public spending would employ Americans who would otherwise be unemployed and money that would otherwise be sitting idle, and put both to work producing something useful.

All of this leaves me concerned about the prospects for the Obama plan. I’m sure that Congress will pass a stimulus plan, but I worry that the plan may be delayed and/or downsized. And Mr. Obama is right: We really do need swift, bold action.

Here’s my nightmare scenario: It takes Congress months to pass a stimulus plan, and the legislation that actually emerges is too cautious. As a result, the economy plunges for most of 2009, and when the plan finally starts to kick in, it’s only enough to slow the descent, not stop it. Meanwhile, deflation is setting in, while businesses and consumers start to base their spending plans on the expectation of a permanently depressed economy — well, you can see where this is going.

So this is our moment of truth. Will we in fact do what’s necessary to prevent Great Depression II?

http://www.nytimes.com/2009/01/05/opinion/05krugman.html

and nothing I stated in any of my posts anywhere in this thread were from change.org...as I give proper attribution to whatever I type or paste.

I think you don't know what you are talking about. That's what I think. I think you are predisposed to poo on everything that Obama proposes period. I may be a fan, but at least I speak with the facts on my side. The naysayers just get emotional and act like they know everything, when that is not really true.

[eridani]

65. Agreed. The least effective economic stimulus possible

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=114&topic_id=52888&mesg_id=52888

[FrenchieCat]

68. So myopic, till it ain't even funny!

These are permanent tax cuts to the payroll tax tables, and are only 40% of the stimulus, if that. There is a reason why Krugman states that Obama has the right idea in what he is doing with his plan.

I'm gonna go with him, and not some little laundry list about the worse and the worser. :eyes:

What Krugman had to say just yesterday.....
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=132&topic_id=8057791&mesg_id=8057791

[eridani]

71. That laundry list consists of actual calculations

We can't afford any money used ineffectively, given that we are in real financial trouble.

[DuaneBidoux]

66. I've always been convinced that money velocity is the single biggest diffference between Dems & Rep.

and the difference in economic performance. Dems do things that increase money velocity and Republicans do things that decrease money velocity.

Having said that you must understand what an incredible sum of money we are talking about with $850 billion package. Even spending that money as absolutely fast as you can it will take three years to spend it. It is just too much to be reasonably done in an effective way as fast as we need the stimulus to kick in.

Thus, if we could come up with a tax cut (permanent or semi-permanent) for the middle and working classes we will be effectively sending money into the economy from two directions at once, and the tax cut can be a bridge until the investment money can begin to kick in. If we do know that the cut is permanent (or at least until we are in our next up cycle) then many people may also be able to hang on to their houses if they were ready to lose them or be able to afford a car, etc.

The biggest potential for me that this has to piss me off is if we get to the end of the administration one day and Obama is saying "we had so many troubles we just couldn't afford to fix health care." That would piss me of big time.

[HamdenRice]

67. I agree completely, and hope they change their minds. This is a consumption crisis

and there is no guarantee -- indeed no reason whatsoever to believe -- that a tax cut, even for the working class, will translate into demand increases.

The only way out of the current crisis is direct government expenditures. I do think, however, that the emphasis on "infrastructure" is misplaced. There just aren't that many people in construction. The stimulus has to be much more broadbased and take account of the fact that we have become a service economy.

Something like the 1970s era jobs program, CETA, would be much more effective.

[w4rma]

54. Recend the Bush tax cuts now, and Obama could use the funds to claim a larger tax cut than Bush's.

Heck, recend Regan's tax cuts, also. And Obama could use those funds, too. Democrats could restructure the entire income tax system.

Obama and the Congressional Dems have the mandate to do it.

[FrenchieCat]

56. It's not a battle worth fighting, considering the amount of time

and the fight he will get from the Republicans to get it done...considering that those Bush tax cuts are expiring anyways. Politically, it is dumb to do, and economically, it may not make as much sense as you suggest. Capital tax gains? Hardly anyone will have any, so there will be no windfall from there. 3% difference on the top 1%? They will fight to the death, while Obama would have to expand political capital and precious time on that fight instead of moving us along to health care, etc.....

It really isn't worth it, when one crunches the numbers and add it to the political equation.

He is still planning on closing Corporate Loopholes and other matters that will help fund the tax cuts he is proposing. I believe that he knows what he's doing in order to get his whole agenda through, as opposed to being stalled based on something that, at the end of the day, will have hardly been worth it.

[babylonsister]

57. $300B? OK. nt

[DuaneBidoux]

64. With the amount of money to be spent by gov this is probably reasonable.

They are talking about $850 billion and that is such an incredible sum that it will take litterally two years to spend it all.

If we take it and divide it up and put some into tax cuts (especially for middle class) then more of the money will actually reach the economy faster.

What would piss me off?: if the wealthy get ANY of this and if we get to the end of the Obama administration and he says "we just couldn't afford health care reform."