Ellington

Take one from column A and one from column B. That seems to be the strategy for the divisive issues of unemployment benefits vs. the Bush-era tax cuts. Republicans, in line with their well-entrenched obstructionist strategy of the past two years, made it clear that no legislation would get through the lame-duck session without first extending tax cuts for the wealthy.

But what does that mean, really? The actual cost of the tax cuts could be more than President Obama's stimulus package, reports The New York Times:

While a detailed cost analysis was not immediately available, Senate aides said the package would cost $858 billion, with tax breaks accounting for $801 billion, making the proposal even more expensive than last year's economic stimulus.

Really? Does anyone really still believe that any of the tax cuts retained by the wealthy will ever trickle down? And what about all the (apparent) hot air about deficit reductions?

Here's how it breaks out for the wealthy according to the story:

The bill would ... provide a generous tax exemption for wealthy estates; maintain lowered rates on capital gains and dividends; and prevent the alternative minimum tax from hitting up to 21 million more households, all for two years.

In the current bill, the estate tax exemption, for example, is $5 million per person and a top rate of 35 percent, an increase from $1 million and 55 percent that was scheduled to go back into effect in January, representing a revenue loss of $68 billion alone.

The upside for the rest of us is that jobless benefits will be extended for 13 months for the many long-term unemployed in America (in Mississippi, that's average of about $178 a week and a maximum of $230 a week), "grant a one-year payroll tax cut for nearly all workers, and would extend other tax breaks for middle- and low-income workers and businesses aimed at revving up the still-struggling economy," the story continues.

"What will the passage of this legislation mean for the future of our country?" asked Senator Bernard Sanders, I-Vt. on the floor of the Senate this morning. "If we pass this agreement as written, it says that we are going to the Bush policy of trickle-down economics for at least two more years. And to my mind, that is absurd because this is a policy, based on all of the evidence, that grotesquely failed."

As I write this, Sanders has been filibustering the bill for seven hours. Go Bernie!

Previous Comments

ID

161272

Comment

@ Ronni - Sister you stating the obvious. This new Republican controlled house is running towards fiscal suicide and heading this country to anarchy, simply to make this president look bad. The American citizenry has spoken in this past political cycle and they gave'em the keys to the cars in the garage, the ATM codes, the titel and deed to the house. Your making a lot of sense, but that sad thing of it all - enough people are not hearing it. But I do feel where your coming from. I only suggest - high doses of Crown Royal, Bud Light and whatever booze you can get your hands on! It will be one hell of a news cycle to 2012.

Author

Duan C.

Date

2010-12-13T09:13:02-06:00

ID

161280

Comment

It is a fact that the richest 2% does not invest towards job creation. This money is spent on luxury items, investments in other countries and bigger nest eggs for their children and grands. These habits have continued for many generations. The "WEEPER" of the House, Bonner, will surely have something to cry about if/when this economy tanks again. The cliff will be too high to clime over and too low to be lifted out of. Is it alright for these jokers to sit back and watch America go to hell in a bread-basket. If you don't care: You don't care! The reality is simply the fact that this 2% can relocate to other countries if/when America falls. This reminds me of the guy who blogged on one of the links about once living in NE Jackson, Fondren but moved to Madison because of the bad streets and falling infrastructure here in Jackson. Do these folks realize that they are taking away the tax base when communities are deserted? The drain on Jackson started during the early seventies and secondary to integration. Now we are expericing a new exodus: The departure of the super rich from this country.

Author

justjess

Date

2010-12-14T11:53:17-06:00

ID

161286

Comment

The "WEEPER" of the House, Bonner, will surely have something to cry about if/when this economy tanks again. Boehner, actually. Tan Man works too. Anyhow, he'll just blame Obama and the Democrats.

Author

golden eagle

Date

2010-12-15T09:20:31-06:00

ID

161287

Comment

@ JustJess - "The reality is simply the fact that this 2% can relocate to other countries if/when America falls. This reminds me of the guy who blogged on one of the links about once living in NE Jackson, Fondren but moved to Madison because of the bad streets and falling infrastructure here in Jackson. Excellent point! Keep'em coming!

Author

Duan C.

Date

2010-12-15T09:25:16-06:00

ID

161402

Comment

All of the numbers produced by the commonly quoted government entities--Congressional Budget Office,the Council of Economic Advisors, etc.--use static analysis which assumes that people and businesses do not respond to changes in the tax code and other government policies. Obviously they do, but we can't predict how much they change there behavior (which is why the government defaults to static analysis, they could not agree on the affect). Consequently, no one knows what the "costs" are. All of the these estimates have limited validity yet we discuss them as if they did. We do know that the top earners have much more discretion on how much work high income they do and how much income they recognize (discretionary securities sales, for instance); in candid conversation both sides of the political spectrum disagree on the magnitude of this affect, not its existence. The second order affect is what the economy does as a result of the bill. If it grows faster than the underlying estimates then the income taxes and the unemployment benefits costs are lower than forecast. If you could consistently predict these affects with any accuracy you could run a very successful investment fund. justjess: 60-80% of the new jobs in this country appear to come a tiny fraction of new businesses that are high potential and innovative (not to be confused with the slower growth businesses like the local shop owner or one-peson e-bay merchant who also get picked up in the small business statistics). It is illegal under Federal securities law to sell investments in those new businesses to anyone other than institutions (that generally don't invest during the early, highest growth stage) or to "accredited investors" (defined by the SEC as having a financial net worth of over $1 million or income over $250,000, sound familiar?). While these investors put less than 5% of their net worth into these new high growth companies (since the fail rate is around 50-90%), virtually all of the funding for these companies comes from that 2% (who comprise all the Accredited Investors). Their funding of those companies has dropped by about 50-75% since 2007 due to reduced income and net worth, economic uncertainty, and uncertainty on tax and regulatory policies at the state and Federal levels. Perhaps you can suggest a funding source to replace the $20-30 billion a year of equity those individuals invest in these companies? justjess: I have not seen evidence of an exodus of the 2% from this country; perhaps you have some statistics on this? If they were to leave, then you (but not I) might applaud for two reasons. First, when they leave they pay an exit tax similar to but higher (last time I checked) than than the estate tax. Second, you probably feel that their economic contribution to society is less than their income. So, if they pay money to the government to leave and were a drain on society in the first place, why would you not be happy to see them go? I would not be happy to see that because most societies that create such an exodus are on the verge of, at best economic stagnation, if not total collapse.

Author

RichardASun

Date

2011-01-01T17:14:42-06:00