[luke warm]

hrothgar, on 2010-December-06, 10:59, said:

Maybe abuse of the Senate rules have blocked any possibility for the democrats to pass legislation?

yeah, that's probably it... i'm sure obama will speak on the subject soon, probably to tell everyone that across the board renewal won't do

[hrothgar]

luke warm, on 2010-December-06, 16:44, said:

yeah, that's probably it... i'm sure obama will speak on the subject soon, probably to tell everyone that across the board renewal won't do

I seem to recall a number of threads a couple years back in which folks on the right were trying to claim that Obama was a raging socialist (the most "liberal" member of congress). I commented that he was a centrist and not particularly liberal.

Very little that I've seen since then has convinced me to change my mind...

FWIW, I've seen pretty good arguments both

1. In favor of letting all the tax cuts expire immediately
2. In favor of a temporary extension of all the tax cuts

Personally, I find Krugman and Rich more convincing than Sullivan and co on this one.
Let the tax cuts expire.
Force the GOP to veto a new round of tax cuts for the middle class on down.
Hang this around their necks.

This is the position that has overwhelming popular support.
Pity the the democrats are so gutless.

[hrothgar]

luke warm, on 2010-December-06, 16:44, said:

yeah, that's probably it... i'm sure obama will speak on the subject soon, probably to tell everyone that across the board renewal won't do

I seem to recall a number of threads a couple years back in which folks on the right were trying to claim that Obama was a raging socialist (the most "liberal" member of congress). I commented that he was a centrist and not particularly liberal.

Very little that I've seen since then has convinced me to change my mind...

FWIW, I've seen pretty good arguments both

1. In favor of letting all the tax cuts expire immediately
2. In favor of a temporary extension of all the tax cuts

Personally, I find Krugman and Rich more convincing than Sullivan and co on this one.
Let the tax cuts expire.
Force the GOP to veto a new round of tax cuts for the middle class on down.
Hang this around their necks.

This is the position that has overwhelming popular support.
Pity the the democrats are so gutless.

[Winstonm]

Too bad Obama isn't a mafiosa boss - Barrack "The Weasel" Obama has such a fitting ring to it.

Richard calls this guy a centrist Democrat - my age group called them Republicans.

[kenberg]

Name calling at Winston's


Oh I hate you, you, you Centrist Democrat!
What did you call me! Say that again, you Republican.
Hah! Your mother voted for Eisenhower.
Yeah? Your mother campaigned for Taft. And what did they do after the rally?

[kenberg]

As I understand it, Obama has now made a deal with the Republicans: They can give scads of money to people who don't need it if he can give scads of money to other people, some of whom actually need it. Any concern about the deficit can be put off for another day.

I am now seriously worried about the future of this presidency.

[PassedOut]

So the "compromise" is that both parties get away with adding to the deficit and neither makes any effort to pay the bill: Package to Aid Most, Especially Wealthy.

Quote

In fact, the only groups likely to face a tax increase are those near the bottom of the income scale — individuals who make less than $20,000 and families with earnings below $40,000.

The poor pay now to give tax cuts to the rich, and the younger people will pay later.

Obama did lay out his reasoning effectively in the press conference today, but he'd better show that fighting spirit for two years straight if he wants to beat Mitt Romney in 2012.

[kenberg]

I am afraid I found his speech weak. The Republicans made me do it, those nasty hostage takers. Oh Oh It's just so awful, what is a caring guy like me to do. Oh me, oh my.

I exaggerate? Sure. But it wasn't good.

[PassedOut]

kenberg, on 2010-December-07, 21:25, said:

I am afraid I found his speech weak. The Republicans made me do it, those nasty hostage takers. Oh Oh It's just so awful, what is a caring guy like me to do. Oh me, oh my.

I exaggerate? Sure. But it wasn't good.

I didn't like the speech either. Thought the press conference was a lot better.

[kenberg]

First, a story that I suppose is irrelevant but I will tell it anyway.
The local bank has a Christmas tree, patrons are invited to leave a gift for a child who needs one. We stopped by Kohl's to get a Fisher-Price toy and while there we picked up a couple of rolls of wrapping paper. The toy and the paper were marked as on sale, the store had an additional 15% discount, and we got a rebate based on our previous purchase on another day. Total bill: $12.31. The gal at the register informed us: You saved $31.54 today. Now I know she is required to say such things and I don't give her a hard time, but it is tempting to reply "No, I spent $12.31 today". The savings are totally fictional. I doubt it would be possible to find a store where the toy and two rolls of wrapping paper came to $43.85. The words "You saved ..." have no meaning whatsoever.

End of that story. Now:

This deal is described as a compromise. In what sense? In 1945 the U.S. and Japan came to a compromise. They agreed to total surrender, we agreed to stop dropping atomic bombs. Obama agreed to a tax deal that will cost hundreds of billions, the Republicans agreed to let him continue to send money to those who are unable to find a job. If this man is representing my interests, I expect better.

I did not save $31.54, and this deal was not a compromise.

[PassedOut]

kenberg, on 2010-December-08, 07:41, said:

I did not save $31.54, and this deal was not a compromise.

Indeed Obama's deal was not a compromise, and to reinstate those poorly conceived tax cuts was shortsighted and foolish, in my opinion. It was truly a "compromise."

[y66]

David Leonhardt has a pretty good take on compromise elements of this deal.

You can argue about the merits of the deal. Personally, I favored the Berg/Krugman alternative. But it seems inarguable that the Democrats have proven themselves inept at managing the legislative process.

[blackshoe]

So what else is new?

[kenberg]

Depends on how new you are thinking.


Bill Clinton managed the legislative process reasonably well, despite his failure to push health care through. So did LBJ. These guys were consummate politicians, whatever you think of the course they set sail on. If memory serves me right, both Clinton and Johnson lost an election early in their careers. This can help provide balance in later years.

I'm sort of serious about this. Obama perhaps believed the press about how transformative he was (whatever that means) and now he seems a bit at a loss after discovering that he is just another president.

He has to get his act together, and quick. A weak presidency is not in the national interest.

[awm]

This "compromise" on tax rates would be more palatable if they allowed the capital gains rate to rise. As opposed to raising the income tax rates:

Raising the capital gains rate would not punish people whose income is from business profits (the people Republicans claim raising the top bracket hurts).
Raising the capital gains rate is a matter of fairness -- the current system allows rich hedge fund managers (and Warren Buffet) to pay lower tax rates than their secretaries.
Raising the capital gains rate punishes the "investor class" whose gambling with the economy arguably caused the economic crisis.
Raising the capital gains rate recoups some government revenue, which can be used to pay for extending unemployment insurance (which Republicans insisted should be "paid for").
Raising the capital gains rate will have little effect on poor or middle-class Americans (few of whom have significant savings).
Eliminating the preferential treatment of capital gains was recommended by the bipartisan deficit commission, and by most of the alternatives coming out of various focus groups.

[phil_20686]

I am not sure about that adam. Agree the actual measures taken are absurd, but capital gains tax should always be preferential rates compared to income tax to account for inflation: If your investment rises in line with inflation you have made no real gain but you still have to pay CGT when you liquidate which has two negative effects:

1) Because you need more lucrative opportunities to invest it will decrease entrepreneurial investment in general, and will also tend to encourage pension funds and other long term institutional investors to rebalance in terms of riskier (and higher paying) investments. Also most ordinary people have significant savings via their pension funds, which will be among the biggest losers.

2) In the long term it will tend to de-capitalise the economy by extracting capital from every investor who makes a marginal decision.

Having said that, while it should be given preferential rates does not necessarily mean that it should be taxed at a very low level. What the optimum should be I am not qualified to say, and doubtless depends on both the rate of inflation and the rate of income tax, but I am certain the optimal level is significantly below income tax.

[mike777]

As I have said in other posts if fairness is most important then fix the gift tax laws.

Raise the rate to 70% and get rid of all of the exemptions. This will include such issues as insurance payouts,foundations, trusts and the estate tax as well as gifts.

That means people such a Buffett and Gates and many other billionaires will pay alot more in taxes.

If you want to gift your money to someone, kids, anyone fine, and thank you but tax them at 70%.


The money can be used to feed, educate and shelter truly poor people.

[kenberg]

For me, it's not the various technical features. Here is what strikes me:

A week ago there was a report released by the deficit commission that Obama established. Now we have this deal that seems to cost a little under a trillion over the next two years. OK, maybe the guys on the commission were supposed to understand that they were just a puppet show. Still, I can imagine they are a little ticked off. And if they aren't, I am.

"This report means that the time of deficit denial is over". Obama and the congressional leadership have a different idea.

[mike777]

kenberg, on 2010-December-08, 20:20, said:

For me, it's not the various technical features. Here is what strikes me:

A week ago there was a report released by the deficit commission that Obama established. Now we have this deal that seems to cost a little under a trillion over the next two years. OK, maybe the guys on the commission were supposed to understand that they were just a puppet show. Still, I can imagine they are a little ticked off. And if they aren't, I am.

"This report means that the time of deficit denial is over". Obama and the congressional leadership have a different idea.

good point the commission comes out and one day later forget it ...raise the debt another trillion or so.......

Again I aint a deficit hawk....

[awm]

phil_20686, on 2010-December-08, 16:44, said:

I am not sure about that adam. Agree the actual measures taken are absurd, but capital gains tax should always be preferential rates compared to income tax to account for inflation: If your investment rises in line with inflation you have made no real gain but you still have to pay CGT when you liquidate which has two negative effects:

1) Because you need more lucrative opportunities to invest it will decrease entrepreneurial investment in general, and will also tend to encourage pension funds and other long term institutional investors to rebalance in terms of riskier (and higher paying) investments. Also most ordinary people have significant savings via their pension funds, which will be among the biggest losers.

2) In the long term it will tend to de-capitalise the economy by extracting capital from every investor who makes a marginal decision.

Having said that, while it should be given preferential rates does not necessarily mean that it should be taxed at a very low level. What the optimum should be I am not qualified to say, and doubtless depends on both the rate of inflation and the rate of income tax, but I am certain the optimal level is significantly below income tax.

Dunno about these. For inflation, note that investing money in a bank requires you to pay income tax (not capital gains) on the interest. Here the interest is often much closer to the level of inflation (bank interest rates are lousy). So how come the "safe" investment is not inflation-adjusted but the capital gains are? Heck, even a fixed salary devalues because of inflation, but I don't get to pay less in taxes on my work income if inflation goes up.

For the first one, having lower capital gains rates encourages risky investments, not vice versa. For example, suppose I can invest my money in a company that actually produces products and pays dividends, and make a safe $100K. Or I can invest in a much riskier stock hoping it goes up, figuring about a 10% chance I can sell in a year and make $1M and a 90% chance I break even. If there were no taxes, my expected money is a wash. Under current tax law, the $100K in dividends will be taxed as income (I think about 20% averaging out the brackets) whereas the $1M will be taxed at the 15% capital gains rate. Thus my after-tax values look like $80K in the "safe" investment and 10% chance of $850K in the risky investment. If everything was taxed at income tax rates it would be more like 10% of $700K in the risky investment (paying something like 30% tax on a million in income rather than 15%). I dunno why we want to encourage speculative investing over investing in solid companies that pay regular dividends.

For the second one, investing will always be better than stashing the money under your bed, because investing has a positive expectation. Marginal taxes reduce that positive expectation but they won't take it from positive to negative. Raising capital gains taxes will encourage people to invest in safer ways -- the current system penalizes things like putting your money in a bank account or a dividend-paying company, and encourages speculating on high-risk stocks where the payout (if any) will be in capital gains (thus much lower tax rate). Certainly if people start stashing the money under beds that is bad for the economy, but if instead of stashing my money I play a series of high-stakes poker games with my other very-rich buddies (so our money moves around from one mattress to another after each game) I don't see how that's any better for the economy than the stashing plan. Certain types of stock market investments (particularly of the hedge fund variety) seem an awful lot like just taking a series of bets -- it's hard to see how a high rate of flux in a company's stock price helps that company any if the long-term average stays pretty constant, but my friends working at hedge funds assure me that a high rate of flux makes their investors billions through high-speed trading schemes.