Paul Kurgman notes that the actuarial numbers for Social are better now than they were 15 years ago.
And that’s with the Social Security board being populated by Bush’s Evil Minions&trade, who are being as alarmist as they can.
Category: Budget
A Correction on Dean Baker’s Tax Proposal
I just had an email exchange with him, and he referred me to his (along with Robert Polli and Marc Schaberg) paper, Securities Transaction Taxes for U.S. Financial Markets, and he does in fact call for a sales tax on most securities.
ABSTRACT: This paper examines the viability of security transaction excise taxes (STETs) as one policy tool for promoting a more stable financial environment, specifically with respect to the U.S. economy. Contrary to a large recent critical literature, we show that a STET can be designed without creating large distortions between segments of the financial market. We also show that a modest STET for the U.S.—beginning with a 0.5 percent tax on equity trades and scaled appropriately for other financial instruments—would generate substantial new government revenues, on the order of $100 billion per year.
The link is to the abstract, and the whole paper is a 55 page double spaced PDF, which you need to read on paper, with a highlighting and a regular pen so you can take notes.
It’s not a light read, but it’s a good read.
On a more general level, I think that, given the current downturn, we will see a large expansion in taxes at all level, with things like internet download sales being taxed, and that we will see an aggressive pursuit of online and mail order sales taxe evasion too.
The state and local governments will have no choice.
Then again, considering my record on predictions, and the fact that the only formal training I ever had on economics was high school, where I did a presentation on microeconomics*, what the heck do I know.
*Microeconomics is a study of the economics of individual businesses, as opposed to entire economies. I prefer it, because the systems are not so huge and complex that cause and effect breaks down. Macro economics sometimes makes my head hurt.
California Mulls Tax on Internet Sales
It looks unlikely that the tax on downloaded purchases will pass, but as state revenues implode, we will see a lot more of this, along with aggressive pursuit of people who are already evading sales tax through online sales.
I expect 2009 to be a banner year for lawsuits filed against Amazon, eBay, etc. for customer purchase information, so that sales taxes due can be pursued.
Dean Baker Has a Great Idea, But it Needs to go Further
Dean Baker suggests that we implement a stock transfer tax. He mentions that the UK has a stock transfer tax of 0.25%, and London is second only to New Work as one of the great financial capitols of the world.
He notes that it would generate $150 billion/year in revenue.
While I agree, I do not think that this goes far enough. It should apply to all financial transactions, stocks, bonds, derivatives, hedging, futures, etc.
I would have an exception for initial purchase, but not resale, of government bonds, but that’s it.
In addition to generating a lot of revenue, it also makes increasing level of arbitrage increasingly more expensive, which is also a good thing.
House and Senate Pass Phase Out of Bush Tax Cuts
It’s a, good start, but we are in a deep hole, both in terms of the Federal budget deficient and the economy, and the Wall Street types who created this whole, and benefit from this hole, need to pay more of their share of the hole.
The maximum marginal tax rate needs to be increased, probably into the 45% to 50% range for people making over $½ million a year, because we are going to need massive government spending to avoid Japan’s 15 year deflationary trap, and we have massive infrastructure needs that have to be addressed regardless of the state of the economy.
When the Financial Times of London Sounds Like the Workers Daily World, The Times are a Changing
London has long had a policy of allowing rich foreigners to live there tax free.
FT columnist Martin Wolf looks at proposals to eliminate this immoral give away to the rich, and finds that too many people in the UK subscribe to the Leona Helmsley way of doing thing.
We live in strange times, as evidenced by his concluding paragraph:
Yet the experience also shows that the case for a simple, neutral and stable fiscal system, which taxes the worldwide incomes of all long-stay residents on the basis of ability to pay, is overwhelming. As soon as one departs from that principle one enters in a maze of special pleading or invidious distinctions, in which failed ideas of industrial policy – subsidising winners through the tax system – return to the fore. If the application of that great principle means some rich people leave the country, so be it.
(Emphasis mine)
Vallejo Avoids Bankruptcy
They got deals from the police and fire departments, so no bankruptcy…for now.
When property taxes take a hit from foreclosures, all bets are off.
Iraqi Withdrawal Back on Table in Senate
All I think needs to be said is that if the Republicans want to filibuster this, make them talk.
None of this courtesy stuff. They use it as an excuse to kill everything. Cut the funding on the war and the escalation.
WRAPUP 4-Shame on you, Clinton tells Obama | Markets | Bonds News | Reuters
Hillary Clinton is finally going after Barack Obama’s dishonest right wing attacks on health care reform.
This is going to make any health care plan nigh-impossible if Obama gets elected. Thanks.
Universal Healthcare is more than a core Democratic Party value. It’s essential to save this nation.
What’s more, it will change the dynamic of governance in the US for decades to come, and will create a Democratic majority nationwide for decades to come.
And Barack Obama is campaigning against it, because he thinks that he’s just so awesome that he will get Republicans to support him in slitting their own throats politically.
Ditch the Home Mortgage Deduction
Good article in The Atlantic about this.
Basically, it makes no difference in home ownership, it just raises the prices of houses.
Germany and Lichtestein in Talks Over Tax Fraud
Well, it appears that Germany is going after a bunch of tax cheats based on a DVD acquired from a paid informant for $6 million, and the leaders of Lichtenstein are upset.
I have no sympathy. Money laundering has been the Lichtenstinian economy for decades, and it’s time that they started unraveling this mess.
California Town On Near of Bankruptcy
Vallejo, California is broke. They will be out of money on late April.
Unlike Orange County, this is not from bad investments. This is the fruit of proposition 13. They have multimillion dollar homes taxed at 100K, and no tax base.
It doesn’t help that the municipal bond market is frozen, like everything else.
My solution would be to disincorporate.
US Air Force Intent on Committing Suicide
Gen. Bruce Carlson, chief of Air Force Materiel Command, told a group of reporters Wednesday that the Air Force will figure out a way to buy 380 F-22s, despite the fact that the Pentagon – through the Office of the Secretary of Defense (OSD) – has capped the number of Raptors to be procured at 183.
What is first obvious is that is engaging in insubordination by giving a press conference saying that he will find a way to subvert the decisions of a superior in his chain of command, and he should be fired immediately.
This is far more brassy, and far more public than anything MacArthur did to Truman.
That being said, if he gets his wish, he will destroy the USAF as a fighting unit.
Flight International’s Stephen Trimble does the numbers, and gets an additional 20 F-22s a year at $150 million an aircraft gets another $3 Billion a year over the next 10 years.
Based on my experience with military contracting, I’d double that number when operational expenses, the inevitable cost overruns, and gold plated block improvements are added.
To do this, I think that you need to slash personnel, and cancel pretty much every other program, the F-35, the KC-X, the next gen bomber, the next gen freighter, etc.
You will also have to reduce the existing inventory to cut costs and to reflect the fact that you don’t have enough people to keep the stuff running
Obama’s Presents Economic Plan
Contrary to complaints, we actually have a decent bit of detail here.
- Payment for program by elimination of upper class tax breaks and ending Iraq war.
- My comment: I still think that you need more, at least a thorough review of the Byzantine system of tax credits and deductions to get enough money.
- A National Infrastructure Reinvestment Bank, spending about $60 billion over the next decade repairing infrastructure.
- My comment: Good, but we probably need to spend more. Unsure of the amount that states would have to match. Also, should include a similar amount for mass transit and/or freight rail, both of which save energy, etc..
- Ending tax breaks for moving jobs overseas.
- My comment: This one has almost become a cliche, but there are also programs that subsidize this in the US that need to be addressed (Ex/Im bank comes to mind).
Generally it’s pretty good. Generally, it’s also pretty similar to Hillary Clinton’s too.
However, there is something else that I found both interesting and laudable, which accompanies his speech (H/T to the other Matthew for the catch), specifically a credit card bill of rights:
- Ban Unilateral Changes: Currently, credit card companies can unilaterally change the terms of a credit card agreement at any time for any reason with only a 15-day notice to the consumer. Barack Obama will ban these unilateral changes in credit card agreements unless companies have obtained written consent from consumers and have followed the rules and terms of the agreement.
- Apply Interest Rate Increases Only to Future Debt: Credit card companies often apply increased interest rates to both new debt incurred by the cardholder, as well as previously incurred debt. Barack Obama will require increased interest rates to apply only to future credit card debt, and not to debt incurred prior to the increase.
- Prohibit Interest on Fees: Credit card companies often charge interest on transaction fees, such as late fees or paying a bill by telephone. Barack Obama will prohibit credit card issuers from charging interest on transaction fees.
- Prohibit “Universal Defaults”: “Universal defaults” are a practice in which a credit card company raises an individual’s interest rate based on failure to pay a different creditor on time. Barack Obama will prohibit this practice.
- Require Prompt and Fair Crediting of Cardholder Payments: Barack Obama will require credit card issuers to apply payments first to the credit card balance with the highest rate of interest and to minimize finance charges.
This is interesting for a number of reasons:
- It’s very good policy.
- This is a proposal where there is actually a loser, the credit card issuers, which is a change from his typical proposals where the policy is not a zero sum game.
- This is actually a fairly specific refution of the Washington DC/DLC/Milton Friedman orthodoxy that financial services need to be completely deregulated in order to provide maximum benefit. This may be more important than the first two in revealing his attitude on such matters. Much of the credit crunch today is due to the repeal of Glass-Steagel, which was driven by this ideology.
All in all, a solid B+ to my mind.
Because Republican Senators Have Nothing Better to Do With Their time
So the hippy-dippy city council of Berkeley California decides to waste its time declaring a Marine recruiting station “unwelcome” in the town, and in reaponse, “Six Republican senators, led by Sen. Jim DeMint, R-S.C., and an Orange County representative on Wednesday introduced companion bills called the Semper Fi Act of 2008 that seek to take away $2.3 million from Berkeley earmarked in the 2008 Omnibus Appropriations bill and give it to the Marine Corps.”
You’re wrestling with a pig, dudes. You both get dirty, and the pig loves it.
Where that money would come from:
- $243,000 from the Chez Panisse Foundation, which provides 10,000 daily school lunches for Berkeley public schools
- $243,000 for the Ed Roberts Campus, a project that houses offices for disability organizations
- $750,000 for water ferry service planned from Berkeley to San Francisco
- $94,000 for a police and fire emergency communications system
- $975,000 from UC Berkeley’s Matsui Center for Politics and Public Service, which houses the papers of the late U.S. Rep. Robert Matsui
Morons.
1000 Words on Healthcare
Matthew Yglesias has a fascinating graphic on the trajectory of healthcare in the US.
We need to go NHS today.
Republicans Threaten Fiscal Stimulus and National Security Over Telco Immunity
First, George W. Bush is threatening a veto unless he gets telco immunity, and the senate Republicans are refusing to allow FISA to move forward until there is agreement on a stimulus package.
Why do Republicans hate America?
F-136 Alternate JSF Engine Killed in Pentagon Budget
I fully expect it to come back. This happens every year. The Pentagon kills it, and Congress puts it back.
I support the F-136 for two reasons:
- I believe that having two ending suppliers for the JSF will make for better cheaper engines in the long run.
- There will be weight growth, and the F-135 appears to be marginal in that case for the STOVL version.
Of course, it’s not put back on the budget for those reasons. It’s put back because GE is big in a lot of Congressional Districts.
Bush’s Phoney War on Earmarks
When Republicans were in power, he never batted an eyelash at earmarks, which are something like ¾% of the budget, but now he’s decided it’s a good time to go to war against them.
Oh…me bad…He’s thinking that NEXT fiscal year is a good time to start this “war on earmarks”, so he’s just “announcing” them at this SOTU speach.
Even the Republicans are calling weak:
But if he was seeking to placate the fiercest foes of earmarking, he failed. Rep. John Shadegg (R-Ariz.) called Bush’s plan “weak.” Thomas A. Schatz, president of the conservative Citizens Against Government Waste, labeled it “fiscal snake oil.”
Well, I guess it meats steroids.
Senate Democrats Mull Adding Retirees to Rebate Plan, Extending Jobless Benefits
Senate Democrats are looking about, “giving retirees tax rebates, extending unemployment benefits, boosting heating subsidies for the poor and temporarily increasing food stamp payments.”
This is great politics!!!, and here’s why:
- Republican or Democrat, the Senate is smarting at having not been involved in the negociations, and there is a bipartisan consensus, in fact a near unanimous consensus that the Senate’s prerogatives should be respected in that body.
- Getting more money to retirees is a politically powerful thing, because senior citizens vote.
- There is widespread political support for extending unemployment benefits in the real (i.e. outside of DC) world.
- Increasing food stamp payments will be seen as being good for American farmers, who figure prominently in a number of red states.
- Heating subsidies for the poor is also very popular nationwide.
On a policy level, if they were to strike the business tax credits, which will take months to have any effect, and are very inefficient, that would be a good thing.