Does the Tax Compromise Raise Taxes on Low-Income Earners? – The compromise plan agreed to between President Obama and Senate Republicans extends all of the Bush tax cuts, and most of the cuts in the 2009 stimulus bill.  Additionally, it includes a cut in the employee portion of the Social Security payroll tax from 6.2% to 4.2% of wages. David Kocieniewski of the New York Times (subscribe) wrote a story a few days ago that looked at how this compromise tax plan would affect a variety of taxpayers.   He claimed that, under the compromise, “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 reason this claim is technically true is because, as explained in the article, the payroll tax cut is less generous to these groups than the Making Work Pay income tax credit that it replaces.  Making Work Pay was a refundable tax credit worth up to $400 ($800 for married filers) enacted in 2009 as part of the stimulus bill, and it is set to expire automatically at the end of 2010 along with all of the Bush tax cuts and the rest of the stimulus tax-cutting measures.  However, it’s silly to use the credit as a baseline for comparison, since nobody, Democrats or Republicans, wants to extend it.
Who Wanted What? – I’m familiar with the argument for the tax cut deal. It’s not a terrible argument. In simple form, it goes, the top priorities are to stimulate the economy and to cushion the impact of unemployment, and a two-year tax cut extension was worth it to get that, especially since we can kill the Bush tax cuts in 2012. Now, no one who wasn’t born yesterday buys that bit about killing the Bush tax cuts in 2012, but you could still make the argument that two years of stimulus is worth making the tax cuts effectively permanent. (I don’t agree, but it’s not a crazy argument.) But that’s not Austan Goolsbee’s argument on YouTube. Here’s his slide: Basically he’s trying to convince you that Obama won: Republicans wanted the top-end tax cuts and Obama wanted the “middle-class” tax cuts, and Obama conceded the top-end tax cuts, but in exchange he won lots of other great things: unemployment insurance extension, some sweeteners to the earned income tax credit, American Opportunity tax credit (for college), some sweeteners to the child tax credit, lower payroll tax, and an extension of some business investment credits. Notice which column he put them in.

New Tactic to Silence Foreclosure Abuse Critics: Sue Them Yves Smith – I suppose the latest efforts taken by the members of the foreclosure industry to silence and neuter critics represent a perverse form of progress. If you go by the Ghandi timeline, “First they ignore you, then they ridicule you, then they fight you, then you win,” opponents of bad foreclosure practices seem to have done enough damage as to now be worth fighting. But what is telling are the desperate-looking but nevertheless potentially effective measures being deployed to hamstring the opposition. The vanguard of this effort are foreclosure defense attorneys, many of whom are solo or small firm operators, with not hugely lucrative practices or doing pro bono work (you don’t make a lot of money defending people who have no money). Suing someone like that, even with a suit that seems spurious, throws a wrench in their operation. It takes time to deal with litigation, and often money, plus the stress is also a considerable distraction. And of course, the hope is no doubt that this sort of risk will also deter other lawyers and critics. The first example is a lawsuit filed by National Title against Matthew Weidner, a Florida attorney who blogs about foreclosure fraud. The suit charges him with slander and libel.

 EPA delays tougher rules on emissions -The Obama administration is retreating on long-delayed environmental regulations — new rules governing smog and toxic emissions from industrial boilers — as it adjusts to a changed political dynamic in Washington with a more muscular Republican opposition. The move to delay the rules, announced this week by the Environmental Protection Agency, will leave in place policies set by President George W. Bush. President Obama ran for office promising tougher standards, and the new rules were set to take effect over the next several weeks.  The delayed smog rule would lower the allowable concentration of airborne ozone to 60 to 70 parts per billion from the current level of 75 parts per billion, putting several hundred cities in violation of air pollution standards. The agency says that the new rule would save thousands of lives per year but cost businesses and municipalities as much as $90 billion annually.
Congressional Black Caucus Says Obama’s Tax Plan Compromise is Harmful to African Americans – At a Friday press conference on Capitol Hill, Rep. Barbara Lee (D-California), who chairs the Congressional Black Caucus, said that an “overwhelming majority” of the group opposes the tax plan brokered by President Obama and Senate Republicans. “We’re extremely concerned that the cuts that could be made should this package pass would disproportionately hurt the poor and low-income communities and further erode the safety net,” Lee said. “We don’t want to create a situation here that will exacerbate the conditions for Americans who are already hurting. That would be unfair and would be unwise.”The caucus endorses three components of the plan: a 13-month extension of emergency unemployment insurance benefits; a payroll tax holiday or an equivalent, such as a tax rebate check that will not deprive the Social Security fund of revenue; and a two-year extension of the Bush-era tax cuts for middle and low income families. Rep. Bobby Scott (D-Virginia), a member of the House Budget Committee, said that Congress should allow all of the tax cuts to expire to prevent Congress from having to make “draconian spending cuts to vital programs” in next year.
A Gentle Nudge About the Deficit – With the recent deal to extend the Bush tax cuts, cut payroll taxes and extend unemployment benefits, it may seem like Washington does not care quite as much about the deficit as some politicians have let on. And given that the policies needed to get long-term fiscal problems under control (higher taxes, fewer government services) are unpopular in the short-term time-frame under which politicians face re-election, it seems unlikely that we should expect much movement on these issues in the near future.The Congressional Budget Office, whose mission is to keep tabs on the long-term fiscal picture, sent out a gentle nudge today though. An excerpt from a report titled “Economic Impacts of Waiting to Resolve the Long-Term Budget Imbalance“:
Give the Poor Money! – Matthew Yglesias posted a blog with a similar title, without the exclamation which I express for this idea. Here’s Matt: Alternatively, one under-discussed possibility is for a guy who has a lot of money and a desire to help poor people to just identify some poor people and give them some money. It sounds banal when you say it, but one of the main obstacles to people being less poor is that they don’t have enough money. If you give them money, they’ll have more of it. Will this be optimal in all cases? Of course not. But in the vast majority of cases, you’ll do some good. It’s tempting to believe that you’re on the [v]erge of some major conceptual breakthrough in the field of philanthropy. But give some consideration to the possibility that you’re not. Perhaps if you have a special talent for anything, it’s a talent for making money. It’s not very hard to identify some people who might need money more than you do. Maybe you should just give them some, and then go back to making money. Indeed, I think that Matt discounts the effectiveness of making simple transfers of cold hard cash (or digital numbers) from one section of society to another. Here’s me:
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