Category Archives: income tax

Let’s Review and Make Some Conjectures

Senator McConnell couldn’t have made himself more clear to the Republican leadership — let’s please have less drama from the White House so we can get along with our agenda.  Less tactfully phrased, McConnell and his myrmidons such as Representative Mark Amodei (NV2) and Senator Heller (R-NV) isn’t going to do anything about the dolt in the Oval Office until after they get what they want.  They want two things: (1) to return the control of the health insurance market back to the insurance companies; and (2) to dismantle the financial and consumer protections enacted in the Dodd Frank Act, and the Sarbanes Oxley Act.  Not sure about this, then please consider the current push for the Choice Act:

“At a time when too many hard-working American families are still recovering from the devastating impact of the 2008 financial crash, deregulating Wall Street’s biggest firms again makes no sense. Yet the Financial CHOICE Act threatens to do exactly that.

It would allow the biggest Wall Street banks to opt-out of significant financial protection rules, while those banks that remain in the regulatory system would be blessed with watered down versions of once-tough protections, like living wills and stress tests. Perhaps most worryingly, the CHOICE Act would cripple two of the most important post-crash reforms: the Financial Stability and Oversight Council (FSOC) and the Consumer Financial Protection Bureau (CFPB).” [the Hill]

Review: The CFPB was the agency which brought to light, and then levied fines against Wells Fargo for egregious violations of their customers’ privacy and financial interests.  Little wonder the banks aren’t happy with those “bureaucrats.” Less wonder why the Republicans aren’t going to do anything about the President who had to fire his National Security Adviser — until the Choice Act is safely delivered to his desk.

We should also recall that the Republican version of the healthcare reform act is much less about health insurance reform than it is about bestowing tax cuts for the wealthiest among us, to the tune of close to $765 billion over the next ten years.  We can easily conjecture that the GOP will do nothing about the man in the office who fired the US Attorney in the Southern District of New York, and then the emissary from the Department of Justice who warned him about the dangers presented by the presence of General Flynn.  At least nothing will be done, until the Republicans can cut Medicaid to the barest of bones:

His (Trump’s) promise would be violated by House GOP bill, as it seeks to freeze Medicaid expansion money for states in 2020 by withhold funding at the enhanced match rate for any new enrollees after that point. Other beneficiaries are at risk with the more long-term transformation that program stands to undergo under the GOP bill. The legislation would overhaul the program—now an unlimited federal match rate—into a per capita cap system, meaning that states would get a fixed amount of funding per enrollee. The Congressional Budget Office, analyzing an initial version of the legislation, predicted out of the 24 million Americans who would lose coverage under the earlier GOP bill compared to current law, 14 million were due to its changes to Medicaid. [TPM]

Given there is no CBO scoring on the current edition, we can’t be certain that States like Nevada which expanded Medicaid enrollment in order to make health care access affordable, won’t be left in the lurch — Congressman Amodei’s tortured logic to the contrary.  So, nothing is likely to be done about the executive who fired the Director of the FBI who was supervising the investigation of Russian meddling in our elections (and possible Trump connections to that meddling) until Medicaid cuts are also tucked into the President’s portfolio for a signing ceremony.

When will Republicans address the Leaker-in-Chief’s discussions with the Russian visitors to the White House?  Probably not until the budget cuts to the Department of the Interior, the Environmental Protection Agency, Medicare, Health and Human Services, and the Department of Education come to fruition.  Do we have a situation in which the following is true?  If the Trumpian honeymoon isn’t over, it soon will be.

That sentiment was echoed by a prominent GOP consultant I spoke to who asked not to be named to offer a candid assessment of Trump and congressional Republicans.
“The question for Republicans is whether this is the straw that breaks the camel’s back,” said the source. “Forty percent approval is not the issue; an erratic, rudderless, leaderless White House is.” [CNN]

The camel’s back may not bend until the Republicans have seen their agenda realized, their Randian Dreams made true, and their Austerity Government imposed on the American people.   The damage of this administration and the Republicans in Congress who enable and excuse him is only starting to come to fruition.

 

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Filed under Amodei, Comey, conservatism, corporate taxes, financial regulation, Health Care, health insurance, Heller, income tax, McConnell, Medicaid, nevada health, Nevada politics, Politics, public health

That Changing Trump Tax Plan and the People Who Love It

 Trump Tax Plan It’s time to haul out the old Etch-A-Sketch template from the Romney campaign for another deployment in the Trump 2016 version – Trump has offered two tax policy proposals.  Neither one accomplishes much more than exacerbating the problems of the current tax code; in fact they’d both do more damage than good.  

Representative Joe Heck (R-NV3) candidate for the Nevada Senate seat and Danny Tarkanian, perpetual candidate and now a contestant for the 3rd Congressional District seat, have both endorsed Donald Trump as their choice for president, and here’s what they’re getting in the bargain.

A Tax Plan for the Top 0.1%

Bracketology: The Tax Policy Center analyzed the initial Trump Tax Proposal (December edition) and this release was followed by significant changes in the original proposal as of August 16, 2016.   And here comes the confusion:

“Trump’s original tax plan included defined brackets, which have since been removed from his campaign website. Trump’s standard deduction increase would make the first $25,000 in income tax-exempt. According to his original plan, the lowest bracket would then apply to all taxable income between $25,000 and $50,000 for single taxpayers, the middle tax rate would be assessed on income of $50,001 to $150,000 and the highest rate would apply to income above $150,000. For married couples, the income ranges would be double these amounts.”  [Motley Fool]

And now:

“As a practical matter, Trump’s plan features a sizable tax-free bracket. He wants to quadruple the standard deduction (currently $6,300) to $25,000 for single filers and $50,000 for joint filers. As a result, about half the population wouldn’t pay income tax.” [TaxAnalyst]

As everyone who has ever filed with the IRS knows full well, what a person actually pays is tax on the adjusted income – income after deductions. If we don’t know what the allowable deductions are then it’s almost impossible to discern what the tax proposal actually means for the average tax payer.  It also isn’t helpful that the ‘defined brackets’ have been removed from the policy section of the Trump info-site.  We can guess that the 12% rate goes for those with taxable incomes between $25,000 and $50,000; 25% for those with taxable income between $50,000 and $150,000; and, 33% for those with taxable income over $150,000.

Who plays in the Brackets?  Here comes the fun, and the way the Trump Tax Plan benefits the upper income earners.   We need to look at Trump’s “pass through entities.”   This is a loophole not only large enough to drive a tractor trailer through, but most of the freight cars on the Union Pacific as well.

“Trump would go one step further, creating an enormous tax loophole for the rich by applying his 15 percent corporate rate to “pass-through” entities as well. Pass-through entities are businesses whose income are not taxed at the corporate level, but rather passed through entirely to the businesses’ owners and then taxed at the owners’ individual income-tax levels. High-income households can easily avoid paying their full income tax bill by reclassifying their income as pass-through income. This loophole allows Trump to claim that he is closing the carried interest loophole, while actually lowering the rate that hedge fund managers would pay from 23.8 percent to 15 percent.”  [EPI]

In 2012 the state of Kansas under the direction of Governor Sam Brownback and a GOP controlled legislature enacted this loophole with disastrous budget results, because of  reduced taxation rates for LLC’s, S Corps, partnerships, farms, and sole proprietorships.

The normally extremely conservative Tax Foundation is not amused:

When the exemption was passed in 2012, it was projected that 191,000 entities would take advantage of the provision. As more and more people have realized the very sizeable tax advantage of being a pass-through entity in Kansas, that number ended up being 330,000 claimants, over 70 percent more than was anticipated.  It’s important to note here that while decreasing taxes is generally associated with greater economic growth, the pass-through carve out is primarily incentivizing tax avoidance, not job creation. [TaxFnd]  (emphasis added)

Thud.  That’s the sound of budget and revenue problems hitting the floor as a result of a ‘carve out’ for the top income earners disguised as a tax cut for small businesses.  Here’s a simple example. If I were earning $165,000 per year working for the Acme Explosives Company, I would ask my employer Wile E. Coyote to immediately re-hire me as an “independent contractor.”  I would re-create myself as an “S” corporation. Handy, since I live in Nevada which doesn’t have a personal income tax, and thus doesn’t recognize the federal S corporation election.  I file the paperwork, get my EIN number, pay some fees, and bingo! – I am taxed at the 15% rate rather than 33%.  There is obviously no job creation here – just a wonderful and perfectly legal way for me to reduce my “bracket” at the expense of those who don’t have the wherewithal to follow my shady example.

The Wichita Eagle editorial board summarizes:

“As part of the 2012 tax cuts, about 300,000 business owners in Kansas don’t have to pay state taxes on pass-through business income. Not only do many Kansas wage earners think this is unfair, so do some of the business owners receiving the tax break – especially when the state is facing serious budget problems.  The exemption is costing Kansas about $260 million a year in revenue. And contrary to what Gov. Sam Brownback promised, it hasn’t acted “like a shot of adrenaline into the heart of the Kansas economy.”

Trump, Tarkanian, and Heck would seemingly like to have Nevada and 48 other states go the way of Kansas?  Only if we’d like to raise tax avoidance and cheating to an art form.

Playing with Children:  Another element of the Trump Tax proposal is the child care tax deduction, and here too the top 1% fare very well thank you.   It’s important to remember at this point that the economic value of a tax deduction increases with the marginal rate of the payer. Or, the higher your tax bracket the more valuable the deduction – for child care.  The deduction is of no use whatsoever to someone already in the Zero bracket but is ever so helpful for those in the upper income levels.

Playing for the Children:  Mr. Trump is pleased to tell us that the Federal Estate Tax is a “horrible weapon which has destroyed many families…”  Not. So. Fast.  “Today’s estate tax is only imposed on less than 0.2 percent of households. Fewer than two estates in a thousand pay it. More than 2.5 million Americans die each year, but less than 5,000 estates were taxed in 2014. Only estates of $5.4 million or more must pay any estate tax at all.” [C&L]   Perhaps it is not too much to return to the appellation “The Paris Hilton Legacy Protection Act,” for this long sought GOP gift to the rich.

There are some serious questions which should be posed to Mr. Trump and his supporters like Mr. Tarkanian and Representative Heck:

#1.  What exactly are the specified brackets in the modified Trump tax policy proposal?  We can assume that the new rates apply to the old brackets but without clarification from the campaign there are significant questions about the revenue projections (or revenue deficit projections) which remain unanswered.  Do those brackets leave us with a revenue deficit of $3 trillion over ten years?  [Tax Analyst] If so, thus much for budget balancing and other forms of fiscal contortion.

#2. Does Trump mean to allow individuals to avail themselves of the Great Pass Through Tax Dodge?  If so, how does he intend to avoid what’s happened in Kansas?

#3. Does Trump intend to provide child care deductions for the rich while working families see none of the economic benefits of it?

#4. Do Mr. Trump, Mr. Tarkanian, and Representative Heck really mean to advocate for estate tax avoidance for those estates of $4.5 million or more? For less that 0.2% of the United States population?

We may have to wait for Trump Tax Policy 3.0 before these questions can be fully answered?

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Filed under Economy, Heck, income tax, Nevada politics, tax revenue, Taxation

Yes, We Could Be Having A Serious Deficit Reduction Discussion?

Tea Party FlagAt some point in the ongoing discussion about federal debts and budget deficits everyone needs to get serious.  Serious, that is, about doing that which will reduce our federal deficit spending.  Really serious, not as in “let’s wave a Debt Crisis Flag every three months to advance an agenda including the privatization of Social Security and the voucherization of the Medicare program.”

Let’s start with the obviousSocial Security doesn’t add a dime to the national debt.  If the words of a progressive blogger won’t suffice, how about listening to former President Ronald Reagan?  (video here)  So, discussing “reforms” to the self funded Social Security program as a means to reduce the national debt is extraneous to any serious deficit reduction discussion.

One way to approach the privatization of Social Security is to change the frame of reference, such as altering the connotation of “entitlement” from some earned benefit to which we are entitled because we paid for it, to one which has a tinge of “welfare” about it.  Social Security is not a welfare program — it is an earned benefit.  People who have paid into it all their working lives have every right to expect to be getting something back.  Social Security is not a retirement program.  It is a program which seeks to prevent abject poverty for elders.   Nothing in the Social Security program prevents anyone from maintaining a self-contributory retirement account of any shape or form.   Indeed, the benefits from Social Security are low enough that retirement to the Gated Golf Paradise Of Your Choice can only happen if you have a self-contributory retirement savings program. Anyone suggesting that “entitlements” such as Social Security “have to be reformed” to ease the burden on the federal debt (1) doesn’t have a clue what they are talking about, and (2) is regurgitating anti-safety net talking points from radicals who want to privatize all retirement income programs to the benefit of Wall Street investment firms.

Medicare does have some issues.  The first, and most readily apparent, is that the Medicare Part D (prescription drug) segment is, and always has been, underfunded.  However, the really big monster under the Medicare bed is the increasing cost of health care in America.  When private health care corporations started buying up religious organization/private, state, and locally supported hospitals the profit motive surged in the sector.  Health care must now generate a profit.  Savings, which were once achieved for the purpose of reducing costs for local tax payers or donors to religiously based institutions, now accrue to the corporate bottom line — not to taxpayers, donors, or patients.

The second factor is technology.  We do have the best medical treatment providers in the world.  However, best often translates into “most expensive.” We have all manner of devices and gadgets and equipment and gear to save or sustain lives.  Our hospitals take it as their mission to save or sustain life, which is all well and good until the emotional meets the economical.  There are “death panels” in this country, but they aren’t governmental — they are familial, with families making ‘end of life’ decisions which horrifically in some instances are based on what the family can afford.   Frankly speaking, we don’t do a very good job of educating our citizens about advance directives.  Some conservatives set up a howl when they noticed the Affordable Care Act provided for paying physicians or other medical professionals who provided ‘end of life’ counseling for their patients — however, a little counseling might go a long way toward reducing the anxiety of hospital personnel and the trepidations of family members.  It could also provide some savings in the long run.

Returning to the Big Problem — the Medicare Part D component; we knew in 2003 that the Part D segment would  cost approximately $534 billion.  [Foster pdf] Simply put, “the drug benefit had no dedicated financing, no offsets and no revenue-raisers; 100% of the cost simply added to the federal budget deficit,..” [Forbes]  The part about “dedicated financing” is important.  While the Social Security trust funds have dedicated financing (payroll taxes) there were no provisions to increase the revenues available to finance the Part D enhancement.   There is something unappealingly ironic about the current GOP insistence on “entitlement reform” because “Medicare is broken,” when it was the GOP majority in 2003 that Broke the Program.

Ways to ‘reform’ the Medicare program have been suggested which do not require “voucherizing” the entire thing and sending seniors back to pounding pavement in order to find affordable health insurance plans.  We could consider means testing for the prescription drug benefit.  We might take under advisement lifting the earnings cap for payroll taxes from the current $110,000 level and dedicating a portion of the revenues toward the Part D program.  We could allow the Department of Health and Human Services to negotiate for prescription drug prices the way the Veterans Administration bargains for prescription drugs for VA hospitals and clinics.

If we are REALLY REALLY SERIOUS about ‘reforming’ Medicare then it would be helpful to get past the silly voucherization proposals, referred to as “structural reform” in Speaker Boehner’s response to the President, [Boehner pdf]  and get to the core of what makes health care expensive — we could talk about health care cost containment, dedicated financing for Medicare, and lifting the earnings cap.   We might also want to take a deep breath and see if the Affordable Care Act’s provisions, such as eliminating tax payer subsidies for profitable private Medicare Advantage insurance policies, could achieve some savings over the next decade.

However, it’s getting relatively obvious that the Republicans aren’t terribly serious about deficit (debt) reduction when their offers are strictly ideological (privatize and voucherize) and the proposals don’t address the monster of their own creation — the lack of financing for Medicare Part D.

Buzz Words and Generalities.   Speaker Boehner is offering (pdf) “pro-growth tax reform that closes loopholes and deductions while lowering rates.”   This phrasing is coming perilously close to the older verbiage: Waste, Fraud, and Abuse.  As if we could make up any gaps in program funding by simply cutting out the WFA.  Most anti-tax advocates cite the WFA as some massive potential figure which if reduced could cure all our fiscal woes.  When pressed to provide total figures associated with the largely mythical WFA these advocates provide outlier examples of welfare fraud, some particularly egregious Pentagon payments to contractors, and perhaps a bit of information from Internet e-mail chain letters.  The WFA numbers have yet to yield up the level of financing needed to close budget gaps in the Pentagon or any other government activity.

The arithmetic from “loopholes and deductions” doesn’t add up either.  The same sort of fantastical thinking is required to equate the WFA savings and the L&D revenues.  These mythological creatures are based on the same gossamer upon which anti-tax advocates conjure up the notion that an inordinate amount of the U.S. budget is allocated to foreign aid.  The average American has come to believe that foreign aid takes up 10% of the federal budget, when if fact it consumes only 1%. [NYM]

The Republicans also appear to be consuming their own rhetoric on savings associated with reductions in federal employee compensation.

“Cutting pensions and benefits for government workers is popular, but once again most Americans overestimate how much that costs the government. On average, Americans think the federal government spent 10 percent of its 2010 budget on pensions and retiree benefits; the OMB figures indicate the real number is about 3.5 percent.” [CNN]

The moral of this story is that if the amounts of spending on pensions and benefits, or the amounts that can be retrieved by closing loopholes and eliminating deductions, are grossly inflated, then the resulting policy and budget decisions will be widely off the mark.

Unfortunately, the same type of ideologically based proposals which are the core of Speaker Boehner’s “structural reforms” i.e. voucherization and privatization of Medicare appear to inform his suggestions about federal employee compensation, and another favorite GOP target, SNAP (food stamps.)

The program is already under assault from all sides, considering the appropriations being entertained in the agriculture bill.

The Senate’s version of the farm bill would reduce overall funding by $23 billion, with a reduction in food stamps of $4.5 billion over five years. The House Agriculture Committee is proposing to cut funding by $35 billion — with nearly half the overall cut coming from reductions in food stamps by $16 billion over five years. [Atlantic]

But there’s a problem here.  Food stamps have a beneficial effect on the national economy.

“Those who believe in cutting SNAP funding as a cost-saving measure should know that food stamps boost the economy — not put a strain on it. Supporters of federal food benefits programs including President George W. Bush understood this, and proved the economic value of SNAP by sanctioning a USDA study that found that $1 in SNAP benefits generates $1.84 in gross domestic product (GDP). Mark Zandi, of Moody’s Economy.com, confirmed the economic boost in an independent study that found that every SNAP dollar spent generates $1.73 in real GDP increase. “Expanding food stamps,” the study read, “is the most effective way to prime the economy’s pump.” [Atlantic]

If the object of the game is to increase federal revenues by generating a higher GDP along the formula proposing that a growing economy produces jobs, and more jobs yield more taxable income, and more taxable income means more revenue — then the GOP has the SNAP portion of the argument exactly backwards.  They are proposing to cut a program which actually generates more economic growth.   If one seriously believes that economic growth means more revenue and hence less indebtedness, then one can’t seriously advocate cutting programs which elevate levels of economic growth.

All Pain and No Gain.  The two sides don’t seem to be speaking to the same fiscal slope, cliff, gully, whatever.  From the Republican perspective the damage to the economy might be done by The Specter of Rising Taxes.  Those legendary Job Creators — who are now seeing record corporate profits while wages continue to stagnate — might not invest, and hence there will be no economic growth.  This is fundamental Supply Side Hoax thinking.  That it has been, and still is, a hoax is demonstrated neatly by this graph from the Federal Reserve Bank of St. Louis:

Corporate Profits Low Wages

The blue line represents wages, the red line corporate profits.  If corporate well being were the driver of overall economic growth and  well being then why has the blue line been trending downward since 1970?  The answer is simplicity itself: Supply Side Economics is a Hoax of the First Water.

A deficit reduction plan predicated on ideology, urban legends, misunderstandings, and economic illiteracy isn’t SERIOUS.   That conclusion further advances the argument that the Republicans aren’t really serious about debt or deficit reduction, but merely see the issue as a flag to be waved in the van of their attack on the social safety net, a banner of privatization signaling their allegiance to Tea Party politics.

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Filed under Economy, Health Care, health insurance, income tax, Medicaid, Medicare, national debt, Social Security

Six Talking Points about Fiscal Cliffs and Austerity Bombs

Senate Majority Leader Harry Reid (D-NV) has a message for the middle class this morning:

“Nevadans and Americans across the country agree that we can strengthen the middle class by adopting a balanced fiscal policy that requires millionaires and billionaires to pay a little more. In July, the Senate passed a bill to cut taxes for the 98% of Americans and 97% of small businesses making less than $250,000. House Republicans should stop trying to protect the wealthiest Americans from contributing their fair share and pass this bill immediately. Middle class Americans will have more opportunities to succeed when we level the playing field and make tax policy fairer.”  Senator Harry Reid (D-NV) 11/19/12″  (emphasis added)

In order to effectively expound on this message it is necessary to plant oneself firmly in the Reality Based World, and to dismiss some common misconceptions being promoted by the plutocrats and their GOP allies.

#1.  When the GOP says “your taxes will be raised” they are not talking to 98% of the American public who earn less than $250,000 in adjusted gross income annually.  The Obama Administration’s proposal is to allow the Bush Tax cuts to expire on earnings above $250,000; and to KEEP the Bush era tax rates in place for those individuals earning less than $250,000 in adjusted gross income annually.

#2. When the GOP says taxes will increase on small businesses, they are including those 3% of “small businesses” which are lobby shops, major law firms, large hedge funds, etc.  They are NOT speaking of the 97% of American small businesses which are small partnerships, single proprietorships, or small corporations which constitute the backbone of the American economy.

#3. Social Security and Medicare are called “entitlements” because they are earned benefits, which individuals have paid for and therefore are entitlements. These programs are not the problem, they are simply the target of choice from the Republican leadership which wants to cut Social Security and privatize Medicare.   These programs have NO place in budget negotiations concerning the reduction of the federal debt.

#4.  The legislation to which Senator Reid refers is S. 3412.  The terms of which can be generally summarized as:

“The Senate bill (S. 3412), passed on July 25, 2012, would extend current tax rates for lower- and middle-income persons, would increase tax rates on higher-income persons, would extend for one year (through 2013) certain tax provisions that expire at the end of 2012, and would patch the alternative minimum tax for one year only (2012).” [source]

#5.  “Harry and Louise” style ads from the Edison Electrical Institute (DefendTheDividend) notwithstanding,  S. 3412 and the Obama Administration proposals are  NOT an attack on retirement savings.  Remember the threshold levels:  “Individuals with incomes above these threshold levels, would have some of their itemized deductions and personal exemptions limited by phase-outs, would have a 20% rate on dividends and long-term gains, and would face tax rates of 33%, 36% and 39.6%”  [source]  The current rate for investors is 15%.

Who would  be affected by the Obama Administration’s tax proposals on capital gains?  Information from the Tax Policy Center is helpful.

Things to note — there are NO changes for those individuals in the bottom four income quintiles.  Only those individuals who are in the TOP income brackets (the top quintile, especially those in the top 1% or the top 0.1%) would be affected by the proposed changes in tax treatment of dividends.

#6.  There is NO correlation between low tax rates and economic growth. The non-partisan Congressional Research Service came to this conclusion after studying data from the last 65 years.

“The results of the analysis suggest that changes over the past 65 years in the top marginal tax rate and the top capital gains tax rate do not appear correlated with economic growth. The reduction in the top tax rates appears to be uncorrelated with saving, investment, and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie.

However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution. As measured by IRS data, the share of income accruing to the top 0.1% of U.S. families increased from 4.2% in 1945 to 12.3% by 2007 before falling to 9.2% due to the 2007-2009 recession. At the same time, the average tax rate paid by the top 0.1% fell from over 50% in 1945 to about 25% in 2009. Tax policy could have a relation to how the economic pie is sliced—lower top tax rates may be associated with greater income disparities.”  [CRS pdf]

In short, the only economic feature impacted by a reduction in tax rates is income inequality.   Nothing says “Support The Plutocrats and Financialists” better than saying we can’t raise taxes on the top 2% without cutting earned benefit programs like Social Security and Medicare.

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Filed under Economy, income tax, national debt, Politics, Reid, tax revenue, Taxation

The Campaign for the Middle Class Isn’t Over

The candidates are no longer running ads, the campaigns have been shut down, BUT the campaign for the American Middle Class continues.  The next phase comes as the Congress debates how to reduce the national debt — brought to us by two wars fought “off the books,” ill considered tax rate reductions, and a nasty recession.  If the American Middle Class is to avoid the detonation of the Austerity Bomb (aka the Fiscal Cliff) then we need to:

(1) Let our Senators and Representatives know that without an increase in the tax rates for millionaires and billionaires the ARITHMETIC necessary to reduce the national debt doesn’t add up.

(2) Remind our Senators and Representatives that federal discretionary spending has already been cut by $840 billion to $916 billion over the next ten years [QS] in the Budget Control Act of 2011.

(3) Let our Senators and Representatives know that we understand merely closing a few loopholes in the tax code isn’t nearly enough to make a serious dent in the national debt.  If they are serious about debt reduction then “increasing revenues” can’t be a code phrase for “tinkering with deductions and loopholes.”

If millionaires and billionaires don’t want a national debt passed along to their children and grandchildren — it just might behoove them to help pay off some of it.

 

 

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Filed under Congress, Federal budget, income tax, national debt, Politics, Senate

S. 3468: It’s Baaack…and shouldn’t be

Heads Up!  They’re back, againS. 3468 is yet another attempt by the financialists and related banking lobbyists to hamstring efforts to regulate the financial services sector.   It’s not like these interests have ever given up their campaign to revert to Business As Usual  such that the Wall Street Wizards can become yet another font of ill advised, incomprehensible, albeit highly profitable synthetic or otherwise manufactured financial products — You know, things like those adorable synthetic CDO’s which flooded the financial market with valueless toxic paper.

Here’s the CRS summary of the bill submitted by Senator Rob Portman (R-OH) on behalf of the banking sector:

Independent Agency Regulatory Analysis Act of 2012 – Authorizes the President to require an independent regulatory agency to: (1) comply, to the extent permitted by law, with regulatory analysis requirements applicable to other federal agencies; (2) provide the Administrator of the Office of Information and Regulatory Affairs with an assessment of the costs and benefits of a proposed or final significant rule (i.e., a rule that is likely to have an annual effect on the economy of $100 million or more and is likely to adversely affect sectors of the economy in a material way) and an assessment of costs and benefits of alternatives to the rule; and (3) submit to the Administrator for review any proposed or final significant rule.

Prohibits judicial review of the compliance or noncompliance of an independent regulatory agency with the requirements of this Act.

Translation: If any of the financial regulatory agencies, like the SEC, the OCC, the FDIC, or the CFTC wants to approve regulations which might have a “significant effect” on some bank’s bottom line, then the agency would have to present a “cost – benefit analysis,” and submit the rule for administrative (read executive branch) review.

There are some very cogent reason to be extremely skeptical about this bill.

#1.  It dramatically changes the relationship between the administration (executive branch) and the independent financial regulators.   The SEC, et. al. are supposed to be independent of the executive branch, which is why their leadership is subject to confirmation.  To require that the agencies present their proposed rules for executive approval inserts presidential politics directly into the rule making process.

Those who find the diminution of regulatory oversight disturbing will not be pleased with this proposal. Nor will those who decry the transference of yet more power to the executive branch.   There’s nothing here for either end of the political and ideological spectrum.

#2.  It invites endless litigation.  S. 3468 could be alternately named the Wall Street Attorneys’ Full Employment Act.  For those of us who believe that the interminable foot-dragging on CFTC regulations of the derivatives market has gone on long enough, this is entirely too much, [CFTC law] the Portman bill merely serves to add yet another bureaucratic roadblock before regulations can be finalized.  [Lieberman/Collins pdf]

#3. It prevents agencies from acting in a timely manner.  Again, inserting a secondary layer of “review” invites both executive interference and financial sector slow walking before any effective oversight of financial institutions can be effected.

#4. It is redundant.  All the agencies involved, with the single exception of the Federal Reserve, are already required to do formal cost-benefit analyses of proposals.  In case no one had noticed during the attempts to get the provisions of the Dodd Frank Act implemented that the banks have been availing themselves of these requirements to slow down the whole process — they have.  All this bill accomplishes is to slow the process down from a crawl to a drag.   Here’s why:

“The thirteen new analytic requirements this legislation could impose are only the beginning of the delays and burdens it would create. The mandated OIRA review of significant rules would take up to six months. In addition, the review process could force agencies to go back to the drawing board or do a re-proposal of the rule, which could add years to the regulatory process. While agencies could overrule an OIRA determination that a rule or a cost-benefit analysis was inadequate, such a step would render the regulation highly susceptible to court challenge. It would make industry attempts to overturn new rules in court almost inevitable. The increased risk of court reversal will discourage independent financial agencies from finalizing any regulation that receives a negative OIRA review.” [AFR pdf] (emphasis added)

In short, what we have here is a bill that simply refuses to die… and one which is unnecessary, unwarranted, and merely serves to benefit the financialists who don’t want oversight of their speculation in the Wall Street Casino.

Perhaps we might initiate newly elected Nevada Senator Dean Heller’s in-box with a few e-mails indicating that this is not a bill which deserves the support of 99.9% of the American public?

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Filed under conservatism, Economy, financial regulation, income inequality, income tax, tax revenue, Taxation

Playing Percentages With Grandma? Romney-Ryan Medicaid Budget Cuts in NV

The median annual household income in Nevada is $55,726. [Census]  The total population estimate for 2011 is 2,723,322 and of these approximately 12.5% are over 65 years of age.  Some simple arithmetic shows that about 340,415 Nevadans are over 65 years old.   So what?

The question is important because some of these individuals will need home care services to deal with infirmities, some will need assisted living to remain independent, and others will require institutional care, aka nursing facilities.

As we can see from the Kaiser Family Foundation graph above,  more Medicaid resources have been allocated for home and community based care since 1995.  Long term care, which prior to 1995 meant institutional care for the most part, is now 43% home/community based health care services.   The issue now becomes do we want to fund the Medicaid program at a level which will allow more low income  Nevada residents over the age of 65 to remain at home, or do we cut program services such that we cope with only the most medically fragile?

The family issue, for that household earning the $55,726 annually, is how to provide care for an elderly relative who requires medical assistance beyond the financial capacity of the family to provide but who doesn’t need institutional care?  There is no answer to this inquiry from the Romney/Ryan budget.

In fact, if as Senator Heller and some of his colleagues recommend,  we repeal the Affordable Care Act (Obamacare) and do what the Republican ticket suggests — transform the Medicaid program into a block grant scheme — we cut approximately 38% from Medicaid services. [KFF pdf]  If we drill down into state by state statistics, if Obamacare were repealed and the Ryan Budget was adopted our Medicaid program in Nevada stands to lose about 44% of its funding. [KFF pdf]

No one would (or should) be so callous as to suggest we slash funding for those with the most serious medical needs, especially those who need nursing facility care.  However, if we’re looking down the line at a 44% reduction in Medicaid funding for state services then the obvious cuts would come “at the margins.”

Who’s marginal?  Are low income single mothers with two dependent children under the age of 6 marginal?  Are low income elderly persons who can still function — albeit barely —  independently marginal?

The Medicaid program in Nevada* is an insurance program which pays servicers to perform some or all of the following tasks:

-Adult Day Care
-Assistance Shopping for Essentials
-Caregiver Respite
-Case Management
-Companion Care
-Homemaker
-Housekeeping
-Laundry
-Meal Preparation
-Personal Care
-Personal Emergency Response System (PERS)

* In order to qualify for the Nevada Home and Community Based Waiver as of 2012, the applicant’s monthly income must be less than $2,094.  Their countable assets must be valued at less than $2,000.

Now, how many families can afford privately financed adult day care, companion care, housekeeping help, meal preparation, personal care, and shopping assistance? On $55,726 a year?  On an income of approximately $2,000 per month?

The obvious conclusion is that perhaps the Republicans are advocating for Crowded Housing?  If they bemoan the fact that recent college graduates are staying home with parents in a tight economy, think how much more familial the entire living situation becomes when the grandparents — or Uncle Festus or Aunt Minerva — move in?  Especially when the elderly relatives are simply in need of the kinds of home or community based services likely to be declared marginal in cost cutting binges?

While this might all sound a little facetious, the fact is that most houses in the U.S. ( some 67%) have two or three bedrooms. [Census] Every parent’s dream for when the offspring depart, be it the new guest room, the man cave, the sewing room — whatever — fails when a no long total independent older relative needs a safe place to live.

A modicum of concern for middle income families who are struggling to maintain their standard of living might be in order.   If we can assist middle income families with the costs associated with the care of a low income elderly relative; if we can chip in a bit so that a low income  elderly person can remain independent as long as possible — then why is is necessary to cut 44% of the Medicaid program in Nevada so that millionaires and billionaires won’t have to revert to paying the income taxes they were paying back in the Clinton years —  39.6%.  (They are current paying 35%.   All this for 4.6%. )

Let’s guess that the hedge fund managers and Wall Street wizards won’t be decimated by a 4.6% tax increase, but a 44% reduction in Medicaid funding in Nevada will have a profound effect on the other 99.99%.

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Filed under 2012 election, Health Care, health insurance, Heck, Heller, income tax, Medicaid, Nevada economy, Nevada politics, Romney, Taxation