View 756 Monday, December 31, 2012
Happy New Year
I don’t do topical news, and it’s just as well. After the President gave his smirking press conference to spike the ball on having forced a tax settlement without any spending reductions he then threw in more insults to Congress. If he intended to end negotiations he could not have done a better job. There are those who say this is exactly what he intended.
Of course there never was much chance of actual spending cuts: in Washington there is an automatic increase in spending unless some action is taken to “cut” the appropriation. Last February the House passed a bill to eliminate this feature, but it was never even voted on in the Senate, and would not have survived a veto from President Obama in any event. http://cnsnews.com/news/article/house-votes-eliminate-automatic-spending-increases-budget
In theory the sequestration will bring about an actual cut, but it’s not likely – mostly it’s a decrease in the increases that the different departments will get. But as I understand it, there may be some actual honest to God cuts in a few cases. One of those will be missile defenses, but there is considerable discretion in the military cuts of about $55 Billion in a base (note that the base has a built in rise) of about $550 Billion. This looks accomplishable: the US spends more on military power than the rest of the world combined, and I don’t see anyone planning an invasion of the United States. The military is not the first line of defense against another 9/11 style attack. It is in theory the first line of defense against activities like the Fort Hood massacre, but I don’t think military budget cuts or increases will have much effect there: what’s needed is a military attitude toward that threat, and that doesn’t cost much. Had all the officers and senior noncoms been armed, Major Nidal Hassan would have been shot down before he could kill and wound so many of his comrades. But the military apparently is being told to be more concerned about Hassan’s beard and with not offending the Muslim community.
We are going over the cliff, which means that each of us will owe about $2000 more in taxes than you planned to pay – assuming that you pay taxes, which I suspect that most non-student readers here do. Those who don’t wish they could. It is not clear whether we will have to actually pay that extra tax. The President keeps trooping up representatives of the middle class – I assume they are actually tax payers, although how he selects those who stand with him when he delivers his post campaign speeches is not known, and I haven’t been clever enough to find out through Google or Bing. Since there was cheering when he slammed the Republicans I presume this wasn’t an actual press conference with actual journalists, although there may have been bloggers. In any event I do not think that even those privileged to stand behind him as he read from the teleprompter would welcome the coming tax increases.
The cost of cutting back taxes to 2012 rates will be that there be no “tax cuts” for those making more than $200,000, and that the new higher rates on “the rich” will be permanent. This may bring in as much as $100 Billion over the next few years, although it’s unlikely – predictions of increased revenue do not take account of probable efforts to avoid those taxes through shifts on spending patterns. It may bring an increase in charitable donations. If your income is more than $200,000 this year this might be a good time to make charitable donations, particularly if there is any chance that the donation may influence school selection committees or have other such effects.
But the drama is not over.
I note that there is frantic last minute activity in Congress, but I also note that it is more devoted to “turning off the sequester” which is the only real spending cut in the future. No one is looking at fraud and waste, bunny inspectors, government activities we would be better off without. Soak the rich is now the goal for a lot of Democrats. By “the rich” is generally meant those whose income is salaries and bonuses, people paid through stock options for engaging in high risk enterprises, etc. People who move money around in circles generally find ways to defer income in ways that don’t get hit with “income” taxes. And of course there are many perks that come with wealth but which don’t look like income.
The President wants to pound the rich. He doesn’t care what that does to investment climates. And no one is going to make any cuts to entitlements.
At some point, one would suspect, the American people will have had enough; but that will take a while. And Congress gets a raise. Their staffers get a raise. Government employee pensions continue to rise, and the courts are now saying that cities can’t stop paying into pension funds even if they go bankrupt, and the idiots who bought city bonds have less claim on a bankrupt city’s money than the pensioned off employees. Salve Sclave.
Happy New Year
An example of modern political debate:
Demand a Plan