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Friday, July 15, 2011

Banker: Cut the budget, but boost taxes too

Who's backing the Republican insistence on cutting Medicare and not raising any taxes to ease the US budget deficit?

Not TD Bank. "The rational outcome" of the current fight between President Obama and House Republican leaders "would be acceptance that a mix of higher taxes and spending cuts is necessary," writes Craig Alexander, chief economist for TD,  the Toronto financial giant that owns what used to be Commerce Bank.

(Obama wants to raise taxes on the rich while also cutting government programs. House Republican leaders want deeper cuts, and no new taxes.)

Alexander wants less tax hikes, more spending cuts: "Say roughly a 15%-85% split".

 Mostly he wants a deal, quick, so the US can borrow more without tripping its debt ceiling or getting the credit rating agencies all upset: "The outcome of not doing so is unacceptable.  A credit rating downgrade for America that is the holder of the world reserve currency would lead to sharply higher U.S. interest rates for all borrowers, and a considerably lower U.S. dollar, not to mention the potential failure in making the required payments to citizensm or a shutdown of government services."

He expects "public outrage from such a result would be so strong that a political compromise would likely come quickly, but the damage to the perceived creditworthiness of the nation would linger."

At least a US budget deal is do-able. Alexander's grimmer analysis is that high unemployment is here long-term, with college graduates moving back with Mom and restaurant workers piling into crowded apartments, since Americans who need jobs don't have the skills employers want. Also that China and India will keep rising, while living standards in the West sink, comparatively. And Europe needs to fix its budget, too...
Posted by Joseph N. DiStefano @ 2:08 PM  Permalink | 18 comments
Comments   
  • 1 like this / 0 don't   •   Posted 3:49 PM, 07/15/2011
    Adding a 10% surtax on the salaries of bank economists is a good place to start.
    — Wilhelm Von Humboldt
  • 0 like this / 0 don't   •   Posted 4:31 PM, 07/15/2011
    Both Republicans and Democrats votes in the budgets that created the need to raise the debt ceiling. We're really talking about who will pay more. Republicans charaterize tax increases as very bad. Whatever, They would require the wealthy to pay more. Republicans are for cutting Social Security and Medicare for the middle class. Health care costs won't go down so the middle class will pay more for health care but that's a good thing according to Republicans. The real goal of some of these Republican is to do away with all social programs, public education, EPA and on and on. They want to bankrupt the country to force eliminiation of these programs. That's why ANY increase in revenue is very bad. And when will someone in the press shoot holes in the "Tax increases kill jobs mantra"? There's no data to support that statement and less than 1% of small business owners make over $250K. I agree that the standard of living in the west will decline as long as we continue unfair trade policies that are largely about the greed of the wealthy. Can anyone make a case that a decline in the standard of living for americans is good for the USA or the world. When the US can no longer afford to be the police for the world and the world becomes much less secure and stable as a result, what will these corporations think about these unfair trade policies? Short term greed for long term disaster.
    — MikeP
  • 0 like this / 0 don't   •   Posted 9:46 PM, 07/15/2011
    If you want to increase taxes then to make it fair include the over 50% who pay no income tax in the mix.
    — jeandarc
  • 0 like this / 0 don't   •   Posted 7:10 AM, 07/16/2011
    Corporations pay no taxes on their foreign business. Most, pay not corporate income taxes, many years in the course of a decade. Taxes are avoided for the most part, causing massive deficits and a false pretext to attack Social Security, that even Democrats want to buy into. The only thing that the Social Security trust fund needs to do is hire Halliburton protective services to put armed guards in front of the $2.5TRILLION social security trust fund surplus cash.
    — Fernando08
  • 0 like this / 0 don't   •   Posted 8:18 AM, 07/16/2011
    I thought Al Gore put the SS Trust Funds in a lock box?
    — Wilhelm Von Humboldt
  • 0 like this / 0 don't   •   Posted 4:09 PM, 07/16/2011
    The greedy pigs in this country pay an effective tax rate not seen since 1950 - and that includes ALL taxes. And for some reason, morons in this country are too stupid to understand that REMOVING a tax break that benefits one industry (oil for instance) is NOT the same as INCREASING taxes, it is the leveling of the playing field. No the real problem is the "average" american (who are those making more than 250K who AREN'T the average, but the dolts THINK they are) is now as greedy as the pigs on Wall Street - wanting everything for nothing. They have taken Wall Streets actions, and instead of being ashamed, embarrassed, and slightly guilty, are using it for their financial game plan.
    — CiceroSpuriousDeodatus
  • 0 like this / 0 don't   •   Posted 8:55 AM, 07/17/2011
    Joe - Obama, Pelosi, and Reid took federal spending from 18% of GDP to 24% of GDP.
    — Thoughtful&concernedvoter
  • 0 like this / 0 don't   •   Posted 9:04 PM, 07/17/2011
    Where was this guy taught that raising taxes will increase tax receipts to the government? It never does, the only answer is to cut spending.
    — mhmmam
  • 0 like this / 0 don't   •   Posted 2:30 AM, 07/18/2011
    Hey Joe, Gotta go Canada to find agreement for your passive aggressive support the administration. This President has not put forward one shred of paper supporting any spending cuts...none His joke of a budget got ZERO Dem votes. It is UNFAIR to raise ANY taxes for anybody. Even if we gave them more money...they will just spend it!!!! THey got more than enough money....it's the spending stupid.....BTW, Joe, Obamacare already cuts Medicare by 500b...Gop is not advocating any more cuts...stop reading and then writing the WH talking points.
    — kevindoc33
  • 0 like this / 0 don't   •   Posted 7:57 AM, 07/18/2011
    Reagan thought it was ok to raise taxes. The republican archangel rose taxes. The guy whose picture they want to put on money....yes, him. I say, just do it. Raise em! But also cut spending please.
    — Jeffritoe
  • 0 like this / 0 don't   •   Posted 11:43 AM, 07/18/2011
    kevdoc you have no idea what ur talking about obama already suggested up to 4trillion in cuts but the republicans backed away because they can't bear to raise taxes on those who fund their campaigns...get your facts straight
    — phillybaseball23
  • 0 like this / 0 don't   •   Posted 12:38 PM, 07/18/2011
    Joe, do us all a favor. Define what a "small business" is and then let us know what percent of small businesses would be impacted by a tax increase for those making $250K or above. What's the truth regarding "job creators"? I think most people would agree that these groups of companies that are owned by one individual and have revenue in the billion is not a small business. I'd agree that single employee companies should be excluded as well because they aren't job creators.
    — MikeP
  • 0 like this / 0 don't   •   Posted 5:14 PM, 07/18/2011
    How much revenue will be generated by taxing the upper income earners more, $15 - 20 billion? Close the corporate jet loophole, what maybe $1 billion in savings? What did the stimulus cost $800 billion to $1 trillion. C'mon that empty suit in the Whitehouse has not put forth any specific spending cuts. The dems were in control for the last 3 years, and they did nothing except shove obamacare down our throats.
    — junethe4th
  • 0 like this / 0 don't   •   Posted 2:22 AM, 07/19/2011
    There has been no document outlining the details of $1 in cuts, let alone $4T of cuts BB23..anyone from the negotiations has concluded that of the "suggested cuts" there is only 2B of cuts in 2012...Put a plan on the table Mr President....unfortunately, he can't because he genuinely has no idea what to do. all he can do is go to the Chicago playbook of attack the opponent and try to buy off the base. We are looking at an unqualified executive that is totally out of bullets.
    — kevindoc33
  • 0 like this / 0 don't   •   Posted 7:33 AM, 07/19/2011
    I say give the republicans what they want. Let the country default.The tea party crowd does not thank anything bad will happen. Let interest rates go sky high.Let China dump our debt. Watch the economy crash and burn.What would Mitch McConnell , Eric Cantor, John Boehner, Michelle Bachmann, Sarah Palin have to say then. Would the business community who paid their way into office continue to support them. Let's find out. Bob Dylan said " if you ain't got nothing, you ain't got nothing to lose.
    — bgreenage


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About Joseph N. DiStefano
Joseph N. DiStefano writes this blog to feed his PhillyDeals column in the Philadelphia Inquirer. Joe has been a member of Bloomberg LP’s New York Finance Team, wrote the book “Comcasted,” taught writing at St. Joseph’s University, and studied economics and history at Penn. Reach Joe at 215-854-5194 and JoeD@phillynews.com
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