DC deadlock threatens 'largest tax increase in US history'
And a government shutdown, again
DC deadlock threatens 'largest tax increase in US history'
Joseph N. DiStefano
Stocks are up today. Maybe cause the Euro fog lifted a bit, or US consumers spent a little better than was feared, or hedge funds are temporarily covering lots of short bets, or Asian investors are spooked and see Western stocks as a safe haven. Or last resort.
But there's plenty more trouble and uncertainty just ahead, thanks to the people we've elected, warns James F. Meyer of Tower Bridge Investors, in a note to clients of Boenning & Scattergood in West Conshohocken. "The supercommittee’s failure to attack fiscal irresponsibility isn’t the end of the story," Meyer notes. "Before year end, there are two issues to address: "Congress at the moment is operating under a continuing resolution that runs out on December 6. That means, without another extension or passage of the necessary appropriations bills, the government will shut down then." So we need another short-term fix. Except this complication: "Last year, Congress passed a 2% cut in payroll (Social Security) taxes for employees as well as one-year accelerated writeoffs for specific capital spending and an extension of unemployment benefits. All of these run out on December 31 unless extended."
As a condition for doing that, "conservatives in Congress want offsetting tax cuts. The left wing wants higher taxes on the wealthy. This is exactly what tied the supercommittee in knots. The right wanted no tax increases whatsoever; the left wanted no plan that didn’t raise $1 billion from taxes on the wealthy. No compromise; no deal."
This payroll tax fight is rehearsal for "next year's battle regarding the demise or extension of the Bush taxcuts. If the payroll tax cuts die, there is little question that growth forecasts for 2012 will have to be lowered. "Take $1,000 out of the pockets of every wage earner and clearly economic growth will be less. But letting the cuts expire will almost certainly shrink the deficit a bit. Both sides have a point but neither is ready to move an inch," at least until after the 2012 elections. Meyer's prediction: Unless one side or the other gives in, "2013 will witness the largest tax increase in U.S. history." (That's assuming there'll be a big winner in 2012, no? What if it's just more deadlock?)
Why not just keep on borowing? That's what the City of Philadelphia and the School District are doing this week. $330 million for the poor taxpayer to finance and repay.— Wilhelm Von Humboldt
All of the false consciousness about the need for austerity, that we are broke as a nation, that the debt is drowning us and taxes are choking business investment is a lie, a big BIG lie in the face of today's revealing numbers that the Federal Reserve lent $7.7 TRILLION DOLLARS TO THE BANKING INDUSTRY TO KEEP IT FROM INSOLVENCY AND KEEP OUR ENTIRE ECONOMY FROM COLLAPSE, AS Of March 2009.
http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-undisclosed-to-congress-gave-banks-13-billion-in-income.html
There is plenty of money, there are too much held as profits and not enough circulating back into the real economy to hire, to start new businesses and to write off the bad debts that will never be repaid because the loans that were sold to the public were knowingly fraudulent by the banking industry, deliberately impossible to repay loans, with terms so ridiculous that everyone stopped trading with one another because the banking industry knew that its dealing toxic assets back and forth to one another in such quantities that the bubble just exploded.
AND OVER $7.7 TRILLION WAS NEEDED TO PROP THE BANKS BACK UP AND YET, THEY ARE STILL NOT MENDED, WHILE WE ARE FORECLOSED UPON, UNEMPLOYED, AND WITH UT HEALTH CARE, AND TOLD TO CUT BACK ON THE WELFARE STATE WHILE TRILLIONS MORE GO TO THE BANKS. IT IS ALL A LIE.
http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-undisclosed-to-congress-gave-banks-13-billion-in-income.html
