From Sweden: Wow! Cutting Taxes for Economic Growth...What a Concept! State, National, International, posted by Carol, a resident of the Amador Estates neighborhood, on Sep 19, 2009 at 8:16 am
As Pleasanton residents hover around the TV on Sunday to watch President Obama on FIVE programs (except FoxNews, which would be too scary because he'd actually have to answer a probing question or two), let's see if Obama is asked any question on why he refuses to cut taxes to improve the economy, because it has been proven to do so.
Check out what the socialist democrat party in Sweden is realizing about taxes and their economy below.
After a generation and more of economic strangulation at the hands of the welfare state, Sweden is cutting income taxes to stimulate growth.
Sweden's centre-right government on Saturday announced income tax cuts of 10 billion kronor to stimulate the job market, its primary objective.
Prime Minister Fredrik Reinfeldt and three other ministers in the four-party coalition said the reduction would mean most wage earners would have 200 to 250 kronor (20 to 25 euros, 29 to 36 dollars) more in take-home pay every month. ...
With that step, 99 percent of full-time employees will have had their taxes reduced by a total of 1,000 kronor per month, while 75 percent will have had reductions of 1,500 kronor, the government said.
"The coalition government has agreed on reforms for jobs and entrepreneurialism that will increase employment in the long-term. It has to be more profitable to work and more companies should be able to hire employees," the government said.
It is nothing short of stunning that the Democratic Party and its media subsidiaries choose to ignore the hard lessons of history and choose a course leading to economic stagnation and personal economic deprivation for many. There are several hypotheses which might explain such willful behavior. None is attractive.
Posted by Curious, a resident of the Downtown neighborhood, on Sep 19, 2009 at 2:13 pm
So Stay Cool,
with your world of knowledge what would you suggest be done to help our economy. You seem to refute anything anyone suggests but I would be interesting in hearing your ideas aside from let's just let Barack continue. What do you believe would work and why?
Posted by a reader, a resident of the Another Pleasanton neighborhood neighborhood, on Sep 19, 2009 at 9:33 pm
"with your world of knowledge what would you suggest be done to help our economy"
Let me take a crack at that one.
My first priority would be to organize a group of experts to reform the regulation of securities, derivatives, hedge funds and the like. I would put back in place many of the financial services regulations that were removed in the Clinton and Bush administrations. I would implement the rules proposed by Paul Volcker which would prevent any financial institution from ever becoming "to big to fail". I would regulate that derivatives market such that all credit default swaps (including custom swaps) were traded on an open exchange. That would take care of the short term.
My second priority would be shoring up the long term federal deficit problem. The problem for the longer term is Social Security and Medicare. Those two programs alone will bankrupt us over the next thirty years even if the government cancels all other programs and spends money on only those two. To solve that, I think we have to do two things over the long term. We have to cut benefits and raise taxes. I would ignore anything having to do with "earmarks" or "pork". There just isn't very much there to save. It is all about Social Security and Medicare, and Medicare is the harder of the two to solve.
The current economic downturn happened because of a credit crisis. It had nothing to do with taxes or the over-regulation of business. Banks stopped lending to each other and credit began seize up. It happened because companies like AIG had operated like casinos and sold derivatives that the company could never pay, ultimately requiring the Bush administration to bail them out with tax dollars that ballooned to $180 Billion to AIG alone. No government agency forced AIG to write those derivatives, and no government agency told them they couldn't do it. Now we're all paying the bill.
When Ronald Regan promised to cut taxes and regulation of business nearly thirty years ago, I think he did the right thing. Many of us were over taxed and many businesses were over-regulated. Today, we face a different set of problems, and I think we all need to start paying attention to what happened.
Posted by Zenmonkman, a resident of the Another Pleasanton neighborhood neighborhood, on Sep 20, 2009 at 9:33 am Zenmonkman is a member (registered user) of PleasantonWeekly.com
The post by "a reader" above is EXCELLENT. I would like to add one thing. The one element that every individual has under their control is "living within their means". Companies should do it, individuals should do it and governments should do it. WE DON'T DO IT. I know this value sounds corny, but it hasn't been the cornerstone of our thinking. My aging step-father has 3 bills. He lives within his means. He is teaching me a lesson. Leverage is a killer.
Posted by Chris H., a resident of the Downtown neighborhood, on Sep 20, 2009 at 11:17 am
So wouldn't raising taxes in a very poor economy and high unemployment makes things even worse than they are now? How much money I wonder do we give to the united nations and other countries in aid not to mention the amount of money it must cost to keep troops and bases in Japan, South Korea, Bosnia, Afghanistan, Iraq, and who knows where else?
Posted by Chris H., a resident of the Downtown neighborhood, on Sep 20, 2009 at 11:19 am
and I did hear an interesting argument on Bloomberg about eliminating the home interest expense deduction on any loan exceeding $100,000 dollars and how much more money it would mean for tax revenue not only nationally but in the state and local community for schools and such. Huge amount of money and maybe more fair to those who do not own homes.
Posted by Stay Cool, a resident of the Another Pleasanton neighborhood neighborhood, on Sep 20, 2009 at 4:35 pm
Couple quick thoughts:
1. Living within your means is an excellent idea. I heard a statistic the other day on the radio, don't remember the exact details, but the story was about how the economic recovery will be slower because people have moved from spending an average of $1.05 for every dollar earned to $0.95 for every dollar earned, and are saving more money after the lessons of the downturn. That's ultimately a good thing.
2. In terms of the middle class, I definitely don't think income taxes should be raised right now, and I definitely don't think they should be cut. The time is right for neither.
3. I agree that the tax breaks for real estate are problematic in terms of lost revenue, but I think it would be a big disincentive for people to buy homes right now if they didn't get those breaks, especially in places like the B.A.; and with the current state of the housing market, this is not the time to go that route.
Posted by No!, a resident of the Amador Estates neighborhood, on Sep 20, 2009 at 6:24 pm
You all are missing it completely.
Obama knows full well that lowering taxes would improve the economy immensely. The latter is not his goal. In fact, the opposite is his goal and he is succeeding. He only needs Obamacare and Cap and Trade to finish off the US economy for generations. In his mind, America deserves to fail.
Posted by Janna, a resident of Dublin, on Sep 20, 2009 at 7:37 pm
Jeez No!, paranoid much? I'm laughing so hard. "Obama wants to finish off the US." Now that's hilarious! You still sticking to that old trickle down economic theory that doesn't work?
This is why no one takes you people seriously. Bush did more financial damage to our country than anyone in recent history and you're calling Obama out because he's trying to fix it. Never a peep from you after what Bush did.
BTW, it might actually make your head pop off to know that Obama has already kept us safe longer than Bush in regards to terrorism since 9/11 happened under Bush's watch. Bush was a huge failure.
Posted by Keith, a resident of the Del Prado neighborhood, on Sep 20, 2009 at 8:21 pm
did you see the title of this is Pleasanton Weekly not Dublin Weekly? Obama is a terrible mistake and now less people believe in him and now I am one of them. I will never vote for him again. Big disappointment.
Posted by Janna, a resident of Dublin, on Sep 20, 2009 at 10:32 pm
Pleasanton was my hometown from 8/2001-2/2009 until long term job loss and a quickly dwindling savings account forced us to move to an apartment in Dublin. My family and I have had to change our lives 180 degrees while fat cats getting tax cuts, that will never result in stimulating the economy, get fatter. I have been and continue to be one of the many who are affected by the failed republican economic policies. Even if I hadn't lived in Pleasanton and considered it the place I wanted to raise my children, I still have every right and obligation to counter garbage when I hear it as a citizen of this country. You may stuff it Keith.
Posted by poster boy, a resident of the Another Pleasanton neighborhood neighborhood, on Sep 21, 2009 at 1:09 am
this is for No!: the Reagan and 2 Bush administrations are entirely responsible for 8 trillion of our 11 trillion dollar national debt, and you think Obama's the one trying to "finish off the US economy for generations." Nice analysis.
Reader. Your analysis was spot-on in some instances, but there was a contradiction in that you call for a need for more regulation of our current financial system then praise reagan for lifting some of those regulations when he took over 30 years ago.
As for entitlement reform, you do point out that social security is an easier fix than medicare, but you fail to mention how easily. Currently social security taxes cap at (i believe) 92k or 102k for individuals and something higher for married/filing jointly (can't remember the exact numbers). To ensure the solvency of social security well into the 22nd century, simply raising the caps to 150k will be enough. Problem is Obama made a campaign pledge to not raise taxes on those making less than 250k, so to keep this promise any reform plan will have a window from 92k - 250k where no SS tax is collected, then the tax picks back up for earnings over 250k up to another cap, say 350k. This alone will ensure SS's solvency for generations with no cuts in benefits and a negligible hit on the overall economy, since this extra tax will only hit the top 1% of wage earners.
Now Medicare is a different beast entirely, but a lot of the projections of Medicare taking over our budget is based on healthcare costs continuing to rise at their current rates. If any form of healthcare is passed that slows down the increase of these costs, Medicare stands to benefit in terms of its long-term stability. That's why Obama has stated repeatedly that healthcare reform is deficit reduction. Just cutting 1% each year over ten years will have a tremendous impact on the stability of Medicare. That's why reform is so important and doing nothing will be a complete disaster for us all.
Posted by JimF, a resident of another community, on Sep 21, 2009 at 11:04 am
I will try to help Bob out - "raising the caps to 150k" is a solution which is not workable, unless the goal is simple redistribution of wealth, simply put, a socialist agenda.
The solution to a problem which was generations in the making is NOT to tax future generations more and more, it is also NOT to tax the earners in this country, prosperity of our country depends on the ability of those creating businesses and hiring people to continue to do so. Speak to any business owner about this if you don't understand. I met with my CPA last week, I have never seen him so tense, his clients are those trying to build businesses in town, so many were hoping to have an end to this recession in sight by now, that light at the end of the tunnel seems distant and dim to many in this area.
When the Obama admin is promoting health care reform which is another tax and spend scheme, allowing Bush tax cuts to expire, and going back on campaign promises to "Create a $3,000 tax credit for companies that add jobs" and "Eliminate capital gains taxes for small businesses and start-ups", as well as increasing taxes on those making under $250k, the very centerpiece of his campaign WRT to taxation, it is not very encouraging for a business owner.
Add to this California's deficits and you have a troubling situation.
Posted by poster boy, a resident of the Another Pleasanton neighborhood neighborhood, on Sep 21, 2009 at 11:37 am
Those are valid points. There is a balance between overtaxing and suppressing economic output versus maintaining the govt services people rely on, but the problem I was addressing was the solvency of social security in the long term. I'm not sure that providing solutions to keep social security solvent for millions of americans is necessarily a "socialist agenda". But if trying to maintain income security for millions of disabled and elderly is having a socialist agenda, so be it. I just don't see how underpaying people in retirement 30 years from now will benefit the overall economy at all. Millions of americans will suddenly find themselves caring for an aging parent because the social security previous generations relied on will not be there, and this added cost will far outweigh any tax they would've been paying over that time. Social Security was the difference between my siblings and I going to college versus taking care of my ailing grandparents. Obviously if the choice was to be made it would've been my grandparents, but because of social security we didn't have to make that choice and now you have several college-educated citizens who earn more and contribute more to society. I hardly see this as income redistribution or a "socialist agenda." I see that because of SS, my grandparents lived out their remaining days without fear of descending into poverty or becoming an undue burden on their children, and we got an education that we paid for ourselves. Win-win.
As for your comments, you expressed two good points of what should NOT be done, but you didn't make any reference to what we *should* do. Aside from a cut in benefits, which would be politically unfeasible, how would you address this problem? Privatization didn't go anywhere under bush, but do you still consider that an option? I'm interested to know...
Posted by a reader, a resident of the Another Pleasanton neighborhood neighborhood, on Sep 21, 2009 at 12:36 pm
" I have never seen him so tense, his clients are those trying to build businesses in town, so many were hoping to have an end to this recession in sight by now, that light at the end of the tunnel seems distant and dim to many in this area. "
I'm not sure what you're saying here, but I think the economy had done better in the last year than many economists expected, after the fall of Lehman Bros. I think it was clear to everyone that the causes of the recession had everything to do with regulation (and lack thereof), and little to do with taxes. Do you agree that regulating the financial services industry should be a top priority? How do you prevent a future AIG of Bear Stearns failure from happening? I don't see how tax cuts do anything in that department.
" "raising the caps to 150k" is a solution which is not workable, unless the goal is simple redistribution of wealth, simply put, a socialist agenda. "
I agree with poster boy in this case. Social Security is redistribution of wealth. It is a regressive tax. Poorer people pay more of it than richer people. It is not a flat tax. How do you pay for it without increasing taxes or decreasing benefits? Do you favor phasing out Social Security and Medicare? Should we borrow more?
Posted by Bob, a resident of the Foothill Farms neighborhood, on Sep 21, 2009 at 12:44 pm
I think it hard to make an argument that the economy is doing well in the last year. Unemployment in the state is now at 12.2% or the highest level since the great depression, they are going to extend unemployment benefits for an additional 13 weeks because people are finding it difficult to find employment, NUMMI will be closing in a few months and with it will go about 50,000 statewide so I believe we have a very long way to go and I do not see us moving in a good direction to change that course.
Social security and medicare? Yes I believe they should both be discontinued as you should only be able to pull out what you have paid in. I believe if you look objectively at California you can see what a welfare state can do to an economy and I also believe that if we keep up what we are doing in Washington we will just see a much larger version of what we are seeing in California. Vote them all out Republican and Democrats and let's start over with a new government because we have messed this concept up.
Posted by a reader, a resident of the Another Pleasanton neighborhood neighborhood, on Sep 21, 2009 at 12:56 pm
Thank you for clarifying your position on Social Security and Medicare.
I agree that the economy is still in bad shape, I was just commenting that many economists said that Great Depression 2 had begun, and so far, they turned out to be wrong.
Doesn't the 12% current unemployment have a lot more to do with the global financial crisis and the seizing up of credit than it does with taxes? Don't we need to focusing on cleaning up the financial services industry so that we never find ourselves bailing out the likes of AIG again?
Posted by Bob, a resident of the Foothill Farms neighborhood, on Sep 21, 2009 at 1:22 pm
I believe that the high cost of gasoline lit the fuse for the economic meltdown followed by the financial markets and banking collapse is what killed the american economy and impacted the global markets. California is a much more difficult situation because we were already on the ropes before any of this happened. We need jobs and industry in the worst way and none to soon. I believe it is imperative that we do something to get some industry in this state or we will see even more people with money leave this state. We are in a bad spiral and taxing more and getting less is making the exodus that much faster.
Posted by JimF, a resident of another community, on Sep 21, 2009 at 1:24 pm
How about suspending capital gains taxes for a defined period, federal tax receipts will shoot up from the resulting economic activity?
How about suspending gasoline taxes for 6 months, putting money directly in the pockets of people who have automobiles and jobs and kids, the people who spend money and can't afford Christmas this year?
How about a lighter and leaner government?
How about rooting out corruption?
How about we stop paying for airports in nowheresville PA that only have 3 flights a day, all of which go to WASHINGTON DC!?!
How about generating more revenue by drilling for oil in barren wilderness in Alaska
How about abolishing useless bureaucracies like the Dept of Education?
What I am trying to say, it is not prudent at this juncture to try to fix the problems in Social Security by levying more taxes. Read my lips, no new taxes
Posted by poster boy, a resident of the Another Pleasanton neighborhood neighborhood, on Sep 21, 2009 at 1:39 pm
Your list is long but still a little light on substance. For one thing, the social security fund is kept separate from the budget that pays for all the things you listed. If you notice on your paycheck, social security and medicare are separate line items from FICA because those funds are distributed into separate funds. So you can cut all the things you listed, you can eliminate the capital gains tax, etc, but it won't do a thing to shore up social security because that money comes from an entirely different source. Sure the congress in the past has made a practice of borrowing from the social security trust fund to pay for general expenditures, but that money has to be paid back with interest on the full faith and credit of the US govt, so that's a non-starter. Also, some of your items are a bit vague. Everyone would love to have a tighter and leaner government that roots out all corruption. Drilling in alaska will not produce for another 15 - 20 years and the amount of revenue would only be enough to help add to the budget for at most a few years, and that revenue wouldn't go to the social security fund anyway. Suspending the gasoline tax won't save you all that much. Say you fill up twice a week at 15 gallons a pop, well the federal gas tax is what, 18 cents a gallon...you just saved $2.70. Multiply that times 2 and you have $5.40. You basically just saved yourself an extra value meal at mcdonalds. That's not gonna do much for the economy, and the nations highway fund will be depleted as a result. Revenue from capital gains taxes doesn't go to social security, so that won't help. Abolishing useless agencies won't help social security either as those agencies are funded by the general budget, not the social security trust fund.
I'm really about hearing what solutions you might have to offer on shoring up social security and medicare. All these issues you listed aren't really targeting the problem at hand, but thank you for offering them.
Posted by Bob, a resident of the Foothill Farms neighborhood, on Sep 21, 2009 at 2:55 pm
One of the reasons why social security is underfunded or broke is because it has been robbed to pay for just about everything else. I said above and mean that we are kidding ourselves to think that social security is going to be around nor will medicare. Both programs need to go away and you should only be able to pull out what you have put in and no more.
Posted by JimF, a resident of another community, on Sep 21, 2009 at 3:18 pm
Right - stop robbing the SS fund to pay for useless programs and you start reducing the enormous amount of unfunded liabilities. Start reducing taxes in targeted areas to stimulate economic activity. I am sorry I don't have the legislation all written out, my PAC and my lobbyists have been busy lately
pb - your math on my gas tax idea works out to almost as much for me as Obama's tax cut for 95% of all Americans he got elected on. It was a great idea then to cut everyone's taxes a tiny bit, its an even better idea to cut it a bit more if it spurs economic activity, i.e. people buy more gasoline. Commuters and businesses that purchase a lot of gasoline will benefit more.
Posted by Johnny, a resident of the Country Fair neighborhood, on Sep 21, 2009 at 7:21 pm
I believe that president obama said he has that one covered but i am concerned about the government buying gm and chrysler. both make terrible and unsafe. I just came back from a business trip and rented a malibu and it was a terrible car as compared to my camry. i thought the car was terrible and to think i own part of that company with my tax money....terrible cars
Posted by a reader, a resident of the Another Pleasanton neighborhood neighborhood, on Sep 22, 2009 at 12:24 pm
I don't trust that Obama has it covered. I wish the administration would pay more attention to the financial crisis. Congress hasn't made much progress on reform, and the proposals lack some key provisions, in my opinion. I think all derivatives should be traded openly, on an exchange. I think financial services companies should be prevented from becoming too big to fail.