Thursday, December 01, 2005

One more example....

...that the country is run by idiots only concerned in their own popularity, and not with what's best for the long-term health of the nation. Fresh from a piece of transcription I worked on today comes a gem from the Center on Budget and Policy ( in the body of the new Tax Reform Proposal.

Here are some of the highlights that well-respected young economist, Jason Furman uncovered about this brilliant new proposal:

"Compared to current law, the two plans that the Panel proposed each would add $1.8 trillion to the deficit over the next decade. (Making the 2001 and 2003 tax cuts permanent would add $1.5 trillion to the deficit over the next ten years, while the President’s additional tax cut proposals would add another $0.3 trillion, for a total of $1.8 trillion.)

Over 75 years, the Panel’s plans would cause the deficit to increase by about $14 trillion (measured in “present value”), relative to what the deficit would be if no changes were made in the tax code (i.e., relative to current law). This increase in the deficit is more than three times as large as the 75-year shortfall in Social Security.

Moreover, the Panel’s proposal is not revenue neutral over 75 years even by the Panel’s own standard of what constitutes revenue neutrality. The Bush tax proposals that constitute the Panel’s baseline would cost $12 trillion over 75 years ($9 trillion for making the 2001 and 2003 tax cuts permanent plus $3 trillion for the President’s additional tax-cut proposals). The Panel’s reform plans, however, contain additional proposals that would not lose much further revenue in the first ten years but would burgeon in cost in subsequent decades. Over the 75-year period, deficits would be roughly $2 trillion larger under the Panel’s plans than if the 2001 and 2003 tax cuts were made permanent and the President’s other tax proposals were enacted.

Based on economic research and standard economic models, the increased deficits that the Panel’s plans would reduce national income by about 8 percent after 50 years. This is substantially larger than most estimates of the potential economic gain that could be produced by reforming the tax code. Thus, despite making a number of thoughtful, innovative reform proposals, the Panel’s plans as a whole would likely reduce economic growth rather than increase it.

Also of note, some of the revenue loss that would result from these proposals would come out of revenues collected from a tax that is dedicated to the Social Security and Medicare Hospital Insurance Trust Funds. By reducing this dedicated revenue source, the Panel’s proposals would enlarge the Social Security and Medicare shortfalls and thereby accelerate the dates when the two programs would become insolvent. That would necessitate deeper cuts in Social Security and Medicare benefits, or greater increases in payroll taxes, to restore solvency.

Finally, in addition to being portrayed as revenue-neutral, the Panel’s plans also have been presented as being neutral with respect to the distribution of tax burdens. This merely means, however, that the distribution of tax burdens would be the same under the Panel’s plans as under the Administration’s proposals to make the 2001 and 2003 tax cuts permanent and to enact several new tax breaks tilted to high-income households, such as Retirement Savings Accounts and Lifetime Savings Accounts. The Administration’s proposals, which the Panel’s plans are designed to mirror distributionally, would make the tax code less progressive.

Now would somebody remind me what it was Clinton did while at the helm which was so terrible for the country? Now bear in mind that the majority of these tax breaks are aimed at megolithic companies and very high income people in this country - not you and I, by any stretch of the imagination. And they're trying to tell us that they have to slash spending in Medicare, Social Security and School loans in order to put the country's coffers in order? Puh-leeze.

Sure...let's saddle our grandchildren and great-grandchildren with backbreaking and crippling debt in order to make our constituents and lobbyists happy, shall we?



Blogger mikevotes said...

It's okay. It flopped. Bush announced over the weekend, so it wouldn't be noticed, that he won't push for tax reform any time soon.

WASHINGTON (Reuters) - The White House may delay unveiling a broad proposal to overhaul the tax code until 2007 or later, despite earlier discussions of making it a major theme for next year, people close to the White House said.


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