Monday morning is going to be interesting.


PrinceofLight2000
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The whole world panicked starting last night in Europe. It doesn't help when the press piles a heaping ton of manure in the hype. It only serves to manifest more sell offs. Yes Monday will be very interesting. Good thing the only thing I depend on is my internet connection. The rest of the household is all self sufficient.

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Generally, when the bond market becomes less safe, people pull their money and put it into stocks. So I wouldn't be surprised to see a rally in the stock market for the first part of next week and possibly longer.

That said: as a tea party sympathizer, there's a good deal of schadenfreude in the fact that S&P explained their behavior by saying that Tuesday's deal didn't do enough to attack the deficit. Erm . . . that was what some of us had been warning about all along. While our opponents just told us that if only Congress kept writing blank checks to the Treasury Department, everything would turn out OK in the end . . .

But look to the left to spin this as "double-dealing" by S&P and other Wall Street analyists. They'll try to make it look like Moody's and S&P were warning about what would happen without a debt ceiling increase, even though both agencies said all along that debt was the problem.

Edited by Just_A_Guy
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Personally I'm hoping for more of this. Europe is on very shaky ground. I hope they fall economically and that will finally kick over the U.S. You touch the flame as a kid and learn a lesson - don't put your finger into fire. I guess some need to have their whole arm burned before they understand the lesson. Burn the house down, that might rally the people into good reform - higher taxes, tarrifs on imports , more regulation, universal healthcare, finally bringing corrupt Wall Street leaders to justice, etc...

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That said: as a tea party sympathizer, there's a good deal of schadenfreude in the fact that S&P explained their behavior by saying that Tuesday's deal didn't do enough to attack the deficit. Erm . . . that was what some of us had been warning about all along. While our opponents just told us that if only Congress kept writing blank checks to the Treasury Department, everything would turn out OK in the end . . .

Can't the deficit either be attacked by cutting spending or raising taxes and it doesn't have to be either/or. Wasn't it the tea party that refused any compromise that included raising taxes?

Wasn't this also cited in the statement regarding the downgrade:

The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.

I don't really like any of the political parties at the moment and I find it very funny that everywhere I look, conservative leaning sites are saying this is 100% democrats fault and liberal leaning sites are saying this is all the doing of the tea party.

In my opinion, this is just another symptom of the poisoned political arena where all hope of an rational discourse has been replaced with mindless following of talking points and endless finger pointing all while nothing gets done. Then when the consequences come for this political deadlock each side simply blames the other and their loyal followers herald the virtues of what their side would have done if they weren't thwarted by the evil other side.

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Just to be clear, I don't think that the tea party is completely at fault here, I was just repeating what I've heard at some of the less conservative parts of the internet. Frankly, I really don't care who's at fault anymore, at this point it's like breaking up two bickering kids who just broke something. Sure, one of them probably started it and is slightly more to blame, but it really takes two to keep it up and they should both be punished.

Edited by DigitalShadow
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I took this balance the budget game, and managed to even things out by cutting two-thirds and raising taxes one-third. The choices were unsavory, and many would never fly politically. How sad, because the answers are out there.

Two proposals have been floated recently that seem imminently fair. One says we cut federal spending by 1% for the next six years, then cap spending at a certain % of gdp that is historically normal. With this, in eight-years we have balance. Another plan is to simply freeze federal spending at current levels. With that we have balance in 10 years.

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Funny how people like DS think that somehow raising taxes will somehow slow down the spending in DC. Who should we raise taxes on? Who doesn't pay their "fair" share? Nearly 50% on the country doesn't pay federal income tax....maybe we should start there? If I am "rich" business owner and my taxes were raised I would simply raise the cost of my goods or services and pass it on to the consumer and/or fire some folks and seek to do the same or more with less.

The debt problem must be solved by taking that "surgical scalpel" Obama referred to in a debate and trim huge swaths of fat from the budget and if we are to increase revenue....Obama should be focused on job creation. More workers = more revenue...unless of course you fall in to that lucky 50%.

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Downgraded US Credit Rating: What comes of Coddling the Super-Rich | Informed Comment

The decision of Standard & Poor to downgrade the credit rating of the United States of America from AAA to AA+ was clearly based on uncertainty in two major areas. The first and least important was the wrangling on the debt ceiling, which took the US to the brink of not being able to meet its debt servicing obligations for as long as the impasse lasted. The second was the increasing refusal of the American business classes to pay their fair share of taxes.

...So the first reason for the downgrade was the irresponsible and flaky behavior of the Tea Party, which created an artificial crisis for the benefit of its Koch Brother patrons, so as to throw more government resources at the super-rich and fewer at ordinary people.

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Downgraded US Credit Rating: What comes of Coddling the Super-Rich | Informed Comment

The decision of Standard & Poor to downgrade the credit rating of the United States of America from AAA to AA+ was clearly based on uncertainty in two major areas. The first and least important was the wrangling on the debt ceiling, which took the US to the brink of not being able to meet its debt servicing obligations for as long as the impasse lasted. The second was the increasing refusal of the American business classes to pay their fair share of taxes.

...So the first reason for the downgrade was the irresponsible and flaky behavior of the Tea Party, which created an artificial crisis for the benefit of its Koch Brother patrons, so as to throw more government resources at the super-rich and fewer at ordinary people.

You will perish down the road of unsustainability.

Edited by PrinceofLight2000
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Downgraded US Credit Rating: What comes of Coddling the Super-Rich | Informed Comment

The decision of Standard & Poor to downgrade the credit rating of the United States of America from AAA to AA+ was clearly based on uncertainty in two major areas. The first and least important was the wrangling on the debt ceiling, which took the US to the brink of not being able to meet its debt servicing obligations for as long as the impasse lasted. The second was the increasing refusal of the American business classes to pay their fair share of taxes.

...So the first reason for the downgrade was the irresponsible and flaky behavior of the Tea Party, which created an artificial crisis for the benefit of its Koch Brother patrons, so as to throw more government resources at the super-rich and fewer at ordinary people.

Nice article...stupid, but entertaining. S & P made no mention of the Tea Party (which isn't a party) or the "business classes" not paying their fair share. Liberal dribble........

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Can't the deficit either be attacked by cutting spending or raising taxes and it doesn't have to be either/or. Wasn't it the tea party that refused any compromise that included raising taxes?

The tea party understood--as many of our friends on the opposite side of the spectrum don't--that,

, there just isn't enough money out there to sustain anything like the kind of spending we've been doing for the past decade--let alone the past three years.

Marxism-lite makes a lot of people feel better, but it ignores these mathematical truths and only exacerbates the attitudinal problem that got us here: to wit, that government must do more regardless of how much it costs.

Wasn't this also cited in the statement regarding the downgrade:

The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.

Indeed. But whose brinksmanship? We've known this would be an issue since January or so. By late July, the White House began threatening to make cuts it knew it didn't have to make--to wit, Social Security, for one. By late July the Treasury department knew they had more time than they'd originally thought, and quietly moved the projected "drop-dead date" from August 2 into late August. They did quietly signal their allies on Wall Street--even when the chances of a deal looked bad--that there would be no default; but this tidbit of information was not deemed relevant to the larger discussion.

Remember when the President warned Rep. Cantor "don't call my bluff"? Everyone in that room knew that the threats we'd been hearing from the White House were precisely that.

I don't really like any of the political parties at the moment and I find it very funny that everywhere I look, conservative leaning sites are saying this is 100% democrats fault and liberal leaning sites are saying this is all the doing of the tea party.

Even with this deal, we're looking at annual deficits in excess of one trillion-dollars through the next decade. That's on top of the fourteen-trillion-odd national debt we currently face. (See the Heritage link I already provided.)

Take a look at this IRS report--see the table on the top half of page 18. In 2009 the IRS took in just under [corrected] $177 billion from people earning over $1 million per year. So, you could double taxes on millionaires immediately and (assuming they all kept working diligently even though they were now facing an 80% marginal tax rate--disregard the Laffer Curve, for the time being) you [corrected] still wouldn't even be twenty percent of the way towards eliminating this year's deficit. Tax them at 100%, and you're less than 3/4 of the way towards a balanced budget.

And we all know a 100% tax increase on millionaires just won't happen; so there's no way we'll balance the budget without huge cuts. And in the face of this, we were offered--what--two hundred billion a year over ten years, IF neither the President nor the Congress changes its mind?

In my opinion, this is just another symptom of the poisoned political arena where all hope of an rational discourse has been replaced with mindless following of talking points and endless finger pointing all while nothing gets done.

There is indeed an end of rational discourse, when our own political leaders ask us to ignore basic math and openly threaten to starve our grandparents into submission.

Edited by Just_A_Guy
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Funny how people like DS think that somehow raising taxes will somehow slow down the spending in DC. Who should we raise taxes on? Who doesn't pay their "fair" share? Nearly 50% on the country doesn't pay federal income tax....maybe we should start there? If I am "rich" business owner and my taxes were raised I would simply raise the cost of my goods or services and pass it on to the consumer and/or fire some folks and seek to do the same or more with less.

The debt problem must be solved by taking that "surgical scalpel" Obama referred to in a debate and trim huge swaths of fat from the budget and if we are to increase revenue....Obama should be focused on job creation. More workers = more revenue...unless of course you fall in to that lucky 50%.

Even with this deal, we're looking at annual deficits in excess of one trillion-dollars through the next decade. That's on top of the fourteen-trillion-odd national debt we currently face. (See the Heritage link I already provided.)

Take a look at this IRS report--see the table on the top half of page 18. In 2009 the IRS took in just under $727 billion from people earning over $1 million per year. So, you could double taxes on millionaires immediately and (assuming they all kept working diligently even though they were now facing a 70% marginal tax rate--disregard the Laffer Curve, for the time being) you still wouldn't solve the annual deficit.

And we all know a 100% tax increase on millionaires just won't happen; so there's no way we'll balance the budget without huge cuts. And in the face of this, we were offered--what--two hundred billion a year over ten years, IF neither the President nor the Congress changes its mind?

You both appear to have completely looked over the fact that I'm not saying increasing taxes is the only solution, I'm simply saying that taking tax increases off the table completely makes no sense when trying to solve this problem. Yes, we need budget cuts and we also need to increase our revenue through taxes if we're going to have any hope, but if you want to go on thinking that it's the evil democrats ruining everything, go ahead.

Funny, I didn't even mention who should get the tax increases. I'm not particularly rich, but I'm certainly willing to pay my part if sacrifice is needed from everyone to fix this. Now that you've mentioned it though, could you tell me how many people are there in the US making over a million per year and what their average total tax rate is? (genuinely curious here)

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DigitalShadow -

Frankly, you're probably right that nudging up tax rates will have to be part of a comprehensive solution to address our budget woes. (Though I think the timing on such a move is horrible right now.) However, as I've pointed out, even doubling rates isn't going to solve the problem completely; and I understand the President is taking flak from his own party for the token cuts that he has committed to. People need to get through their heads that our budget problems were primarily caused by, and will primarily cured by, massive changes to federal outlays, not revenues. (Sort of like Dave Ramsey says that 90% of all family financial problems are caused by problems in spending, not income. Same principle, but on steroids.)

Per the report I linked earlier; in 2009 the IRS received about $177 billion in income tax from just under 237,000 millionaires. [incidentally, I accidentally quoted incorrect figures for my post above--have now corrected; and you may want to take another look. It's staggering--the $727 billion I quoted earlier was annual combined income, not tax collections, for every millionaire in the country.] See page 21. Tax revenue from millionaires constitutes a hair under 20.4% of all personal income tax revenue for 2009. The statutory top marginal tax rate right now is 39.6% for anyone with over $250,000/year in income. If you count everyone in that top bracket, they paid just under $344 billion which accounts for 39.7% of all personal income tax revenue. Again, see page 21.

Apparently through deductions, credits, and rolling gains/losses forwards or backwards, the average millionaire paid about 24% of his income to Uncle Sam in 2009. See page 23. Quadruple the taxes actually collected from every millionaire in the country--tax them at 100%, if you want--and you're still not even three-quarters of the way towards balancing our 2011 budget.

Nor can we shunt the tax burden off onto the middle or lower classes--who are, generally speaking, already in debt up to their eyeballs to private lenders. A hefty chunk of them are living paycheck to paycheck as it is.

We can not solve this mess through tax increases. To blame the US' budget crisis on those who oppose tax increases, is like me blowing five thousand dollars a week at casinos and then telling my son that our family's financial woes are all his fault because he won't go get a paper route.

Edited by Just_A_Guy
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DigitalShadow -

Frankly, you're probably right that nudging up tax rates will have to be part of a comprehensive solution to address our budget woes. (Though I think the timing on such a move is horrible right now.) However, as I've pointed out, even doubling rates isn't going to solve the problem completely; and I understand the President is taking flak from his own party for the token cuts that he has committed to. People need to get through their heads that our budget problems were primarily caused by, and will primarily cured by, massive changes to federal outlays, not revenues. (Sort of like Dave Ramsey says that 90% of all family financial problems are caused by problems in spending, not income. Same principle, but on steroids.)

Per the report I linked earlier; in 2009 the IRS received about $177 billion in income tax from just under 237,000 millionaires. [incidentally, I accidentally quoted incorrect figures for my post above--have now corrected; and you may want to take another look. It's staggering--the $727 billion I quoted earlier was annual combined income, not tax collections, for every millionaire in the country.] See page 21. Tax revenue from millionaires constitutes a hair under 20.4% of all personal income tax revenue for 2009. The statutory top marginal tax rate right now is 39.6% for anyone with over $250,000/year in income. If you count everyone in that top bracket, they paid just under $344 billion which accounts for 39.7% of all personal income tax revenue. Again, see page 21.

Apparently through deductions, credits, and rolling gains/losses forwards or backwards, the average millionaire paid about 24% of his income to Uncle Sam in 2009. See page 23. Quadruple the taxes actually collected from every millionaire in the country--tax them at 100%, if you want--and you're still not even three-quarters of the way towards balancing our 2011 budget.

Nor can we shunt the tax burden off onto the middle or lower classes--who are, generally speaking, already in debt up to their eyeballs to private lenders. A hefty chunk of them are living paycheck to paycheck as it is.

We can not solve this mess through tax increases. To blame the US' budget crisis on those who oppose tax increases, is like me blowing five thousand dollars a week at casinos and then telling my son that our family's financial woes are all his fault because he won't go get a paper route.

Thank you, that's the most reasonable post I've seen on the subject yet across many forums. Now, if only our elected officials could express themselves in a similar manner and keep an open mind across party lines.

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Now this is a kind of protest I can support in Israel and we need that protesting here in the U.S. too. And the problem they are saying - the gap in Israel between the poor/middle class and wealthy used to be one of the smallest in the world but now that gap has grown wider and wider. Exactly what is happening in the U.S. and is a large part of the problem.

Massive protests in Israel over cost of living -

BBC News - Massive protests in Israel over cost of living

Edited by HoosierGuy
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I've long wondered what a "fair share" was and how it was "fair" that nearly half of Americans pay NO taxes, or even worse, have a NEGATIVE effective tax rate....it's funny how it's often these very same people who say that the rich don't pay enough. Disclaimer- i'm talking about personal income taxes here- not corp taxes.

Also, in case you haven't seen it- "Eat the rich"

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The whole world panicked starting last night in Europe. It doesn't help when the press piles a heaping ton of manure in the hype. It only serves to manifest more sell offs. Yes Monday will be very interesting. Good thing the only thing I depend on is my internet connection. The rest of the household is all self sufficient.

I think that's important. Yes, there is reason for concern about the economy, but it really doesn't help when people panic. That only makes things worse, sometimes a lot worse, than they really need to be. Last Thursday my coworker decided to give a speech about how terrible the economy is, and he said "I don't think people understand how scary the situation really is." I didn't want to upset him, so I didn't say this out loud, but I was thinking to myself, "Actually, I think people are already plenty scared. Look at what's happening in the stock market. That's because they're scared. Freaking them out even more isn't going to help."
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I've long wondered what a "fair share" was and how it was "fair" that nearly half of Americans pay NO taxes, or even worse, have a NEGATIVE effective tax rate....it's funny how it's often these very same people who say that the rich don't pay enough. Disclaimer- i'm talking about personal income taxes here- not corp taxes.

Also, in case you haven't seen it- "Eat the rich"

Frankly I think tax loopholes are more of a problem than tax breaks for the poor. My former manager drives an Escalade and is by no means poor. He was bragging to me that his effective tax rate was only 4% because he basically uses his LLC (which has yet to make any money) as a tax shelter. I'm not sure of the exact the details, but I think he was writing off his time spend on projects as a business expense billed at his contracting rate leaving the LLC taking huge losses that transfer on to his personal taxes.

I don't particularly care that people who barely can scrape out a living aren't being taxed much if at all, but it does irk me when I see people making far more than me, paying far less total taxes (not just percent of income). Perhaps that's just me though.

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