Financial topics

[Reality Check]

Obama ran for re-election claiming he had already reduced the deficit by 2,400 Billion in spending cuts over ten years beginning in 2013 and would do more deficit reduction by raising taxes on the wealthy.

In the last few hours Obama delayed the previously claimed 2,400 Billion in deficit reduction by delaying the start of $2,400 Billion in spending cuts for two months and instead signed a deal with Democrats and Republicans in Congress to increase ( not decrease ) spending immediately and continue that new increased spending for years, permanent increase taxes on the American people to partially pay for that increased spending, and permanently increase the deficit, rather than decrease it, to pay for the portion of the increased spending not covered by new permanent taxes. The massive increase in spending will be occurring during the first months of the 10 year period and then magically stop a a couple of years later, the new tax revenue that will partially pay for this increased spending will occur primarily in the later years of the 10 year period.

Obama is also promising to avoid some, or all, of the 2,400 Billion in spending cuts beyond the new implementation date of March 1st, 2013, by reaching another deal with Congress between now and then to avoid spending cuts. Keep in mind these are not new spending cuts being delayed, but spending cuts Obama claimed during the election campaign were already a done deal.

Obama will now lie and claim that he has partially delivered on his previous promise to raise taxes for the purpose of further reducing the deficit, when, in fact, he has increased the deficit and permanently increased taxes while delaying deficit reductions he had claimed were already a done deal during the re-election campaign.

This is what John meant by not fixing the problem, then claiming, falsely, that you had fixed it.

In Obama's case he has exceeded expectations by actually making the problem worse than it was before the year end "fix".

[Reality Check]

The Key point here is the increased taxes are not a big deal.

Increasing taxes on those making over 250,000 does not even pay for the increased spending Obama just got Congress to agree to.

Limiting them to those over 400,000 of course does even less, but both tax revenue increases are insignificant.

The relatively small immediate increase in spending Obama just got Congress to agree to more than wiped out all the money in new revenue the taxes will bring in over the next 10 years.

Obama already spent all the increase in tax revenue over the next 10 years by a small, temporary increase in U.S. Government spending over the next couple of years.

No, repeat none, of the increased "taxes on the rich" will be used to reduce the deficit over the next 10 years.

[Trevor]

Obama already spent all the increase in tax revenue over the next 10 years by a small, temporary increase in U.S. Government spending over the next couple of years.

Sounds like the "temporary" tax hikes that are going into effect in California as well. The deal went about as I expected it to. Also, he's planning on asking for more tax hikes during the next debt ceiling fight, which will probably go in a similar direction.

In 1960, non-military government spending was around nine percent of GDP. Today, it's around 20 percent of GDP and if these talks are any indication, it's going to continue to skyrocket.

[OLD1953]

I know it's shocking, but Obama is not a dictator. When it comes to spending, the nation gets what Congress approves. All any President can do is what's authorized in the budget. Which is what makes this debt ceiling business so ridiculous, Congress is saying "we voted to spend this money already, but we want to vote on it again". It isn't like it's a shock, they know almost to the minute when the debt ceiling will be reached from the day the budget passes.

[OLD1953]

With the lense with see as positive progression we know as the 19th century elaborated the concept of economic rent as that element of price which found no counterpart in actual cost of production and hence was “unearned.” It was a form of economic overhead that added unnecessarily to prices. In 1817, David Ricardo’s Principles of Political Economy and Taxation elaborated the concept of economic rent. Under conditions of diminishing soil fertility in the face of growing demand, value was set at the high-cost margin of production. Low-cost producers benefited from the rising price level. Ricardo helped clarify the concept of differential rent by applying it to mining and subsoil wealth as well as to land. Heinrich von Thünen soon added the more helpful concept of rent-of-location (site value). The important classical point was that economic rent was produced either by nature or by special privilege (“monopoly”), not labor effort. Hence, it was that element of price that could not be explained by the labor theory of value, except by marginal costs on what Ricardo hypothesized to be “rentless land” as recourse was made to poorer soils. Ricardo’s follower John Stuart Mill explained that being income without labor or other costs, such rent formed the natural basis for taxation. The Progressive Era developed the view that public utilities and other natural monopolies rightly belonged in the public sector, where governments would provide their basic services at a subsidized price or even freely as in the case of roads. The idea was to keep user fees no higher than the actual cost of production, so as to avoid rent seeking. This pejorative term means extracting income by placing tollbooths on the economy’s key infrastructure. To leave roads and railroads, electric and power utilities in private hands ran the risk of private owners “rack-renting” the population, adding to the cost of living and doing business. U.S. policy is just the opposite. Commercial real estate has been regressively “freed” from taxes – leaving the rental value to be pledged to banks as interest. This un-taxing of land rent has been a major factor inflating the real estate bubble on credit, much as deregulating monopolies has helped inflate their stocks and bonds on credit. This is the policy that the Bowles-Simpson Deficit-Reduction Commission endorses. Its regressive tax proposals would shrink the economy, pushing it further into debt. This transfer of revenue from labor and business to property owners – and from them to their bankers and bondholders – threatens to force up the government’s fiscal deficit (as states and municipalities are seeing today) and turn the United States into a Third World type neofeudal economy. I cannot change my view or have they warranted I do. The only advise is to look for energy margin clusters groups. I have conveyed our view on light switch investments and why since if the switch does not work you have a larger issue today. I will look as you have also H the seams you noted correctly. Of the 7 views last year and the 3 more pronounced we did fine also on these moves. It is possible and as you we use the house money and never margin acounts since we feel it is counter productive to goals and listed why above as tire spikes which correcly we noted as kill switches which leads to another level in this climate. We need to left alone since we are working for a living.
http://generationaldynamics.com/forum/v ... 415#p17409 H link covers it clearly.

A message to the church of Egypt, from an Egyptian Muslim: I tell the church — by Allah, and again, by Allah — if you conspire and unite with the remnants [opposition] to bring Morsi down, that will be another matter…. our red line is the legitimacy of Dr. Muhammad Morsi. Whoever splashes water on it, we will splash blood on him.”

I am a remnant and whom I care for. Why do you seek our bothers blood? We seen what Morsi allowed into your land.
We correctly seen Amos unfold on Damascus of four the time, brick by brick, stone by stone and the truth of Dan unfolding
and you did not my brother? I was shown clearing clouds and it is by your hand alone the sky will darken.

Paying rent for what's already been paid for will kill us eventually. And that is becoming more and more common. Along with simple fraud.

http://www.nytimes.com/2012/12/30/busin ... d=all&_r=0

Is that fraud or is that simply overcharging or is it actually rental on something already paid? Whatever you want to call it, it's certainly sleazy.

[Reality Check]

It is now Official. Obama broke his deficit reduction promise in huge way.

The non-Partisan Congressional Budget Office serving both the Democratic controlled Senate and the Republican controlled house released it's report ( score ) of the Budget Deal Negotiated by Obama.

Obama promised during his re-election campaign he would use a tax increase on the rich to reduce the Deficit.

Obama declared the tax increase bill a victory. Obama included in that tax increase bill new U.S. government spending increases that dwarfed the size of the new tax revenue.

How much bigger were the spending increases than the tax increases ?

According to the non-partisan Congressional Budget Office:

"An analysis by the Congressional Budget Office released Tuesday estimated the accord would add $4,000 Billion ( $4 trillion ) to the deficit over a decade."

At the same time the Bill also delayed the start of $2,400 Billion ( $2.4 Trillion ) in previous Deficit Reductions that Obama had claimed he had already delivered during his re-election campaign.

Now the lies from the Media and the White House will start on how Obama partially kept his Deficit Reduction promises with more deficit reductions just like this to come.

http://www.politico.com/story/2013/01/s ... z2Glp2tGWt

[Reality Check]

The next fight will be over defense cuts.

Obama will demand additional tax increases and additional spending increases and canceling all domestic spending cuts already written into law if any part of the $1 Trillion dollars in Defense cuts are to be canceled or delayed.

The next battle will be a Win-Win negotiation for Obama. If the Republicans allow both the automatic U.S. Government Domestic Spending Cuts and the Automatic U.S. Government Defense Spending cuts ( the fiscal cliff which has just gotten worse and delayed for two months ) to automatically go into effect on the new drop dead date of March 1st, 2013, the Republicans, will be blamed by the Media and everybody else for any down turn in the economy.

The "Compromise" will be no real cuts in the Domestic side over the next two years, massive real cuts to defense over the next four years ( leaving the huge increase in domestic spending that Obama negotiated at year end in place), a whole bunch of smoke and mirror cuts to domestic spending that will kick in after Obama's eight years end, and a small amount of cuts to domestic spending set to kick in after the next house elections which the Media and the Democrats will blame on the Republicans during the run up to those elections.

Net result, Republicans and Democrats will both lie and claim a small reduction in the 10 Year Deficit, when in fact they will have canceled $2,400 Billion( $2.4 Trillion ) reduction in Deficit spending they had all taken credit for during the last election as a done deal and replace it with a lesser ten year reduction made up of substantial, immediate, real defense cuts and smoke and mirror cuts to domestic spending, the vast majority of those domestic spending cuts will not occur until after Obama's eight years in office are over ( which means they will never occur unless the economy collapses ).

Any negative reaction in the financial markets to these "phoney deficit reduction deals" will be blamed by the Media on the Congressional Republicans delaying these great deficit reduction packages delivered by Obama. Since the Republicans will have already lied and agreed they passed "a great deficit reduction package working with Obama" these narratives will stick.

[Reality Check]

Key point here.

The Fiscal Cliff has not been avoided by this Compromise, it has been made worse.

The Fiscal Cliff has been moved from January 1st to March 1st.

The tax increase has already been spent on new Domestic spending proposed by Obama and Agreed to by both parties in Congress.

New, Immediate, Spending ( Not Spread over 10 years - but all new spending beginning immediately and completely spent over the next 2 years ), over and above the amount of the tax increases, have been added to spending to the tune of $4,000 Billion ( $4Trillion ) according to the Congressional Budget Office. The negative impact on Borrowing by the U.S. Government during 2013 and 2014 can not be over estimated as a result of the front end loading of this new spending.

So new taxes on the rich can not be used to reduce the height of the fiscal cliff, those new taxes have already been spent on new Obama spending initiatives.

And the height of the fiscal cliff has been raised by an additional $4 Trillion dollars.

The only sure thing here is the Media will declare this a huge victory for Obama.

[Trevor]

No matter how badly it went for him, the Obama campaign, I mean the media, would declare it to be a victory. It's gone about as I expected it would. They'll fight over the spending cuts during the debt ceiling, perhaps making a few promises of small cuts that will be ignored, similar to the last such debate.

However, I expect the military to endure considerable cuts as well, being that it's the politically easiest thing to do. We'll pay for it in the long run, but it's not like they will care.

[OLD1953]

The military budget request includes a 31 billion cut from last year. I doubt they'll be asked to do more than that. Funny not seeing any uniforms today, but all military in Iraq is now on detached duty.

WSJ has a gimmick set up, balance the budget. As I've said before, it's not impossible save for the political and business flack you'd get from actually trying. But you'll never manage with just cuts in the real world. (And if you get into this thing, I think you'll realize pretty quickly why I keep saying all the cuts from 2000 on should expire, not some, all.)

http://projects.wsj.com/my-deficit-plan/#sel=0-0-0

(Ah, was scratching my head over their figure of 550 billion for the change due to tax cuts, when I usually figure it would be about 400. They aren't allowing for reduction in the economy by pulling that much. Oh well.)