Deficit Reduction Plan Takes from Poor and middle class to reward the wealthy

It is an unfortunate truth that a sizable number of African Americans are seemingly more interested in whether T.I is going to prison again, or Mike Vick’s great performance against the Washington Redskins, or in Tyler Perry’s brutal dissection of Ntozake Shange’s play, For Colored Girls Who Have Considered Suicide When the Rainbow Is Enuf, than they are in the economy. President Obama’s National Commission on Fiscal Responsibility and Reform revealed a recent plan to reduce the national deficit. Unlike most people, I have just finished reading the proposal and the way I read it, the deficit is the least of its targets when compared to cutting taxes for the ultra wealthy.

The guiding principle of the proposal is not to reduce the deficit, but rather to establish an upper limit on revenue — not lower. The obvious point agreed upon by the Democrats, Republicans and other members of the commission is tax cuts for the rich.

Case in point, the proposed tax cuts obviate mortgage interest and health benefits deductibles — things that the middle class and lower economic groups depend on. Yet, all gained from these tax cuts. From my reading and interpretation the tax cuts will be used to reduce the top marginal and corporate tax rates. So, in essence the breaks that regular folks receive will currently result in larger breaks for the wealthy, who do not need them. Don’t get me wrong, I am not a socialist, but rather a pragmatist who understands basic math.

Another example is the proposed increase in the retirement age for Social Security. The commission has suggested that the age to be eligible to receive social security be raised to 69, in line with the increase in life expectancy of U.S. citizens. The problem is that most Americans do not have jobs where they sit on their ‘azzez’ all day. Not to mention that African Americans and minorities, for example, have a life expectancy less than the current age for retirement under Social Security. Which, in turn, means that to expect someone to work more years labor-intensive job than somebody like a politician, who sits on their butt behind a desk, is just foul! The truth is that the rich and wealthy live longer and they don’t need Social Security for a safety net.

No way in the world is the work of a garbage man, teacher, janitor or day laborer as easy as an executive, banker or Wall Street lawyer.

There is a hole in the economy

It gets me as to how folks can propound on the esoteric meaning of nothing in the world of economics. Especially here in America, were we hear how to solve problems with solutions that do neither have method nor definition. All reminds me of an Island song I would hear harry Belafonte sing when I was a child growing up, “There's a hole in the bucket dear Liza, dear Liza.” If ever was there a need of a song to be remixed, it should be this one and the word bucket should be replaced with economy.

What is their not to see? It seems that politicians, albeit not very good in math as most Americans, want to make this a complex issue and act as if the solutions are massive and difficult – for lack of a better phrase, as if we are talking about Calculus or differential equations. Unfortunately it is not that complex and really a function of basic, simple, remedial math – adding, subtracting, multiplying and dividing.

The simple truth is that the way we are going economically is unsustainable. We are borrowing as a nation more than one-third of what we spend. I mean, let me put it another way. We as a nation, the United States, are spending $3 for every $2 we are bringing in the form of GDP.

It is also infelicitous that our political leaders know this and don’t or won’t tell us or worse, they do not know or understand the rusticism of the situation at hand themselves. For if they did they would do something and stop pointing fingers at each other. If they do not, you can best believe that the global capital markets will do it for us and like at the G20, we will not be in a position to do anything about it. We see what has happened in London, with students marching against the conservative political leadership, or last year in Greece with protesters in the streets or even this year in France. Don’t sleep it can happen here also.

But what is more troubling and scary to me is that if the Government, regardless of political affiliation does not see on the horizon what I fear, and that is a collapse in the bond market. I mean if the US is a company, with a massive debt problem plus $12 trillion and counting, with all these nations like China holdings of dollar-denominated short-term U.S. securities, including Treasury bills, and other custody liabilities, and the feds drop $600 billion into circulation, the value of the dollar may drop.

If this happens then it would not surprise me if foreign governments no longer want long-term US debt and will dump all the bonds on the markets if interest rates rise from current lows. This is not as farfetched as one may think given what has just occurred in Ireland and soon maybe in Portugal.

Politicians, there is a hole in the bucket. We have a sovereign debt crisis and all yawl do is point fingers at each other. We see that neither the Bush Tax Cuts, nor Obama’s massive spending have not worked. Regardless, something needs to be done now before it is too late, and it must entail at looking at entire projects and not bits and pieces. For inaction, may take our jobless rate up like Greece while they are trying to tackle their deficit. Maybe we could learn something from the difficulty they face now trying to restore fiscal soundness to their economic policy – naw, that would be too simple, instead we pass the buck, a borrowed buck at that,.

Truth About Bush Tax Cuts: They Don't Work

It appears that with midterm elections quickly approaching in November, all any Washington, D.C., politician can talk about is tax cuts. Not just any tax cuts but the Bush tax cuts, which largely benefited the rich. Republicans believe that we should keep them in place — at least for another two years and Democrats say they should only be kept in place for the middle class. What is not talked about is whether the tax cuts have had any impact on the average American.

The two major tax-cutting bills from the Bush era were the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001, and the Jobs and Growth Tax Relief Reconciliation Act of 2003. These bills lowered tax rates across the board on income, dividends and capital gains; eventually eliminated the estate tax; further lowered burdens on married couples, parents and the working poor; and increased tax credits for education and retirement savings. The Obama Administration’s proposal would extend most of these reductions, allowing only those for individuals earning more than $200,000 and families earning more than $250,000 per year to expire.

Bush tax cut dollars benefit higher-income households, the group of people who save more and spend less than lower income earners. If this is how jobs are created then there should be some visible growth, given that they are still in place until December 31, 2010. Also, it is inaccurate to say that if removed they will hurt small businesses. Less than 2 percent of tax returns reporting small-business income are filed by taxpayers in the top two income brackets.

The fact is that extending the tax cuts adds to the deficit by creating an even larger deficit. In fact, even if everyone in America was employed, continuing the Bush tax cuts would lead to a national debt, meaning the yearly deficit would rise from 6 to 7 percent of GDP by 2020. The Bush tax cuts reduced revenue and by some estimates, account for 25 percent of our current deficit. As for creating jobs, there is no evidence of that for if they did, we would have more jobs being created now with the tax cuts still in place