In the wake of the November 6 elections, voters have approved a number of contentious state initiatives, including a $6-billion-a-year bundle of tax increases sponsored by California Governor Jerry Brown. Proposition 30, a focal point of Brown’s administration, would increase the sales tax by 0.25 cent for the next four years, while raising income taxes on those earning more than $250,000 for the next seven years.
On January 1, 2013, many new taxes are set to begin. Unless Congress and the White House can agree by year's end on an extension of tax cuts that have been in place for most of the past decade, workers will see an increase in the taxes taken out of their paychecks next year and a loss in the amount they claim for deductions when it comes time to pay their 2013 taxes.
According to an October 16 memorandum prepared by the Congressional Research Service (CRS) for the Senate Budget Committee, the federal government spent $746 billion on means-tested welfare programs in 2011. As the U.S. Census Bureau notes, there were 16.8 million households living below the poverty level in America in 2011. In other words, if the federal government were to give this money directly to the impoverished households, all 16.8 million households would have received over $44,000. This is double the 2011 federal poverty rate of $22,350 for a family of four, and nearly double the 2012 poverty rate of $23,050 for a family of four.
As the deadline to extend the Bush-era tax cuts looms, economists have agreed that the pending tax hikes would be devastating to the economy, and that permitting their expiration would have about twice the impact on economic growth as government spending cuts under the sequester.
Former U.S. Comptroller General of the United States David Walker just finished another tour across the country promoting “fiscal reform and responsibility,” according to Forrest Jones, writer for MoneyNews.com. And what he learned is that most people are frightened at the immensity of the fiscal and financial challenges facing the country, but almost no one has any confidence that things can be fixed.
U.S. unemployment slid from 8.1 percent to 7.8 percent in September, according to the Bureau of Labor Statistics (BLS), giving the Obama campaign ammunition to tout job growth right before the November election. But as soon as the numbers were released, critics asserted a slew of criticisms over the BLS report, claiming the numbers were cooked to favor the president’s plot for reelection.
Waiting for the economy to improve before turning off the printing presses is likely to take a very long time. The August numbers on the economy were disheartening for those waiting for such an improvement: U.S. durable goods production fell for the third month in a row, astonishing economists who had predicted much better numbers. GDP continues to slow, and companies such as Caterpillar, the world’s biggest construction and mining equipment manufacturer, cut its earnings outlook because of the continuing slowdown in the world economy.
A preview of the upcoming Census Bureau's upbeat analysis of the economy was met with little enthusiasm and contrasted sharply with reports from FedEx and elsewhere.
When the Federal Reserve announced last week its plan to buy more treasury securities, only a few read the fine print. Many observers envisioned sugar plums dancing in their heads as the Fed’s plan would lead, no doubt, to more economic growth, more jobs, more profits, and more stocks to sell on Wall Street. But in fact, unemployment not only hasn’t fallen significantly since the start of the Fed’s rollouts of Quantitative Easings, but it has remained higher longer than any time since the early 1980s.
If the Fed decides to extend its Operation Twist program beyond the end of the year and into the year 2015, then the math is irrefutable: 40 months of purchases totaling $85 billion a month is $3.4 trillion. The Fed’s balance sheet is currently at $2.7 trillion. That brings the Fed’s balance sheet, if nothing changes, to a mind-bending $6.1 trillion.
The U.S. tax code is a complex and burdensome maze of rates, exemptions, exclusions, credits, deductions, phase-out levels, and exceptions. People may not agree on anything else, but the nature of the tax code is certainly something that anyone of any political persuasion would agree on.