Ray Jay wrote:Steve:

Meanwhile, all the fat cats (those making $250K) are flitting about in their private jets:

There's an interesting dance going on here. Obama wants to raise taxes in 3 ways:

1. Limit the deductibility of private jets.
2. Reduce favorable tax breaks for oil and gas companies.
3. Limit deductions for individuals making more than $250,000 per year.

Obama emphasizes only the 1st two in his talk.

Now the Republicans have to respond. What they could say is that they agree with Obama on #s 1 and 2. However, they are reluctant to say that because of political concerns. This enables Obama to get away with his simplifying description.

Instead, the Republicans say no tax increases and enable Obama to blame them for the deadlock. I think the Republicans are going to have to give in on #s 1 and 2 or they will lose the PR battle.

I have a slightly different take.

On 1:

Just a few months after lawmakers scolded auto executives for flying to Washington in private jets, Congress approved a tax break in the stimulus package to help businesses buy their own planes.

The incentive -- first used to help plane makers recover from the 2001 terror attacks -- sharply reduces the up front tax bill for companies who buy assets like business planes.

The aviation industry, which is cutting jobs as it suffers from declining shipments and canceled orders, hopes the tax break in the economic-stimulus bill just signed by President Barack Obama will persuade more companies to buy planes and snap a slump in general aviation that began last year.

In other words, to "stimulate" the economy, encouraging private jet building was seen as a good investment. Now that the planes are built, Obama wants to punish people for using them--and has highlighted it (mentioning it 6x in that presser).

2. What will happen when those breaks are removed? Will oil and gas companies simply eat the loss? Of course not, they'll pass it on to consumers. But wait, didn't the President just release oil from the Strategic Petroleum Reserve sans the supposedly requisite "emergency?" Why was that? Oh yeah, to reduce prices. So, now, he wants the prices to go up again?

3. Actually, I think it's couples making $250K a year and individuals making $200K a year--depending on where you live, that's not exactly "millionaire and billionaire" territory.

However, taken together, those revenues would be what? I would be shocked if they even approached $100B a year.

I disagree with you that this somehow puts pressure on Republicans. They should do the math--it's a trifling sum--and ask Obama how he's going to cut a trillion a year in spending. I saw Krauthammer say the first two, projected over one hundred years, are equal to the deficit . . . from February of this year.

The President said leaders need to lead.

We're still waiting for you, Mr. President, to lead.

Sorry I was not able to respond quickly Danivon (1st of the month rush and all that!).

You may call it hyperbole, but it is class discrimination and pitting one class against another. By continually stating that "Fat Cat" Bankers, "Jet setting Corporate types" and "Hedge fund managers" need to pay their fair share is trying to bring support for from the lower classes against the upper classes via greed and envy. What is meant by "fair share" anyway?

Is that where everyone pays the same amount?
Is that where everyone pays the same percentage?
Is that where some don't pay, and some pay a higher percentage? (I think this is the current system, btw)

RickyP says that the lower class pays a higher percentage of their income in taxes because of payroll/medicare/SSI/unemployment insurance etc.
Bbauska says that the upper class pays more total via the income tax.

We are both right.

Why is there such divisiveness based upon class? There will be destitute, poor, middle class, upper middle class, rich, and Ultra rich. Do we want to give incentives to people to become more wealthy? Or a handout to stay in the same situation?

http://dictionary.reference.com/browse/incentive
http://dictionary.reference.com/browse/handout

It is one thing to take more money from people to help others via the taxation system. It is another entirely to demonize them for not "giving" enough. Does that sound thankless to anyone else?

http://thesaurus.com/browse/thankless

Regarding the corporate jets, as I understand it, Obama's proposal is to change their depreciable life from 5 years to 7 years. This wouldn't apply to commercial jets. I'm sure these corporate jets last for 15 to 20 years, or even more, so I don't see why extending their life by 2 years is such a big deal. So, if the jet costs $5 million, one would average a deduction of $715,000 per year for 7 years instead of averaging a deduction of $1 million a year for 5 years, and no deduction for the 2 years after that. This is very different than Clinton's proposal on yachts which was an excise tax on purchase. Somehow this change on corporate jet depreciation creates $3 billion of revenue over 10 years.

Obama also wants to get rid of the carried interest provisions for hedge fund managers. These are provisions that only benefit this industry and do not stand up to scrutiny. Basically it enables hedge fund managers and other private equity investors to treat the bulk of their income as capital gains instead of ordinary income. There's a $20 billion savings in doing that.

Meanwhile, news reports have the spending savings in the agreement at $1.4 trillion. Congress is even willing to get rid of some subsidies for agriculture which has been so difficult in the past because of the power of the farm states in the senate. Overall, I think the Republicans are doing very well in these negotiations, and a certain amount of flexibility on corporate jet depreciation and carry interest would go a long way in getting a deal done.

Brad:

ou may call it hyperbole, but it is class discrimination and pitting one class against another. By continually stating that "Fat Cat" Bankers, "Jet setting Corporate types" and "Hedge fund managers" need to pay their fair share is trying to bring support for from the lower classes against the upper classes via greed and envy. What is meant by "fair share" anyway?

I agree on the class warfare language. It is very damaging and flies in the face of Obama saying that he is a healer. However, on the specifics of these tax laws, the reality is that there are special tax provisions that heavily favor these jet setting gas drilling hedge fund managers. Brad, they probably aren't paying their fair share as it relates to these narrow provisions. If you made $1 million in your business, you would pay tax at a 35%marginal rate. If a hedge fund manager makes $1 million in his business, he pays tax at the cap gains rate of 15%.

Randy:

Monte, you and George are intelligent guys. Are you so blindly in love with socialism and big(ger) government that you overlook all this?

Randy, I'm a capitalist, through and through. Professionally, personally, and definitionally.

Ray Jay wrote:Meanwhile, news reports have the spending savings in the agreement at $1.4 trillion. Congress is even willing to get rid of some subsidies for agriculture which has been so difficult in the past because of the power of the farm states in the senate. Overall, I think the Republicans are doing very well in these negotiations, and a certain amount of flexibility on corporate jet depreciation and carry interest would go a long way in getting a deal done.

Is that $1.4T annual or over a ten-year period? If the latter, yikes. Is it some time frame in between? Two years?

I don't know how there can be a deal if Schumer has any sway. He says entitlements are off the table. Without touching entitlement reform, we've got no shot.

It is $1.4T over 10 years. The Republicans want it to be $1.7T over 10 years.

They are only extending the debt limit till about the end of 2012, so there will be more discussions after this. Also, they will still have to have budget negotiations after this.

I believe that entitlements are in the mix.

Ray Jay wrote:It is $1.4T over 10 years. The Republicans want it to be $1.7T over 10 years

Peanuts.

Really, that's pathetic. We're heading for broke.

Ray Jay, are those figures including or excluding the effects on revenue of a return to growth over the next ten years? I'd like to know if there have been decent projections of tax income as a recovery comes in.

Also - does it include or not ending the stimulus money?

In context, perhaps $1.4 or $1.7 over ten years is part of an overall picture. Also, what would be the effect on annual revenue by the tenth year? If the costs are front-loaded, most falling at the start, then it's not a lot (perhaps $150bn a year). If they are building up over time, then it could be more sustainable and more effective over the long term (perhaps double that).

A reduction in the deficit is certainly the main aim. Getting it to the point where with the debt doesn't keep growing as a proportion of GDP (which means you can still have a deficit as long as you have growth) means full stability and reduced fear of bankruptcy (ironically, the higher the debt, the easier this is to achieve).

Fine, but the tidal wave is the increase in both entitlements and interest--those are going to go up at a fairly rapid clip.

No finer Demagogue in modern American history:

President Obama on Tuesday said he cannot guarantee that retirees will receive their Social Security checks August 3 if Democrats and Republicans in Washington do not reach an agreement on reducing the deficit in the coming weeks.

"I cannot guarantee that those checks go out on August 3rd if we haven't resolved this issue. Because there may simply not be the money in the coffers to do it," Mr. Obama said in an interview with CBS Evening News anchor Scott Pelley, according to excerpts released by CBS News.

No American President has ever ruled with more fear than Mr. Obama.

Losing an argument? Scare the old people!

Facts not on your side? Scare parents of autistic kids!

The great man indeed.

I'm confused. Do you think he's wrong?

Doctor Fate wrote:

Ray Jay wrote:It is $1.4T over 10 years. The Republicans want it to be $1.7T over 10 years

Peanuts.

Really, that's pathetic. We're heading for broke.

So... umm...

$4T over ten years? Not a goer for the GOP, they'll settle for $2T over ten years because they won't agree to tax increases?

Neither side seems to want to compromise, but Obama's offer is the biggest one in terms of deficit reduction.

Shall we take bets on whether Greece defaults before the US hits their debt ceiling?

geojanes wrote:I'm confused. Do you think he's wrong?

I know he's wrong. He "can't guarantee" those checks will go out?

Really? Who decides what gets paid first?

Answer: Treasury Secretary, who works for???

danivon wrote:Neither side seems to want to compromise, but Obama's offer is the biggest one in terms of deficit reduction.

What is Obama's offer? Please provide a link.

If you want, I can link what he has made public--his budget that went down 97-0. He also presented a speech that the CBO refused to score.

Other than that . . . ?

Well, here's someone who has heard his proposals:

“Dealing with them the last couple months has been like dealing with Jell-o,” Boehner said. “Some days it’s firmer than others. Sometimes it’s like they’ve left it out over night.”

Boehner explained that talks broke down over the weekend because, he said, the president backed off entitlement reforms so much from Friday to Saturday, “It was Jell-o; it was damn near liquid.”

“By Saturday, they’d spent the previous day and a half just going backwards” on reforming entitlement programs such as Social Security, Medicare and Medicaid.

“The only thing they’ve been firm on is these damn tax increases,” the Speaker said.

Please, tell me what the $2T in cuts are. You seem to be the only one who knows.