“In Just Six Months” – The Tax Increase Email

Sep 06 2010

Published by at 7:38 pm under Current Events


Note of Apology

In response to the criticism in the comments I wish to extend my apologies for any partisanship that came through in my article. I attempted to address the facts and their presentation in the viral email and to point out that these new taxes are not realistically a given considering the (in)action that Congress would have to take for some of them to come into effect. This is something that is not stated in the email itself and supporting documentation is provided.

MOAA is apolitical by law and by nature, and this blog was created by the Member Service Center to address the many viral emails that we encounter daily. Instead of responding to each one individually, we started it to have a reference point to refer members to. It in no way takes time away from our legislative team’s actions nor does it affect our mission or goals, which are clearly laid out on MOAA’s Legislative Action Center. This is for informational and discussion purposes only and should not be seen as an extension of MOAA’s core principles and goals.

I can certainly understand the sentiment expressed, especially by Colonel James Rogers, that wishful thinking and predictions of Congressional action can be seen as partisan. It was not meant to be a support of any group, but an attempt to address specific items in the email.


Death, Taxes and Distortions

Probably the most distributed email for the past month has been a scare message that talks about what would be the largest tax hike in history starting in January 2011. While the intent of the email is to tie in the increases in taxes and changes in law directly to President Obama’s ‘redistribution of income’ scheme and some of the items in the email are directly related to President Obama’s health care bill, there are several items that should be of concern to citizens. The partisan language at the conclusion of the email is not warranted, and the assertion that this is an attempt to force America to ‘Soviet style Socialism and then Communism’ is simply a scare tactic. So let’s drop the partisanship and examine the particular items.

We sat down with our resident MOAA financial expert, Phil Dyer, CFP, and went over the list item by item. Our thoughts follow the full text of the email.


The Email

Subject:Tax Hikes in 2011

In just six months, the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2011
First Wave: Expiration of 2001 and 2003 Tax Relief

In 2001 and 2003, the Congress enacted several tax cuts for investors, small business owners, and families.

These will all expire on January 1, 2011:

Personal income tax rates will rise. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates.

The full list of marginal rate hikes is below:

– The 10% bracket rises to an expanded 15%
– The 25% bracket rises to 28%
– The 28% bracket rises to 31%
– The 33% bracket rises to 36%
– The 35% bracket rises to 39.6%

Higher taxes on marriage and family. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care and adoption tax credits will be cut.

The return of the Death Tax. This year, there is no death tax. For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.

Higher tax rates on savers and investors. The capital gains tax will rise from 15 percent this year to 20 percent in 2011. The dividends tax will rise from 15 percent this year to 39.6 percent in 2011. These rates will rise another 3.8 percent in 2013.

Second Wave: Obamacare

There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:

The “Medicine Cabinet Tax” Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).

The “Special Needs Kids Tax” This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. Abortions are covered by Obamacare.

The HSA Withdrawal Tax Hike. This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

Third Wave: The Alternative Minimum Tax and Employer Tax Hikes

When Americans prepare to file their tax returns in January of 2011, they’ll be in for a nasty surprise the AMT won’t be held harmless, and many tax relief provisions will have expired. The major items include:

The AMT will ensnare over 28 million families, up from 4 million last year. According to the left-leaning Tax Policy Center, Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families, rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.

Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or depreciate) equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be depreciated.

Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place. The biggest is the loss of the research and experimentation tax credit, but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.

Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families.

Charitable Contributions from IRAs no longer allowed. Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual required minimum distribution. This ability will no longer be there.

Now your insurance is INCOME on your W2’s. One of the surprises we’ll find come next year, is what follows – – a little “surprise” that 99% of us had no idea was included in the “new and improved” healthcare legislation . . . the dupes, er, dopes, who backed this administration will be astonished!

Starting in 2011, (next year folks), your W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are given by the company. It does not matter if that’s a private concern or governmental body of some sort. If you’re retired? So what; your gross will go up by the amount of insurance you get.

You will be required to pay taxes on a large sum of money that you have never seen. Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your tax debt. That’s what you’ll pay next year. For many, it also puts you into a new higher bracket so it’s even worse.

This is how Obama is going to buy insurance for the15% that don’t have insurance and it’s only part of the tax increases.

Not believing this??? Here is a research of the summaries…..

On page 25 of 29: TITLE IX REVENUE PROVISIONS- SUBTITLE A: REVENUE OFFSET PROVISIONS-(sec. 9001, as modified by sec. 10901) Sec.9002 “requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer sponsored group health coverage that is excludable from the employees gross income.”Joan Pryde is the senior tax editor for the Kiplinger letters. Go to Kiplingers and read about 13 tax changes that could affect you. Number 3 is what is above.

Why am I sending you this? The same reason I hope you forward this to every single person in your address book; increased taxes are a way to accomplish what Obama said he wanted for the United States, “redistribution of income”. Ask yourself, “is he accomplishing this in partnership with Congress?

The consequences of these Congress legislative actions will be a continued deep-recession, even a possible depression. This will open the door for Soviet style Socialism and then Communism. People have the right to know the truth because an election is coming in November.


‘Wave 1′ Analysis

What is labeled as ‘Wave 1′ here are primarily related to the Bush tax cuts that were written and passed in 2001 and 2003 set to expire on January 1st, 2011. These changes would become the regulations and terms only if Congress did not act to extend the cuts. Currently the discussion is not if they should be extended, but for which groups and whether or not it should be extended for everyone. There is very little in the way of chatter that would indicate that no action will be taken prior to the end of this term.

Regarding the rises in tax brackets, which should really be described as a return to the previous states, this item leaves out a huge point. While the email states that these changes will happen starting on January 1, 2011, it is extremely unlikely that the tax brackets will not be extended, especially for anyone making under less than $200k annually or $250k for families filing jointly.

The return of the ‘Marriage Penalty’ and a 50% reduction of the child tax credit. This would be something that would hit the most American families directly and, by our estimations, has about as much chance of expiring as the Rams have of winning the Super Bowl this year.

The ‘Death Tax’ return is a concern and has a high probability of coming back in some incarnation, but it is extremely unlikely that the rate will be for estates worth over $1 million. The House passed a bill in 2009 that would make the top rate 45% and only applicable to estates worth $3.5 million and newer Senate figures are talking about 35% top rates for estates over $5 million. The Senate measure failed, and the estate tax expired in 2010 as it was written to in the tax cuts of the early 2000s. The most probable solution, barring an irreconcilable procedure debate (which we all know happens far too much), is that the $3.5 million 2009 level will return, affecting a small portion of the populace.

The capital gains tax rises from 15 to 20% in 2011 and will most likely increase in 2013. If there is another part of the Bush tax cuts that need an extension, here it is. Capital gains and dividends tax increases are brutal on small businesses and, in a jobless recovery, anything that will end up being a ‘job killer’ is likely to be addressed. Take this item to heart as it would have a large impact on investments and hiring should they expire.


‘Wave 2′ Analysis

Each of the three items listed in section 2 are represented in the email fairly accurately in terms of cost and impact with a few exceptions. It lists three changes to law that could hardly be considered a historic wave of new taxes, it affects a much smaller portion of the populace than the email implies, and the final line of item 2, ‘Abortions are covered by Obamacare’, makes no mention of the tight restrictions on when and under what conditions abortions are covered by federal funding.

The most controversial of the items is number 2, the “Special Needs Kids Tax”. For this, I refer you to FactCheck’s summary:

The argument made in the e-mail is that “many” families with special needs children now use FSAs to pay tuition at private schools catering to special needs children, schools that ATR [Americans for Tax Reform] says “can easily exceed $14,000 per year” in Washington, D.C. Perhaps so. IRS rules do allow use of FSA funds to pay for such expenses with pre-tax dollars. But the e-mail message offers no evidence of how many families might be taking advantage of this tax break currently. The claim is copied from the website of Americans for Tax Reform, but as ATR itself says: “For most people, the $2500 cap won’t be noticed.” As ATR concedes, FSAs “tend to be used for things like small deductibles, co-payments, eyeglasses, over-the-counter medicines, and laser eye surgery.” The amount deferred in the typical FSA is probably much less than $2500 today, ATR says. The JCT [Joint Commission on Taxation] expects the change will bring in $13 billion over 10 years, but says nothing about how much of that is likely to come from the pockets of parents of special needs children.


‘Wave 3′ Analysis

The items in wave three are mostly concerned with the annual debate Congress and the White House have over extending the Alternative Minimum Tax (AMT). Like the Bush tax cuts, this would only be an issue if Congress failed to enact an extension to the yearly fix that ensures that the number of families affected remains low. In 2009 the AMT band aid was passed and there are no strong indications from Congress that this will not happen again. Eventually, the law will have to be fixed and adjusted for inflation, but the budget presented by President Obama for 2011 actually assumes an extension of the fix to keep the AMT at 2009 levels and factors that in to the equation.

The most concerning item in section 3 is the small business expense reductions and research and experimentation tax credits. Although the ‘literally scores of tax hikes’ are mostly obscure, if Congress fails to extend the tax credits we’ll have another case of possible job killing changes. Again, this is another case of ‘if Congress does nothing’, and if the Tax Extenders Act of 2009 is any indication, the fate of the increases are, at worst, still up in the air, and at best, an almost sure-to-pass group. Especially in a hot mid term election year, we expect Congress to ensure that these changes don’t come into effect.

The provisions that company-provided insurance will be required to be listed on your W-2’s as income leave out the most crucial part of that provision – that the amount is not taxable and does not factor into your tax brackets. It is an add-on to the email of a previous viral scaremail that we discussed in May and June. While an argument could be made that this sets the stage for a slippery slope trending towards inclusion of employee provided health care costs, it would be a purely hypothetical one.

The ending of the email is more of the same that we’ve seen before, with the keywords thrown in there for good measure. Politics and obstructionism will play their roles in the coming months, and we will all have to watch closely to make sure that this email turns out to be dismissible come 2011.

Note: As pointed out by an observant reader, the $100,000 IRA charitable contribution amount expired at the end of 2009. A falsehood that we did not cover initially. You can still of course contribute from your IRA to charitable foundations, but the amount you send will be added to your Adjusted Gross Income and negatively affect your tax return. For more information, see the following article from Getting Your Financial Ducks In A Row: click here.


Update

The New York Times is reporting that President Obama is against any compromise that would allow the top 2% of earners an extension on the Bush tax cuts:

It is not clear that Mr. Obama can prevail given his own diminished popularity, the tepid economic recovery and the divisions within his party. But by proposing to extend the rates for the 98 percent of households with income below $250,000 for couples and $200,000 for individuals — and insisting that federal income tax rates in 2011 go back to their pre-2001 levels for income above those cutoffs — he intends to cast the issue as a choice between supporting the middle class or giving breaks to the wealthy.


Further Reading

MOAA’s Financial Frontiers Blog
CNN Article
FactCheck.org Article
Media Matters Rebuttal
Time Magazine’s “Stupid Tax Tricks”


Discussion

Posts are not held for moderation so your comment will appear immediately, but may be modified if it is deemed inappropriate.

Politics Blogs - Blog Rankings

107 responses so far

107 Responses to ““In Just Six Months” – The Tax Increase Email”

  1. J Daveyon 08 Sep 2010 at 1:05 pm

    Thanks for laying out facts concerning tax proposals. It is very difficult to glean the truth from all the rhetoric that has and will be flying in the runup to midterm elections.

    That said, the economic environment is not favorable for raising taxes of any kind.

  2. Mike Burkeon 08 Sep 2010 at 1:09 pm

    This is an interesting analysis. One area, however, does not ring true, and that is that dividend and capital gains taxes are “brutal on small businesses.” Unless, of course, we are talking about the hundreds of thousands of attorneys, physicians, and dentists who are sole proprietors and have both capital gain and dividend income from investments. Would the author expand this aspect of his discussion?

    What kills the small businesses for which I did taxes is the self-employment tax for sole proprietors and the expiration of a variety of depreciation accelerations. The president’s recent proposal to allow 100% deduction of capital purchases in the same tax year as bought might well ameliorate that aspect of small business finances.

  3. COL Fred Waggoneron 08 Sep 2010 at 1:18 pm

    Its very insightful that the sources you list for “further reading” are all left-wing rags whose sole mission in life is to carry Obama’s water.

    The truth is that Obama and the Democratic controlled Congress has had two years to extend the Bush tax cuts, correct the AMT, and put an end once-and-forever the death tax, but have failed to do absolutely nothing except spend, spend, spend!

    You did fail to mention that so-called “cadillac” health insurance plans if paid for by employers would be counted as income and if my memory serves me correctly, the unions were exempted in the final version of the bill.

  4. George C Windrowon 08 Sep 2010 at 1:22 pm

    That is Why Obama and the democrats are pushing to keeo the tax cuts for all families with income under $250 thouaand.

    Sounds like the thing to to do to me.

  5. Dave McCroskyon 08 Sep 2010 at 1:24 pm

    Let me get this straight, as a combat vet I like to lay things out: we start two wars, don’t finance them, cut the VA budget during the wars, have one of the lowest tax rates in the industrialized world. (http://taxpolicycenter.org/) Reagan even had a 50% bracket on those making over 50%. We have huge deficits and this guy whines and complains about paying more? Go away. My guess is your one of those calling the current President a socialist and you don’t even know the definition. I’ll gladly pay more to fund the wars, to reduce the deficit and fix the country. I’m not republican or democrat, but if you want to go partisan, get your facts straight, 90% of the deficits were created by republicans: http://www.cato.org/pubs/briefs/bp-087es.html It’s time to fix the problem, get out of wars that drain our troops and resources, and to restore pay-as-you-go, which is one of the first things that bush allowed to expire, which allowed him to incur huge deficits. Sometimes things are that easy.

  6. R. Hayon 08 Sep 2010 at 1:28 pm

    I appreciated the facts. There is no question that any tax increase at this time is irresponsible even for the rich. Increasing taxes just gives the government more money to spend instead of learning how to tighten the belt.

  7. KIOWAon 08 Sep 2010 at 1:35 pm

    The fact is, no one (self admittedly not eventhe people who wrote or passed the legislation) has been able to sort out the “thousands” of pages of new legislation to really know what the uninternded costs to the country will be – including the pay, medical, and retirement for the thousands (such as the 16000 IRS employess, increase in DOH, etc. in itself) of new state and federal employees that will be hired based on the legislation (government workers do not add to the potential capital of a country – they only take it). No matter how you state it or what “partisan” language one choses to use, taxes are going up for the middle class at the cash register, in business spreadsheets, in all money transactions, for property at state level, at the gas pump, health insurance, and education. We are already starting to see it at the local level, but NOONE outside the “nasty partisan” crowd who don’t believe in socialism (the classical definition being distribution of services and wealth from a centralized authority) wants to say that before the elections because they are hoping the average schmuck doesn’t notice it. Good luck with that.

  8. Donald Brownon 08 Sep 2010 at 1:37 pm

    My opinion is that the “email” lays out the facts as they are under current law. Your analysis is based upon what congress and the president could or should do. Remember the old saying, “Don’t count your chickens before they hatch.” The analysis/explanation appears to me as being more bias than the orginal email. A fact is a fact. Socialism is Socialism.

  9. tfhron 08 Sep 2010 at 1:49 pm

    Dave McCrosky,

    You say you’re “not a republican or democrat” but you sure spent the balance of your comment slamming Bush and defending, if not by name, the current administration. There are plenty of political blogs out there where you can amuse yourself, why don’t we just stick to the financial details as per the MOAA analysis, courtesy of Mr. Dyer and Mr. LoFiego, and leave the rest for some other time and place?

  10. James Lewis Rodgerson 08 Sep 2010 at 1:54 pm

    To quote Matthew Lofiego:
    “The partisan language at the conclusion of the email is not warranted, and the assertion that this is an attempt to force America to ‘Soviet style Socialism and then Communism’ is simply a scare tactic. So let’s drop the partisanship and examine the particular items.”

    Mr. LOFiego, YOU should drop your partisanship.

    You have just taken sides in this matter in a partisan way, on the side of the Democrats, and that is improper for MOAA to do.

    Your statement is inaccurate and YOU are the one who is misinformed. If you want to do a fact/counter-fact analyze, fine. But you have clearly taken a side on this matter, and told MOAA members what their opinion should be. This again is improper.

    I demand a retraction of your remarks, and an apology to the membership.

    James L. Rodgers
    Colonel, USAF (Retired)

  11. M. Greeneon 08 Sep 2010 at 1:57 pm

    @ J. Davey, entending the tax cuts for the top two percent makes little economic sense, if you’re looking at return on investment. Especially since the money will have to be borrowed elsewhere and repaid with interest. The simulating effects of it would be minimal. The Bush cuts were budget-busting spending. The long term wisdom of those are questionable considering we have little to show for the investment and are no better positioned on the other side lead the world economically.

  12. L. G. Mcfarlandon 08 Sep 2010 at 2:02 pm

    This rebuttal is as biased as the email itself. Most the refuted points are made by saying such things as “surely congress will not–” ” There is no indication that congress will–” etc. This is a rambling of assumtions and few facts in counter point. Your rebuttal also frequetly alludes to ” How few people will be effected” which is to say the author of the article IS in favor of redistriuting wealth from a few and giving it to others.
    The email under discussion may be overhyped but it contains more facts than your response to it.

  13. James Willison 08 Sep 2010 at 2:07 pm

    Re listing the value of employer-provided health insurance on your W-2. The value of employer-provided life insurance above $50K is already included on your W-2 and you pay taxes on the value of that insurance just as if it were cash income (that’s what is called imputed income or income calculated from the supposed value of intangible or non-cash sources). What would make any thinking American conclude that the value of health insurance is being included on the W-2 just for the fun of it? If you don’t intend to tax it, why include it on the W-2?

  14. James Lewis Rodgerson 08 Sep 2010 at 2:09 pm

    I recommend that all MOAA members with objections to Mr. LOFiego’s pro-Obama remarks, contact the office of the MOAA President to complain.

    You may call the MOAA Customer Service number, ask to be connected to the office of the MOAA President. I recommend speaking to Mr. Tom Gibson, who is an assistant to the Director Ryan.

  15. MTPotteron 08 Sep 2010 at 2:12 pm

    Not sure why MOAA feels the need to defend Obama with what may / may not be “likely”… this article made MOAA play “Email Police” and that is not its function IMHO.

    If you want to describe tax law – fine. But don’t lecture me on how to read / judge any email that may be floating around the Internet.

  16. Bill Mooreon 08 Sep 2010 at 2:12 pm

    A lot of people like to state that tax cuts are budget busters. If you look at the IRS figures for tax revenue to the government, when Reagan and then Bush had tax cuts enacted the tax revenues went up. The trouble was that expenditure also went up. When Reagan was the president the Democrats controlled the House where spending bills originate. The spending went up as fast as the increased revenues. When Bush was president the Republicans controlled the house until 2006. In 2007 the Democrats assumed control of the House and that is when spending dramatically increased.

  17. R. Parsonson 08 Sep 2010 at 2:13 pm

    tfhr is totally correct on McCroskey’s skewed analysis. One with half a brain can see that MOAA’s conclusions are based on “what ifs” and an Administration without our best interests at heart. If you have no worries from all of this, then that half brain is already non-functional. I’m recommending Col James L. Rodgers for promotion to BG and I too am awaiting MOAA’s apology.

  18. Jim Comptonon 08 Sep 2010 at 2:14 pm

    You commented, “ The provisions that company-provided insurance will be required to be listed on your W-2’s as income leave out the most crucial part of that provision – that the amount is not taxable and does not factor into your tax brackets…. While an argument could be made that this sets the stage for a slippery slope trending towards inclusion of employee provided health care costs, it would be a purely hypothetical one.”

    Purely hypothetical? If that’s the case, why even require companies to include the cost of insurance on our W-2’s? My guess is that the IRS needs time to get its software up to speed before it can continue to extort the population under the new healthcare bill.

  19. LTC Teddy H. Sanford, Jr.on 08 Sep 2010 at 2:18 pm

    The response to the original email is a very troubling analysis of what was originally said. Do you really think that wishful thinking is going to get the President and the Congress to come to an agreement that can be passed and signed before the election? I would submit that nothing will be done and the American people will be the ones to suffer in terms of lost job opportunities and more oppressive taxes to pay for many things that we did not sign on for. The President and the Congress – both current Democrats and Republicans – should be fired in November in hopes that such a massive repudiation might lead the follow-on bunch to recognize that they need to get out of the way of the American people.

  20. Sheila F. Hooten, Col, USAF (Ret)on 08 Sep 2010 at 2:18 pm

    Bravo to Donald Brown and Col Rodgers! IF congress does this and IF congress does that…please. We’ve already seen what congress wants to do and that is to take, take and take without the consent of the PEOPLE.
    Right now, we are looking at increases. Period. I too, am disappointed with MOAA allowing this piece of ‘anaylsis’ to be published. It was partisan and based on IF congress fixed the problem. When have they ever fixed the problems?

    Sheila F. Hooten, Col, USAF (Ret)

  21. James Lewis Rodgerson 08 Sep 2010 at 2:20 pm

    I’d like to call further attention to an insightful post by COL Fred Waggoner, very early in the thread on this very objectionable article by MOAA’s LoFiego:

    “Its very insightful that the sources you list for “further reading” are all left-wing rags whose sole mission in life is to carry Obama’s water.”

    I didn’t catch that at first reading, but I certainly agree with COL Waggoner’s point: ALL of the sources cited are left-wing, partison and very pro-Obama. Apparently, those are the sources that the article’s authors used to prepare this rebuttal.

    Where is the balance in using only left-wing sources? How about checking with Americans for Prosperity, the American Conservative Union, or any number of other far more balanced sources???

    Again, I object to MOAA’s taking a partisan position on this subject, especially while claiming that it is NOT a partisan position.

    J. Rodgers

  22. Dave McCroskyon 08 Sep 2010 at 2:24 pm

    tfhr, I have voted both sides, but when I hear someone whining about taxes in a biased way when ignoring the facts I like to inject reality. So that makes me liberal? Facts are facts period. bush did reject pay as you go, fact, not a liberal allegation. bush hid the cost of the war, never put it in the budget, it was always funded by special appropriations, and Obama put it in the budget, fact. bush ran up an unprecedented deficit that had nothing to do with the wars since they were never in the budget, fact. bush’s gift to the vets was a 2 billion dollar cut to the VA for serving, fact, look it up. It’s not about a party, it’s about that annoying little item called facts, and they are black and white. They are there, you just don’t like them. Facts make you start asking critical questions that invite uncomfortable answers that promotes change. I can see why some people don’t like them and would rather use labels.

  23. Richon 08 Sep 2010 at 2:26 pm

    Our federal, state and local governments must stop the spending spree! If we give government more money via taxes they will spend it, not pay down the debt. All you have to do is look at their track record, republican or democrat, it doesn’t matter, politicians are wired to spend. Again, as we approach the new fiscal year on October 1, Congress has failed to approve a single appropriation bill on time, thus abdicating again their constitutional obligation to fund the federal government. I remember when a million dollars was a lot of money, then we gasped when we heard of a billion dollar spending bill. Today, we toss around a trillion as the norm. I fear for my college age children who will have to pay back all of this debt just as social security and medicare run out of money.

  24. Michael F. Chenowethon 08 Sep 2010 at 2:35 pm

    It is rather disheartening to see people who should be well educated, i.e., relatively high-ranking military officers, attacking MOAA’s resident financial expert, because the discussion presented regarding the e-mail that is circulating doesn’t mirror their own personal political views. I expect an unbiased analysis from MOAA, and to the best I can tell, that is what was presented.

    Calling the “further reading” list “left wing rags” doesn’t cut it either. The sources referred to, and MOAA’s resident financial expert, are all better informed on this subject than the average observer on this end.

    Attacking the messenger, which is what several commenters did, doesn’t help any of us get a good handle on these issues. If the commenters have facts that support a different perspective, then please let us know what those facts are.

    Calling the statement that “the language at the end of the e-mail is unwarranted,” some kind of a partisan position flies in the face of reality. There is nothing, anywhere, except accusations in wild e-mails, like the one being discussed, that would support a conclusion that someone is trying to “force America to Soviet-style Socialism and then Communism.” If any reader has any real evidence that this is not so, they should submit it for all of us to examine.

    Thanks to MOAA and Phil Dyer for their thorough dissection of the claims in this e-mail. That is why I pay my dues. Kudos to MOAA for their effort to clarify the real facts about the issues raised in the e-mail.

    Michael F. Chenoweth
    Lieutenant Colonel, US Army, Retired

  25. Charleson 08 Sep 2010 at 2:35 pm

    Again you have made it known that your organization is totally left wing and your lie that this is not a Communist take over of the nation when socalism is just like Hitler and Stalin when that is what it is.

  26. DonBon 08 Sep 2010 at 2:41 pm

    CR*P! I quit AARP when it moved into the Administration’s camp in order to sell Medigap coverage to former Medicare Advantage beneficiaries … and sounds like MOAA is headed in the same direction.

    Can’t trust anyone with a DC … or apparently and Alexandria, VA address either.

    Get your head out of your butt and represent us. As others have said don’t counter points made from one position with “Congress might” or “probably will” as a defense.

    Either get into the game and lead from the head of the line … or get out of the way altogether.

  27. Richon 08 Sep 2010 at 2:45 pm

    Hey Dave, you’re correct that the Bush Administration spent too much money, I agree he should have vetoed more spending bills, but I seem to remember the Dems controlled Congress in 2006 and they wrote the spending bills (check the constitution). And how much of the Obama “stimulus” and the omnibus 2010 spending bills were subject to “pay go”. I think we borrowed most of that money from the Chinese. Today the President said we cannot afford $700 million to pay for tax cuts for those earning over $250K. Fair enough, but the CBO says the “middle class” tax cuts will “cost” $2.3 Trillion, and that we can afford?? How about this, lets freeze government spending for 2 or 3 years. Yes, lets include defense, make those Program Managers sharpen their pencils and stop the requirements creep that drives contract costs through the roof. And only the troops get a pay raise this year, as a military retiree I can go a year or two without a cost of living increase. Are you with me Dave?

  28. Edgar Blockon 08 Sep 2010 at 2:52 pm

    You have nothing to apologize for. Your article makes reasonable forecasts of legislative action, in contrast to the email which leaves the reader with the impression that the tax increases are certain to come. Some of the language of the responses is inappropriate coming from what should be a fairly well educated group of people.

  29. R. Parsonson 08 Sep 2010 at 2:54 pm

    The longer President Obama refuses to acknowledge the direction of our nation’s economy the greater the impact will be when the looming depression that awaits is named in his honor.
    For a leader who has had the advantages of an Ivy League education, our president seems to be an exceedingly poor student of history. But in 120 days no one will be able to dispute that the economic mess the United States finds herself in belongs to anyone except the man in theWhite House.
    The basis of this reality is rooted in two truths that became quite pronounced last week. The first is that President Obama is ignoring the very real direction the nation is headed. The second is that he is purposefully ignoring the impact his looming historic tax increases will have. Both are contributing to the pessimism that overarches the morale and tone of the entrepreneurial framework of the future.
    Last week President Obama spoke to the White House press corps — and by extension the nation — to claim that the nation saw job growth of 67,000 jobs in August. Even if this number was real it would be a pitifully tiny percent of the 14,885,000 who are both on unemployment (1 in 10 Americans) as well as those 23,768,000 who are underemployed (working but not earning enough for basic needs — 1 in 5 families).
    The bigger problem for the president, however, is that the number isn’t real. The fact is the nation saw 114,000 people added to the unemployment lines in August and the net jobs lost for the month sat at 54,000.
    In all the “summer of recovery” — as declared by both President Obama and Vice President Biden — saw 238,000 more jobs disappear. Telling the nation that his plans have taken the economy in the right direction, and implying that the nation is seeing a recovery in the area of employment is either willfully dishonest, or painfully, even treacherously naive. At the rate of this “recovery” another 317,333 workers could be sitting on the sidelines before the end of the year.
    Additionally we are now on track to see the single largest collection of tax increases ever proposed take the Obama economy even further into the tank.
    In less than 120 days President Obama’s plan to add a collective 18.6% to the federal tax burden will continue the economic downward spiral into record breaking Depression-era territory. — And remember this is all from the man, who said repeatedly –on the campaign trail — that he should be elected expressly to prevent the nation’s economy from falling into complete deterioration.
    Instead, the unemployment that was growing in the transition period from Bush’s reign to Obama’s reign has exploded to double what it was under Bush. Even worse this means that while 14,885,000 Americans are claiming unemployment assistance, some 23,768,000 families are presently struggling to hold on through work that they have but are unable to meet their basic needs.
    And about the time we are belting out “Auld Lang Syne” this holiday season, President Obama will raise all five income levels of tax categories between three to five percent.
    Ironically the president will be raising the rate on the category that is home to seventy-five percent of all small businesses in America — they will be socked by the largest increase.
    I call it ironic because it is the small business community in America that hires 2 out of every 3 new workers in America.
    Eventually it all adds up.
    And then there was Monday’s announcement. In Wisconsin, the President Obama proposed a $50 billion investment in long-term infrastructure projects that he claimed will stimulate the flailing economy, create jobs and refill the exhausted federal highway trust fund. But it’s very unclear whether or not this proposal will ever be passed by Congress before the November midterms.
    The president has not been pushed on this issue by the press. The president’s team pretends that these realities do not exist. The president himself is willing to perpetuate the false notion that the stimulus package set up a “recovery summer” that in truth ended up in greater pain than it began with.
    None of this takes into account the additional costs that will be incurred by taxpayers when the full implementation of President Obama’s control of one-sixth of the economy through the manipulation of how we receive health care benefits kicks in. And not that it has a great likelihood of passing this year, but if by some miracle it did, the Obama tax penalties that would be incurred by every citizen in the nation under the proposed “cap and trade” legislation would add even greater misery to the growing pile.
    All of these pending tax increases will be put into effect against well more than 95% of American tax-payers. Speaking of which that certainly contradicts his most famous campaign line.
    In 1929, Yale economist Irving Fisher made note of a number of trends led to the worst economic depression in our nation’s history.
    Guess how many of these same trends fit into today’s scenario:
    • Debt liquidation and distress selling
    • Contraction of the money supply as bank loans are paid off
    • A fall in the level of asset prices
    • A still greater fall in the net worths of business, precipitating bankruptcies
    • A fall in profits
    • A reduction in output, in trade and in employment.
    • Pessimism and loss of confidence
    • Hoarding of money
    • A fall in nominal interest rates and a rise in deflation adjusted interest rates.
    President Obama is ignoring and misrepresenting the rate of growth (or lack thereof) in the job numbers, and his economic team has laid the groundwork for the harshest attack on small businesses and every family in America that pays taxes effective January 1, 2011.
    By every indicator this observer can see, we are poised for tragedy… and I didn’t even get an Ivy League education!

  30. Matthew LoFiegoon 08 Sep 2010 at 3:04 pm

    R. Parsons, in accordance with our community standards, information posted in comments that are under copyright need to include attribution:

    http://www.foxnews.com/opinion/2010/09/07/kevin-mccullough-economy-depression-summer-recovery-obama-biden-bush-tax-cuts/

  31. Thomas Minnehanon 08 Sep 2010 at 3:08 pm

    I agree completely with Chenoweth’s comments and those others who state similar views. I am certainly no fan of Obama and his track record these past two years and Congress, well its reputation precedes itself. But there is not a dime’s worth of difference between either party in Congress-it just depends upon who is buying whom.

    As far as the analysis, it was spot on-the reader may not like the point of view but characterize it all as ‘left wing” simply tries to characterize the message and not to consider the arguments.

    I for one am very tired of the hate, the spin, the rhetoric, the lies but then again, these are politicians we are watching.

    Thomas J. Minnehan
    LTC, US Army (Ret)

  32. Dave McCroskyon 08 Sep 2010 at 3:09 pm

    Hi Rich, I agree with just about everything. My beef with the dems is that they should have had the guts to stand up to bush during those years and they caved. They’re just as much as the problem. I have no issue with the stimulus. If bush can lose $10 billion (remember the missing money) in Iraq and no one is accountable, then I have no problem spending on our own people. I’d rather nation build here than Iraq and Afghanistan. I think the bush tax cuts should expire for the rich and be kept in place for families making $250k and below, and like you, I think we need to cut spending after the recession is over. If you go to any chart that shows debt vs. GDP, you’ll see we’ve been here before and we’re not quite in extremis yet, but we’ve got to start acting soon. We also need to bring back pay as you go. So I agree, it’s mostly common sense. The problem is that both sides are more concerned about their party and place it before their country. You can see it by the way the republicans vote no on everything after they ran up the deficit and ruined the economy, and by the way the dems sat there and let them do it and happily ate the same swill. As far as a cost of living increase, no issue, as I stated earlier, I have no issue with paying more taxes to get out of this mess.

  33. M. Greeneon 08 Sep 2010 at 3:12 pm

    “Congress will likely…” is good intel from people paid to research this stuff. I don’t think much of it can be assumed to be wildly off the mark, especially in an election year–as there haven’t been that many surprises in this congress sincee the battlelines were drawn. Until military officers develop ESP, then I guess we use the experts…

    Also, the argument that revenues increased after the Bush and Reagan tax cuts addresses the wrong question. Revenue almost always increases year to year. if it doesn’t we’ve got serious problems. The real question is the rate of growth. Most economist agree that revenue was hundreds of billions less than it would have been without the cuts. They stifled revenue by nearly all estimates.

    I’d be the first to say that the Government grossly mismanages money at times and is overdue for serious cuts in expenditures. But we need to pay for what we spend…that’s basic math. Spend less, but also pay for your expenditures. There’s a good reason the tax cuts had a built in expiration. Because it’s unsound long term policy. The era of something for nothing is quickly coming to a painful end because math is as inescapable as gravity.

  34. HAKIMon 08 Sep 2010 at 3:29 pm

    It is very difficult to show both sides of an issue without some bias creeping in. It is especially hard when doing a futures trend piece much like this environmental scan. It would have added validity to your argument to give point and counterpoint backed up by articles who tend not be left or right leaning. If it comes to a left or right leaning source then always try and throw in the other side to avoid the type of vitriol that was thrown in here by a few posters.

    Thanking God every day I defend a country where this kind of debate can occur.

  35. Garyon 08 Sep 2010 at 3:37 pm

    I agree with DonB. MOAA is on the path with AARP. My AARP membership will be cancelled when it comes due in 2011 and I probably won’t renew my MOAA membership this year. It seems like MOAA is wearing blinders and their viewpoints are just not the same as mine and I have been a member for several decades MOAA has gone from conservative to liberal and that just does not fit a military organization. Military discipline and honor codes do not fit well in the liberal mold and the far left has never liked the military. I feel for those who have died in Iraq and Afiganistan because our president thinks the wars were a “mistake” (his words) ; sounds like what those on the left felt about we who served in Vietnam. Nothing like dying for a mistake. Our taxes will be raised to pay for the wild spending that is going on and we will soon find out how much. Insurance premiums will go out of sight setting the stage for bringing in the “public option”. History shows that if you take over the media, the banks, the major industry, and the health care you have set the stage for socialism to follow and we have gone past that point. In November, I think the American voters who have not been listened to will make their point and try to get things turned around.

  36. Patricia Leverett, retired CPAon 08 Sep 2010 at 3:38 pm

    Regarding the “slippery-slope” argument that disclosing the cost of health insurance on W-2s means it’s going to be taxed;
    employers have long been required to disclose various non-taxable items on W-2s. Amounts deferred into 401(k)s are disclosed, as is the non-taxable portion of the cost of life insurance (the cost of coverage in excess of $50,000). These items and many others have been required disclosures on W-2s for decades and there is still no move to tax any of them. The value of health insurance coverage will simply be one more non-taxable disclosure item.

    As to why companies are required to disclose non-taxable items on W-2s, I’ve always thought it was so people could see they were getting a tax break. That is, it’s good public relations for people to see they’re being taxed on less than they actually made.

    The biggest complaint I have with the e-mail being circulated is that they’re blaiming the Obama administration for laws that were passed under the Bush administration. Wave One and the majority of Wave Three have to do with the 2001 and 2003 tax cuts that were scheduled in those laws to expire in 2011. The Obama administration had nothing to do with those breaks being scheduled to expire – that was written into the laws passed early in the Bush administration.

    Judge Obama on what he does or doesn’t do right now when faced with the expiration of these cuts, but don’t blame him because Congress decided on these tax-cut expirations 10 years ago!

  37. John Tytlaon 08 Sep 2010 at 3:38 pm

    I have only one problem with the analysis. It is skewed with comments like “There is very little in the way of chatter that would indicate that no action will be taken prior to the end of this term.” This analysis if objective would say it is correct unless there is action taken by congress. Otherwise it is stating an opinion that they will undoubtedly do something to extend it. If they were going to they would have or they are waiting until the elections to use it as a ploy for voters, or they will wait until they are voted out and then let them expire since they are out of office anyway.
    Then the is the “While the email states that these changes will happen starting on January 1, 2011, it is extremely unlikely that the tax brackets will not be extended, especially for anyone making under less than $200k annually or $250k for families filing jointly.” And references to the Rams winning the superbowl. If I want real analysis just tell me if the statement is true not your opinion of if it will ultimately happen. I never thought our country would be where it is today but my opinion is only that and had no basis in reality.

  38. Ralph A. Rossion 08 Sep 2010 at 3:50 pm

    Why am I not surprised by the unnecessary strident and, at times, name-calling comments?

    It’s election time…and that, for some, means it’s time to name-call and, in one case, to demand a retraction!

    This piece helped me better understand the probable consequences of possible near-term political actions. The information is backed up by a list of sources for these facts or conclusions. These are helpful as I do my own research.
    They are not the only sources I use to become better informed about these complicated issues.

    I do not feel that the explanatory comments are partisan. Not one bit.

    Thanks to Mr. LoFiego , Mr. Dyer and MOAA’s Member Service Center for this forum. I look forward to similar articles and discussions about current events.

  39. Dave McCroskyon 08 Sep 2010 at 3:50 pm

    Your right Hakim, it’s great to live in a country where we can do this. Now just point out which of these facts, which can be found in most major papers came from left or right leaning articles? Did bush ever put the two wars in the budget? No. Why not? This is where the critical thinking part comes in. Did bush pass two major tax cuts during war? yes. Did that lead to this current mess? Did bush take 2 billion out of the VA budget following the tax cuts? Yes. Just a fact, no right or left. Here’s one, what about the $500 billion medicare giveaway of 2003? That was unfunded, no money to pay for it, just a giveaway, it will always be in the budget: http://www.forbes.com/2009/11/19/republican-budget-hypocrisy-health-care-opinions-columnists-bruce-bartlett.html Forbes is pretty conservative, just like me. So which of these facts are liberal, which are conservative? This started because of the tone of the original email and some of the assuming comments. Facts are facts, and they’re important because they instruct those that are willfully ignorant. So Hakim, which of these facts are liberal?

  40. D. Markon 08 Sep 2010 at 4:04 pm

    Who is Matthew LoFiego?

    If it is true that MOAA is apolitical by law and by nature, it needs to review everything written by Mr. LoFiego.

    The liberal partisanship displayed by Mr. LoFiego is clear to me. Appears he is on board with the White House “fact checkers” team. Just check the titles of his past blogs. Some of the words sound near “Media Matters” like to me.

    Again, Who is Matthew LoFiego?

    D. Mark
    COL
    U.S. Army – Ret

  41. CAPT A.S. Dansker, USNR (Ret.)on 08 Sep 2010 at 4:05 pm

    I’ve come to believe that all politicians do their best to get elected by spending as much as they can for their voters, either individually or as a class. That IS the prime directive: to get elected or re-elected. Maybe I’m naive, but from the last 50 years as a voter I’ve never been refuted. Now with that “bias”, I give the following opinion: balanced budgets only happen by accident, not design. Congress and Presidents talk a lot, but the proof is how they act when presented with the requirement to tighten their belts without raising taxes. Many before me here have stated the obvious: tax & spend repeated manifold. So, if this is so, I forecast one of 2 options will happen: the USA will NEVER repay it’s debts fully or we will. If we will, you and I will all be dead and long gone. IOW, it’ll never happen. Politicians will keep pushing out the debt further forever. That’s the new normal. I don’t have that much longer on this earth to see what will happen. I just hope that I survive long enough to see my 15 grandkids graduate high school & the world doesn’t implode before that. Good luck to all.

  42. Jim Cookon 08 Sep 2010 at 4:30 pm

    Matthew, neither you nor MOAA should apologize for your article! The original email clearly pushes a partisan agenda through fear-mongering. Your article is a good effort to put real concerns into a more realistic perspective. Stand your ground!

    Jim Cook
    Lt Col, USAF (Ret)

  43. Henry M. Donaldson, Maj. USAF Ret.on 08 Sep 2010 at 4:38 pm

    Wow! what a hornet’s nest has been stirred up……..

  44. Marty Richmanon 08 Sep 2010 at 4:40 pm

    The problem is not all the viral emails – it’s standard fare for the ‘silly season.’ What’s really scary is the truth, but no one, either political party, the the president nor his administration, nor most organizations like MOAA, spend nearly enough time working on that.

    We are spending ourselves into oblivion and all anyone is worrying about it that they – and their political supporters – get their ‘fair share’ which usually means all they can get away with and use to buy votes.

    It does not pencil out. The debt is overwhelming and the interest on the debt and the government’s worthless IOUs to itself and the taxpayers are eating up all the investment capital.

    One cannot go on promising unearned entitlements to everyone who comes along without breaking the bank.

  45. Hubert Russellon 08 Sep 2010 at 5:15 pm

    MOAA’s approach is sorely needed to offset the slanted news that comes from the Republicans and their station, FOX.
    Taxes in the USA are abysmally low. 15% of GNP taxes last year is a historic low for USA. As someone said “Taxes are the price of civilization.
    SS- I think that P Johnson made a mistake when he combined the SS budget and the federal budget in the 1960’s. P Reagan made a bigger mistake when he lowered income taxes from a 70% top rate to 28%, while increasing the SS tax on the working man. Result: SS taxes have supported the overall fed budget while income taxes have not (wealth distribution from poor to rich!).

    Fed budget is about 1/3 SS and Medicare, 1/3 defense (including VA), and 1/3 other. Please find me another country where defense costs are so high,..

    Yes, some democrats supported P Bush’s massive tax cuts for the rich, but very few. One of the two tax reduction bills was decided (under reconciliation procedures!!!) by VP Cheney’s tie breaking vote.

    Where would we be today w/o our socialized Tricare? How can good old Republicans now support Medicare Advantage to the tune of 14Billion/year when it consists of income distribution to the rich, ie those fo us who participate in the Medicare Advantage subsidy?

    Which party alway supports the status quo and the growing inequality of wealth in this country?. Which party came up with SS, 40 hour week, civil rights, Medicare , and yes Tricare. How can good religious people among us be against medial care for the poor and for a medial system which is rated 38th in the world and is 80% more expensive per capita than the second costliest country, France. (usa 18%, France 10% of Gross National Product?

    This is cheers for FACTS, whether they support D’s or R’s.

  46. Frank Smithon 08 Sep 2010 at 5:20 pm

    Mr. LoFiego should be working for George Soros instead of MOAA

  47. Hubert Russellon 08 Sep 2010 at 5:26 pm

    Sorry, forgot to mention that under P Reagan the National; debt doubled, 1.5 to 3 Trillion. Under P Bush the debt again doubled from 5.5 to 11 Trillion. P Clinton passed on a budget surplus to P Bush who squandered it.

    Now, when the Feds should be spending massively so that consumers will spend and producers will produce, the R’s and conservative D’s are concerned about those additions to the debt. Why not when they were boosting iot under P Bush.

    Pay as you go. Tossed out bu P Bush. Reinstated by Speaker Pelosi. BUT, the financial crisis has required exceptions.

    AMT and the 21% medicare fix were in P Bush’s cross hairs for 8 years.

    Income Redistribution–When you do not have same, the rich get richer and then you get a revolution MAO, France, Russia. I made good money in my time, as did a good R friend of mine. He says “Thank God that I made so much money that I had to pay more taxes.

  48. Hovey McClureon 08 Sep 2010 at 6:35 pm

    Interesting comments and I’m smart enough like most others readers taking their time to post to make my own judgements. They havent changed.

    One standout is Mcrosky who appears to be somewhat deficient in keyboard operation since he is unable to make a cap B but has no problem with the o.

  49. Hovey McClureon 08 Sep 2010 at 6:37 pm

    Even my keyboard misfired on the C

  50. Bruce Lavellon 08 Sep 2010 at 7:17 pm

    My personal opinion… when one becomes an officer in the US military, one should keep their political feelings private as much as possible – whether active or retired. We took an oath to support and defend the Constitution, not the Republican or Democratic party. I understand we have the right to exercise our freedom of expression, but that does not necessarily mean it is the best practice to do so.

    Thanks,
    Bruce Lavell
    LTC, USA (Ret)

  51. E. Gibsonon 08 Sep 2010 at 7:24 pm

    Just to focus everyone who’s collecting a military pay check or pension about the reality of taxation. 100% of our military compensation and benefits come from taxes. Our TRICARE medical care insurance comes from taxes. When I was on active duty I took part in the most socialist medical system in the world, the US military medical system. I did 30 years on active duty and now I work as a defense contractor; and don’t forget that contractor pay comes indirectly from taxes on the American people. I’m in that group that will have to pay more taxes when the Bush tax breaks “for the rich” expire. I am ready and ABLE to pay more taxes, which in the long run will benefit me and all the other folks who receive military benefits.

  52. John Williamson 08 Sep 2010 at 7:25 pm

    I agree with all your points, BUT, and it is a BIG BUT, our President has a history of favoring and supporting the redistribution of wealth. The party he represents, which also is predicated on wealth redistriburion, has, at least until January 2011, a vast majority in both houses of Congress. That means he, supposedly, is assured of his desires as far as legislation is concerned at least until after the November 2 elections, after which he will very possibly have a “Lame Duck” session during which he can still get unpopular legislation passed by Senators and Representatives who no longer are at the beck and call of their constituents. I wont say anything about “bribery”, but he has in the past resorted to the issuing of favors to recalcitrant legislators to assure passage of his favored legislation. It will pay, over the next few months, to be ultra-cognizant of what your Senators and Representatives might be up to.

  53. REED GRAYDONon 08 Sep 2010 at 8:10 pm

    My concern is not about the details of the specific tax cuts/increases you discuss, rather I am concerned about the way you approach these POSSIBLE changes. Voters were warned before he became President, that he had liberal ideas and positions that would adversely affect America, but most voters blew them off! Obama’s actions have proven that he is capable of radical and damaging views, laws and practices. In your article, I see that same kind of forward thinking; that “Oh! he won’t do that” and “that’s not going to happen”, kind of mentality towards these critical issues. MOST PEOPLE KNOW THAT NOW AND ARE FEELING IT!!!!!!

    The DOUBT, the DOUBT, and the DOUBT about what he might do is rampant. It’s enough to cause turmoil just to have the doubt.

    I am not a political whiz, but it’s pretty easy to see that obama is for REDISTIBUTING THE WEALTH, which is some sort of socialism any way you try to sell it!!!!!

  54. Len Liston 08 Sep 2010 at 8:15 pm

    I had not realized the hyper, irrational tirades that some members of this supposedly mature community insist on espousing.
    Repeating these sad, “I hope he fails!” Rush / Boener / McConnell talking points contribute nothing to the important issues dealt with in the original analysis.

    To some here, it is all well and good to slam our sitting, duly-elected President, and find no redeeming qualities in him (how nuts is that?), but go completely bonkers when one suggests that former President Bush might — just possibly — have something to do with the mess that we’re in.

    How about keeping some perspective here, and if one feels the need to let off several puffs of clearly partisan political steam, please do so elsewhere.

  55. Len Liston 08 Sep 2010 at 8:23 pm

    Holy Geez! All this “redistribution of wealth” crapola chatter hardly started with President Obama. The people of the United States have been doing this for many, many years (like the income tax, “providing for the common defense”, etc.) But now, of gosh, we have a leader that is not named Bush, and suddenly he is to blame for ALL of the world’s ills since, well, the beginning of time.

    Really, some folks need to get a grip, and a serious dose of reality!

  56. REED GRAYDONon 08 Sep 2010 at 8:24 pm

    CAUTION: In direct opposition to a previous poster, I beseech all of you not to become the quite little non-poliitcal soldier, especially when you retire. Your MOST IMPORTANT STATUS is that of CITIZEN. We need ALL citizens at times like these, to speak up and be counted in yours and our America. I do understand the rule that we all lived with when we were in the military, but you can’t just shut down and not offer direction and opinions to/for your fellow citizens!!!! That, indeed would be a great loss.

  57. Ron Blackburn, USAF, Lt.Col.(Ret.)on 08 Sep 2010 at 9:02 pm

    It is almost shameful how a non-partisan issue (difficult to define, though) degenerated into such a diatribe of comments, especially from one of the most honorable communities in the U.S., military officers!

    Patricia Leverett, CPA, had some good insight. Also, my recollection is that Reagan’s administration tripled the national debt, while Bush (the piker) only doubled it (not counting the after effect going into the Obama administration).

    If some of the honorable officers above want to label me a “socialist”, then so be it. But I will not be distracted by the lies and half truths spread by Karl Rove in the Wall St. Journal (yes, I read it assiduously), and his association with Grassroots (which is where I suspect some you might be getting your information).

    Bully for MOAA for trying to shine some light on a very difficult subject. Maybe that is why I am a Life Member.

  58. Steve Brown, Col, USAF (Ret) (Ret)on 08 Sep 2010 at 9:17 pm

    Mr. LoFiego appears to have shot himself in the foot in this particular matter, for which he has apologized. He gets high marks for bravery in taking on this emotionally charged topic. Unfortunately, he gets lower marks in wisdom for responding to unattributed emails. If the author won’t take responsibility for this writing, why should anybody bother to take it seriously?

    If the tax cuts do expire who do we blame? The people who originally passed these political time bombs and who are out of office, or the people in power when the bombs go off? Frankly, who gets the blame doesn’t matter, but those out of office can’t do anything about these bombs!

    A sound near-term public policy probably would not increase taxes during a period of relatively high unemployment and sluggish economic recovery.

    A sound long-term public policy may be worth an increase in taxes, but it depends on what we propose to do with the tax revenue. Our interstate highway system, Project Apollo, and opposing communism are examples of tax-funded ‘programs’ that I think were mostly well spent. There’s no reason to believe there won’t be future government programs that will allow American’s to collectively achieve great things they could never have done otherwise.

  59. John Williamson 08 Sep 2010 at 9:32 pm

    I hate to admit that I have come to the conclusion (from reading most of the posts) that the lunatic right wing has succeeded in contaminating our community that used to be sane and relatively intelligent.

    To read the comments – that any non-republican is a socialist / stalinist / communist – shows the inability to the writers to form any intelligent opinion. They are clearly just parroting the ‘American Taliban’ wing of the ultra right. Those who study history should see coorelations – and recognize that the right wing is closer to European fascism (and socialism) than moderates or left-wing people in this country.

    Anyone who attacks factcheck.org as a left wing organization is clearly listing so far to the right that they have capsized.

    As officers – we (or at least those that I knew and worked with) were taught to look at things objectively. Propaganda is not truth. Neither is opinion (remember that opinions are like certain orifices – everyone has one and most smell the same).

  60. Harry Woodon 08 Sep 2010 at 9:51 pm

    This was really good reading. Time after time a poster would almost give the answer but then fail to do so. Our problem is THEY need to be reelected, that is what THEY want, and term limits would be the only thing that would change that. Vote for housewives and farmers, let them work for us.

  61. Vincent Puleoon 08 Sep 2010 at 10:00 pm

    Redistribution of Wealth. .. There are those that are saying that this is bad. This in light of the enlightened opinion that there is a widening gap between the haves and the have nots. There are human beings within our borders that are suffering. Many of these are children. And the numbers ARE increasing.

    The conditions if allowed to continue will result in future generations of people living in the same culture of the forgotten and ignored. Most of us, even those working closely to help those in need, cannot fathom what life is like at the bottom! What life is like with no hope of improvement without help.

    Many of our wealthy citizens are sharing their wealth through philanthropy. Many are willing to pay additional taxes. There are, however, many who are earning over $250,000 who say they will suffer if they have to pay an additional $10,000 per year. That they would have used it to create a job, not invest it in stocks and bonds.

    Nuff said.

  62. Daniel Leonard Moyeron 08 Sep 2010 at 10:19 pm

    All career military sign on and serve with our families under collectivism, where the group rather than the individual is the fundamental unit of concern. The rights of the individual are suppressed in seeking the completion of the group mission. What I read in many of your comments are expressions of individualism. You seek to keep all your benefits from a very generous nation yet deny the need to create revenue streams to pay for the largest military in the world, an ever expanding intelligence gathering community next to none, social security for seniors, medicare for seniors, and a health care network that pays for the millions without the ability to pay. Not one comment suggested that the military community may have to give up something, yet I’m sure most support the notion that the nation can’t afford the many underfunded public social programs. If we’re honest with ourselves, all of us are better off financially than anytime in our lives. Can we say that of our children? I doubt it! Time for continued change, and NO is not the answer.

  63. Carl W. Cardinon 08 Sep 2010 at 10:45 pm

    As a partisan experienced in political wars I am ashamed of MOAA. To allow lies and distortions to appear under our nonpartisan banner — disguised as a kind of eye-opening experiment to show what is happening in blogging — baloney. You have got to be partisan in the leadership to allow such crap. Space and time for this tax garbage is either cleverly made available or foolishly permitted. I charge you with bad judgment at the least. Bill Cardin, LTC (USAR) Ret.

  64. Lee Cornelisonon 08 Sep 2010 at 11:22 pm

    I am extremely disappointed in the MOAA leadership for allowing this left wing drivel to be published in the guise of non-partisan discourse. If you had half a clue about the economic reality of the U.S. and the jeopardy to which our freedoms are now exposed you couldn’t possibly countenance this nonsense.

    Lee Cornelison, Colonel, US Army, Retired

  65. DCon 09 Sep 2010 at 12:01 am

    You should stay out the abortion issue as you are wrong and off base. First off all, any (if only one) abortions are federally funded, it is wrong and too many.

    Second, during the Clinton administration it was reported that partial birth abortions (i.e., infanticide) were rare, when in fact they were common and easily accessible.

    This administration has no problem disguising the truth with “want the public needs to hear” rhetoric. Do not fall into the trap of repeating the misrepresentations.

    DC

  66. Robert Hoskinson 09 Sep 2010 at 12:18 am

    This article identified some of the fear tactics that are being used by radical conservatives who are owned by wealthy individuals and corporations.

    I really like it when people refer to “Reagan tax cuts.” His “tax cut” cost me big time. While the tax bracket for high income taxpyers did go down the rest of us lost the deduction for consumer interest, dog licenses, and other nuisance taxes. I got a letter from Representative Duncan Hunter explaining the “tax cut” that asked for input. One of the items I objected to was losing the consumer credit interest deduction. I didn’t think it right to deny a low income worker who had to put new tires on his credit card from deducting that interest but a wealthy stock investor can deduct the interest on his margin account. What those Reagan “trickle down” supporters want to do now is the same inequitable philosophy.

  67. Nick Con 09 Sep 2010 at 12:58 am

    President Obama in his speech in Cleveland today (SEP 8) said, “In 2011 every persons taxes will go up”. As for deficits my source is the CBO AND US STATISTICAL ABSTRACT. The CBO numbers show that the total cost of the eight year war (Operation Iraqi Freedom) was $709 billion which was less than the $862 billion stimulus bill passed in 2009 with a shelf life of two years. The deficit for 2010 is expected to be $1.3 trillion. The deficit in 2007 was $160.7 billion and the deficit in 2008 was $458.6 billion. In 2007 and 2008, the deficit as a percentage of gross domestic product (GDP) was 1.2% and 3.2%. This year’s deficit is the second largest shortfall in the past 65 years; 9.1% of GDP, exceeded only by last year’s deficit of 9.9% of GDP. The most expensive ($140 billion) year of the Iraqi war was in 2008, the year of the surge. The cost of the Iraqi war from 2003-2008 was $20 billion less than the cost of education spending and less than a quarter of the cost of Medicare during the same period. Where did all this money go in 2009 & 2010 and what did it get us? Nothing but “Deeper in debt”.

  68. K Cardwellon 09 Sep 2010 at 1:03 am

    M Greene writes that it makes no economic sense not to tax the income from large income earners because it forgoes the “return on investment”. Taxes are not return on investment. Taxing is taking money away from the person who made the investment to redistribute the earnings to people who made no investment.

    Your explanation appears to me to be Democrat party line to let them slid past the November elections and continue their taxing and spending.

    Thoes who blame George Bush for this situation forget that both houses of congress have been controlled by the Democrates for 4-years and had plenty of time to correct the situation. Moreover, the democrates in control in the house and senate (including Senator Obama were taking money hand over fist from freddie mac and fanny mae while they were fighting restrictions on the financial institutions proposed by Republicans.

  69. John Currellon 09 Sep 2010 at 1:44 am

    In 1977 we shifted the beginning of the fiscal year from 1 July to 1 October; to permit the Congress to debate and enact a budget for the new fiscal year. And still have time to get home in the fall to campaign for relection. One or more years President Clinton shut down the Government when they had not done so. And while he passed on a budget surplus – he also passed on an existing large National debt. We have different kinds of budgets – some we reveal – some we do not. In 2009 I took a large capital gain from a property that I purchased also in 1977. I paid capital gains and AMT and also had my Social Security reduced about $ 200 per month for one year even tho 80 % of the gain accured prior to becoming 62. Fair – hardly. Was I able to pay and continue living my same lifestyle – yes. So let’s talk about the budget deficit and the National debt and get rid of a Congress that is not able to pass a budget for themselvess to live on. Have been a non-partisan for many years and all this name calling is really a drain on the Country. Let the rich pay more tax and poor who are able tho not willing to work – starve. We need some serious help in the Congress – Go Vote ! JC

  70. Gray Boneson 09 Sep 2010 at 8:05 am

    Taxes always have been and always will be a redistribution of wealth. Would bet however that for ever $10 increase in taxes that about $1 likely goes directly from the fortunate to the poor. The other $9 goes for non wealfare programs, defence and to pay for the wars we always seem to be fighting.

    It looks like Obama is trying to address some of the major problems by extending the tax breaks for those making less then $250,000. On a pure economic basis if one makes more then this they should fight aganist his propoosal. If they make less $250,000 a year then this they should support his efforts. I believe that results in about 95% of every 100 people should be trying to support what he is trying to change relating to taxes.

    Funny, the bail out was started by the Rep, and now that Obama wants to extend the bailouts Rep fight him. It was ok and the supported econimic bail outs with a Rep in office, now they are lock step against it and we have a Dem as president.

  71. Ann Barberon 09 Sep 2010 at 9:03 am

    Good grief!! Mr. Lofiego and Mr. Dyer write a “debunking” blog to help people disseminate “information” they receive in random e-mails, and they publically flogged for it. Folks, half the stuff you get in e-mails regarding “political” or “legislation” are only half true, if true at all. That has been shown not only in this blog, but many other places. I’ve found MOAA to be a great source of giving factual information on a variety of legislative and financial issues. In the end though, when you get such e-mails as are discussed in this blog, try using your “critical thinking skills”. I always find it funny how biased people are on subjects without actually doing research. Many of you have proven that the real bias is how you feel about the government, not in the facts.

  72. Paul Pierceon 09 Sep 2010 at 9:30 am

    I agree with Donald Brown. Your so-called impartial analysis is filled with ‘what ifs’. The facts are that the tax burden is in fact going up on everyone, including the hallowed ‘middle class’.

    See you at the polls in November.

  73. Paul Pierceon 09 Sep 2010 at 9:37 am

    Also, please keep your sanctimonious attitude to yourself. The belittling tone of your so-called impartial, non-partisan writing is insulting.

    “Oh, just a rare abortion here and there…oh, just smacking down the rich…don’t worry, it only hits a small number of people…oh, it’s not really a tax increase, it is an expired tax decrease…”

    See you at the polls in November

  74. Robert Siefkeron 09 Sep 2010 at 9:38 am

    The MOAA “analysis” does not refute any of the claims of the email. The majority of the “analysis” seems to say: “Surely they won’t leave things as they are!”
    Flip statements such as “there is as much chance of that happening as the Rams winning the Super Bowl” have no place in “objective” analysis.
    The email is much more factual and objective than the “analysis. Bravo Zulu (well done) to the originator of this email that shines a klieg light on this impending catastrophe.
    Shame on MOAA for trying to cast this important email in such a poor light.
    “Objective analysis?”
    I don’t think so.

  75. Capt. Rob Deane, USN(Ret)on 09 Sep 2010 at 9:45 am

    The original e-mail painted the blackest possible scenario. The analysis was, in my opinion, overly optimistic that Congress and the President will take the necessary actions to extend the current tax laws in whole or in part. With the current Congress and President many of the items that conventional wisdom opined would be accomplished have not been. We are betting on (hoping for) salvation. I am attempting to prepare for the worst while maintaining some hope for better than the current default prospects.

  76. Charles Justice, CFPon 09 Sep 2010 at 10:49 am

    Mr. LoFiego: Thank you for your attempt to clarify the many misunderstandings and bold misinformation prevalent concerning federal tax issues. I am, like you, very familiar with these matters in a professional capacity. I see nothing objectionable in your comments. Obviously, criticism of your remarks is politically-motivated and not based on a valid analysis of current federal tax rules or any proposed changes. Unfortunately our nation’s current climate of public discourse makes many people impervious to factual information. Please do not be cowed. You have my full support.

  77. Christopher Goodmanon 09 Sep 2010 at 1:55 pm

    My criticisms of the Bush administration were met with accusations of a lack of patriotism – even though the facts underlying my criticism were mostly undisputed. It was the mere idea of criticizing the President during a time of war and while in the military.

    Now when I expose the lies being told about President Obama, I am accused of being “partisan” and “too political”. In defending my President I often offend my fellow Soldiers.

    Sure, I like President Obama, but I just want people to realize a. the man says he’s a Christian, b. he is a citizen of the US (his mother was a citizen!), and c. he actually does want to prevent tax increases for the poorer 90% or so of us, to the extent that it is fiscally responsible. He’s pretty open and honest about his views and intentions – as was President Bush. I just happened to disagree with President Bush’s views, intentions, and the sources of his “facts”, while I tend to agree with President Obama’s.

    While I see possibly a little bit of unconscious partisanship in this article, it pales when compared to the partisanship I’ve seen in officers and senior enlisted in my 9 years on active duty – nearly all of which has been Conservative Republican. Most attempt to be non-partisan – an admirable goal for leaders with much power – but many don’t quite achieve it. It’s hard to do.

    I’d like to point out one fact that people consider partisan – although it is indeed a fact. We had budget surpluses at the end of the 1990s with a Republican controlled Congress and a Democratic in the White House. Our current deficit issues came about mostly in the past ten years, when just one party controlled our government (Republicans for 8 years and Democrats for almost 2). Perhaps it’s best to not trust either party?

  78. Frank Balantic, CDR USN, Reton 09 Sep 2010 at 2:41 pm

    Great exchange to date.
    Plenty of useful data, and a wonderful learning opportunity.
    I too was shocked by the partisan hand-waving in the original article that MOAA presented.
    It is good to see a recant/apology. Yes, the original email was attention getting. I hope that it got the attention of a lot of people….because it is actually a quite factual representation of the trajectory that we are on.
    More factual than the original MOAA article that attempted to dispute it.
    It is good that MOAA has accepted that fact.
    Frank Balantic
    CDR, USN Ret

  79. Sahwn Engelon 09 Sep 2010 at 3:33 pm

    Well, I am not going to decide how to vote based on an email I received, or what I read on MOAA Blog so both the email and the analysis are for the most part useless. Mr LoFiego what would be useful is a detailed analysis of what taxes are scheduled to increase and by how much in 2011, and a nonpartisan statement of what action congress is likely to take to offset any of these increases. I am sure MOAA Legislative Affairs has in-depth knowledge of pending legislation and can make and educated assessment of legislation to be introduced that is likely to pass. That would be useful—Thank-you

  80. John Grahamon 09 Sep 2010 at 5:29 pm

    Most of us are aware of the profound sacrifices made by the citizens of this country to support our efforts during WWII. Why would an administration, with the support of Congress, dramatically cut taxes while fighting wars on two fronts? I’m not a CPA but you can bet I don’t manage my budget by applying that kind of reasoning. Why one might even think there was an ulterior motive such as dismantling social security, medicare, medicaid and maybe even veterans benefits. You know, those socialist agenda driven programs. Well here we are with at best a struggling economy(It could have been significantly worse) and what do you hear once again? The drumbeat to privatize social security is again being foisted upon us. Right, hand your hard earned bucks to those paragons of virtue on Wall Street and let them control your future. Well the truth is out here somewhere it’s just harder than at any time in the history of this country to find it. Tokyo Rose is alive, well and much transformed. Thank you Mr. LoFiego and
    Mr. McCrosky as well as others for some much needed perspective.

  81. James Lewis Rodgerson 09 Sep 2010 at 7:40 pm

    I would like to join back into the discussion, and thank MOAA and Mr. LoFiego for their prompt apology regarding inappropriately partisan language.

    Now, I also join in the request by others…to avoid the partisanship problem completely…just remove it from the equation.

    To do so, MOAA really SHOULD do a simple, straightforward summary (Power Point presentation??) of what they:

    1) KNOW to be changing (up or down)

    2) THINK is changing

    3) THINK Congress will act upon, or no

    4) and then keep it UPDATED, with changes annotated.

    This truly would be something to assist all MOAA members…because to be frank, my own rather expert tax attorney isn’t sure he’s got a complete picture of all the financial, health care and tax law and rule changes. I’m sure many of us are in the same boat.

    And as far as tax policy is concerned…there are many MOAA members with varying political views.
    — I venture to say that the majority of us are conservative in our political viewpoints, but that really shouldn’t matter AS LONG AS MOAA is staying truly, completely nonpartisan in working on our behalf and providing STRAIGHT information to us.
    — Nonpartisan should mean reporting the facts, and ONLY the facts, and each MOAA member can then make their own political decisions.

    Respectfully submitted to all,

    Jim Rodgers
    Colonel, USAF (Retired)
    Idaho

  82. Bob in Virginia Beachon 09 Sep 2010 at 9:40 pm

    Why do I have the feeling after reading the analysis that MOOA is sounding like a left liberal group similar to AARP. Reference reading: CNN ; FactCheck.org Article; Media Matters Rebuttal; Time Magazine, give me a break. These are far left media groups. Someone up at MOOA is providing free cool aid to the staff.

  83. Hubert Russellon 09 Sep 2010 at 9:50 pm

    Bob in Va —Factcheck.org is liberal.?? CNN is liberal?? Please give an example.

    Why do you not find a stated item that is non factual and attack same, rather than put up the tired argument of the liberal media?

    Best Wishes

  84. John Currellon 10 Sep 2010 at 1:01 am

    When we talk about the redistribution of income and the redistribution of weath – these are two seperate discussions. When we talk about budget surpluses and budget deficits – we are normally referring to a single year. And this is different than discussing the balance of the National debt. When we are told Social Security is able to pay all planned benefits through 2039 – it does not say much about 2040. President Bush attempted to address this problem with at least two Congresses to no avail. While we may credit President Obama for addressing Medicare – a much larger problem: it does not speak well of a Congress that permitted the problem to grow essentially since its inception. Earmarks and discretionary spending may be disgusting – tho they are only the tip of the iceberg relative to Entitlements – the seemingly invisible gorilla in the room – the 3rd rail of politics. So let’s get serious: How can we get the rich to provide for the poor ? Providing a job is the best solution. No jobs – then it is higher taxes for the rich. So eat out more often – hire a gardner or a cleaning gal – get your car washed – – – stuff like that if you are retired and do not have a payroll to meet. Conjecture: We would all benefit from a large factory located just North of the Panama Canal – where all the folks of Mexico could work. And we could control immigration from the Panama Canal – where the Continent gets skinny ! Seriously – Mexico is rich and continually fails to care for their poor – and so why should we ? Sorry for skipping around – it would be useful for MOAA to provide us with some structure to keep us on the same page when talking about apples and oranges. Go Vote – JC

  85. Matthew LoFiegoon 10 Sep 2010 at 7:28 am

    Colonel Rodgers, thank you and that is a great suggestion and I’m definitely going to push for getting that done, without commentary and without gray areas.

    We’ve been discussing different ways of going forward and there will definitely be changes to the way the blog is written. I’ve been looking since we started it for another member of our staff to write and to help with editorial content. We have recently hired an employee that will do just that (like me, on top of their daily membership work). We’ll both research items from every viewpoint and come up with a strictly fact based narrative, or at least as close to fact as possible (and when we can’t nail down a fact we will state that clearly). After that our director will take an additional look at the article before it gets posted to strip out anything speculative or unproven and anything that would come off as biased. Then we’ll put it out here for members to discuss and debate freely. We don’t apply the same standards for posts on this blog that we do on our official article comments or other blogs. There’s no moderation going on unless there is profanity or ugly attacks on other posters (as evidenced by the fact that no comment here, not even those that have been strongly against me personally, have been edited or deleted). I’ve only had to modify one comment since starting the blog and that was due to profanity and in that case I just re-worded the comment.

    This thread has taught me a great deal and there has been some very good advice provided in the comments, and I thank everyone for participating in the discussion. MOAA has never really had a strong online community for these types of conversations, but we are currently working on integrating a community function into our site where there will be true forum-style capability, tiered with members only sections and general communities. This thread shows me that we have more than enough active, engaged members that wish to voice their opinions and discuss items of interest to make that community successful. It is unfortunate that my casualness and presentation of future probable intentions of Congress was the catalyst for it, but it helped me see the value of having multiple eyes on the same subject.

    Colonel Rodgers said:
    ” — I venture to say that the majority of us are conservative in our political viewpoints, but that really shouldn’t matter AS LONG AS MOAA is staying truly, completely nonpartisan in working on our behalf and providing STRAIGHT information to us.
    — Nonpartisan should mean reporting the facts, and ONLY the facts, and each MOAA member can then make their own political decisions.”

    While our legislative and executive teams do just that, there is no reason why this blog shouldn’t follow the same guidelines. So you just wrote my mission statement for future topics. I printed it out earlier and put it on my wall. I hope you have the time in the future to help keep us on that track.

  86. OKJack™Group™on 10 Sep 2010 at 3:58 pm

    AMENDMENT XVI [usually referred to as “the sixteenth (or 16th) amendment”]
    Passed by Congress July 2, 1909. Ratified (by 36 states) February 3, 1913.
    Note: Article I, section 9, of the Constitution was modified by amendment 16. Further, 6 additional states ratified by March 7, 1913. However, Connecticut, Rhode Island, Utah, Florida, Pennsylvania & Virginia have (after 97 years) still not ratified the sixteenth amendment.
    “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

    Those 30 historic words get right to the point—and especially the 12 words, “…power to lay and collect taxes on incomes…from whatever source derived…”.

    History tells us that the initial approach to the implementation of the 16th amendment was indirect, i.e., as part of tariff revisions—tariff revenues being the primary method by which the federal government financed its operations for decades.

    In 1894, one such indirect (pre-amendment) attempt at including an income tax with a tariff revision was a 2% tax levied on personal incomes over $4,000 ($88,100 in 2010 dollars). However in 1895, the supreme Court ruled that said income tax (part of the Wilson-Gorman Tariff Act) was unconstitutional. Wilson was a former Confederate soldier and a Bourbon democrat (i.e., conservative laissez-faire capitalist) representative from West Virginia—and the all important chairman of the House Committee on Ways and Means, i.e., the committee charged with writing all U.S. tax legislation.

    The Constitution requires that revenue (tax) legislation “originate in the House of Representatives”, i.e., Article I, Section 7, Clause 1: “…All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills…” AND Article I, Section 8, Clause 1: “…The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States…”.

    Maryland Senator Arthur P. Gorman was also a Bourbon democrat. It would be fair to say that Wilson and Gorman were of the similar conservative bent of today’s so called Blue Dog democrats, i.e., 19th-20th Century “Bourbons” were equivalent to 20th-21st Century “Blue Dogs” with conservative voting electorates behind their reelections.

    Republican, William Howard Taft, had just been inaugurated president in 1909. The republican control of 1909’s 61st congress was: House: 56% & Senate 65%. Contrary to popular opinion—it was NOT the democrat party that finally opened the door to a federal income tax on personal income (and on small business, corporate & capital gains net profits). Rather it was the republican party that threw this door open—the republican party that proposed and sent the 16th amendment to the states for ratification in 1909. Since America’s beginnings more than a century earlier, the federal government had been looking for a more predictable (and more lucrative) alternative to the practice of paying America’s bills with revenue derived primarily from unpredictable import tariffs.

    It turned out that the democrat party finally returned to power in 1913—after some 9 congresses (18 years), and just at the moment when the republican-initiated 16th amendment was ratified by 75% of the state legislatures across the United States.

    Somebody needed to write and pass income tax legislation, and it fell to the democrats to do it. It should be noted that 97 years ago, congresses and presidents preferred “tax and spend” over “spend and borrow”, i.e., getting as close to a balanced budget as they could. Naturally, wars (i.e., guns instead of butter) invariably gummed up the works both fiscally and financially. And it wouldn’t be long before the United States would find itself in World War I (and in need of much more revenue, which it got from the income tax).

    The new democrat president, (Thomas) Woodrow Wilson, did something unprecedented after he was inaugurated in March of 1913. He personally went before congress to exhort its members to finally settle the issue of how the federal government would be financed. This not only included the traditional revenue tool (tariffs)—but the government’s new revenue tool as well, i.e., the “power to lay and collect taxes on incomes, from whatever source derived”.

    It took some 7 months to work out the details, but the democrat party (with practically no help from the republican party, whose members passed the 16th amendment 4 years earlier) did in fact implement the 16th amendment by the end of September—President Wilson signing the new law at 9:10 PM in “the oval room of the Executive offices” on Friday, October 3, 1913…purposely not “until all the Custom Houses of the country had been closed for the day.”

    The democrat party’s control of 1913’s 63rd congress was: House: 67% & Senate 53%. The final votes were those of September 30th and October 2nd, i.e., the votes to adopt the House-Senate conference reports on the revenue legislation. The vote in the House was 58% yes, 24% no & 18% absent or not voting. The vote in the Senate two days later was 38% yes, 17% no & 45% either absent (mostly republicans) or not voting.

    The Revenue Act of 1913 (usually referred to as the Underwood-Simmons Tariff Act) was shepherded through the House of Representatives by democrat, Oscar Wilder Underwood, a representative from Alabama—Underwood wearing two indispensable hats—those of the House Majority Leader & of House Ways & Means Chairman during the 62nd and 63rd congresses (from 1911 to 1915). North Carolina Senator Furnifold McLendel Simmons was also a democrat, and the chairman of the indispensable Senate Finance Committee.

    The basic details of the first income tax act can be seen at http://en.wikipedia.org/wiki/Revenue_Act_of_1913. Said tax act planted the seeds for an untaxed working class that would in some 50 years (by about 1963) have grown into the largest and most prosperous middle class in global history—and become the foundation for all of America’s prosperity in the process. That is of course, until successive congresses and presidents (beginning with presidents Kennedy/Johnson in 1963/1964) decided to begin shifting America’s wealth from the middle class to the “long suffering” privileged class.

    It started slowly at first, with the top marginal federal income tax rate being cut from the long-standing 91% to 70% in the early 1960’s.

    The shrinking of the middle class (and massive redistribution of wealth to the privileged class) really and earnestly got underway in 1981 and 1986 when the top rate was cut even further, to 50% and 28%, respectively (while raising the bottom rate from 11% to 15%).

    There was an attempt to reverse course in 1990 (by the first Bush administration and congress) when the top rate was raised to 31%. George H.W. Bush called Ronald Reagan’s economic theory “voodoo economics” during the republican party primary elections of 1980. However, once offered the vice presidential spot on the party’s ticket, he apparently decided that it would be best to begin his own journey to the presidency without further criticism of “trickle down economics”.

    In 1993, the Clinton administration and congress raised the top marginal rate again, this time to 39.6%. Coincidentally or not, there was a major peacetime economic expansion—government figures showing the net creation of some 22 million American jobs. By 2000, the budget was finally (more or less) balanced, and monthly borrowing from the social security trust fund had finally been halted. However, the redistribution of wealth away from the middle class was still well underway. And by that time of course, the social security trust fund was owed $Trillions by the federal government.

    During the second Bush administration, the top rate was cut to 35% and America got involved in two overseas counterinsurgencies. The cut in the top rate and the two lengthy (and still ongoing) military deployments quickly drained the U.S. Treasury. Also, there was a net loss of jobs over the next 8 years. Finally beginning in October 2007, the stock market precipitously declined by over 50% and millions more American jobs were lost within the space of only 15 months. Middle class retirement accounts evaporated almost overnight. More $Trillions were owed to the middle and working class social security trust fund.

    Absent a large, prosperous and growing middle class (traditionally 75% of the U.S. economic base) and the creation of jobs HERE in the United States (primarily by small businesses which traditionally do 75% of U.S. hiring INSIDE the United States)—and absent a redistribution of wealth back to the middle class by lowering taxes on the middle class and small businesses to a single rate of no more than 10% below $350,000 and raising the top marginal rate for the privileged class back to 1980’s rate of at least 70% above $350,000—the U.S.’s middle class consumer-driven economy as we once knew it will simply cease to exist in the not too far distant future.

    Where has America’s once vibrant manufacturing base gone? Why…overseas, of course—mainly west and south!

    Said another way, the American voting electorate had better get over the FANTASY dreamed up for middle (and working) class gullibility by privileged class congresses & presidents (and by Wall Street & corporate America)—said fantasy being that by redistributing middle class and small business wealth to the privileged class and corporations (including banks), that the privileged class will somehow “trickle that wealth” back to the middle class and create jobs here in the United States.

    Together, fantasy & gullibility are a recipe for disaster. The thing is that the privileged class seems ODDLY OBLIVIOUS to what is happening. Somehow they don’t think that they need a constantly growing middle class and small business job base that enables upward mobility for the working class into the middle class…and upward mobility for the poor into the working class. Does the privileged class somehow think that they can exist for very long, with everybody else occupying an economic underclass? Well, we’ve got news for them. One day they’ll wake up and find the protection afforded by the U.S. Armed Forces reduced to nothing more threatening than a local neighborhood watch. Why? Because the middle class will be tapped out from being overtaxed, underemployed & unemployed—and there will no longer be sufficient revenue to support the cost of the finest military force in global history. Will China still be financing America’s armed forces? Of course (not)!

    While it is correct that privileged class corporations do in fact create jobs within the realm of their 25% of the economic base—virtually all of those jobs are created overseas where there is ultra cheap labor…NOT in the United States. The trickle down theories of “Reaganomics” (’81-’89) and its imitative stepchild, “Bushonomics” (’01-’09) have turned out to be dismal and tragic failures—massive “so called competitive” economic miscalculations that have succeeded only in tossing the once proud American middle class and its manufacturing base right into the maelstrom of the worst economic disaster to befall the United States since the Great Depression of the 1930’s.

    Does the American voting electorate have the intestinal fortitude to forego the “Reaganomic/Bushonomic” trickle down (“voodoo”) fantasy in favor of reality? We’ll see on November 2nd.

    Does the Obama administration and congress have the political courage (the guts) to truly reverse the course of American middle class decline? We’ll see what they do both before and after November 2nd.

    If another “1994” occurs—will John Boehner be another Newt Gingrich? We haven’t forgotten the Gingrich-Clinton fiscal and financial gridlock and endless Beltway shenanigans (even worse than today’s!).

    Will Mitch McConnell be up to emulating a Bob Dole…or will he be more like a Trent Lott?

    Fifty-three (53) days and counting…

    We’d flip our 50:50 coin, but…well…okay we will!

    Whoops! It slipped through a crack!

    Okay, okay…the democrats will still be in control of the House and Senate come midnight on November 2nd. Not only that, the Obama plan for letting the 35% top rate expire (i.e., returning to the Clinton era top rate of at least 39.6%) will become the new reality for America’s wealthy class. Will the middle class get its single rate of 10% below $350,000? Unfortunately not…but the democrats (especially if they are in lame duck session) will preserve the present rates and thresholds (brackets) below $250,000 (the president’s “line in the sand”) not later than December 31st at midnight.

    OKJack™Group™
    Middle & Working Class Disabled American Veterans
    We Paid the Dues that Aren’t Required!™

  87. SeaRation (Cpl E-4 retired)on 10 Sep 2010 at 5:53 pm

    Abraham Lincoln said, “You can fool all the people some of the time, some of the people all of the time, but not all of the people all of the time.”

    This is the lesson that is being learned by President Obama.

  88. Hubert Russellon 10 Sep 2010 at 8:57 pm

    OK Jack group
    Well said.

    When there is no wealth redistribution as has occurred since P Reagan, the middle class shrinks.

    When there is no wealth redistribution, one has revolutions as the lower classes can no longer stomach the absurd concentration of wealth at the top. China w/Mao. France in 1789, Russia in 1917.

    The very conservative Henry Ford had it correct when he raised wages to $5 /day saying that he could ,not sell cars if there were not enough people to buy them.

  89. CAPT Bill Ostag, USN (ret)on 10 Sep 2010 at 11:55 pm

    During the presidential campaign, Senator Obama was asked by a reporter how he could justify tax increases since virtually every tax increase resulted in a decrease in tax revenues. Senator Obama’s response was (I’m paraphrasing) that it was “…tax policy was not a question of revenue but of fairness…”, and he then went on to describe a manager of a hedge fund who made hundreds of millions, etc, etc.

    I’d say that pretty much describes President Obama’s “redistribution of wealth” mindset, it pervades all of his thinking, social and economic and is at the core of every legislative initiative. It is simplistic and naive, and history has shown that it does not benefit society but is incredibly harmful, economically and socially.

    Raising taxes is a disincentive for folks to better their lot in life. President Obama’s belief’s and any actions stemming from those beliefs will only make matters worse.

  90. Hubert Russellon 11 Sep 2010 at 9:41 am

    Capt Bill Ostag

    Sorry, but you are mistaken on tax increases resulting in tax revenue decreases.

    P Clinton raised taxes in 1994 . At the time, Sen Phil Gramm (R Tex) decried this move saying that the economy would collapse. Sen Gramm was wrong. Tax receipts increased and USA ended up with 3 years of budget surpluses.

    Then P Bush lowered taxes, especially on the rich. Check an almanac and you will see that tax receipts dropped trillions due to this tax cut.

    As someone has said, “Taxes are the price we pay for civilization!”

    Thanks for listening.

  91. Nobodyon 11 Sep 2010 at 12:33 pm

    The problem for the democrats is, they’re not going to renew the brackets.

    The lowest income on the ladder will see a 5% increase in their taxes, and the next lowest run will see a 10% increase in their taxes.

    You guys are about to find out exactly what Obama meant by “everyone has to put some skin in the game.”

    That’s why all the stories about the tax framework not being renewed have been pulled down.

    Yet, Obama isn’t discussing the framework. Only the top 2 rates.

    And why is that? Because, they don’t plan on keeping Bush’s tax framework in place, that raised the rate at which someone paid 21% from 43K to 131K. . . .

    Yep, everyone will see their taxes increase. . . .because the framework isn’t going to be renewed.

    This “analysis” says it’s “highly unlikely”. . . .yet, you don’t hear a single word being discussed about it, do you? Reuters pulled down their story, and so has Yahoo. . . .why?

    Why can’t you find any story that lays out the problem with not renewing the framework? Why hasn’t Obama come right out and spoken about leaving Bush’s “tax brackets” in place, hmmmm?

    Because he isn’t going to leave the framework in place. democraticunderground.com blogs are just now realizing it. . . .and finding out, even the lowest income earners are going to have “skin in the game.”

    Myself, I want the lowest income levels to pay income taxes. Noooo, not payroll taxes, I mean income taxes. I want everyone to put into the system, to feel the “pain” of all those gimme gimme entitlements everyone wants. Start feeling the impact of that gimme gimme mentality.

    So those making the princely sum of 16K a year will feel an increase of 800.00 per year, gone. Out of their checks. . . .to the federal government.

    It’s just now dawning on some of the democrats who supported Obama what a huge mistake he was. He talks a good game to you, but it’s what he doesn’t tell you that you really have to worry about. . . . . .just like his onion skin thin resume. It’s what wasn’t there that should have scared everyone. Leadership and private enterprise experience.

    And now, you will all feel the impact of that lack of knowledge. . . .you will all be in pain now. Welcome to our world.

    “Toldjaso” feels so trite to say, but so appropriate. . . .

  92. Nobodyon 11 Sep 2010 at 1:33 pm

    Clinton vs Bush tax amounts.

    Where our taxes are going to end up if Obama doesn’t renew the tax framework:

    Single making 30K, 8,400 – Bush, 4,500
    Single making 50K – 14,000 – Bush, 12,500
    Single making 75K – 23,250 – Bush 18,750
    Married making 60K – 16,800 – Bush 9,000
    Married making 75K – 21,000 – Bush 18,750
    Married making 125K – 38,750 – Bush 31,250

    Now, these are over simplified from the tax foundation – but it shows that Bush helped everyone across the board, which actually Obama is now acknowledging that Bush cut taxes for all, not just the wealthy.

    The problem is, as I said, Obama doesn’t plan on renewing the tax brackets.

    Think I’m kidding?

    http://seekingalpha.com/article/67479-comparing-income-taxes-clinton-vs-bush

    Look at that chart way down on the page.

    Under Clinton:

    0-$43,505 – you paid 15% under clinton, under Bush, 0-$16K paid 10%. Yep. . the lowest on the rung will now pay 15%, not 10%, a 5% increase on the poorest of the poor.

    Now, those at 43,050 to 104K under clinton, you were at a 28% bracket.

    Under Bush, those at 65K hit a 25% bracket. But under Clinton, if you were at 43K, you were at 28%. Are these rich people? You tell me. . . .

    Under Clinton, 104K put you into the 31% bracket. . . 131K under Bush only puts you in a 28% bracket. These sound like “rich” people? Clinton smacked you at 158K with 36%. Under Bush, 200K put you at 33%.

    Do these brackets sound like “rich” people to you? These are the brackets we are going back to if obama lets the framework expire.

  93. John Currellon 11 Sep 2010 at 3:09 pm

    NOBODY

    Some good stuff for MOAA to chew on -and include along the lines that Col Rodgers very thoughtfully suggested – and MOAA welcomed. thanks.
    jc

  94. Hubert Russellon 11 Sep 2010 at 3:54 pm

    Nobody
    Interesting but flawed thinking on the tax brackets. A 5% increase on 16 k income does not comae out to $800, because there are exemptions! I made almost 120 K and my taxes were $16K.

    USA is most undertaxed country in the advanced world. Overall rate was 15% in 2009.

  95. Leonard Tillersonon 12 Sep 2010 at 8:11 pm

    As a Life Member, I suggest that MOAA print facts and facts only. There should be no bias in any reporting. I suggest readers go to the Library of Congress and read the bills, the authors, the sponsors and the details of the bill proposed and/or passed. We do not need anyone giving their analysis using sources, like The New York Times! I will not refer anyone to become a member of MOAA until I see that this organization stays professional by being apolitical. There have been many occasions where a liberal tone of opinion has evolved..this article being one, and that is NOT why I am a member of MOAA. Please…stick to the truth and facts directly from the Bill itself.

  96. Matthew LoFiegoon 14 Sep 2010 at 1:04 pm

    Captain, as outlined above, we will strive to do just that and have already put measures into place that will help ensure that we accomplish that goal.

  97. OKJack™Group™on 18 Sep 2010 at 12:21 am

    During the course of our research, we continually think of ways to look at historical data—and then to subject it to analysis and synthesis.

    Recently, we decided to look at the U.S. Public Debt and the average top and bottom marginal federal income tax rates during periods of major federal expenditures.

    We examined periods of wartime—and in particular World War I (1917-18); World War II (1941-45); the Vietnam Counterinsurgency (1964-73) and the Afghanistan Counterinsurgency & Iraq Counterinsurgency combined (2001-10).

    We also decided to look at average annual jobs growth (or decline) nationwide, using the periods that such data are available, i.e., World War II and later. We used data from the Bureau of Labor Statistics for jobs growth (or decline) and for inflation—the latter when converting to 2010 dollars (such inflationary adjustment being necessary in order to compare “yesterday’s apples” with “today’s oranges”).

    The 16th Amendment to the Constitution (legalizing the federal income tax) was ratified in 1913 by 75% (36) of state legislatures nationwide…this, after being “on the road” for 4 years since 1909 (said amendment being sent “on the road” by the republican party). The first levy of the new federal income tax (by the democrat party) began in 1913, with a bottom rate of 1% and a top rate of 7% (a ratio of 1:7). Few Americans had an income tax liability 97 years ago. That’s because there was an $88,000 exemption for married couples ($4,000 in 1913 dollars). Also in 1913, import tariffs were the primary source of revenue for the federal government (as they had been for more than a century).

    During American participation in World War I (1917-18), the average bottom marginal income tax rate was 4%. On the other hand, the average top marginal income rate was 72%. The ratio was 1:18. In 2010 dollars, the public debt increased by 116% or some $113 billion during the war (again, in today’s dollars).

    Looking at World War II (1941-45)—the most expensive war in history (as well as the most devastating)—we found the average bottom rate to be 18.8%, with an average top rate of 89% (a ratio of 1:4.73). This worldwide conflict resulted in the U.S. Public Debt increasing by 425% and some $2.4 TRILLION (in 2010 dollars). The highest top rate during World War II was 94% (1944-45) on taxable incomes above $2.5 million (in 2010 dollars), or $200,000 annually at the time. The bottom rate during those 2 years (the height of the war) was 23% levied on the first $2,000 ($25,000 in today’s dollars).

    An average of 251,750 jobs per year were created during the years of World War II.

    The two preceding conflicts were primarily conventional in nature, and were also constitutionally declared by congress. Deployed forces returned to the U.S. at the conclusion of World War I—and even though American forces remained in defeated countries after World War II, there were no long counterinsurgencies to contend with.

    We went on to look at the counterinsurgency period in SE Asia (1964-73) as compared to the counterinsurgencies conducted in SW Asia (2001-Present).

    During the years that the U.S. Armed Forces were engaged in SE Asia (Vietnam, Cambodia, Laos), the average bottom rate was 14.2%, the average top rate 70.7% (a ratio of 1:4.98). During that 9-year period, the U.S. Public Debt increased by only 2.6% and some $57 billion in today’s dollars.

    An average of 1,990,000 jobs per year were created during the Vietnam War.

    Naturally, after looking at taxes, debt and jobs during the preceding conflicts, we were interested in looking at the data for the ongoing conflicts in Afghanistan and Iraq (about 9 years overall so far). The average bottom rate has been 10.5%, the average top rate 35.8% (a ratio of 1:3.4)—the lowest ratio and lowest average top marginal rate so far in our review.

    During these past 9 years, the public debt has increased by 88.6%—an increase of $6.4 TRILLION in 2010 dollars.

    An average of 45,778 jobs per year were LOST between the end of 2001 and August 2010—although through the end of 2008, there had been an average annual increase in jobs of 515,000 per year (since the beginning of 2002).

    The net jobs growth between 1993 and 2000 was 23,070,000 (2,883,750 new jobs per year on the average), while the top marginal rate was 39.6% (the expected top rate beginning in 2011)—the bottom marginal rate being 15%. On the other hand, during the period 2001-2008, net jobs growth was 1,843,000 (230,375 new jobs per year on the average or 92% LESS than the previous 8 years), while the top marginal rate was 39.1% (2001), 38.6% (2002) and then 35% (2003-08)…the bottom marginal rate being 15% (2001) and then 10% (2002-08), but the latter applying only to a token percentage on the bottom end (see next).

    Of course, rates hold more significance when their respective thresholds (brackets) are moved up or down, i.e., if there is a low bottom rate and also a low threshold, then the benefit to the taxpayer is less than if there is a high threshold attached to the low rate. Likewise, if there is a high top rate and also a high threshold, then the benefit to the U.S. Treasury is less than if there is a low threshold attached to the high rate.

    For instance, if the top rate is say, 39.6%, and the threshold for that rate is $1,000,000, then only the amount of taxable income above $1 million is taxed at 39.6%. Dropping the threshold to $250,000 yields an additional $297,000 to the U.S. Treasury (39.6% x $750,000).

    By the same token, if the bottom rate is say, 10%, and the threshold for that rate is $16,750 (and say, 15% is the marginal rate above that threshold), then only the amount of taxable income below $16,750 is taxed at 10%. Raising the threshold for the 10% bottom rate to $250,000 yields an additional $11,662.50 to the taxpayer [(15% – 10% = 5%) x ($250,000 – $16,750 = $233,250 subject to the 10% rate instead of the 15% rate) = $11,662.50)].

    While the $11,662.50 additional benefit to the bottom-rate taxpayer may not seem as significant as the $297,000 top-rate benefit to the U.S. Treasury—said additional $11,662.50 is going to be spent either by the individual taxpayer or by a small business where every dollar counts. Said spending is indispensable to a consumer-drive economy where 75% of the economic base lies in middle class small businesses (rather than large corporations and lucrative partnerships). On the flip side, the $297,000 benefit to the government (when multiplied many times over) will go a long way toward reducing the deficit—and in the long run toward reducing the U.S. Public Debt.

    After 29 years of unrealistic and unsustainable cuts in the top marginal rate, said national debt is presently $13.4 TRILLION with $2.6 TRILLION owed to the middle & working class Social Security Trust Fund (and another $1.9 TRILLION owed to the civil service retirement & disability trust fund; Medicare trust fund; the MILITARY RETIREMENT & HEALTH CARE trust fund & various other trust funds—all of these trust funds required by federal law to “invest” their surpluses in federal government securities…the “investments” then used to offset otherwise unfunded cuts in the top marginal rate).

    We think that the OVERALL historical average of 10% should remain as the bottom rate, and that said 10% bottom rate should be applied to the first $350,000 of taxable income (after exemptions & deductions) beginning in 2011…and that the OVERALL historical average of 70% should become the top rate, and that said 70% top rate should be applied to taxable income above $350,000.

    When the extreme downward trend in the top rate began during the Reagan administration (from 70% to 50% to 28%), there was no fiscal and financial reason for it (although there may have been a political reason to do so). America’s bills were being paid and American jobs were being created. Likewise, American millionaire’s were also being created…but apparently not as many as the Reagan administration would have liked.

    OKJack™Group™
    Middle & Working Class Disabled American Veterans
    We Paid the Dues that Aren’t Required!™

  98. OKJack™Group™on 19 Sep 2010 at 10:31 pm

    All one hears on the Sunday political talk shows is that the top marginal federal income tax rate just simply cannot be increased on privileged class (PC) folks by a PC congress and PC president being lobbied by PC lobbyists—and that if the lid IS lifted on the top rate that terrible things will somehow befall the middle class!

    We know that WE don’t pay the top rate because WE don’t have a taxable income anywhere near $373,650—the point at which the top marginal rate cuts in. So, we’re wondering just WHICH middle class the PC media keeps referring to—the middle class in Antarctica…or on the Moon perhaps…or maybe on Pluto?

    It seems that these PC talking heads and PC politicians don’t think terrible things have ALREADY happened to the middle class—by virtue of 1) budget deficits over the past 3 decades 2) a $13.4 TRILLION national debt 3) hand-over-fist borrowing even from overseas “benefactors” ($8.9 TRILLION) and 4) borrowing from just about every (so called) trust fund in sight…the latter to the tune of $4.5 TRILLION. Holding securities (in lieu of cash) in a trust fund is one thing…but when those securities represent empty IOU’s (future unfunded liabilities) because the cash has already been spent on current operations…well…that’s another thing altogether.

    The aforementioned $4.5 TRILLION (1/3 of the U.S. Public Debt) is “managed” by the Bureau of Public Debt through so called “intragovernmental debt holdings”. The latter includes $2.6 TRILLION owed to the middle and working class Social Security Trust Fund (58%), as well as $1.9 TRILLION owed to the 1) civil service retirement & disability trust fund (17%) 2) the Medicare trust fund (9%) 3) the MILITARY RETIREMENT & HEALTH CARE trust fund (8%) & 4) various other trust funds (8%). Again, this $4.5 TRILLION in nonexistent “cash” is called “intragovernmental debt holdings”. How clever!

    For whom do the aforementioned wonks, hacks & talking heads think that these $TRILLIONS were put in trust for? Them?

    Anytime one hears this kind of stuff, one might think that “down has become up” or “east has become west” or “black has become white”! As a matter of fact, the preceding is exactly the type of upside-down “logic” applied 3 decades ago when the progressive income tax system was simply turned on its head Hollywood style!

    An old tired refrain just keeps ringing out, i.e., raising taxes on the privileged class will somehow hurt the middle class…or…lowering taxes on the middle class will somehow hurt the privileged class! All of this ridiculous talk is meant to do only one thing—confuse the voting electorate. In other words, talking heads (and the politicians they interview) invariably engage in the age old diversionary practice of CONFUSION, i.e., inherently following the old dictum, “Don’t confuse me with the facts.”

    The reason for the present ongoing “PC media blitz” is because all of the wealthy talking heads on these shows will themselves have to pay 39.6% on each additional dollar of taxable income in lieu of the present 35%—when 39.6% becomes the new reality for the wealthy class on the morning of January 1st.

    Likewise, those members of the privileged class lobbying against the 39.6% top rate, and those members of the privileged class congress who will be voting on tax legislation between now and midnight on December 31st—will personally see an additional 4.6% come out of every additional (marginal) dollar and go directly to the U.S. Treasury.

    Naturally, we think that legislation lowering middle-class tax rates and raising corresponding middle-class tax thresholds should be passed before November 2nd (to include raising privileged-class tax rates and lowering corresponding privileged-class tax thresholds). But democrat and republican political cowardice will in all likelihood prevent that from happening. After all, when certain important legislation cries out for a vote BEFORE a mid-term election, said legislation generally never materializes (e.g., lowering middle-class taxes and raising wealthy-class taxes). On the other hand, when other certain important congressional action cries out for a vote AFTER a mid-term election, said action generally takes priority over almost everything else (e.g., giving the president carte blanche authority to unnecessarily invade another country, i.e., the pre-election 2002 congressional resolution to invade Iraq…the $1+ TRILLION war that was supposed to pay for itself from the sea of oil that Iraq sits on top of).

    Ever since 1981/1986 when congress voted to lower their own taxes from 70% (the average top rate since 1913…or more accurately an average of 68.6% for those 68 years) down to 50% (1982) and then down to 28% (1988)—they have all been avoiding the day when an economic meltdown (i.e., 2007-Present) would require that they vote to raise their own taxes again—and lower taxes on the middle class in the process. After all, as the middle class shrinks, so shrinks the number of middle class small businesses with a corresponding increase in unemployment, increase in the working class and increase in the poor class. Likewise, the middle class tax base shrinks (individuals and small businesses).

    In other words, the AMERICAN ECONOMY SHRINKS and AMERICAN PROSPERITY SHRINKS—which leads to all kinds of undesirable things, not the least of which is a shrinking capability of the U.S. Armed Forces to maintain its edge over opposing armed forces. That inevitably leads to “bad guys” testing U.S. military prowess to see what they can get away with. If America doesn’t have the economic power to support the immense cost of a cutting-edge military force that can adequately defend America and American interests abroad…well…who knows what could happen next.

    We’re often reminded of what Adolf Hitler, Hideki Tojo & Benito Mussolini tried to get away with in the years between World War I and World War II (using the worldwide Great Depression as a lever). The Germans, Japanese and Italians took the chaos of the post-World War I era and turned it into their economic-military expansion all across the globe. Giving “bad guys” an inch, leads to them taking a mile.

    Did Osama bin Laden and Ayman al Zawahiri know the vast economic consequences of what they sanctioned in 2001? Well, if they didn’t know then, they certainly know now. Those events and their aftermath (along with internal greed and avarice here in American itself) literally knocked the economic wind out of the United States of America—to the tune of multi-$TRILLIONS in both direct and indirect costs.

    The bottom marginal rate of 0% (1977-1986) was increased to 11% (1987) and then to 15% (1988-2001), while lowering the top marginal rate to 28% (1988-1990)—which was then raised to 31% (1991-1992) and then to 39.6% (1993-2000) before being lowered again to 39.1% (2001), 38.6% (2002) and then to the present top rate of 35% (2003-2010).
    http://www.taxfoundation.org/files/fed_individual_rate_history-june2010.pdf

    PC politicians and the PC media have been heard over and over chorusing the figure of a “mere” $70 billion per year as the “only” cost to the U.S. Treasury of leaving the top rate of 35% in place, i.e., the cost of not raising the top rate by 4.6% to 39.6% beginning in 2011.

    That being the case then, the federal government should really be looking at the cost of not raising the top rate by 35% to its historical average of 70%.

    If all the mumbo jumbo of “trickle down” and “Reaganomics/Bushonomics” is put aside (having failed dismally anyway)—the federal government should be able to raise the top rate to the historical average of 70% and generate $5.3 TRILLION in additional revenue over the next ten years, i.e., the 70% historical top rate – the 35% failed top rate = 35% (the appropriate historical rise in the top rate) divided by 4.6% per $700 billion in additional revenue over ten years = a factor of 7.6 x $700 billion = $5.3 TRILLION).

    We like that figure because the $4.5 TRILLION owed to the aforementioned trust funds (e.g., social security, military retirement, Medicare, etc.) could be paid back, thus transforming these various trust funds into so called “funded liabilities”, rather than leaving them as “unfunded liabilities”, i.e., rather than kicking the ball of debt down the road.

    Or if that very practical idea doesn’t seem to be persuasive enough, then said $5.3 TRILLION in additional revenue could be used to pay down 60% of the other 2/3 of the national debt that presently totals $8.9 TRILLION.

    Of course, if paying down debt or RE-funding depleted and formerly robust trust funds isn’t persuasive enough, then here’s another idea. Simply take that $5.3 TRILLION provided by the newly patriotic wealthy class over the next ten years, and simply erase the annual budget deficits for as far as the eye can see. After all, we’re talking about an additional $532 billion per year for the next 10 years on the average—IF the president and a simple majority in congress (269 of 535 politicians) can put patriotism (i.e., love of country) ahead of greed (i.e., love of oneself) just long enough to save the country they all profess to love just short of their love of God.

    Of course, that would mean that the decades-old “rule of 60″ (i.e., Rule XXII) that the Senate has imposed on itself be suspended just long enough to get something done inside the Beltway!

    OKJack™Group™
    Middle & Working Class Disabled American Veterans
    We Paid the Dues that Aren’t Required!™

  99. OKJack™Group™on 23 Sep 2010 at 2:48 pm

    Please dissect this yesterday’s video clip and devote one of your posts to all of the TAX BILGE that you might care to address: http://www.msnbc.msn.com/id/3036677/#39316659

    We’re primarily interested in the VIDEO’S CLAIMS that the following $multi-million firms and $multi-BILLION companies are classified as “small business pass throughs”, which pass company tax liability from the businesses themselves (the net profits) on to the individual tax returns of their various owners…the latter then supposedly receiving a HUGE TAX SAVINGS as to FICA and/or federal income tax:
    1. Bechtel Corporation – $31 BILLION in annual revenue in 2009 (largest engineering company in the U.S.; 5th largest privately owned company in the U.S.; 44,000 employees)
    2. Chicago Tribune (newspaper) – $4.2 BILLION in annual revenue in 2008
    3. Ferrellgas (propane supplier) – $2 BILLION in annual revenue in 2009
    4. Coorstek (technical ceramics; semiconductors) – $549 million in annual revenue in 2000
    5. Dead River Company (oil & propane delivery; systems maintenance) – $500 million in annual revenue in 2009
    6. McIlhenny Company (Tabasco sauce) – $250 million in annual revenue in 2007
    7. Fidelity Investments – $11.5 BILLION in annual revenue in 2009 (largest mutual fund groups in the U.S.; 38,000 employees; $1.5 TRILLION in assets under management)
    8. Enterprise Products Partners LP (gas & oil pipelines) – $25 BILLION in annual revenue in 2009
    9. Kohlberg, Kravis Roberts & Company (Wall Street firm) – $445 million in annual revenue in 2009
    10. Price Waterhouse Coopers (accounting firm) – $26 BILLION in annual revenue in 2009

    Can the following statement possibly be true, or is it also BILGE (also in the video clip)? John Boehner (House republican minority leader): “Well it may be 3%, but it’s half of small business income, because obviously the top 3% have half of the gross income for those companies that we would term small businesses.”

    As either alluded to or stated in the video clip—are there really HUGE TAX SAVINGS when filing with the IRS as an “S” Corporation or Partnership (as opposed to filing as a “C” Corporation)…or is this just so much additional BILGE?

    We think this ties in with your objective of clearing the air while congress debates whether or not to extend the present Bush-era marginal income tax rates for those with taxable incomes below $250,000 or above $250,000 (or both). So, any other possible BILGE in the video clip that you might discern and decide to discuss will, we’re sure, certainly be worth reading here on “Battle of the Bilge”.

    It is very possible that the real bilge going around is that which best confuses taxpayers and voters when they make their choices on November 2nd.

    Incidentally, sir, we think that your web log is far and away the most informative that we’ve seen of late…and it is associated with people we trust—those who are looking out for others, i.e., MOAA.

    OKJack™Group™
    Middle & Working Class Disabled American Veterans
    We Paid the Dues that Aren’t Required!™

  100. Matthew LoFiegoon 23 Sep 2010 at 2:59 pm

    Right now we’re looking into the claims brought up by MSNBC and a whole host of other tax and health care messages that have been issued this week. The barrage of claims from the left and the right is incredible, and so is the rhetoric.

    “It is very possible that the real bilge going around is that which best confuses taxpayers and voters when they make their choices on November 2nd.”
    Nail on the head, and it looks like everyone is a party to it.

  101. OKJack™Group™on 30 Sep 2010 at 9:48 pm

    We shall not mince words. The decisions by the democrat majority and the republican minority are indicative of the political pusillanimity that has reigned supreme in congress for at least the past three decades.

    The top marginal rate was rolled back by 42% (from 70% to 50%) to 28% beginning in 1988 by Messrs. Reagan/O’Neill/Dole/Rostenkowski and a majority in congress.

    Since that 1986 law was passed (and Speaker O’Neill immediately retiring from congress), successive congresses and presidents have individually and collectively lacked the political fortitude to get anywhere nearer than an additional 11.6% to the historical average top rate of 70%—the latter being the minimum top rate necessary to pay America’s bills and keep America out of debt.

    And even then, the top rate of 39.6% (28%+11.6%) did not endure—dropping to 35% after only eight years (at the beginning of the second Bush administration). Of course, 23.1 million net new jobs were created during that selfsame 8-year Clinton administration. The Bush administration’s 8-year job creation record was as dismal as the Clinton administration’s was robust.

    We’ve flipped our 50:50 coin and it comes up as follows: The Obama/Pelosi/Reid/Levin team (or an Obama/Boehner/McConnell/Camp team) and a majority in congress will most likely temporarily (or even permanently) extend the 35% top rate when the lame duck session of congress convenes after the November 2nd election (or after the new congress convenes on January 3rd…any new law being retroactive to January 1st).

    While acquiescing to the privileged class on the income tax issue, congress and the president will probably do what they have usually done (as at the beginning of the Bush administration), i.e., throw a bone to the middle class by perhaps adding a 5% bottom marginal rate or slightly raising the threshold for the 10% bottom rate (and perhaps slightly lowering the threshold for the 35% top rate).

    Of course, there is always the chance that a miracle of political courage & country-ahead-of-self patriotism may somehow take root and bloom on Capitol Hill and at the White House before midnight on December 31st.

    That miracle would mean America being able to pay its bills once again (i.e., diminishing the deficit), and even being able to pay down the U.S. Public Debt which presently flows in a river of red ink that is 13.5 trillion dollars wide and deep.

    Said another way, congress and the president may finally dispense with unproductive talk, and raise the top marginal rate to the historical average of 70% above $350,000, and opt for a single rate of 10% below $350,000 (10% being the historical average bottom marginal rate).

    Not only would these two rates and a single threshold of $350,000 enable the payment of America’s bills and pay down America’s debt—but the massive tax burden on the middle class would be lifted to the point that middle class small businesses and individuals can then significantly expand the middle class job base, thereby expanding opportunities for the working class and the poor class to be hired and then move up economically.

    Expanding the middle class would save it—and likewise save America in the process.

    OKJack™Group™
    Middle & Working Class Disabled American Veterans
    We Paid the Dues that Aren’t Required!™

  102. OKJack™Group™on 08 Oct 2010 at 11:01 pm

    It seems that there is in fact a new age “truism” that IS “true” after all, i.e., the short lifespan of a web log. Nevertheless, we’re going to try and help to “keep hope alive”—for this one anyway. After all, this particular web log has gotten more traffic than any other that we’ve seen on the MOAA web site.

    It goes without saying that in less than a month we’ll be participating in the U.S. congressional mid-term elections of 2010. To be decided by the voters (in all 50 states) are just which politicians of which political party will be filling 435 House seats, as well as 1/3 of the Senate, i.e., come January 3rd, when the new congress convenes its first full session. There will, of course, be a lame duck session shortly after November 2nd—which hopefully will accomplish what the democrat majority and republican minority made every possible effort to confuse the American voting electorate about before they packed their bags and flew home to their respective states.

    What was the confusion all about? Well, it was about the need for new income tax legislation to replace 8-year old tax rates and inflation-adjusted thresholds (i.e., brackets) that are set to self-destruct at midnight on December 31st…and that are likewise set to take a BIG bite out of the middle class, and a SMALL bite out of the wealthy class. All of this will happen unless congress extends or replaces the old tax rates/brackets.

    Naturally, if tax legislation MUST wait for the new congress to convene on January 3rd, new tax rates/brackets CAN be made to be retroactive to January 1st—which takes some of the edge off the urgency. Congress knows this, of course. And that’s why they went home without doing anything about the expiring George W. Bush era revenue laws.

    As for our small research team here at OKJack™Group™, the most important conclusions to come out of our analysis and synthesis of the following items are that all three of these items are inextricably tied together in one way or another: 1) Federal income tax rates/thresholds (i.e., brackets) 2) Net new middle class job creation [“creation” meaning the absolutely necessary continued expansion of the middle class and middle class small businesses] and 3) the U.S. Public Debt [33% of which consists of the $4.5 TRILLION in cash surpluses owed by the U.S. Treasury to America’s trust funds (yes, both the trust funds & their surpluses are real), e.g., social security ($2.5 TRILLION), Medicare, military retirement, military health care, etc.].

    Contrary to popular belief, more net new jobs were created during the single 4-year term of Jimmy Carter, than during the average of either of the 4-year terms of President Reagan (and yes, we’re well aware of the “legacy” that the Reagan Foundation is “dedicated to the promotion of”…to include the Reagan administration’s fiscal, financial and economic “legacy”). We conclude that the inextricable relationship between the net creation of jobs (and middle class expansion) during the Carter years and the top/bottom marginal income tax rates during the Carter years is no accident. That is, the Carter years’ bottom marginal rate was 0% (v. the rise in the bottom rate from 0% to 11% to 15% during the Reagan years)…the Carter top marginal rate having been 70% (v. the precipitous drop in the top rate from 70% to 50% to 28% during the Reagan years)—bearing in mind that the 70%/0% top/bottom marginal rates in the first year of the Reagan administration were carried over from the Carter years—and the net loss of 2,180,000 jobs (during Aug-Dec 1981 & Jan-Dec 1982) coming on the heels of the Reagan administration’s (and congress’s) Economy Recovery Tax Act of 1981 (signed into law on August 13, 1981, to take effect in 1982).

    What follows is a ranking of net new jobs created (source: BLS) along with top/bottom marginal income tax rates (source IRS)…looking back over 48 years at every presidential administration from John F. Kennedy/Lyndon B. Johnson (1961-68) through Ronald Reagan (1981-88) through George W. Bush (2001-08):

    #1 – CLINTON – an average of 11,535,000 net new jobs during each of his two 4-year terms.
    (1993-2000) Top Marginal Rate: 39.6%/Bottom Marginal Rate: 15% (by 2000, the Social Security Trust Fund surplus had finally topped $1 TRILLION for the first time, and borrowing from the SSA Trust Fund surplus was briefly halted—$1,049,445,000,000 in assets at the end of 2000 (so, $1.5 TRILLION was borrowed from the SSA Trust Fund during the George W. Bush years); the top rate of 31% enacted during the George H.W. Bush administration to replace the Reagan administration’s unsustainable top rate of 28% is found to also be unsustainable, and then raised to 39.6% in order to slow down government borrowing and lower the annual budget deficit)
    #2 – CARTER – 10,488,000 net new jobs during his one 4-year term [much of the net new job growth (beginning in 1983) that was credited to the follow-on Reagan administration is in reality the result of the delayed effect of Carter administration economic policies that the democrats could have taken credit for had Carter been reelected].
    (1977-80) Top Rate: 70%/Bottom Rate: 0% (ZERO PERCENT) (America’s bills were being paid on the top marginal end, and the low tax burden on the bottom marginal end allowed for continued expansion of the middle class and middle class small businesses)
    #3 – REAGAN – an average of 7,967,500 net new jobs during each of his two 4-year terms.
    (1981) Top Rate: 70%/Bottom Rate 0% (ZERO PERCENT carried forward from Carter administration)
    (1982-86) Top Rate: 50%/Bottom Rate: 0% (ZERO PERCENT continued from the Carter administration) (so called “landmark” income tax legislation signed into law on August 13, 1981, to take effect in 1982)
    (1987) Top Rate: 38.5%/Bottom Rate 11% (transitional threshold raises the bottom rate from 0% to 11%, and therefore adds to the tax burden of the middle class, slowing down expansion of the middle class and middle class small businesses)
    (1988) Top Rate: 28%/Bottom Rate: 15% (top rate is cut to an unsustainable 28% level, compensated for by borrowing and by higher middle class income taxes and progressively higher and higher middle class FICA tax thresholds; bottom rate rises again and this time to 15%, thus putting an even greater tax burden on the middle class, further slowing down expansion of the middle class and middle class small businesses (only 311,000 net new jobs are created in 1990, and 857,000 jobs (net) are LOST in 1991); so called “landmark” two-rate income tax legislation signed into law on October 22, 1986, to take effect in 1988)
    #4 – KENNEDY/JOHNSON – an average of 7,751,000 net new jobs during each of two 4-year terms.
    (1961-63) Top Rate: 91%/Bottom Rate 20%
    (1964) Top Rate: 77%/Bottom Rate: 16%
    (1965-68) Top Rate: 70%/Bottom Rate 14% (top and bottom rates are lowered—but the top rate is cut by 21 percentage points for the wealthy class, the bottom rate for the middle class being lowered by only 6 percentage points)
    #5 – NIXON/FORD – an average of 5,601,500 net new jobs during each of two 4-year terms.
    (1969-76) Top Rate: 70%/Bottom Rate: 14%
    #6 – George H.W. BUSH – 2,544,000 net new jobs during his one 4-year term (a “legacy” of the Reagan years).
    (1989-90) Top Rate: 28%/Bottom Rate: 15% (carried forward from Reagan administration)
    (1991-92) Top Rate: 31%/Bottom Rate: 15% (28% is unsustainable, and it is raised to 31% in order to cut borrowing and lower the deficit…and then raised to 39.6% in 1993 for the same reason, because 31% proves to be unsustainable)
    #7 – George W. BUSH – an average of ONLY 921,500 net new jobs during each of his two 4-year terms (an “imitation” of the Reagan years).
    (2001) Top Rate: 39,1%/Bottom Rate 15%
    (2002) Top Rate: 38.6%/Bottom Rate: 10%-15% (10% threshold is a mere “token” $12,000, cutting the bottom marginal end’s tax liability by ONLY $600)
    (2003-08 & expiring at the end of 2010) Top Rate: 35%/Bottom Rate 10%-15% [35% found to be unsustainable; 10% bottom rate found to have a low “token” threshold, the real bottom rate being 15%; and by 2010, the U.S. Public Debt found to have risen to $13.5 TRILLION ($11.1 TRILLION increase from $2.4 TRILLION (in 2010 dollars) in 1981 when Ronald Reagan was inaugurated]

    As a matter of fact, between the end of the Great Depression and the end of World War II, the last 1-1/2 terms of the administration of Franklin D. Roosevelt saw the creation of an average of 7,958,667 net new jobs (v. Reagan: 7,967,500)—1939-44 being a period when the top marginal rate ranged from 79% up to 94% (v. Reagan: 50% down to 28%).

    Our conclusion is that high top rates are best for America (with low thresholds) in order to pay America’s bills…and that low bottom rates are best for America (with high thresholds) in order to prevent a heavy tax burden on the bottom end from stifling the necessary continued expansion of the middle class (75% of America’s economic base being INSIDE the United States and CREATED by small businesses…NOT by corporate America and Wall Street which create jobs OUTSIDE the United States with their 25% share of the U.S. economic base).

    Likewise, when the top marginal income tax rate is cut to shift wealth (redistribute wealth, if you will) from the middle class to the (already) wealthy class, middle class expansion slows down and eventually grinds to a halt, e.g., 8,363,000 middle class jobs (net) LOST in 2008 and 2009 (and the small businesses associated with most of those jobs simply closing their doors and ceasing to exist).

    The result is that the traditional middle class generators of America’s wealth shut down, the U.S. Public Debt increases dramatically (i.e., annual budget deficits) and America’s trust fund surpluses are totally depleted to help mask the size of those deficits. The proof of all of this is staring us in the face…beginning slowly with the top marginal tax cuts of the Kennedy/Johnson years (91% to 70%)…and then picking up speed with the totally unrealistic and unsustainable top marginal tax cuts during the Reagan/George H.W. Bush years (70% to 28%)…and finally culminating in the economic free fall of the George W. Bush years, when an imitation of the Reagan years was instituted and the top marginal tax rate cut from 39.6% to 35%.

    At this point in history, we recommend that the top rate be increased to its historically traditional level of 70%, and that the historically traditional bottom rate of 10% remain in place. Naturally, because of the dire situation as to the U.S. Public Debt ($13.5 TRILLION) and the shutting down of the traditional middle class generators of America’s wealth—and the actual shrinkage of the middle class and small business economic base—we recommend a single threshold of $350,000 between the 10% and 70% rates. In other words, something drastic must be done to recharge and restart America’s middle class using the bottom end of the tax rate schedule—while at the same time bringing down the deficit and the national debt using the top end of the tax rate schedule.

    At the following link is another article that may or may not be BILGE: fair.org/index.php?page=4161 Regardless of its source, we don’t think that it is BILGE at all.

    Here is the introduction to said article: “Way back in 1983, corporate media helped sell the dubious notion that Social Security needed saving by a blue-ribbon commission (Extra!, 1–2/88). The panel—headed by future Federal Reserve chair Alan Greenspan—raised payroll taxes and the retirement age for the ostensible purpose of accumulating a large surplus to help finance the retirement of the baby boomers born between 1946 and 1964. That this surplus, loaned to the general federal budget in exchange for Treasury bonds, would also help to finance the Reagan-era tax cuts for affluent taxpayers was treated as a complete coincidence. Twenty-seven years later, the baby boomers are retiring on (delayed) schedule, and Social Security has accumulated the projected surplus—some $2.5 trillion. But now that it’s time for wealthy taxpayers to pay back the money that the Treasury borrowed from the Social Security program, suddenly Social Security needs “saving” once again. The new twist is that the use of the trust fund that had previously been the mechanism by which it was “saved” is now the chief indication that the program is in dire danger.”

    Referenced in the preceding article’s introduction is the following link to the Social Security Administration’s (SSA) tote board showing 2009’s $2,540,348,000,000 SURPLUS (i.e., $2.540348 TRILLION SURPLUS ) in the Social Security Trust Fund. Yes, there really IS such a “trust fund”: ssa.gov/OACT/STATS/table4a3.html

    Once you get into the SSA’s tote board, note that there was $667,257,000,000 in net social security CONTRIBUTIONS in 2009 v. 675,482,000,000 in BENEFIT PAYMENTS in 2009. When this happens (i.e., when benefits are more than net contributions), the “cash” in the trust fund surplus is supposed to take up the slack and kick in. However in order to RETRIEVE its cash, the SSA Trust Fund must REDEEM treasury instruments (the article’s referenced “Treasury bonds”). That’s because there is no actual cash surplus in the SSA Trust Fund. Why? Good question! Well, that’s because the federal government has borrowed it all for operating expenses…which in effect, masks the true extent of the annual budget deficit.

    We’ve always been told that the Federal Reserve System is supposed to be independent of the executive branch of the federal government…you know, independent of the president. However…was Mr. Greenspan actually “cooperating” with Mr. Reagan and the latter’s flawed view of macro/micro economics, when the top marginal income rate was cut from 70% to 50% (1982) and then to 28% (1988)? Perhaps Mr. Greenspan will tell us about this one of these days.

    The one thing that we do know is definitely NOT BILGE are the economic RESULTS of Mr. Greenspan’s advice and counseling to both congress and to the voting electorate of our great nation. To put it bluntly, Mr. Greenspan’s advice and counseling have apparently not been sound—and could even be termed “very scary stuff”.

    Another thing that we also know is NOT BILGE is that Mr. Greenspan strongly supported (and was present for the signing) of the Gramm-Leach-Bliley Act of 1999. However, we can’t post the photo here that showed just how happy he was to be there for the signing (along with others such as then U.S. senator, Phil Gramm and the present House minority leader, John Boehner). There is a second photo indicating that their happiness apparently shifted to pure joy after Mr. Clinton put pen to paper, and signed the congressional legislation into law a few moments later.

    To quote from a little known web site (which contains said photos): “How Sweet It Is (For The Few)—Gramm-Leach-Bliley Act of 1999 [passed by Congress in veto-proof form on November 4, 1999 (House 83.2% Yea & Senate 90% Yea) and signed into law by President Bill Clinton on November 12, 1999] conflicts with the anti-stupidity Articles, Sections & Clauses of this Constitution for the United States of America—Repealed those portions of the Glass-Steagall Act of 1933 that prohibited consolidating the operations of commercial banks (deposit banks), investment banks, securities firms and insurance companies into financial services conglomerates…thereby precipitating the subprime mortgage-backed securities meltdown of 2007-09 and still counting.”

    OKJack™Group™
    Middle & Working Class Disabled American Veterans
    We Paid the Dues that Aren’t Required!™

  103. Matthew LoFiegoon 11 Oct 2010 at 7:05 am

    Thanks Jack, and thanks for continuing to keep this discussion alive. You have helped to give us a great deal of information and I appreciate it. We’re playing a wait and see game with the elections, the congressional dances being played and all the other factors that are going into it. Unfortunately, there has not been any movement on the tax extensions so there hasn’t been much to report.

  104. OKJack™Group™on 07 Nov 2010 at 3:21 am

    We, a small research group of Veterans, four days ago sent a message encouraging Washington democrat and military-friendly representative, Adam Smith, to sponsor TRICKLE-UP income tax legislation during the lame duck session of the House—legislation that can easily be passed by a mere 51% of the House and likewise only 51% of the Senate [simply bypassing the obstructionist republican senate minority of 41% led by Mr. McConnell, while getting the jump on the upcoming obstructionist republican house majority (of a mere 9% or less) that will most likely be orchestrated by Mr. Boehner].

    This “McConnell business” of spending four irreplaceable years of OUR (i.e., your and our) LIVES attempting to hamstring the Obama (or ANY) presidency is similar to what happened when Mr. & Mrs. Clinton were individually or together being “investigated” by a republican “independent” counsel for 8 long and bitter years. All the republican party seems to desire is to GRIDLOCK America for the sake of its own wealth, power, privilege and control of our middle & working class Constitutional institutions, i.e., the House, Senate & White House (not to mention the supreme Court…aka Big Business’s legal department). And they keep harping on “saving social security”…which is one of the biggest diversions in the history of the republican party (or any political party). The Social Security Trust Fund is owed $2.5 Trillion in nice, crisp, clean greenbacks!

    Such legislation as we are encouraging would help mightily to create middle class jobs and Small Businesses—and then TRICKLE-UP middle class economic wealth created as a result thereof.

    After all, Reaganomic/Bushonomic TRICKLE-DOWN of privileged class (unsustainable 28% & 35% tax-rate-created) wealth to create jobs, Small Businesses and wealth for the middle class simply NEVER MATERIALIZED over the past 28 years—that is, except in the “fantasies and dreams” of the majority of the middle and working class voting electorate apparently. The latter have proved yet once again [as in ’94, ’96, ’98, ’00, ’02, ’04 (& almost in ’06)] just how much they are in denial about exactly how the American Dream is actually achieved, i.e., NEVER from the privileged-class top down…but ALWAYS from the middle/working-class bottom up! There is no free lunch [except for millionaires and billionaires paying a top marginal rate of no more than 28% (Reagan); 31% (Bush 41); 39.6% (Clinton) & 35% (Bush 43)]. Up until 1963, the top marginal rate was 91%, and one heck of a lot of middle class jobs were being created along the way, as a matter of fact (while America’s bills also got paid)!

    When any vote-toting or vote-slinging member of the middle & working class electorate says that privileged class-controlled Big Businesses create jobs from the top down…well…they are in denial as to where 75%-80% of America’s jobs and economic wealth really come from—and that is straight up from the bottom through the creation of middle class-controlled Small Businesses and middle class jobs!

    The U.S. progressive income tax system enabled America’s middle class to grow and prosper from 1913 to 1963 (shrinking thereafter). How did this prosperity occur? Well…the middle class paid little or no income tax during that half century—while the wealthy class paid ALL of America’s bills and minimized America’s debt (and DID NOT borrow from the Social Security and Military Retirement trust funds!).

    On the other hand, we middle & working classers certainly did our part. Right? Yes, definitely…by risking and sacrificing our lives and limbs, sight, hearing and mental & physical health on foreign battlefields through two world wars, the Korean Civil War (the north backed by China)—and numerous counterinsurgencies to include Vietnam, Iraq and Afghanistan.

    In the process of implementing our TRICKLE-UP income tax proposal, the middle class would reboot itself and open its doors to the working class…thereby opening the the doors of the working class to the poor who want to work at jobs besides being the “fry person” or “shake person” at a burger joint. Although frying potatoes and mixing milk shakes are honorable enough, these are not the same quality of family jobs that Big Business has for decades now, exported overseas to where 75%-80% of the consumers of Big Business’s products and services live and work (for guess who…Big Businesses).

    Middle & working class America has become but 20%-25% of the market for America’s Big Businesses—and likewise only 20%-25% of its job base! Because of this, the question that could easily be asked is whether Coca Cola, IBM, etc. are really “American” anymore. The answer to that question is a resounding “no”. They have become what is called “global”. And in the process, they hardly pay any U.S. business income taxes anymore! And of course, 75%-80% of their employees don’t pay U.S. individual income taxes either! One could say as a matter of fact, that the income taxes a Chinese employee of Coca Cola pays to the Chinese government enables China to loan money to the U.S. government to send out tiny little income tax refund checks that don’t mean a hill-of-beans to the average American!

    This is a ridiculous, unsustainable and downright messy situation that blurs the future of our great nation!

    We just want to emphasize the terms “global” and “Big Business”—as such so called “American” companies have net worths that are as much or more than some individual small countries. And Big Business’s CEO’s and boards of directors are more interested in the long-term health of their global corporations (and their investors, many foreign) than they are in the long-term health of the United States of America. That’s just the way of it.

    Apparently, however, the middle and working class voting electorate hasn’t figured that out yet. But then, look who is keeping them informed. Yes, we’re speaking of Big Business’s PR firm—none other than (collectively) the Big Business Media (and is that really a surprise?). After all, look at who controls television, radio and the internet!

    We encouraged President Obama, Mrs. Pelosi and Mr. Reid to pursue a “Revenue Act of 2010″ before the election—and it didn’t happen. That was a major miscalculation on their part in our opinion. Instead, something else happened. And we all know what that “something else” was, i.e., the beginning of what will soon be the worst gridlock to face “We the People” since Newt Gingrich faced off against Bill Clinton beginning in 1994 (Dennis Hastert inheriting Mr. Gingrich’s mantle as House Speaker and thereafter preventing Full Concurrent Receipt, for instance, from ever coming to the floor of the House for an up or down vote).

    And look at the “ride” that Bush/Hastert/Lott/Daschle(D)/Frist took us for…we, the middle class & working class…and particularly between October 2007 and February 2009 when we lost 54% of the value of our IRA’s and 401(k)’s…and most particularly when 6.5 million of us lost our jobs and closed the doors of our Small Businesses, many of those jobs and businesses lost forever!

    In our TRICKLE-UP proposal, there would be a single tax rate for middle class individuals and Small Businesses with taxable incomes (after exemptions/deductions and expenses, respectively) below $350,000—that single tax rate being a Reaganesqe (e.g., simple-to-understand) 10%, i.e., what has been the historical average bottom marginal rate since 1913. The present 10% threshold is a mere $16,750—nothing more than a “political token” or “crumb” thrown out by the Bush administration and republican congress in 2003—basically nothing more than a gimmick (similar, as a matter fact, to the gimmickry of small refund checks borrowed from China (or printed & minted) and sent out by the Obama administration during the past 22 months). The selling of the latter as “bona fide tax cuts” by the Obama administration has been…well…almost laughable.

    We call our proposal TRICKLE-UP, because middle class jobs would be created by middle class Small Businesses, and these Small Businesses would reboot and rebuild 75%-80% of the U.S. economic base (their present overwhelming slice).

    Those above the single threshold of $350,000 would (while benefiting from the $35,000 maximum income tax below $350,000) pay a top rate of 70% (the historical average top marginal rate since 1913). So, instead of the present unsustainable effective rate of 32% for the first $1 million in taxable income/net profits, the effective rate for that $1 million would increase to 49% (10% below $350,000 and 70% above $350,000).

    This 2-rate, single threshold tax rate schedule is the best of both worlds for the U.S. economy.

    That is, those individuals and Big Businesses making more than $350,000 would over the long-term pay down the $1+ Trillion deficit and the $13.5 Trillion U.S. Public Debt (and repay the $2.5 Trillion owed by the federal government to the middle and working class Social Security Trust Fund—$1.5 Trillion of that borrowed from the SS Trust Fund for federal operating expenses just since 2001). Those individuals and Big Businesses with taxable incomes/net profits greater than $350,000 would also repay the $2 Trillion owed by the federal government to America’s other trust funds, e.g., MILITARY RETIREMENT. In other words, $4.5 Trillion of the oft recited $13.5 Trillion U.S. Public Debt was borrowed during the past 30 years from trust funds what were never intended to be touched (yes, that’s why they call them “trust funds” in the first place, Mr. & Mrs. Middle & Working Class America). And one of the greatest burdens on these middle & working class trust funds over the past 28 years has been to pay for much of the unsustainable reductions in the top marginal income tax rate for the wealthy class.

    On the other hand, those making less than $350,000 would create the Small Businesses and 75%-80% of middle class jobs that would in turn create wealth for both the middle class—and for the wealthy class to share in as well—over the next 6-14 years.

    As America re-prospers from the dire economic prospects that it now faces…everybody would share in that rebooted prosperity in the long-term, i.e., share in America’s return to an economic glass that is full. For millionaires in the long-term, 51% net (49% effective tax rate) of a glass that is full or nearly full (1/1) is exactly the same as 68% (32% effective tax rate) of a glass that is only 3/4 full (also 51% net)—and certainly much more desirable than 68% of a glass that is but 1/2 full (34% net)—as U.S. middle class wealth and economic output appear to be (since at least 2007).

    Regardless, the wealthy class would not be able to hold on to and hoard (and gamble with) middle class wealth, as it has been doing for the past 28 years—when the top rate was cut by 60% [the traditional average of 70% down to 28% (Reagan), 31% (Bush 41), 39.6% (Clinton), 35% (Bush 43)]…while the bottom rate was raised by 65% (from an effective rate of 9.1% up to 15%…the present historical 10% bottom rate being of little or no use or benefit to the middle class and Small Businesses because of its present low threshold of a mere $16,750).

    If the lame duck session (still controlled by the democrats) and President Obama compromise by retaining the present 2003 Bush tax rates and brackets (thresholds)—then it will be obvious to us that neither the government’s wealthy class nor the private sector’s wealthy class (both of the triple “private-public-media” sector revolving door fame) really care what happens to the Unites States of America in the long-term.

    It is time for greed to come to a screeching halt!

    It is time for a resurgence of REAL patriotism—even if only that of the privileged class wallet, pocket book & purse genre. Otherwise, we all might as well kiss our proverbial you-know-whats goodbye—since we will no longer be able to foot the bill for the strongest and most effective U.S. Armed Forces that the world has ever known (and of necessity rightly so to be that strong!).

    OKJack™Group™
    Middle & Working Class Disabled American Veterans
    We Paid the Dues that Aren’t Required!™

  105. CDR JC West USCG(RET)on 12 Jan 2011 at 9:30 pm

    I encourage you to reread the earlier comments of Col Rogers. You are not only UTTERLY WRONG but in direct violation of your charter. You’ve spent altogether too much time inside the capitol beltway so you can no longer distinguish between the compromises you feel you must make with anonymous congressial staffers to accomplish your political objectives and the lies you must tell your members to keep them sending in money. Whining and wringing your hands and crying MEA CULPA does not constitute a correction.

  106. CDR JC West USCG(RET)on 12 Jan 2011 at 9:34 pm

    Sorry for the typographical error– the adjective is, of course, “congressional”

  107. Matthew LoFiegoon 13 Jan 2011 at 9:28 am

    Lesson learned and changes made in terms of tone and political prognostication, Commander. But I was not utterly wrong on the predictions, as we saw Congress extend the tax breaks, saw a special bill to help small businesses and there was no ‘Historic’ wave of tax increases on January 1st. I take great exception to the statement that I lied to members to get them to send in payments. The mission of this blog is to calm fears and correct inaccuracies that are being transmitted. If I were being dishonest for the purpose of membership dues, you would see a good deal of fear mongering and actual distortions.

    The current talk of Defense cutbacks and personnel benefits reductions mean that earned entitlements are under real attack, and that is being worked on by our Government Relations team.