Skip to comments.Bernanke Urges Congress to Renew Bush Tax Cuts
Posted on 07/23/2010 5:16:24 AM PDT by maddog55
Federal Reserve Chairman Ben S. Bernanke dropped a major bombshell on Democrats seeking massive new revenues to narrow the deficit, announcing Thursday that he favors preserving the Bush administration tax cuts in order to help a faltering U.S. economy.
In the short term I would believe that we ought to maintain a reasonable degree of fiscal support, stimulus for the economy, Bernanke told the House Financial Services Committee. There are many ways to do that. This is one way.
Bernanke's statement put him directly at odds with White House officials and House Speaker Nancy Pelosi, who favors raising taxes on wealthy Americans by letting the tax cuts the Bush administration passed in 2001 and 2003 expire.
Bernanke's views also conflict with those of his predecessor, Alan Greenspan, who just last week told Bloomberg TV's Judy Woodruff that lawmakers should allow the Bush tax cuts to expire as scheduled at year's end.
Greenspan conceded however that doing so probably would slow growth.
Bernanke emphasized the importance of giving the economy a boost. But he also told the House that dealing with the deficit, which has ballooned during the Obama administration, remains a major consideration.
We need to be taking steps to reassure the American people and the markets that our fiscal situation is going to be well controlled, Bernanke told the committee members. That means that if you extend the tax cuts, you need to find other ways to offset them.
Bernanke's comments came on a day when the Dow Jones Industrial Average jumped 201 points, in part on reports of strong corporate profits.
(Excerpt) Read more at newsmax.com ...
Translated: "We're not going to break your kneecaps after all. We're just gonna kick you in the nuts instead. Oh, and maybe poke you in the eyes and...."
Um...how about getting rid of the income tax and replacing it with a national sales tax, 25% across the board? It’s none of the government’s business if I sell my gold at a “profit”, even though in reality the dollar fell by a reciprocal amount and it wasn’t really a profit.
I often use the example of bartering as a way to show how stupid the idea of an income tax system really is. Scenario: If I were to paint your fence and you offered in exchange a pair of Nickelback tickets upon finishing, how the hell should the government be involved in this particular transaction? Why are they entitled to 10-30% of the face value of the tickets?
First of all, tax cuts increase revenue, so there is no need to offset them. But if you insist, how about laying off about 10% of the federal government workforce.
The fact that the economy didn't recover wrt jobs puts Obama in a bad situation. If those tax cuts expire(Obama raises those taxes in effect) , and the economy stays bad or gets worse, this will put an end to the democrats long standing myth that :” Clinton's tax increases saved the economy and the Bush tax cuts destroyed the great Clinton boom. ” . Yet, Obama has got himself into a rhetorical political trap. He can't cut the the upper income taxes now but if he doesnt it could hurt his chances in 2012.
I will say it over and over. Make Obama own the unemployment and debt. His progressive leanings and supporters will not allow him to fix them (together.) If he hires more government workers, he runs up the debt. He can't win this one, and every day that goes by voters want to hear the 'it's Bush's fault' excuses less and less.
Wow, I agree with Ben.
As each demographic realizes the personal hit they are taking because of administration policies, they start
questioning the hopeandchange of the last 19months.
And it don’t look so good.
Obama’s in a slow bleed. His supporters are quietly slinking into the shadows and the bumper stickers
are coming off.
I am so fricken sick of hearing the only the wealthy benefited from the Bush tax cuts. I have pasted a perfect example of how they work. I changed beers to sodas, as I use this example in my high school business and personal finance classes.
A brilliant explanation of our tax system using actual percentages, the impact of a tax cut, and the public reaction that everyone should be able to understand.
Suppose that every day, ten men go out for soda and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, thats what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. Since you are all such good customers, he said, Im going to reduce the cost of your daily sodas by $20. Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes, so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his fair share?
They realized that $20 divided by six is $3.33. But if they subtracted that from everybodys share, then the fifth man and the sixth man would each end up being paid to drink his soda. So, the bar owner suggested that it would be fair to reduce each mans bill by roughly the same amount, and he proceeded to work out the amounts each should pay.
And so -
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.
I only got a dollar out of the $20,declared the sixth man. He pointed to the tenth man, but he got $10!
Yeah, thats right, exclaimed the fifth man. I only saved a dollar, too. Its unfair that he got ten times more than I!
Thats true!! shouted the seventh man. Why should he get $10 back when I got only two? The wealthy get all the breaks!
Wait a minute, yelled the first four men in unison. We didnt get anything at all. The system exploits the poor!
The nine men surrounded the tenth and beat him up. The next night the tenth man didnt show up for drinks, so the nine sat down and had sodas without him. But when it came time to pay the bill, they discovered something important. They didnt have enough money between all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.
David R. Kamerschen, Ph.D.
Professor of Economics
University of Georgia
For those who understand, no explanation is needed. For those who do not, or will not, understand, no explanation is possible.
More Keynesian Khaos. Keynesians are so conflicted about printing money. They find it easy to print a little all the time, but somehow it is different when they print too much. It is financial cocaine to them. They refuse to acknowledge that it is theft of wealth by dilution.
To have a deliberate ‘targeted rate of inflation’ is to have a deliberate rate of theft from all of us. Even 2% a year adds up. In the almost 100 years of the Federal Reserve, the dollar, as valued by the price of gold, has gone from $20/oz to almost $1,200/oz. The dollar has been inflated by a factor of 60x! Yet, the answer is more “liquidity”, more “fiscal stimulus”, more borrowing that is bought by the Fed and put on their “balance sheet”.
We cannot print our way to prosperity any more than we can feed more people by cutting our pizza into smaller slices.
Sorry in advance for the multiple posts on this subject, but, at risk of redundantly repeating myself, I am sooo sick of hearing that only the rich benefit from the Bush tax cuts I could puke until my shoes exit through my mouth.
Here’s a great article and I will be posting a real calculation later today.
I am not in the Obama or DemocRATic defined rich group. Yet my taxes are set to increase by $6,000. I will lose $1,500 in child tax credit, rate increase of $2,500 and marriage penalty. Also, potential college tuition credit is gone.
First of all, Geithner has already announced the year-end
expiration for the tax cuts. But the problem for them is more image than anything else. Bush was excoriated by the left-wing going into spasmic paroxsyms of epileptic intensity at the mere thought of implementation. Tax cuts have come to symbolize everything Democrats hate about Republicans and no matter how effective maintaining the status quo may be, they won’t ever get themselves to extend it.
"Abandon ship ! ! !"
Dr. Kamerschen says he did NOT write that piece and does not know who did. Someone in internet folkloreland decided the tax story sounded better if it was written by a PhD.
I know some folks here are not snopes.com fans, but they do get a few things right.
They’ve traced it back to a letter to the editor in 2001, but that may not be the origin.
Regardless of who wrote it, the content is what is more important.
That’s awesome! Thanks for sharing it!
His rectum is on fire just like the rest of these slimes.
I love that example although I have seen some of the variations before. It is a very instructive tool that I have and still need to share with one or more of my lmore liberal friends. Educating the masses, one individual at a time. Some of them are getting it. Shame though, they’ve been pablum fed a steady diet of AP, PBS, left wing dogma and have not had their eyes fully open for some time.
The first Bush tax cut I received in August of 2001 for $700. I immediately went out and made sure I spent it (or most of it) in retail businesses within 5 miles of my home. That was the intent of a real stimulus, get the cash flowing in your communities. If I can figure that out, what is so hard? The bigger businesses did much the same thing on a larger scale.
- July 22, 2010
White House Spent $23M of Taxpayer Money to Back Kenyan Constitution That Legalizes Abortion, GOP Reps Say
Rep. Chris Smith of New Jersey cited a report by USAID that estimated more than $23 million in U.S. taxpayer funds have been spent on the referendum on the proposed constitution, which would legalize abortion in the country for the first time
I feel for you. It will affect us all.People get so lost in the stick it to the rich beat that they forget how much it will hurt everyone.
I’m one of the “stinking rich” (just over Obama’s official rich limit). I paid 6 figures in state and local taxes last year, and my accountant told me to expect a 15% increase this year. Limited write offs and no college financial aid package for me, I make too much. Yet when I work extra to help pay college tuition, I have to give over 1/2 of every dollar I bring in to the tax man. Doesn’t pay to work anymore, but it does pay not to work....
The tax increase will hurt me - a lot. But it will hurt the person I would have hired to clean my house, the lawn service I would have hired, the car dealer I would have bought a new car from etc... a whole lot more. And that is how you kill an ecomony.
I would lay off 30%, and completely eliminate the Dept. of Energy and Education for a start.
Oh wait, this is coming from the same idiot that does not one the Fed to be audited; this is coming from the same idiot that wants another Stimulus, etc. Riiiiiigggghhhht........=.=
Bernanke has always been careful not to comment on tax policy hasn’t he?
Didn’t he basically cay - he’s the money supply guy - the interest rate guy - and tax policy belongs to the legislators?
So - Pelosi’s insanity and Greenspan’s continued slide into liberal la-la land (no doubt due to too much time spent w/ Andrea Mitchell) must have really ticked him off?
“Tax cuts have come to symbolize everything Democrats hate about Republicans and no matter how effective maintaining the status quo may be,”
Isn’t that funny? Considering that was one thing JFK did quite well?
If they were smart they would have owned that one for themselves.
Of course- if they were smart - they’d by conservatives.
The government thinks I now make too much and should share my wealth. Never mind that my decision is to share my wealth with my four children in college. The government is going to tell me how to share my wealth. So what will I do?
My plan is to avoid tax but sticking as much money into my 401(k). This will save me on progressive tax rates of 35% or higher. Then I will borrow as much as possible for education costs. Borrowing costs are historically low. I will pay far less in interest than I will in tax. Some student loans are free and I can borrow from my 401(k).
Good ideas. We are going to attempt to pay cash, but as I have 3 kids, at least 2 of whom are bound for grad school and beyond, the kitty will give out at some point. I just wish I could pay for my kids education, not my kids and 4 others as well. (At lease by my choice, I am helping my son’s best friend with his education as well)
When I have to make twice what I need just to cover taxes, it gets pretty discouraging. Good luck with your kids and congrats to your wife!
I agree the content is important, but it makes conservatives look careless when people make up things that can easily be fact checked by the lefties.
They can say, “See, these people just make things up and put them on the web. How can we trust anything they say?”
I think accuracy and proper attribution are very important. Especially if you are giving this to students. It’s embarrassing when a student says, “Mr. Cyclone59, I looked it up. That guy didn’t write it.” A teacher doesn’t want that.
Also, there are tons of sayings attributed to Lincoln that were written by various people who decide to make them have more impact by tacking Lincoln’s name on them.
“A good story in the defense of conservatism is a great story.” - Abraham Lincoln, 1867.
The Democrats will hold out hope of renewal to get votes. There is not a chance in the world that the Deficit Commission will recommend that ANY tax cuts.