The International Monetary Fund has finally stated the obvious: the United States lacks any “credible strategy” to stabilize its mounting debt — and our lack of restraint is now posing a threat to the world economy. The IMF does not mention President Obama’s decision to launch a third war and spend billions in Libya.
In the meantime, Obama is reportedly about to call for higher taxes. The failure of the Democrats to deal with the debt crisis and the decision to go to war in Libya will undermine the credibility of the Administration on the issue. Because of their failure to control congressional spending for years, the Democrats will now go into the next election with a demand for higher taxes and record spending. This is not to forget the wasteful and wild spending of George W. Bush. However, the Democrats had an opportunity to show greater fiscal control and anti-pork policies. They did not.
The IMF rebuke is well deserved. What is astonishing is that we have political system that appears immune from the disaster caused by leaders of both parties.
Source: FT
Blouise
It would be wise if everyone would remember the Era of Good Feelings and then 20 years later we had the depression of 1837. In the early 90s the .coms revolution began and here we are about 20 years later with a debt crisis. Currently it takes 2.4 years to pay off our national (secured) debt of 14 trillion if we spend $186,000 per second and 9.4 years to pay off our unsecured debt of 55 trillion at the same rate. If Liberals don’t wake up then we will see our country fall apart. The solution if what we did in the 1840s. High tarriffs and begin building everything at home. Not more taxes for the rich!
Blouise,
“I agree … I was typing with the 2 year old on my lap so was taking shortcuts thus “nunbnuts””
Using the grandchild as an excuse again, I see …
😀
Elaine M.
1, April 13, 2011 at 11:30 am
Blouise,
“Obama kept all the ol’ boys and those numb-nuts lacked the intellectual vision needed to solve the problems. Obama has no excuse as he was warned over and over again that failure to bring really smart people on board would result in failure. He is now reaping that which he sowed.”
**********
I don’t think those people are numb nuts. I think they are smart people with a perverted view of how our economy should work and who it should enrich. They are/were just taking care of their own kind. In addition, I think President Obama wants to get re-elected–and he knows where the money is. Think of how much money his 2008 campaign got from Wall
======================================================
I agree … I was typing with the 2 year old on my lap so was taking shortcuts thus “nunbnuts”
It would be wise if everyone would remember the Era of Good Feelings and then 20 years later we had the depression of 1837. In the early 90s the .coms revolution began and here we are about 20 years later with a debt crisis. Currently it takes 2.4 years to pay off our national (secured) debt of 14 trillion if we spend $186,000 per second and 9.4 years to pay off our unsecured debt of 55 trillion at the same rate. If Liberals don’t wake up then we will see our country fall apart. The solution if what we did in the 1840s. High tarriffs and begin building everything at home. Not more taxes for the rich!
Corporate Tax Holiday an Even Worse Idea the Second Time Around
April 11, 2011 at 5:15 pm
A coalition of large multinational corporations has launched a major lobbying campaign for a temporary “repatriation tax holiday” that would allow companies to bring foreign-generated profits back to the United States at a strikingly low tax rate of about 5 percent. They’re promoting the measure as a cost-free way to boost domestic investment and jobs — the same pitch that proponents used to sell Congress on a similar tax holiday enacted in 2004.
Amount of Foreign Earnings Reinvested Abroad Rose Dramatically After 2004 Holiday. But as we show in a new paper, the first holiday mainly benefited corporate shareholders, not the U.S. economy, and a second holiday would be an even bigger mistake. Far from being cost-free, it would expand deficits by tens of billions of dollars over the coming decade. And just as many companies responded to the 2004 holiday by shifting even more profits overseas (see graph), a second holiday would further embed the shifting of investment, jobs, and profits overseas as a major tax avoidance strategy — precisely the opposite of what its backers claim.
Here are our key findings:
* A tax holiday enacted in 2004 failed to produce the promised economic benefits. The evidence shows that firms mostly used the repatriated earnings not to invest in U.S. jobs or growth but for purposes that Congress sought to prohibit, such as repurchasing their own stock and paying bigger dividends to their shareholders. Moreover, many firms actually laid off large numbers of U.S. workers even as they reaped multi-billion-dollar benefits from the tax holiday and passed them on to shareholders.
* Repeating the tax holiday would increase incentives to shift income overseas. If Congress enacts a second tax holiday, rational corporate executives will conclude that more tax holidays are likely in the future. That will make corporations more inclined to shift income into tax havens and less likely to make investments in the United States. That’s why Congress, in enacting the 2004 tax holiday, explicitly warned that it should be a one-time-only event and should not be repeated.
* The claim that a tax holiday would increase domestic investment by freeing multinationals from cash restraints is extremely dubious. U.S. non-financial corporations currently have $1.9 trillion in cash and other liquid assets, the highest level as a share of total corporate assets since 1959. The ten companies lobbying hardest for a new tax holiday alone have at least $47 billion in cash and other liquid assets that could be used for domestic investments — without triggering additional tax liability.
* Some of the biggest beneficiaries of a tax holiday would be firms that have aggressively shifted income overseas. Companies in the technology and pharmaceutical industries have been particularly aggressive in shifting income abroad because they rely on intellectual property, which is relatively easy to shift to other countries as a tax avoidance strategy. Half of all repatriations from the 2004 tax holiday came from companies in these two sectors alone. The same corporations and sectors would stand to benefit disproportionately — and enormously — from a second tax holiday.
http://www.offthechartsblog.org/corporate-tax-holiday-an-even-worse-idea-the-second-time-around/
Bob From District9,
“No, from Ohio congressional district 9.”
Got it – I thought you were referring to the movie, “District 9.”
“Sorry, you did it so well it looked like you meant it.”
No problem – stick around long enough and you’ll see that sometimes, sarcasm rules the day.
I’m a little confused about, “In the meantime, Obama is reportedly about to call for higher taxes. The failure of the Democrats to deal with the debt crisis and the decision to go to war in Libya will undermine the credibility of the Administration on the issue. ”
I’m reading that as saying that the tax increase wouldn’t address the deficit. It seems to me, if we’ve got a problem with a deficit, raising income as well as lowering spending might be a good idea (of course I haven’t had time to read the proposed tax increases, so I won’t endorse them just yet).
I also wonder why we all like to pretend that we’re the only country when we’re discussing this sort of thing. I mean, why not go and look at countries that DON’T have a deficit problem, and see what they have in common, and borrow the policies that we can. Heck, why are we pretending this country doesn’t have a history? I bet if we look REALLY hard, we can figure out when the debt started to take off…
Smallguvguy
“After accruing $14,225,706,915,227, as of 12:27 central time 4/13/2011, I think that it is time we rid ourselves of the current batch of kleptocrats and give someone else a chance.”
Are you allowing for the fact that GW Bush left Obama nearly $12T of that debt?
Are you allowing for the fact that the growth in debt as a percent of GDP from WW2 till Jan 2009 was 100% under three anti-tax republican presidents?
Are you allowing for the fact that we have not yet recovered from a near depression that may yet turn into a full scale depression?
“Bob From District9,
Are you from the alien race? Oh, never mind …
Since you appear to be new to this world, allow me to clarify … my comment was meant to be sarcastic …”
No, from Ohio congressional district 9.
Sorry, you did it so well it looked like you meant it.
rafflaw,
You’ll appreciate Jon Stewart’s take on Ryan’s **cough, cough** courageous budget:
http://www.thedailyshow.com/watch/tue-april-12-2011/ryan-s-private-savings—republican-deficit-plan?xrs=share_copy
“The International Monetary Fund has finally stated the obvious: the United States lacks any “credible strategy” to stabilize its mounting debt — and our lack of restraint is now posing a threat to the world economy.”
Good for us. Not Obama should tell the IMF the US needs to concern itself with our problems, not their petty concerns. America’s debt would not be a big concern to the rest of the world if the rest of the world had not been feeding off the US for decades. Time for the US to stop being a dinner plate for China etc.
The debt is not the crises, the debt is a symptom. The real crises is unemployment. With an unemployment rate over 15%, that’s U6, the real unemployment rate, we are in a domestic crises that outweighs any concern with the IMF. Until we bring down unemployment, below 5% real (U6), everything else is a joke. A bad joke.
Ryan and his budget are ideologically driven, not economically. He and his followers have no real concern for the American worker.
See http://www.shadowstats.com for the unemployment rates.
Elaine M,
“For those who may have missed this Vanity Fair article written by Joseph Stiglitz–which I previously posted on another thread:”
Thanks for reposting as I forgot where else you posted it 🙂
Bob From District9,
Are you from the alien race? Oh, never mind …
Since you appear to be new to this world, allow me to clarify … my comment was meant to be sarcastic …
After accruing $14,225,706,915,227, as of 12:27 central time 4/13/2011, I think that it is time we rid ourselves of the current batch of kleptocrats and give someone else a chance.
For those who may have missed this Vanity Fair article written by Joseph Stiglitz–which I previously posted on another thread:
Of the 1%, by the 1%, for the 1%
Americans have been watching protests against oppressive regimes that concentrate massive wealth in the hands of an elite few. Yet in our own democracy, 1 percent of the people take nearly a quarter of the nation’s income—an inequality even the wealthy will come to regret.
By Joseph E. Stiglitz
Vanity Fair, May 2011
http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105
Excerpts:
It’s no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone. All the growth in recent decades—and more—has gone to those at the top. In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran. While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow.
Economists long ago tried to justify the vast inequalities that seemed so troubling in the mid-19th century—inequalities that are but a pale shadow of what we are seeing in America today. The justification they came up with was called “marginal-productivity theory.” In a nutshell, this theory associated higher incomes with higher productivity and a greater contribution to society. It is a theory that has always been cherished by the rich. Evidence for its validity, however, remains thin. The corporate executives who helped bring on the recession of the past three years—whose contribution to our society, and to their own companies, has been massively negative—went on to receive large bonuses. In some cases, companies were so embarrassed about calling such rewards “performance bonuses” that they felt compelled to change the name to “retention bonuses” (even if the only thing being retained was bad performance). Those who have contributed great positive innovations to our society, from the pioneers of genetic understanding to the pioneers of the Information Age, have received a pittance compared with those responsible for the financial innovations that brought our global economy to the brink of ruin.
Some people look at income inequality and shrug their shoulders. So what if this person gains and that person loses? What matters, they argue, is not how the pie is divided but the size of the pie. That argument is fundamentally wrong. An economy in which most citizens are doing worse year after year—an economy like America’s—is not likely to do well over the long haul.
**********
Alexis de Tocqueville once described what he saw as a chief part of the peculiar genius of American society—something he called “self-interest properly understood.” The last two words were the key. Everyone possesses self-interest in a narrow sense: I want what’s good for me right now! Self-interest “properly understood” is different. It means appreciating that paying attention to everyone else’s self-interest—in other words, the common welfare—is in fact a precondition for one’s own ultimate well-being. Tocqueville was not suggesting that there was anything noble or idealistic about this outlook—in fact, he was suggesting the opposite. It was a mark of American pragmatism. Those canny Americans understood a basic fact: looking out for the other guy isn’t just good for the soul—it’s good for business.
The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn’t seem to have bought: an understanding that their fate is bound up with how the other 99 percent live. Throughout history, this is something that the top 1 percent eventually do learn. Too late.
“Don’t forget Medicaid … those ungrateful and lazy recipients are the first to get the boot off the government teat.”
The great majority of medicaid recipients are elderly in nursing homes and the handicapped.
Such a showing of concern by you to boot the elderly out of their nursing homes, and let the handicapped fend for themselves.
The projected “budget” by Paul Ryan is the final straw on the economic camel in this country. If allowed to be implemented, the disparity between rich and poor will climb even higher and we will grow closer to real battles in the streets. Very sad.
Swarthmore,
“Ryan gets rid of Medicare.”
Don’t forget Medicaid … those ungrateful and lazy recipients are the first to get the boot off the government teat.
Elaine M,
“And how about Joseph Stiglitz too?”
Absolutely.
“I wonder where I’d be now if I failed to pay my income taxes–even for one year.”
When I was unemployed, I had to supplement my lavish unemployment compensation with my retirement plan the first year. Trust me, the IRS was all over me like white on rice.
We are mere peons whose sole purpose is to ensure that we are run through the grinder so the wealthy can reap the benefits.
Elaine, I don’t think we are there until the tea party wipes out the unions and Ryan gets rid of Medicare.