Prediction: There will be no compromise on the Bush tax cuts

[Sbane]

I agree with sbane, coporate taxation levels in the US are a sick joke. But the left-wing would shoot down any serious cuts to it. "Rich corporations don't need a tax cut now!".

That'd have a lot larger effect on the economy though than extending personal income tax rates at any level, not just the top bracket.

Let me understand... You think the current levels of taxation in the USA are too high ?

On corporations they certainly are. On the people too we have a high level of taxation, which a lot of well connected people/companies can avoid due to loopholes. In addition we waste a crap ton of money on defense projects and other corporate welfare. Medicare advantage is another such welfare scheme. Our military is overextended. Some things America does, like trying to provide defense to the entire world, is based on a 1950 perspective of the world. That needs to change. Europe needs to start spending way more on defense.

Good thing they're flush with cash right now. We've tried this trickle down crap for 30 years now and it hasn't done much for the median citizen. Getting back to sane Clinton levels of taxation would be a start toward sanity, but omg teh socilizm!!!11, Granted, we could certainly cut a TON of waste in healthcare and military as you point out, but fiscal sanity cannot emerge solely on the spending side.

I agree with you that we need to both cut spending and increase revenue. They both need to be done simultaneously. I don't know if the political parties are mature enough to handle that though.

[True Federalist (진정한 연방 주의자)]

not sure how 1-2 years of tax cuts is going to spur economic growth.  investments usually take more than 1-2 years to start paying off.

once again, Obama is short-sighted and is simply trying to increase short-term demand.  What is needed is a more realistic long-term plan to reshape the way the country runs:

1)  10 year plan to end dependence on foreign oil

You're going to get the US to drastically cut its consumption of oil in only ten years?  How, a $5/gal gasoline tax, because that's about the only way to do it.  There isn't enough accessible oil that could be put into production in the United States to get us off of using foreign oil in ten years, even if drillers didn't have to worry about any permits or environmental impacts at all.

I’ve posted several times that Obama should have used $500B of the stimulus to:
1)   Expedite the licensing and subsidize the building dozens of new nuke plants, so that we’re not using natgas to produce power
2)   open up drilling all over the country for natural gas, the U.S. is the Saudi Arabia of natgas.
3)   Based on calculations of how quickly natgas production can be ramped up, mandate a phase in of all cars sold in the U.S. to run on something other than gasoline (natgas and/or electricity).  If we approach this as we did the Apollo program, the last new car to run on gasoline sold in the U.S. would be sold in 2020, at the latest.  Converting a car to natgas costs a bundle, but building a new natgas powered car costs the same as a gasoline powered car.
4)   Expedite land use for many more natural gas pipelines.
5)   Mandate all new gas stations include natgas pumps, and mandate oil company owned gas stations to start to convert some of their pumps.
6)   The $700B/year we spend on foreign oil would start to be spent in the U.S., which would be a HUGE economic boost to the U.S. and would create millions of jobs (pipelines, nuke plants, traders, etc, etc, etc.).  It would also keep money out of the hands of those who wish us harm.

The plan is doable with very little, if any, increase in prices for the consumer.  In fact, it would probably lower consumer energy bills.

I'm an advocate for more nuclear power, but building nuclear plants will do nothing to lower petroleum imports.  Petroleum is not much used for electrical power generation, and where it is used, it is as a supplemental source to deal with quick spikes in electrical demand in areas where access to natural gas is not available.  Building additional nuclear plants would displace coal generation, and to a lesser extent natural gas generation.

There are plenty of reasons beyond lack of access why NG cars haven't taken off.   It's much the same reason why diesel cars haven't taken off in the US.  At the price of fuel in this country, their economics have only paid off for vehicles that drive considerably more than the average.  (Incidentally, back when I was last car shopping, back in 2000, I considered buying one of the VW diesel cars.  However, I determined that given how much I drive, the savings in fuel costs would be less than the added expense in buying the exact same model of VW with a gas engine, so I dropped the idea.)  The current dip in NG prices due to the unexpected increase in NG supply has made the economics more favorable, but that will be a temporary phenomenon until the market adjusts to supply and demand.

The projections for NG availability are impressive but optimistic.  Fracking requires considerable amounts of water, so even if the equipment needed for every proposed project was available, the water wouldn't be, especially out west.

I'm surprised you advocate a government mandate to allow nothing but NG and electric cars to be sold. I don't.  Besides the problem that even with increased production, such a mandate would cause the demand for NG to rise to the point where NG would not be cheap as it is now, I'd much prefer using less heavy-handed and authoritarian methods to reduce oil consumption and allow the market to determine which method would be the best way to reduce oil consumption.  A petroleum tax would do that as it would discourage petroleum use and not lock us into pursuing a single silver bullet as its replacement.

[True Federalist (진정한 연방 주의자)]

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Consumption is the driver of our economy, and I don't trust the Federal government to both introduce a Federal sales tax while reducing or replacing the Federal income tax.

Demand doesn’t drive the economy, rather increased efficiency (e.g. industrial revolution) is what drives the economy.

Increased efficiency only helps the economy as a whole if it allows for increased demand.  While a switch to a sales tax would be largely economic neutral, I don't trust that the government would do a switch, but would instead do an addition in a manner that would reduce demand and thus harm the economy worse than many other forms of tax increases would.

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We need to stop wasting Federal dollars on the manned space program and the Federal role in education should be limited to helping the States develop effective curricula.  The Federal government plays too much of a role in education, not too little.

There is no reason to waste the current capabilities of NASA.  The space station doesn’t provide much science, but it could be a treasure trove in teaching value if used for school math and science programs.

Not really.  You wouldn't happen to be an independent contractor for NASA or one of its suppliers would you?  NASA's efforts in the schools to date have been mostly PR to push for more government pork. While not totally worthless, there are better ways to fund education initiatives than to funnel them through NASA.

[Swing low, sweet chariot. Comin' for to carry me home.]

I'm an advocate for more nuclear power, but building nuclear plants will do nothing to lower petroleum imports.  Petroleum is not much used for electrical power generation, and where it is used, it is as a supplemental source to deal with quick spikes in electrical demand in areas where access to natural gas is not available.  Building additional nuclear plants would displace coal generation, and to a lesser extent natural gas generation.

I never said the building of nuke plant would drive down imports, rather we need more nuke plants to: 1) free up the natgas used in some power generation, 2) increase grid capacity to accommodate more electrical cars.

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There are plenty of reasons beyond lack of access why NG cars haven't taken off.   It's much the same reason why diesel cars haven't taken off in the US.  At the price of fuel in this country, their economics have only paid off for vehicles that drive considerably more than the average.  (Incidentally, back when I was last car shopping, back in 2000, I considered buying one of the VW diesel cars.  However, I determined that given how much I drive, the savings in fuel costs would be less than the added expense in buying the exact same model of VW with a gas engine, so I dropped the idea.)  The current dip in NG prices due to the unexpected increase in NG supply has made the economics more favorable, but that will be a temporary phenomenon until the market adjusts to supply and demand.

1)   NGVs (nat gas vehicles) are no more expensive to mass produce than gasoline cars. The reason why they now cost $5-10k more is due to return on car company investment.
2)   NG has always been more cost effective per energy unit than gasoline.
3)   It’s lack of refilling infrastructure that is keeping NGVs from taking off, but the proposal addresses the infrastructure issue.

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The projections for NG availability are impressive but optimistic.  Fracking requires considerable amounts of water, so even if the equipment needed for every proposed project was available, the water wouldn't be, especially out west.

What?! You do realize I worked for BJ Services and presented papers on well fracturing in SPE symposiums, don’t you?  Well service companies simply bring water trucks on site.

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I'm surprised you advocate a government mandate to allow nothing but NG and electric cars to be sold. I don't.  Besides the problem that even with increased production, such a mandate would cause the demand for NG to rise to the point where NG would not be cheap as it is now

That’s why the proposal 1) opens up natgas drilling all over the country, and 2) only mandates production of NGV’s according to the supply of natgas.

You would have MASSIVE job creation in rebuilding the infrastructure as more and more of the $700B/year we spend for foreign oil is spent in the U.S. Also, it meets are geopolitical concerns by having less money going to hostile and non-so-friendly countries.

[Swing low, sweet chariot. Comin' for to carry me home.]

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Consumption is the driver of our economy, and I don't trust the Federal government to both introduce a Federal sales tax while reducing or replacing the Federal income tax.

Demand doesn’t drive the economy, rather increased efficiency (e.g. industrial revolution) is what drives the economy.

Increased efficiency only helps the economy as a whole if it allows for increased demand.  

increased efficiency is the ONLY free lunch an economy has.  Otherwise someone else becomes more efficient and drives you out of business.

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We need to stop wasting Federal dollars on the manned space program and the Federal role in education should be limited to helping the States develop effective curricula.  The Federal government plays too much of a role in education, not too little.

There is no reason to waste the current capabilities of NASA.  The space station doesn’t provide much science, but it could be a treasure trove in teaching value if used for school math and science programs.

Not really.  You wouldn't happen to be an independent contractor for NASA or one of its suppliers would you?  NASA's efforts in the schools to date have been mostly PR to push for more government pork. While not totally worthless, there are better ways to fund education initiatives than to funnel them through NASA.

1) Neither I, nor anyone in my family, derives any income from NASA's budget.
2) I never said the current model of NASA's effort in the schools should be used as the model going forward.

[opebo]

It takes more then transfer payments to drive an expansion, and you can't help the poor with the economy stuck in neutral, either. There is a place for them, but they can't be the only economic policy.

Actually no, they can be the only economic policy.  Well, transfer payments and heavy regulation.  We currently have an economic policy of maximizing transfers from the workers to their owners.. and we can see how well that has worked.

[Grumpier Than Uncle Joe]

It takes more then transfer payments to drive an expansion, and you can't help the poor with the economy stuck in neutral, either. There is a place for them, but they can't be the only economic policy.

Actually no, they can be the only economic policy.  Well, transfer payments and heavy regulation.  We currently have an economic policy of maximizing transfers from the workers to their owners.. and we can see how well that has worked.

So you agree taxes are too high? Or are you speaking of an owner other than the Government?

[True Federalist (진정한 연방 주의자)]

I'm an advocate for more nuclear power, but building nuclear plants will do nothing to lower petroleum imports.  Petroleum is not much used for electrical power generation, and where it is used, it is as a supplemental source to deal with quick spikes in electrical demand in areas where access to natural gas is not available.  Building additional nuclear plants would displace coal generation, and to a lesser extent natural gas generation.

I never said the building of nuke plant would drive down imports, rather we need more nuke plants to: 1) free up the natgas used in some power generation, 2) increase grid capacity to accommodate more electrical cars.

NG is primarily used to supply generation capacity that can be quickly turned on and off to meet demand.  Nuclear is most useful when used as a baseload source, which is why nuclear would tend to displace coal rather than NG when it comes to electricity

With current battery technology, and its dependence on rare earths, electric cars will never be more than a niche segment of the transportation infrastructure.  There is no way we can develop and deploy alternatives in ten years to significantly increase the potential market share of electric cars.

There are plenty of reasons beyond lack of access why NG cars haven't taken off.   It's much the same reason why diesel cars haven't taken off in the US.  At the price of fuel in this country, their economics have only paid off for vehicles that drive considerably more than the average.  (Incidentally, back when I was last car shopping, back in 2000, I considered buying one of the VW diesel cars.  However, I determined that given how much I drive, the savings in fuel costs would be less than the added expense in buying the exact same model of VW with a gas engine, so I dropped the idea.)  The current dip in NG prices due to the unexpected increase in NG supply has made the economics more favorable, but that will be a temporary phenomenon until the market adjusts to supply and demand.

1)   NGVs (nat gas vehicles) are no more expensive to mass produce than gasoline cars. The reason why they now cost $5-10k more is due to return on car company investment.
2)   NG has always been more cost effective per energy unit than gasoline.
3)   It’s lack of refilling infrastructure that is keeping NGVs from taking off, but the proposal addresses the infrastructure issue.

Past performance is no indicator of future performance.  Transportation is a major component of our energy use.  Artificially increasing demand for NG will increase the price of NG.  You're also neglecting the fact that unless you increase the size of the fuel tanks significantly, NG vehicles have much shorter ranges, the same problem that afflict electrical vehicles.  The problem gets worse with bi-fuel vehicles.

The projections for NG availability are impressive but optimistic.  Fracking requires considerable amounts of water, so even if the equipment needed for every proposed project was available, the water wouldn't be, especially out west.

What?! You do realize I worked for BJ Services and presented papers on well fracturing in SPE symposiums, don’t you?  Well service companies simply bring water trucks on site.

No I only knew you were self-employed, not what you did for a living.  Where does the water in those trucks come from?  Water is a finite resource, and at least in the popular press, water shortages are in some of the dryer areas making fracking undesirable there despite known reserves that could be gotten.  (And that's without worrying about the other problem of contamination of ground water when fracking is improperly done.)

[Badger]

Assuming the proposal passes the House, it looks like we now have a compromise...

It's better than nothing at all. I'm glad some sort of agreement was made at least.

I don't hate it... obviously there's things I would've done differently, but I'm ok with this proposal.

I figured both sides would eventually have to give in, but the three things I knew would be in it were:

- Some sort of extension of all tax cuts (including for the wealthy).
- Said extension would not be permanent.
- There'd probably be an extension of unemployment benefits.

I just think it's sad an "agreement" had to be made on something like this. Republicans don't even really get what they want, the wealthy tax cuts are only extended for two years. Why even extend it at all then? Why not just do it for a year if you are going to anyways. It's sad something so minuscule as this had to be done just to make Republicans happy. 

Because right now, in the middle of a recovery from a recession is not the time to raise taxes back up to pre-2001 levels.

Now is never the right time for the GOP. It's all about protecting their monied interests. We played this game and raised taxes on high earners without a single GOP vote in 1993. How was that economy in the mid to late 90s again?

It is ridiculous to claim that a tax hike caused the economic expanision of the 90's. Any growth happened inspite of that tax hike and we will likely not see such a strong decade again for a long time. We are far worse off economically then we were in 1993.

And the Republicans did get what they wanted here. All they gave up was a permenent extention which wouldn't have happened anyway.

No it didn't "cause" the economic expansion, but it sure as hell didn't inhibit it one iota. When the highest earners simply do not consume enough of a portion of their income to stimulate economic growth in a meaningful way there's a huge diminishing return). Furthermore, the upper income tax increase did have a huge factor in getting the deficit under control. Remember how much the Bush tax cuts impact the deficit in budget planning?
http://marketplace.publicradio.org/features/budget_hero/

[memphis]

You do realize I worked for BJ Services

Love it.

[True Federalist (진정한 연방 주의자)]

increased efficiency is the ONLY free lunch an economy has.  Otherwise someone else becomes more efficient and drives you out of business.

That's why I said for the economy as a whole, not for individual winners and losers.  If the demand of the economy is for 500 widgets and it takes 5 people to make those widgets, an innovation that allows for only 2 people to make those widgets, only helps those 2 people who continue to make widgets unless the innovation allows for a price decrease that increases widget demand and/or the economy has excess demand in other sectors so that the other 3 people who are no longer needed to make 500 widgets still have something to do.  In either case, the innovation has allowed for additional demand to be satisfied.  Sadly, that isn't always the case, tho it is the case more often than not.

[Badger]

Being purely political for the moment, one the worst things for the Democrats about this compromise is if the recent signs of recovery expand to where the economy is in decent shape in 2012 (but keeping hoping not, GOP, we've all got our fingers crossed for you), the Republicans will endlessly trumpet--and surely convince a large number of under-informed voters--that such recovery was due to GOP policies forced on the out-of-control tax and spend Democrats. Arguing "but we got middle class tax cuts passed that wouldn't have otherwise because it takes 60 votes to beat a filibuster and...." (zzzzzzzz) doesn't exactly play well in campaign ads.

[Swing low, sweet chariot. Comin' for to carry me home.]

You do realize I worked for BJ Services

Love it.

should have seen the time the company took a bunch of us to tour a homeless shelter.  The very devout but naive Christian administrator of the shelter asked one of our hot secretaries, "What company are you with?"  "BJ Services, " she answered for all of us.  Then he asked her a follow up question, "What does BJ stand for?"

ha!  we all looked around grinning at each other

[Sam Spade]

I guess Obama and the Congressional GOP are doing something right if this deal is oposed by both Bernie Sanders and Jim DeMint.

Nah, it means both Bernie Sanders and Jim DeMint are doing something right, which happens far more often than the latter. 

[opebo]

actually no, they can be the only economic policy.  Well, transfer payments and heavy regulation.  We currently have an economic policy of maximizing transfers from the workers to their owners.. and we can see how well that has worked.

So you agree taxes are too high? Or are you speaking of an owner other than the Government?

Obviously I am speaking of 'private' owners - the rich.  The government is merely their servant.  I would like to see taxes on anyone making over a basic living (say $75,000/year) raised a lot, and raised to near confiscation levels above say $250,000/year.

[??????????]

raised to near confiscation levels above say $250,000/year.

Thug.

[Marokai Backbeat]

I agree with sbane, coporate taxation levels in the US are a sick joke. But the left-wing would shoot down any serious cuts to it. "Rich corporations don't need a tax cut now!".

That'd have a lot larger effect on the economy though than extending personal income tax rates at any level, not just the top bracket.

Let me understand... You think the current levels of taxation in the USA are too high ?

On paper, our corporate tax rates are perhaps the highest in the world. In practice, however, very very very few of them actually pay it. As long as corporations dodge the tax altogether, it wouldn't matter how low we drag the corporate tax rate.

This is what always makes me laugh about the corporate tax debate. If a corporation can pay 0% of the corporate tax, no amount of lowering it is going to matter. Moreover, it's the idea that we should cater to businesses by offering them all sorts of treats to "pretty pretty please come over here and let us tax you" as if we can't make them do anything otherwise. You can lower the tax rate on corporations to 5% for all I care, but it's not going to matter, because the system is riddled with loopholes, and until those are taken care of, the corporate tax rate is effectively meaningless, since most corporations that matter pay nothing at all.

Of course, there's all that, the hypothetical arguing on how wonderful it would be to reduce the corporate tax rate, and then the actual facts of how effective a corporate tax cut would be. People like Franzl and other economic conservatives might have you believe it would be some sort of magic pill for the economy, but the CBO, CBPP, and CRS, as well as Mark Zandi, centrist economist and former adviser to the McCain campaign, have all said corporate tax cuts wouldn't have any serious impact on the economy and isn't "cost-effective stimulus."

[Franzl]

I'm all for abolishing the loopholes, sure...and doing that would certainly save money as well. Regardless though, some conpanies obviously are paying substantial corporate taxes...it's those that can cheat the system that don't. There has to be a reason why many companies prefer to do business in places like Ireland. It's not as if these European countries have lower expenses related to employment...often quite the contrary.

America has its priorities wrong in this case...giving personal income tax breaks that are either unnecessary or simply ineffective....and at the same time we tax away the companies that create jobs (which leads to higher revenue overall). If you're unemployed, the extension of the Bush tax cuts doesn't help you. It seems like people would understand that paying 5% higher income tax is the lesser evil.

I'm with you on the loopholes in all forms of taxation. Unfortunately, they're awfully hard to get rid of the way the political system works.

[○∙◄☻¥tπ[╪AV┼cVê└]

"Senator McCain once knew better. He said that he couldn’t vote for the Bush tax cuts in good conscience because they were too skewed to the wealthiest Americans"  - Obama when he was running his lying campaign for President

[○∙◄☻¥tπ[╪AV┼cVê└]

I am not proposing to turn them into street people. I am proposing that they hew to more strict protocols about taking actions to move towards work, including classes, training, resume preparation, etc. Getting ready for, and looking for, work, becomes the full time job, in exchange for a check. It is just a fact that getting a check, truncates the incentive to get a paycheck, and that is particularly true for lower paid workers. Many are doing far less than Bushie to find a job.

After 99 weeks, you are out on the street even with this deal. Obama obviously didn't care much about those 3 million hostages.

[○∙◄☻¥tπ[╪AV┼cVê└]

4)  revamp education system and intagate NASA into primary and secondary curriculum for more applied math and sciences.  Institute student-in-space scholarship for most outstanding American student in math and science, to be awarded senior year with student flying within 18 months of graduation.

Why bother? There aren't any jobs for them.

[Torie]

One of the great mysteries of economics (I should check to see if more progress has been made on parsing the issue in the last decade), is just how much of the corporate tax is really a sales tax which raises the price of goods passed on to the consumer, and how much is really a tax on capital. The answer depends on just how inelastic the supply of capital is. If it will be there, relatively speaking, even if the after tax return on capital is lower, than the corporate tax is mostly one on capital. If the supply is more elastic, as taxes go up, so will the cost of capital, and that will be passed on to the consumer in the form of higher prices - to wit, a sales tax. The guess back when was about half and half, or two thirds sales tax, one third tax on capital.

The point is that the corporate tax (and I am not taking about Subchapter S corps here, but C corps, the big public company guys), does not fit in too well with some progressive taxation agenda, when all is said and done.

[??????????]

I am not proposing to turn them into street people. I am proposing that they hew to more strict protocols about taking actions to move towards work, including classes, training, resume preparation, etc. Getting ready for, and looking for, work, becomes the full time job, in exchange for a check. It is just a fact that getting a check, truncates the incentive to get a paycheck, and that is particularly true for lower paid workers. Many are doing far less than Bushie to find a job.

After 99 weeks, you are out on the street even with this deal. Obama obviously didn't care much about those 3 million hostages.

At what point does it go from unemployment to welfare? Ninety nine weeks is already a LOT of unemployment.

[Swing low, sweet chariot. Comin' for to carry me home.]

looks like House Dems have rejected the deal....oh my!

[Swing low, sweet chariot. Comin' for to carry me home.]

looks like House Dems have rejected the deal....oh my!

it was a non-binding vote of the House Democratic Caucus