The elevation of reform of our broken monetary system to a bi-partisan economic issue may be the biggest positive development of the next two years. Just last week, two-thirds of the Delegates in the Virginia House voted to “establish a joint subcommittee to study the feasibility of a metallic-based monetary unit.” That follows the lead of the Republican Platform’s call for a commission to consider the feasibility of a metallic basis for the U.S. currency, and last year’s decision by Utah to recognize gold and silver coins minted by the U.S. government as legal tender.
Importantly, there is nothing inherently partisan about favoring a metallic-based monetary unit. George Bernard Shaw, co-founder of the London School of Economics and ardent socialist, in his 1928 book, The Intelligent Women’s Guide to Socialism and Capitalism wrote this about the gold standard:
]]>The Congressional Budget Office (CBO) released a report to show how Obama’s tax hikes, signed into law last month, will affect the federal government’s fiscal outlook.
Here are some highlights:
]]>When the government borrows on the scale that Washington has been doing over the past decade, it reduces the funds available for private lending and therefore the investment activities that fuel the economy. Concerned observers have raised the possibility, unless substantial deficit reduction occurs, of a long-term trend of higher interest rates and slow growth.
]]>Democrats repeatedly claim their goal is to promote middle-class prosperity. Yet, their policy of increased spending financed by higher taxes and rising debt are a direct threat to the middle-class standard of living and economic security. That is the conclusion of new research I have just completed based on an analysis of state taxes, spending and debt policies and their economic consequences based on data provided by the Tax Foundation, Sales Tax Institute, U.S. Census Bureau, and the U.S. government.
States are a perfect laboratory for cutting through the political spin and observing the actual economic policies of the nation’s two major political parties, along with their consequences for the average American. Democratic states – defined as those 18 states and District of Columbia won by the Democratic candidate for President in the 2000, 2004 and 2008 elections – are true to the Democratic Party’s rhetoric.
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"Today I am pledging to cut the deficit in half by the end of my first term in office,” President Obama boldly declared on February 23, 2009. He added that this “means taking responsibility right now, this administration, for getting our spending under control.”
Among Obama’s parade of disappointments, this vehicle may be the most dangerous.
]]>In the days following the first Presidential Debate, the spin coming from the mainstream has been that while Republican challenger Mitt Romney “won” the debate, he did so with the caveat that he was lying about how he would address the tax problem in America.
At Engage America, we’re not so much concerned with who “won” the debate, but rather what policies are part of a winning future for the country. We do, however, find it troubling when the mainstream media appears to be mitigating a one-sided debate of the issues.
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This article originally appeared on The National Review Online on October 5, 2012
Slip slidin’ away . . .
Why does America seem to be slouching? Multiple measures have found this country going down, down, down since President Obama’s inauguration.
]]>This article orginally appeared in the TaxVox blog on October 1st, 2012
If Congressional gridlock sends the U.S. government tumbling over the fiscal cliff later this year, Americans could face an average tax hike of almost $3,500 in 2013. Nearly 9 of every 10 households would pay higher taxes. Every income group would see their taxes rise by at least 3.5 percent, but high-income households would suffer the biggest hit by far, according to a new Tax Policy Center analysis.
TPC found that if the tax hikes last the entire year—a big ”if”–those in the top 0.1 percent would pay an average $633,000 more than if today’s tax rules were extended. However, even middle income households would take a hit: they’d pay an average of almost $2,000 more, and see their after-tax income fall by more than 4 percent. Such tax hikes would be “unprecedented,” said the paper’s authors, Bob Williams, Eric Toder, Donald Marron, and Hang Nguyen.
]]>In what can be viewed as a desperate effort to bail out the failed economic policies of the Obama Administration, the Federal Reserve this week committed to purchasing $40 billion a month of mortgage backed securities for an unlimited time and to keep interest rates artificially low until at least mid 2015. By so doing, the Fed has embarked upon a course that invites higher inflation, falling living standards, and a global financial crisis.
]]>This article originally appeared on the TaxVox Tax Policy Center blog.
As politicians and their allies look for ways to finance tax rate cuts, a surprising option is getting a great deal of attention among conservatives: The tax exemption for municipal bonds.
Mitt Romney’s economic adviser Glenn Hubbard, The Wall Street Journal editorial page, and the American Enterprise Institute’s Matt Jensen are among those who in recent weeks suggested limits on tax-exempt bonds. On Aug. 13, Journal editorial writers quoted Hubbard as saying the tax benefit of munis is “on the table” as Romney searches for ways to slash tax preferences.
And the idea is not new. For instance, the tax reform plan offered by the chairs of President Obama’s fiscal commission, Erskine Bowles and Alan Simpson, would also limit the exemption.
]]>"When Washington confronts our crushing debt burden – and we will confront it either by choice or crisis – the solution will follow a path that is largely accepted among policymakers on both sides. Some form of comprehensive tax reform that lowers rates and broadens the tax base will accompany or precede fundamental entitlement reform. Put another way, tax reform is the policy and political bridge that will help us achieve a grand bargain and avert a European-style debt crisis.
As a matter of policy, tax reform is critical because it will help us create real growth and jobs like no other reform. Tax reform won’t just give us a tune up; it can help rebuild our economic engine for the 21st century. We waste more than $350 billion on tax compliance every year according to the Tax Foundation while another $2 trillion is sitting on the sidelines, due in part to uncertainty in the code. The last time Congress reformed the tax code was 26 years ago, which preceded the longest peacetime economic expansion in our history. Our country desperately needs that kind of growth – and revenue boost – again to help us avoid the collapse of our safety net.
As a political matter, tax reform is essential because it will build a coalition that will make a grand bargain possible. Tax reform is a form of stimulus everyone is for, but perfect tax reform won’t be enough to avert a catastrophe. We have to embrace fundamental entitlement reform: If we don’t, entitlement programs won’t exist for the next generation. That means Democrats will have to back safety net fixes that are unpopular with their base while Republicans will have to agree to revenue increases. The only way to avoid this path is for either side to run the table in the next two elections, which is a delusional expectation. Yet, in this moment, as at our founding, the path of compromise is the path of principle. Doing nothing is selling out and will lead to massive tax increases and benefit cuts for future generations."
]]>"Republicans and Democrats spent last summer battling how best to save $2.1 trillion over the next decade. They are spending this summer battling how best to not save $2.1 trillion over the next decade.
In the course of that year, the U.S. government’s fiscal gap -- the true measure of the nation’s indebtedness -- rose by $11 trillion.
The fiscal gap is the present value difference between projected future spending and revenue. It captures all government liabilities, whether they are official obligations to service Treasury bonds or unofficial commitments, such as paying for food stamps or buying drones.
Some question whether “official” and “unofficial” spending commitments can be added together. But calling particular obligations “official” doesn’t make them economically more important. Indeed, the government would sooner renege on Chinese holding U.S. Treasuries than on Americans collecting Social Security, especially because the U.S. can print money and service its bonds with watered-down dollars.
For its part, economic theory sees through labels and views a country’s official debt for what it is -- a linguistic construct devoid of real economic content. In contrast, the fiscal gap is theoretically well-defined and invariant to the choice of labels. Each labeling choice changes the mix of obligations between official and unofficial, but leaves the total unchanged."
Click here to read the entire article
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This article orginally appeared in Profit Confidential on July 23rd, 2012
Just outside Los Angeles is the City of Compton, home to 93,000 people…a city running out of money. As the city treasurer eloquently put it, he has $3.0 million in cash and $5.0 million in bills due in the next month. (Source: Reuters, July 18, 2012.)
If debt restructuring decisions are not made soon, the City of Compton could file for bankruptcy as early as September.
Due to the fact that Compton has a $43.0-million budget deficit hole, it has been unable to secure a line of credit to get it through a difficult period. The reason why it can’t secure a line of credit is that the budget for 2012 is forecasting a further budget deficit of $9.0 million!
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