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Look at the graph below and it is easy to see what is wrong with that picture.
Combined Corporate Tax Rate
The US government is signaling to business that if they have a choice there are better places than the U.S. to invest new jobs and grow. Any first year financial analyst would recognize that the return on investment needed to invest in America must be at least 13% better than other OECD (Organization of Economic Co-Operation and Development made up of countries with established, emerging, and developed economies committed to global development) countries in order to make sense.
Debt, Deficit, Taxes are the talk of the town right now. Whether government spending and taxes are too high or too low is a confounding issue. Right now there is a consensus that the current corporate tax rates scare away foreign business and push U.S. companies into investing abroad. Neither of these actions helps the U.S. get out from under its mound of debt. In all of the confusion, there is a solution that helps both businesses and the U.S.
Like many Americans I have become fed up with the debt ceiling debate. How many more articles do we need to read about potential solutions that go nowherein the contentious nature of today’s Washington? The situation got so out of hand that President Obama and House Speaker Boehner spoke directly to the American people to drive support for their plans. The President specifically said “I’m asking you all to make your voice heard. If you want a balanced approach to reducing the deficit, let your member of Congress know.” Calls and emails to the White House and Congress surged, but it seemingly has had little impact, if any at all.
The recently passed debt ceiling deal, the Budget Control Act of 2011, is already being attacked for its deficiencies. The bill was a necessary short-term fix for raising the debt ceiling to prevent a governmental default. However, it does not adequately address long-term fiscal problems. Reflecting the deal’s inadequate fiscal reduction plan to stabilize the government's debt, Standard & Poors downgraded the US credit rating from AAA to AA+.
By Charles Kadlec
This blopost originally appeared on Forbes.com, February 6, 2012
The Federal Reserve Open Market Committee (FOMC) has made it official: After its latest two day meeting, it announced its goal to devalue the dollar by 33% over the next 20 years. The debauch of the dollar will be even greater if the Fed exceeds its goal of a 2 percent per year increase in the price level.
An increase in the price level of 2% in any one year is barely noticeable. Under a gold standard, such an increase was uncommon, but not unknown. The difference is that when the dollar was as good as gold, the years of modest inflation would be followed, in time, by declining prices. As a consequence, over longer periods of time, the price level was unchanged. A dollar 20 years hence was still worth a dollar.
By Charles Kadlec
This blogpost originally appeared on Forbes.com, February 20, 2012.
The federal budget is a dense document totaling hundreds of pages of numbers. Yet, for all of the digital precision, the use of various “base line” budgets, numbers that span 11-year time frames and other arcana known only to Washington insiders and budget mavens obscure more than they reveal about what the federal government is up to.
To cut through the haze and spin, I chose to focus on President Obama’s “Proposed Budget”, and to compare all projections with actual 2011 levels. I came away with four observations:
By Charles Kadlec
This blogpost originally appeared on Forbes.com, March 5, 2012.
Last Friday, Treasury Secretary Timothy Geithner charged in a Wall Street Journal op-ed that those who oppose the Obama Administration’s regulatory regime for the financial services industry “seem to be suffering from amnesia about how close America came to complete financial collapse under the outdated regulatory system we had before Wall Street reform.” Au contraire, Secretary Geithner, it is you who choose to ignore and misrepresent the lessons of the financial crisis by perpetuating the myth that the source of the crisis was a lack of regulation.
Oh, temporary tax breaks, music to the ears of their beneficiaries and the bane of CBO Director Douglas Elmendorf who must make budget projections accounting for them.
If it weren’t for the recent explosion in the number of tax breaks, they wouldn’t be such pesky pieces of economic policy. In 1998, there were only nine temporary tax breaks. By 2009, there were 73; meaning that in more than 10 years the number of temporary tax breaks built into the tax code has increased by 711%.
By Charles Kadlec
This blogpost originally appeared on Forbes.com, March 19, 2012.
Do you know why oil and prices are moving sharply higher? Some blame the oil companies, charging they are manipulating prices. Others cite U.S. sanctions on Iran and the threat of a military encounter that would disrupt the flow of oil from the Middle East.
Speculators, too are blamed for ostensibly bidding up the price of oil. In the political arena, President Obama is taking credit for increased domestic oil production even as his critics point out the slow pace of drilling permits issued by his Administration soon will hamper additional increases in the U.S. oil production.
Yet, the basic reason for higher energy prices is being overlooked, even though it is right before our eyes: Oil prices are up because the value of the dollar is down. Our common sense hides this source of higher prices because we view the dollar as fixed, and prices as moving. News reports explain the sharp rise in consumer prices in February were caused by higher energy and food prices, implying that higher prices cause inflation. Of course, higher prices do not cause inflation. Higher prices are inflation.
As the entire country (except for that area known as Washington, D.C.) works to get out of this financial rut, we are starting to see the same economic problems on the local level as we have seen on the national level.
Last week California Gov. Jerry Brown announced that the Golden State has a projected deficit of $15.7 billion. At least it wasn’t the same as our national deficit of $1.3 trillion.
By Richard Callahan
Job creation almost nil, unemployment increasing, the left is angry, the right is up in arms and the center is grumbling. What is wrong with this great experiment that promised so much?
Almost 4 years ago an eloquent, energetic, charismatic political outsider, Barack Hussein Obama, burst upon the scene. He arrived at a time of great economic turmoil and dissatisfaction with the regime in power and promised sweeping change. He promised change from an economic downturn gripping the country. He promised new, forceful leadership in which all citizens of the country would be united as one and prosperity and economic vibrancy would once again be restored. He promised American international leadership and the restoration of the American dream. Sadly, his promises have proven to be empty rhetoric and his policies have wreaked destruction on the unity of America, it's economy and the hope of so many Americans who believed his false prophecy.
By Tammy Frisby
This blogpost originally appeared on Advancing a Free Society, on June 12, 2012.
This week’s installment of Data Matters features data presented by Tammy Frisby, a research fellow at the Hoover Institution who also teaches in the political science department and public policy program at Stanford.
This week on Capitol Hill, there was renewed attention to the looming Taxmaggedon (or Taxmageddon; take your pick), which involves, among other pending tax code changes, the scheduled expiration of lower tax rates on income, dividends, and capital gains, and the end of the extended payroll tax holiday. There is now more public talk from senators and members of Congress about using the threat of Taxmaggedon in January 2013 to build a legislative coalition for a sweeping tax overhaul that would preempt the economic and political damage that Taxmaggedon would wreak.
By James D. Agresti and Dustin Siggins
If the U.S. government continues with its current tax and spending policies, children born this year will be saddled with a crippling publicly held debt that is more than twice the size of Japan's by the time they turn 30 years old. This grim picture, projected by the Congressional Budget Office (CBO) in its newly published annual long-term budget outlook, expects U.S. publicly held debt to grow from 73% of GDP by the end of 2012 to 247% of GDP by 2042.
Worse still, the CBO projects that current policies will continue to drive the U.S. deeper into debt, and by the time today's newborns reach 38 years of age in 2050, the major federal healthcare programs and Social Security will consume all federal revenues, leaving nothing for any other function of federal government or even interest payments on the national debt.
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.