Compromise!?

Obama wants to push the so called compromise of extending the payroll tax cuts by another 2 years. If this is considered a compromise it a joke. Because first both sides for the most part agree with the idea, but yet there was still a lot of fighting over the bill? This bill extends tax cuts and there fighting over it! I wonder how long it would take to talk about balancing the budget? Now if they don't want to increase the payroll tax rates and do other things to balance the budget it will effect the middle class even more. See income tax cuts do help people, but if their wages go down even though the tax rate went down they make less money. WHY? Because if you don't help increase the median wage and allow the outsourcing of jobs, elimination of unions people will make less money even though the tax rates went down. With the Bush tax cuts the poor and middle class made less money then were the tax rates were higher. That why the Bush tax cuts must expire even for the middle class, because it doesn't work and the money can be better put to help people's wages go up or help reduce people's expenses like Health care. Same goes with the payroll tax it's a short term fix, and if middle class keeps dying the tax cut does nothing. That why the Payroll tax should increase to 6.2% and eliminate the Bush tax cuts for everyone. This will not only help balance the budget, but the country can help the middle class by reducing many families biggest cost like tuition, health care, and bring new good paying jobs.

I Agree With A Libratarian!

My Blogger friend the "Libertarian" (lilatomic) has an opinion that's a bit controversial, but quite frankly I "somewhat" agree with what he is saying. Now somewhat is very vague so let me explain. First I don't think rich people are bad people. I mean some of them could be, but just because someone is rich doesn't mean that they are bad people. Now I agree increasing taxes on the rich isn't going to fully balance the budget. But it has to be done! I think all the Bush tax cuts should be eliminated. Now that isn't enough to balance the budget. What will have to happen is to not only eliminate the Bush Tax cuts, but also to raise the retirement age and think about either a sales tax, cut military funding and cut medicare (which I don't suggest). If the U.S eliminates the Bush tax cuts, makes a sales tax and cuts the military they will be able to balance the budget. I don't think Rich people have no role in the economy I think (lilatomic) is right in what he says that rich people put money in the bank. Although that helps the economy as it gives money for the bank to invest in order for banks to actually give money to people to make small business there needs to be people who aren't rich (or they would have the money themseleves) that are finicially liable in order to take a loan, because if they are dead poor the bank won't give them a loan. The idea that giving rich people money to put in the bank helps create small business isn't 100% true. There needs to be people who are middle class to be loaned that money by the bank. We can't have these middle class people start a business if they don't make money. So the easier way to start a business is to have a middle class. But with the Bush tax cuts the average income of the middle class and the poor has shrank so the tax cuts didn't even work! The top 400 Americans make more money then the bottom 50% of the U.S. The rich are doing fine in the U.S they should be taxed 50% not the low 35% they are currently taxed. Because it is either taxing the rich or cutting programs for the middle class and poor which won't help the economy. Now I think in order to balance the budget the poor and middle class need to give up a few things too, but the Rich should be the first to pay then we work are way down. The middle class are the people who work the economy. If we continue with Bush policy that shrank average income the main driving force of the U.S the middle class (the small business people) then the economy can't grow and yes if no one takes a loan in the U.S the money will stay in a vault. I am sure people who are rich worked hard to get there, bur many patrotic millinaires told Obama last year to raise there taxes so that they could help reduce the deficit. I agree with lilatomic that eliminating the tax cuts to the rich won't balance the budget, and I believe that the rich have a role to play in the economy, but what I disagree with is that just giving money to the rich won't help the economy. What helps the economy is having a strong middle class and the way to achieve a strong middle class the U.S needs to raise the minimum wage encourage unions not discourage. The problem in the U.S is that the rich are getting too much at th expense of the poor, although money for the rich helps banks have money to loan out. If instead of that money going to one rich person the economy would do much better going to a poorer person. Because buying products helps the economy more than putting money in the bank that won't be loaned out, because the middle class is getting poorer in the U.S. And unless the rich pay there fair share then the economy can't grow.

Can you do math?

The idea that the Bush tax cuts are the reason of the deficit is just wrong. Allow me to demonstrate.

The math

How annoying the facts get in the way. The CBO (Congressional Budget Office) estimated that extending the tax cuts would cost 2.8 trillion dollars for extending them through to 2017 (from 2007). But these are the cuts for everyone. The "rich" bracket tax cuts will cost about 700 billion for the ten years. That's 70 billion per year. But yes, that 70 billion will magically solve the 1,480 billion dollar deficit (this is just an estimate; imagine the actual deficit). So that would only leave 1,410 billion dollar deficit. (As a tangent, the richest people in the US no longer have enough total combined assets to pay off the deficit for one year.)

Idle money

If you think that the money could be better spent helping small businesses, you don't know how banks work. When a rich person (or any person) has money, they don't just put in under a mattress or in a safe. That would lose money (because of inflation) at a rate between 3 and 5 percent. So they seek elsewhere to put it. One option is to invest it in the stock market. The upside is that one can make significant increases, often out-pacing inflation. The downside is that one stands to lose money (called risk), and it is not easy to pull small amounts of money out from the market (one needs to find a buyer). One could also invest it in bonds, but the risk of loss is traded for lower returns. The last option (leaving out investments in hard commodities) is to place one's holdings in a bank, which will pay moderate rates for very low risk.

But the bank doesn't make money by paying you interest, and holding on to your cash. They loan it out, or invest in (which is also like loaning it). This money does not sit idle in a bank vault, collecting dust, waiting to be withdrawn. It gets re-invested, helping those small businesses, either by buying stocks in the public ones or giving loans to the private ones.

Bar stool economics

I could explain what this is here, or I could just link to a video. As explained in the video, the rich already pay most of the taxes, and it is logical that a tax cut for the rich will end up being a larger dollar value, because it is of a larger amount.

I hope I have offered up a convincing case to at least end the rich bashing for a few days. The idea that it is the rich that are bringing down the US is flawed to its core. In my opinion, it is overbearing government, supported by both big businesses and big unions, that is killing the country. If it were simply easier to start a business, it would be easier to become wealthy, and then the divide would be lessened, allowing good people to rise to the top, and not just those who were there first (who are being unwittingly entrenched by the well-meaning but misguided regulators).