Republicans No Fiscal Conservatives

According to the independent committee for responsible federal budget most Republican candidates aren't at all fiscally responsible. In fact 3 out of the 4 Republicans would increase the debt over the next ten years.

The worst on the budget is Newt Gingrich according to the report he would increase the debt by 7 trillion in nine years and make the Debt to GDP ratio 114%. Rick Santorum wins second place on the worst fiscal conservative by adding 4 trillion to the debt in nine years bringing the Debt to GDP to 104%. Mitt Romney had some credibility, because his old plan would have increase the debt by only 250 billion in nine years, that on average 28 billion a year. that way below the current projection of a 500-600 billion dollar deficit per year, but most recently if you add Romney new tax plan he just talked about a few days ago he would add 2.5 trillion to the debt in nine years. He's kind of like Harper promise a small deficit first then show up with a bigger deficit. But the best plan (at least for the deficit) would be Ron Paul his plan according to the study would reduce 2.2 trillion in debt over 9 years. The only problem, rather one of the problems with Ron Paul's plan is the fact that in the process of eliminating a bunch of government agencies and some economist say eliminate up to 1.5 million jobs in the process. All of these Republicans would cut spending on essential programs for the poor and the elderly and all of them would then take that money and reduce taxes on the rich who don't need anymore money and some to the middle class. Even with small tax cuts for the middle class they would still be worse off, because a lot of the agencies that help them would be cut harsh like Medicare or even be completely dismantled.

Mitt, Rick and Newt are lying when they call themselves fiscally responsible, and Ron although would cut defense his other policies would take the U.S back into recession. In fact all these candidates would put the middle class and the poor back into recession.   

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Another Deficit Year in Washington DC!

The U.S again goes for the easy way out of a problem by extending tax cuts for two months. Just like the super committee it seems that this congress is going to delay and then delay again. Nothing this year has even seriously touched the deficit. The U.S is running out of time. The interest on the debt that is accumulating every minute will soon become more expensive then medicare. The U.S has just wasted another year arguing about how bad the current congress is at getting the deficit under control. Maybe next year they will talk about how terrible the first four years were under Obama. Hello the term isn't over you have one more year to do something. Then again I am an optimist (I think maybe the rich will get some sort of tax increase next year).

Every minute we wait the more severe the austerity is going to be in the future. Happy New Year Congress.

Wow I Was Right!

I stated just a few post's ago that the Conservative would reduce their budget targets. Now This time around Jim Flaherty thinks he has a good case. Saying the economy isn't good and the budget is going to suffer. True, but why didn't you know about this decline before. Economics have been talking about a economic instability since even before the recession. Why then put in your election platform a promise to eliminate the deficit in 2014. Now the conservatives say they will balance it by 2015. Now I would understand this if a bad economy came out of nowhere, but why say in October of this year that the economy is strong when it's by are now Flip flopping Minster bad enough to delay deficit targets. Now I think this will be just the first delay in the Conservative budget target. Soon the cost of the Corporate tax cut, Mega prisons and fighter jets will force our minister to tell us that we must move the deficit target yet again.

By the way I thought our minister would take at least one year to move the deficit target, but I guess that will be the next time our minister tells us we will delay our deficit target.

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PC over Promising.

In PEI the PC's in the province who are losing terribly in the polls are trying to gain support promising something that PEI can't afford. The Pc leader Olive Crane said if elected she would reduce the P.S.T in the province from 10% to 9%.

"For a one percentage change, it means there is $20 million available to invest in Islanders. And, as you know … Islanders can make good choices with their dollars," said Crane.

And although reducing the P.S.T in the province would help the economy no doubt I think she neglects to mention that P.E.I has a deficit of 42 million. The Liberals in the province are trying to reduce the deficit and eliminate it under there projection by 2013. It seems yet again that the Liberals are the fiscally responsible one's and the Tories wants to continue to use money they don't have.

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Another Stimulus?

With more fear with the stock market some people in the U.S have been asking for another stimulus or spending package. Although putting money into the economy will create jobs the U.S can't afford it! Debt to GDP ratio is at 98%. The U.S doesn't have much wiggle room right now to lower taxes or to increase spending without paying for it. The U.S needs to reduce spending and raise taxes in order to lower the deficit. If the U.S doesn't reduce the deficit then it can face future downgrades, and will increase the interest of the debt. the Interest on the debt this year for the U.S is 200 billion and growing. With more downgrade and more stimulus that number will get bigger and force future cuts to be more sever and taxes to be raised more heavily in order to balance the budget. In 2020 under current projections the Interest on the debt will explode and be more expensive than the military, medicaid and medicare, and almost the exact same as social security. Another stimulus will make things harder in the future. The first stimulus wasn't all good either their was not enough spending on infrastructure and construction, and most of all it wasn't planned to be paid for. The Stimulus did create jobs and things would have been worse without it, but the U.S has no money or room to take any more cash for another stimulus. The U.S should invest in infrastructure and should extend the unemployment benefits , but this time they should pay for it. They need to have a plan that will eliminate the deficit all together within 7-8 years, and then if they want to spend any more they should have a new tax or cut to pay for the new spending. Stimulus season is over! The U.S made over 200,000 jobs last month in the recession they lost 700,000 a month in 2009 a stimulus made sense now not only is the U.S making jobs, but making another stimulus will make the deficit hard to handle .This May be an economic slowdown and the U.S might not employ to many people this month, but they are moving (slowly) in the right direction. the U.S may have to deal with sluggish employment for a while if they want to avoid being Greece!

Debt Deal History

There is a lot of history on the debt ceiling in the united states. In fact for many decades the debt ceiling increased tremendously without the need of any compromise on spending. In fact JFK increased has the debt ceiling rise by 5% only. Some would say Obama is asking the debt ceiling to be increased way too much.But let's look at history  .every President has increased the debt ceiling. Johnson increased it by 18%, and then after that Nixon and Jimmy Carter both increased the debt ceiling by 35.6% and 33.6% respectfully. Then came the "fiscally responsible" Ronald Regan who increased the debt ceiling by oooh....199%!!!!! Bush senior in just four years increased the debt ceiling by 48%. Then came Clinton who also increased the debt ceiling by 43.5%, but mid way in his term he balanced the budget and the debt ceiling never had to rise ever again.Of course Bush Junior came and increased the debt ceiling by 90%. Obama with this deal of an extra 2 trillion to the debt ceiling has increased the debt ceiling by 44%. This isn't a good number at all considering Obama hasn't even finished his first term, but it shows that Obama wasn't the only one who has ever increased the debt ceiling. If Reagan can without the risk of default double the debt and increase the national debt ceiling by 199%. Why is it that Obama must be pushed almost to default in order to increase the debt ceiling. The fact that the U.S almost went into default is irresponsible of the Republicans. The Republicans should realize that the debt ceiling should be separat then a deficit plan which by the way is no where near good enough to eliminate the deficit.

Wow Republicans !

Last few years when the Dem's held both houses the Republicans stood united against almost every single thing the Democrats proposed. The Republicans now are somewhat divided in passing Boehner plan. It seems the curse of being the party in power has now been caught by the Republicans. The Republicans see that it is harder to be the party that has to actually make decision rather than to be the party that just votes NO! The Republicans have no big plan. I am slightly disappointed in the Boehner plan. Nine hundred somewhat billion over a decade is actually just 90 billion a year. The deficit is now 1.2 trillion and will only get as low as 600 billion in a few years then get even worse later on. This plan is maybe a baby step. I still would disagree with this bill as it is just cuts important programs and there are no tax increases. At least Reid's plan is twice as big and for that matter still has no tax increases. I still don't support Reid's plan as it would just be 200 billion a year which is a good start, but not enough, but we could close the rest of the deficit putting the taxes back to there 1990 levels. Where Clinton who also faced a deficit made tax increases and payed record amounts of the debt. It's funny Ried has a plan twice as big in just cuts while Boehner has just 900 billion. No wonder it he kept delaying his plan multiple times his plan is a joke. Even Bachman is against the bill, and the tea party part of congress is also very much against it. I am glad now to see the Democrats are united. To be quite honest we need to reduce entitlements, by increasing the medicare age and the retirement age to 70, while also stopping the Bush tax to all, end the mission in Afghanistan and Iraq, eliminate subsidies to big oil and finally pass bowl Simpson plan which will reduce the corporate tax rate and eliminate loopholes and increases revenue.

update: I support the Bowl Simpson plan, but I think we should eliminate loopholes and reduce rates only a little or nothing, because the U.S needs to balance the budget, but for a compromise I would agree with reducing corporate tax rates by 7% while eliminating loopholes, even though my ideal situation is eliminating all loopholes and no change to the tax rate.

Fiscally Reposible? Yeah Right

The Conservatives are going to reduce the Corporate taxes by more for next year. If this years budget passes (which of course it will) the corporate taxes will be 16.5% the next year the Harper Government wants to reduce it to 15%. The cost for these cuts will be large.

The cost is about $1.6 billion in foregone revenue in the 2011-12 fiscal year, $3.9 billion the year after, and a total of more than $10 billion over three years.

How will the Conservatives fund these tax cuts. They don't know. Canada has already a very competitive tax cuts compared to the G8 and the Conservatives want to make Canada a country that cuts taxes and has a large deficit problems. Wait that reminds me of a country. The U.S! If we continue this tax cuts and spending increases Harper agenda we will never reach surplus. This isn't fiscally responsible. I wonder how the Conservatives will reach surplus  without making new cuts they didn't tell us about.

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update: there was a problem on  Blogger I am sorry i know that this was an old post

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).