Tag Archives: President Obama

The Talk: Tax Increases or Class Warfare?

The Talk: Tax Increases or Class Warfare?
September 22, 2011

Chip Lebovitz: The president finally released a concrete deficit reduction plan Monday. Taking a populist stance, the president’s plan features GOP opposed tax increases including one specifically on millionaires called the “Buffett Rule,” named after the billionaire hedge fund manager who suggested the idea in a recent New York Times op-ed. What’s your take on the president’s proposal Ross?

Ross Freiman-Mendel: The president has once again proven that he’s either woefully lost or willfully destructive with the economy. Senator Tom Coburn said it best: “The plan is a giant tax increase [with] maybe 81 billion in cuts and 1.45 trillion in revenues.” The best example is the “Buffett Rule,” is nothing but class warfare and political posturing at the expense of job creation.

Chip Lebovitz: The plan just represents what I find to be the current political reality. Republicans would have seized on any concessions the president had thrown out in his opening offer and pulled him past where a natural agreement should lie. The Buffett Rule, however, is anything but class warfare – it’s an idea supported by the people suggested by a member of the truly rich. The basic thrust that the extremely wealthy should pay as much in taxes as someone from middle class – hardly an unfair notion.

Ross Freiman-Mendel: And with what authority can Mr. Buffett speak, when he has relied on bailouts — i.e. Goldman and Bank of America — to make his investments successful? A tax is fundamentally a punishment; President Obama proposes we should take more from rich people because they’re successful and have more of something. But ideology aside, the plan is terrible economics, because the government now demands a share of capitals gains only 2.5 years after Bernanke went to infinite and beyond to pump up the “wealth effect” for the richest 1% of Americans. That’s contradictory.

Chip Lebovitz: That’s a bold statement on the nature of taxes; basically, you are declaring that the payroll tax is punishing people for wanting to have Social Security. Turning back to Mr. Buffett, his investments would still be an overall success with or without the government bailouts of Goldman Sachs and Bank of America. If anything, he realizes the value of government preventing a complete economic meltdown – instead of a very large scale one – and feels that maybe he and his fellow millionaires might contribute a bit to help the government balance its budgets after it took the time to support their industry. Furthermore, the timing of this tax plan is in fact its best part; most economists support stimulus now to get the economy going with long term deficit reduction to prevent a ballooning of debt to GDP over the long run.

Ross Freiman-Mendel: But you haven’t responded to the impacts on the wealth effect. When you say “a bit” that’s totally disingenuous; increasing the tax on capital gains could cut actually income for those invested in the stock market by 25 percent, encouraging all to exit the market at the current lower rate capital gains rate of 15 percent and forcing more downward pressure on the stock market. Crash anyone? I’m all for “smart” stimulus now, but all this plan does is continuing to make the country inhospitable to business and economic growth in the name of “fair share.”

Chip Lebovitz: That’s because the wealth effect isn’t even relevant here. David Backus, an NYU economist, showed that the wealth effect, when people perceive their money is more valuable then it is, isn’t visible in stock prices. But regardless, Republican leadership has ruled out tax reform, the best revenue raising concept, for super committee consideration. How else you would you raise revenue to help balance the deficit.

Ross Freiman-Mendel: I (and I believe basically every member of the Federal Reserve, including the Chairman himself) respectfully will question David Backus’ claim, because the wealth effects applies directly to the stock market. I see two great ways to raise revenue. First, have Mr. Buffett (and his cohort Mr. Gates) donate 90% of their wealth to the Treasury, and second, implement tax reform that closes loopholes and brings individual rates down across the board.

Chip Lebovitz: Speaker Boehner has ruled out tax reform, and a vast majority of Mr. Buffett’s wealth has been marked off for charity. You’re points however sum up an irresponsible view of debt reduction, “Either let someone else do it, or push it down the road so it’s not your problem.” At least the president is trying to create a comprehensive solution now that doesn’t gut a major entitlement or two.

Ross Freiman-Mendel: Any attempt to solve our debt with lots of revenue and pathetic spending cuts implies the president wants to fund current spending levels. As I’ve said before, the he will continue to punt the can down the road, but one day it obstinately will remain motionless. That’s when our real problems will begin.

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Source: Dave Makes

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The Talk: No Hysteria Over Obama’s Speech on Syria

The Talk: No Hysteria Over Obama’s Speech on Syria
August 19, 2011

Charles Lebovitz: Let’s move beyond the continental United States this week. President Obama finally called for Syrian despot Bashar al-Assad to resign. Was this the right move by the president?

Ross Freiman-Mendel: Yes. I often struggle with my “Ron Paul non-interventionist under no circumstances leanings” and remembering the massacres in Rwanda, for example. While I support the president’s condemnation, the United States should go no further in intervening in Syria, unlike how they have in Libya.

Chip Lebovitz: Blanket policies on any subject worry me for their lack of flexibility; however, the president’s Syria policy has been well thought out. He left most of the heavy lifting to his very popular Secretary of State Hilary Clinton, and he worked to limit the Assad regime through sanctions while not riding lone ranger all over the toes of allies, like Turkey. Pragmatically, pushing for Assad’s departure any earlier would have likely achieved nothing but diminishing the power of the United States.

Ross Freiman-Mandel: Fair enough, Chip. It’s important that Turkey, and not the United States, takes the lead on the issue. While the international community will press for Assad to step down, the United States can and should do it at little to no cost with soft power and diplomacy. In the face of massive budget cuts this year, our resources can’t sustain a fourth war and increased global intervention.

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The Talk: Congressional Recess and the Economic Mess

The Talk: Congressional Recess and the Economic Mess
August 5, 2011

Chip Lebovitz: The debt ceiling crisis has been finally defused, or at least, temporarily disarmed. Congress has fled the capitol for its August recess. With unemployment over 9 percent, how should the president be trying to get the country back on track?

Ross Freiman-Mendel: Having just turned 50, the president should probably just celebrate his birthday. The most effective thing that he can do at this point is nothing — this vacation could be the least destructive weeks of his presidency. In all seriousness though, the name of the game when Congress and the president return will be the economy.

Chip Lebovitz: Think more proactively: the name of the post-recess game may be the economy, but the unemployment numbers determine the score. The president has a couple of options moving forward to help bolster the flagging economy. A smart first step would be to demand a resolution to the recent Federal Aviation Administration shutdown. 75,000 workers should not remain unemployed because members of congress are more focused on their recess and fundraising than actually running the country.

Ross Freiman-Mendel: Again, Congress remains divided on the FAA issues, with both houses having offered different plans. The president displayed his immaturity as a negotiator and inability to lead during the debt-ceiling debate, so I don’t expect much from him. With a failed attempt at stimulus, can you be more specific in what the current administration can do?

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The Talk: The Washington Tea Party

The Talk: The Washington Tea Party
July 29, 2012

Chip Lebovitz: With less than a week to the August 2nd default deadline, both Congress and the president have still failed to pass a debt ceiling increase. The failure is due, in part, to the extremely divided Republican caucus split between a Tea Party faction opposed to nearly any debt ceiling increase and a mainstream element supportive of a spending cut only increase. Ross, what’s piqued your interest most about the recent GOP dynamic?

Ross Freiman-Mendel: Speaker Boehner is really stuck between a rock and a hard place. He must find a solution that stands a chance against two ideologically intransigent caucuses. It’s certainly harder to govern in the majority.

Chip Lebovitz: It’s nice of you to admit to the Republican caucus’ intransigency, though I’m not so sure that’s a fair characterization of Democrats. Without the Tea Party movement, Speaker Boehner would’ve already passed a grand bargain with President Obama and Congressional Democrats that would have reduced our deficit by $4 trillion and seriously reformed entitlements, weakening Obama on his left flank for the 2012 elections. Instead, Speaker Boehner and the Republican establishment are forced to deal with an insurgent element of their caucus that is willing to sacrifice political victory in order to achieve an impossible goal – a balanced budget amendment.

Ross Freiman-Mendel: That’s a bit harsh. The Tea Party caucus is rightly forcing Boehner, Senate Democrats, and Obama to acknowledge the referendum that propelled the GOP to big gains during the midterm elections. I think it’s fairer to say that the Obama administration has been disingenuous during these talks. Continue reading

The Talk: The Cut, Cap, and Balance Gang

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The Talk: The Cut, Cap and Balance Gang
July 22, 2012

Chip Lebovitz: Welcome back from Costa Rica Ross, have you kept up with the tangled mess that is the debt ceiling debate?

Ross Freiman-Mendel: Good to be back Chip: the venue changed, but it’s all a jungle. The debt ceiling is a truly global issue. I don’t support an increase, but since that view is unacceptable to reasonable people, I support Cut, Cap and Balance.

Chip Lebovitz: While I’m sure the foreign policy implications of a failure to raise the debt ceiling are ominous, the Cut, Cap and Balance Act (CCB) going through Congress is equally portentous. CCB is a radical attempt to balance the budget on the backs of entitlements like Medicare and Social Security and would cap discretionary spending at 18% of the previous years’ GDP. The last time the U.S spent that little on discretionary spending was in the 1960’s, and I think that this Center for American Progress info-graphic shows that times have been a-changin’ quite significantly since then.

Ross Freiman-Mendel: You’re characterizing radical change as if it’s a devastating consequence, rather than a necessary one. To me it’s a simple logic issue: this government has consistently demonstrated its profound ability to live outside of its means, evidenced by the previous 74 times the ceiling has been raised since 1962. Congress is kicking the can hard — this time it obstinately is going nowhere down the road. What would you have Congress do?

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