Dems: Tax Cut Package Will Kill Social Security

Is the tax deal the beginning of the end of Social Security? Some Democrats in Congress sure think so.

The Hill.com reports:

Rep. Peter DeFazio (D-Ore.), who voted against the legislation, said on Thursday that “this [vote] is the beginning of the end of Social Security.”

“Next year Republicans are going to want to continue to undermine Social Security, and we are not going to be in any position to borrow the money under whatever new rules the Republicans adopt to make it whole,” he said.

Rep. Jim McDermott (D-Wash.) told The Hill that the tax bill -- which passed the lower chamber on Thursday night -- is a “trojan horse” designed to kill the Social Security program.

“My view is this is like the magician. He has got people looking at the estate tax. Meanwhile, he is putting his hand in your pocket and taking your Social Security,” McDermott said.

In the tax bill that the White House hailed on Friday as a "big win," workers will get a two-percent tax break for one year on their payroll taxes -- a tax that funds Social Security. The cut will leave Social Security with a $112 billion short fall. To make up the difference, the government will need to borrow the money.

Proponents of the bill contend the payroll tax holiday will provide a significant boost to the economy.

Read more here

White House Denies Folding on Bush Tax Cuts, but Still ‘Open to Compromise’

From WashingtonIndependent.com:

A lot of hubbub this morning surrounding a Huffington Post article that suggested the White House was willing to cave on its position of permanently extending tax cuts for most Americans while only temporarily extending those for the upper two percent and instead accept the idea of a temporary extension of all the tax cuts. Following the story’s publication, White House Communications Director Dan Pfeiffer emailed Greg Sargent to set the record straight:

The story is overwritten. Nothing has changed from what the President said last week. We believe we need to extend the middle class tax cuts, we cannot afford to borrow 700 billion to pay for extending the tax cuts for the wealthiest Americans, and we are open to compromise and are looking forward to talking to the Congressional leadership next week to discuss how to move forward. Full Stop, period, end of sentence.

That still leaves unclear, however, whether the White House will keep demanding that the majority of the tax cuts be permanent while the ones for individuals making more than $200,000 be temporary. Republicans are pretty much categorically opposed to “decoupling” the time frames of tax cuts for these two groups, because then they’d be forced to advocate for an extension of tax cuts just for the rich at some point down the line.

Republicans and Democrats Spar Over Tax Cuts, Economy as Election Nears

From AdvisorOne.com:

As the hours dwindle down to the election on Tuesday, the talk Sunday was still about the economy and the two-sided coin of tax cuts and the deficit. On This Week with Christiane Amanpour, Sens. Robert Menendez, D-N.J., and John Cornyn, R-Texas, squared off about both.

Amanpour’s question to Menendez about whether this election would be “as bad as 1994” brought a resounding no. He stated that the Republican brand’s “image was much better [in 1994] than it is today,” and that Democrats are faring better than they did then. He added that the Democrats’ “goal is to have them understand and channel their anger on election day against the Republican Party that brought us to the verge of economic collapse in November of 2008, when financial institutions in this country were ready to collapse.”

Amanpour challenged him about that. “A recent Bloomberg poll found that most Americans think that taxes have gone up since President Obama took office;” she said, “that the economy has shrunk; that TARP, the corporate bailout, won't be mostly paid back. I mean, all of those are untrue. Why is the messaging so bad?”

Menendez replied that “I think the challenge is, when you're hurting economically—and we have gone from negative job growth to positive job growth, from negative GDP growth to positive GDP growth—but if you're still unemployed, none of that news makes that much difference to you.”

Cornyn agreed about the cause of voters’ reactions, but disagreed about the cause of the economic problems. Amanpour turned the conversation to the subject of taxes and asked him about Obama’s plan “to raise taxes on the wealthiest and preserve them for the middle class.” Cornyn replied, “I don't believe we ought to raise taxes on anyone during a fragile economic recovery. …”

Republicans Accuse Dems of Using IRS Audits to Bully Conservative Groups

From TheBlaze.com:

Congressional Republicans are accusing Democrats and administration officials of leaking privileged IRS information and using invasive audits to bully conservative groups, the New York Times says, and they are not happy about it.

The first charge by Republicans Senators centers around a senior Obama administration official who may have improperly accessed the tax records of Koch Industries, an oil company whose owners are major conservative donors, while the second charge lambastes Senator Max Baucus (D-MT) for scoping the funding activities of historically conservative tax-exempt groups.

According to the Times, the Treasury Department has opened up an investigation regarding allegations by Sen. Chuck Grassley (R-IA)* and six other Republican senators who claim a senior administration official disclosed confidential taxpayer information regarding Koch Industries — whose owners are major conservative donors — during a conference call with journalists.

During that call, the official pointed to Koch Industries as an example of “multibillion-dollar businesses that are structured as partnerships in ways that allow them to avoid paying sizable corporate taxes.”

Congress Punts on Taxes

According to the Wall Street Journal Democratic members of congress have decided to wait until after the November elections to decide the fate of the Bush tax cuts. Unfortunately, the move raises uncertainty for small business owners, and taxpayers across the country. It will also create a huge battle over taxes at the end of this year.

If returning lawmakers don't pass legislation by Dec. 31, the expiration date of the cuts, tax rates would rise not only on income, but also on estates, capital gains and dividends. Important corporate tax credits and relief from the Alternative Minimum Tax also are up for renewal.

Democratic leaders and President Barack Obama made the proposal to extend the middle-class tax breaks a centerpiece of their midterm campaign strategy. They now face the possibility their members are vulnerable to Republican charges that they have failed to prevent taxes from rising for almost everyone.

Congressmen from both parties said the toxic politics of taxes and the crush of issues to be resolved increased the likelihood all the Bush-era breaks, including those for higher earners, would be extended at least for a year or two. But Mr. Obama could still veto such a bill.

For now, taxpayers confront a number of worrisome scenarios, including the possibility Congress might deadlock on the issue in the post-election "lame duck" session, resulting in across-the-board tax increases.

With taxes a hot-button issue on the campaign trail, lawmakers threw in the towel Thursday until after the elections. Sen. Richard Durbin, the No. 2 Senate Democrat, said, "The reality is, we are not going to pass what needs to be passed to change this, either in the Senate or in the House, before the election."

Continue reading at WJS.com…

Democrats Divided on Bush-Era Tax Cuts Vote

From Reuters.com:

Democrats cannot decide whether to hold a vote on extending tax cuts, as some lawmakers fear the issue could hurt their re-election chances in November.

Senator Max Baucus, the Senate Finance Committee chairman drafting a bill to extend tax cuts for all but the wealthiest taxpayers, told reporters he would like a vote before the elections but there was no agreement in the party to do so.

President Barack Obama and most of his fellow Democrats want tax cuts enacted under former President George W. Bush to be extended only for the first $200,000 of a person's income, saying the country cannot afford the cuts for higher earners.

Republicans want the lower rates renewed for all Americans, regardless of income, and say that losing the cuts would hurt small businesses and job creation just as the economy is recovering from its worst recession since the 1930s.

Voter anger over the weak economic recovery has produced heavy headwinds for Democrats ahead of the congressional elections in which Republicans are expected to make big gains and possibly regain control of Congress.

Democrats Against ObamaCare

From the Wall Street Journal:

This wasn't a good week for ObamaCare, with Missouri voting to repeal the law and a Virginia judge refusing to dismiss a serious Constitutional legal challenge. Unlikely as it sounds, however, the repeal movement even came to include House Democrats.

To wit, the House voted last week to repeal one ObamaCare mandate. It might have been the first part of the bill to go over the side, except Democrats rigged the vote so that it failed, even though it got a majority.

The target was an ObamaCare footnote that could wreak havoc with more than 30 million small businesses. In the name of smoking out the illusory "tax gap" of unreported business income, Democrats snuck in a requirement that companies track and submit to the IRS all business-to-business transactions exceeding $600 annually. This 1099 reporting detail received no scrutiny until the IRS's National Taxpayer Advocate Nina Olson exposed the paperwork burden, which would produce no improvement in tax compliance.

Just before the House left town for August, Dave Camp, the ranking Republican on the Ways and Means Committee, offered an amendment that would have rescinded these mandates; as a "motion to recommit," it was guaranteed an up-or-down vote.

Speaker Nancy Pelosi and wingman Sander Levin were terrified that rank-and-file Democrats would defect, so they pulled their entire bill and reintroduced it a few hours later, with the basic Camp language included. In other words, not only was the House leadership unwilling to defend the 1099 provision but it took the lead in rolling it back, if only to prevent an embarrassing floor spectacle.

$26 Billion for States Passes Key Test Vote

A measure to send federal aid to cash-strapped states passed a key vote in the Senate, putting it one step closer to becoming law. However, if a final vote is not made by the end of the week, the bill will have wait until the end of the month because the Senate has an August recess scheduled to begin next week.

The measure, which passed by a 61-38 vote, contains $16.1 billion in additional Medicaid money and $10 billion in education funding to prevent teacher layoffs.

State officials have been desperately lobbying their representatives, saying they need the money to shore up their budgets. President Obama weighed in Monday, asking lawmakers to pass the bill.

Senate Democrats needed to garner at least 60 votes for the measure to pass this initial vote, meaning some Republicans had to cross the aisle. That help came in the form of Maine Republicans Susan Collins and Olympia Snowe.

A final vote could come late in the week, just before the Senate is scheduled to recess for the long August break. The measure would then have to go back to the House, which has already recessed. So it might not get to President Obama's desk until September.

Continue reading at CNN.com…

Who Would Obama Tax Increases Hit?

From the Wall Street Journal:

Some conservatives and moderate Democrats say that letting the Bush Administrations tax cuts expire only for top earners, as President Obama has proposed, would actually hurt small business.

Sen. Jon Kyl (R. Ariz.) said the increased tax rates that would result would “clobber small businesses.”

“Small businesses generated roughly 64 percent of net new jobs in the past 15 years,” he wrote in response to a Washington Post editorial. “Of the almost 120 million private-sector workers in the United States, slightly more than half work for small businesses. So if we’re trying to promote economic policies that create jobs, why raise taxes on the job creators?”

Democrats counter that the taxes would mainly hit wealthy–a group voters typically are much happier to tax than small business. They point out that taxes would rise only for those households earning $250,000 or more.

So who would be hurt? Small businesses or rich people?

The Tax Policy Center, a venture of the Urban Institute and Brookings Institution, just released an analysis of IRS figures showing how many of those top earners–whose rate would jump to 39.6%–also are small-business owners.

Senate Combines Jobless Benefits, Homebuyer Credit

While still recovering from a failed attempt to extend unemployment benefits last week, Senate Democrats are working on a new bill that would combine the unemployment benefit extension with an extension of the homebuyer’s credit.

Sponsors of the legislation have said it aims to create more jobs and support the struggling real estate market. As this article from the Associated Press claims, Democrats are going to need to get a handful of Republicans on board if they want the bill to pass the Senate.

Under current law, homebuyers who signed purchase agreements by April 30 must close on their new homes by Wednesday to qualify for credits of up to $8,000. The bill would give those buyers until Sept. 30 to complete the purchases and qualify for the credit.

Democrats hope to pick up Republican support for the bill by combining the two provisions. They have been trying for weeks to pass an extension of unemployment benefits as part of a larger tax and spending package, but the larger bill died in the Senate last week.

Without an extension, unemployment payments would continue to be phased out for more than 200,000 people a week.

Many Democrats see the benefits as insurance against the economy sliding back into recession. Many Republicans, however, worry that adding nearly $34 billion to the budget deficit will only contribute to the nation's economic problems.

Continue reading at Google.com…

Unemployment Benefits Extension Nixed for Nearly 1 Million

According to CNN Money, over a million Americans have lost their unemployment benefits as Senators failed to pass an extension last Thursday. There were 57 votes for the legislation, but it was not enough to overcome the GOP filibuster of the bill.

Hoping to overcome deficit concerns, the Senate trimmed down the bill yet again on Wednesday night so that it would only increase the deficit by $33.3 billion over 10 years, instead of $55.1 billion. The main changes were to scale back additional Medicaid funding for the states and to reallocate some stimulus and Defense Department spending.

The bill will now be pulled, according to two Democratic leadership aides. This leaves many groups in flux, including the jobless who have lost their safety net, companies who are waiting to learn what tax breaks are extended, and governors who were counting on the additional funds to balance their budgets.

The grab-bag legislation pushes back the deadline to file for federal unemployment benefits until the end of November, renews expired tax provisions, lengthens a small business lending program and adds to infrastructure investments.

Continue reading at CNN.com…

More Non-Profits Win Exemption From Campaign-Finance Rules

From USAToday.com:

Top House Democrats agreed today to exclude more non-profit groups from new disclosure requirements to win broader congressional support for a campaign-finance bill, the Associated Press and other news organizations report.

The move comes after Democrats reached a deal to exempt the National Rifle Association and other groups that have at least 1 million members and receive no more than 15% of their money from corporations from the new rules.

Organizations on the left and right criticized the NRA carve-out, and Rep. Chris Van Hollen, D-Md., the bill's author, has widened the exemption to include groups with 500,000 members, the AP writes.

The legislation comes in response to a January Supreme Court ruling that opened the door to unlimited corporate and union spending to support and defeat candidates. Under the bill, corporations, unions and non-profits that broadcast political ads would have to disclose their top donors.

Democrats' Tax Bill Moves Toward Vote In US Senate

The Senate is scheduled to vote on the new tax bill designed to extend unemployment insurance tomorrow. In order for the bill to pass, 60 of the 100 Senators will need to vote in favor of the legislation. Many Republicans and fiscally conservative Democrats are still weary of the bills price tag, and some bloggers are predicting the bill will not pass. Read more from this Reuters.com story below.

According to Reuters.com, Majority Leader Harry Reid moved toward an initial vote on the $126 billion earlier this week.

Under Senate rules, the vote on whether to limit debate on the legislation will likely occur Wednesday. Sixty votes are needed out of the 100-member Senate.

Complaints by fiscally conservative Democrats about the plan's price tag and opposition by some Democrats to the investment fund manager tax has stalled the proposal.

According to several lobbyists, the majority Democrats remain shy of the 60 votes necessary. They need to attract as least one Republican plus keep all of the 59 votes they generally hold in the chamber.

Over the next 10 years, the Senate proposal would increase direct spending by $126 billion and add $22 billion in funding to prevent a 21 percent payment cut to doctors in the Medicare program, the Congressional Budget Office estimated.

Continue reading at Reuters.com…

Democrats want investigation into surprise Senate primary winner

An investigation will be underway regarding the legitimacy of the South Carolina Democratic Senate primary winner. It turns out that the winner is a political novice named Alvin Greene, a 32 year old unemployed veteran. Everyone seems to think it a mystery how he won the primary.

Due to Mr. Greene’s past run-ins with the law and possible felony charges for “promoting obscenities” the South Carolina Democratic Party Chair has asked Greene to step down. However, Mr. Greene has no plans to bail out. According to Greene, he “is the best candidate for the United States Senate in the race.”

According to CNN.com, despite running zero ads, Greene toppled former state legislator Vic Rawl with almost 60 percent of the vote. Greene will face Republican Senator Jim DeMint in the general election if he is found to be a legitimate candidate.

WOW, this is amazing. Tell me your thoughts on my Facebook or Twitter.

Obama Pleads for $50 Billion in State, Local Aid

According to the Washington Post, yesterday President Obama asked Congress to approve $50 billion in emergency aid to state and local governments. He said the money was necessary to avoid "massive layoffs of teachers, police and firefighters" and to assist local governments with their economic recovery efforts.

In a letter to congressional leaders, Obama defended last year's huge economic stimulus package, saying it helped break the economy's free fall, but argued that more spending is urgent and unavoidable. "We must take these emergency measures," he wrote in an appeal aimed primarily at members of his own party.

The letter comes as rising concern about the national debt is undermining congressional support for additional spending to bolster the economy. Many economists say more spending could help bring down persistently high unemployment, but with Republicans making an issue of the record deficits run up during the recession, many Democratic lawmakers are eager to turn off the stimulus tap.

"I think there is spending fatigue," House Majority Leader Steny H. Hoyer (D-Md.) said recently. "It's tough in both houses to get votes."

Democrats, particularly in the House, have voted for politically costly initiatives at Obama's insistence, most notably health-care and climate change legislation. But faced with an electorate widely viewed as angry and hostile to incumbents, many are increasingly reluctant to take politically unpopular positions.

Democrats propose tax hikes in response to Schwarzenegger's fiscal plan

Party leaders have been getting together in response to California Governor Arnold Schwarzenegger’s proposed fiscal plan, which I wrote about here. Legislators agree that there needs to be a way to increase revenue to close the $19.1 billion deficit, but how that will be done is always the argument.

Governor Arnold Schwarzenegger’s “spending blueprint” proposes eliminating California’s welfare program and cutting other state services. Democrats are responding by making a proposal of their own: generate billions in the form of new taxes.

The democrats’ detailed $5 billion plan calls for taxing oil companies, borrowing from the state’s recyclable bottles and can deposits, delaying corporate tax breaks, increasing personal income taxes, increasing vehicle license fees and raising taxes on alcohol. In order to pass, the plan would require at least some Republican votes. Republican legislators are expected to reject these tax hikes.

According to the Los Angeles Times, Schwarzenegger's office immediately dismissed the Democrats' proposals. "It is unfortunate that the Democrats' first instinct is to raise taxes," said Schwarzenegger spokesman Aaron McLear.

Read more about the proposed plans here.

Group Proposing Nevada Tax, Government Changes

From the Associated Press:

A study group appointed by majority Democrats in the Nevada Legislature is proposing sweeping changes to raise taxes and reshape state government to improve the quality of life in the state over the next 20 years.

A preliminary report due for discussion Friday by the 20-member Nevada Vision Stakeholders Group offers hundreds of goals — but few specifics about how to reach them. The legislation creating the group called for recommendations but left it to legislators to figure out how to change taxes and implement the goals.

Republican Gov. Jim Gibbons quickly dismissed the proposals to change Nevada's tax structure and diversify an economy now largely based on tourism and mining.

"You surprised?" Gibbons scoffed.

Gibbons vetoed a measure last year to allow the Legislature to spend money to hire a consulting firm to review Nevada's revenues and spending, and to work with a citizens group to create a plan to build a better state over the next 20 years.

Gibbons had predicted the results would include tax increases that will scare away businesses that want to relocate in the state.

"These companies already are bypassing Nevada because of the uncertainty about our future tax structure," Gibbons said. "It is affecting our ability to recruit businesses."

Senate Financial Bill Misguided, Some Academics Say

From NYTimes.com:

As Democrats close in on their goal of overhauling the nation’s financial regulations, several prominent experts say that the legislation does not even address the right problems, leaving the financial system vulnerable to another major crisis.

Some point to specific issues left largely untouched, like the instability of capital markets that provide money for lenders, or the government’s role in the housing market, including the future of the housing finance companies Fannie Mae and Freddie Mac.

Others simply argue that it is premature to pass sweeping legislation while so much about the crisis remains unclear and so many inquiries are in progress.

“Until we understand what the causes were, we may be implementing ineffective and even counterproductive reforms,” said Andrew W. Lo, a finance professor at the Massachusetts Institute of Technology. “I understand the need for action. I understand the need for something to be done. But what I expect from political leaders is for them to demonstrate leadership in telling the public that we need to proceed about this in a much more deliberate and rational and thoughtful way.”

Senate Republicans echoed some of these concerns as they delayed debate on the legislation last week. Democrats agree that significant issues remain to be addressed. But they say that the government must press forward in responding to the problems that already are clear.

The Dividend Tax Bill Arrives

As January 1^st, 2011 approaches Democrats in Congress are laying out their fiscal priorities. According to the Wall Street Journal, the Senate Budget Committee passed a fiscal 2011 budget resolution that includes an increase in the top tax rate on dividends to 39.6% from the current 15%—a 164% increase. This huge increase is much higher than the 20% rate President Obama proposed in his 2011 budget.

And that's only for starters. The recent health-care bill includes a 3.8% surcharge on all investment income, including dividends, beginning in 2013. This would nearly triple the top dividend rate to 43.4% in Mr. Obama's four years as President. We suppose the White House would call this another great victory for income equality.

But the driving impulse here isn't equity. It's money. According to the static revenue estimation rules that Congress lives by, maintaining the current 15% tax rate on capital gains and dividends will "cost" the government $347.7 billion over 10 years. The Congressional Budget Office hasn't broken out how much the higher 39.6% dividend rate alone would yield in revenue, but a reasonable guess is $200 billion. Congress simply wants that cash.

But this revenue estimate assumes businesses and investors are dumb and dumber. Dividends which are payouts from business earnings are already taxed once at the corporate rate of 35%. The individual dividend tax is a second levy on that same income and at a rate of 43.4% would take the total tax on each dollar paid in dividends to something like 60 cents.

Still no Wall Street bill debate in Senate

Once again, Democrats in the Senate have failed to come up with the votes needed to debate the Wall Street reform bill. Coming up only 4 votes short of the 60 votes required, this makes the 2^nd time in the 48 hours that an attempt to start a debate has failed. According to CNN, all 40 Republicans present in the chamber joined with two Democrats, Sen. Ben Nelson of Nebraska and Majority Leader Harry Reid of Nevada in voting against.

Reid's vote was a procedural move that allows him, under the Senate rules, to bring the bill up again this week.

The Democrats failed the first two times by 57-41. On Wednesday, Sen. Robert Byrd, D-W.Va., a prior "yes" vote, was absent, while Sen. Robert Bennett, who voted "no," returned from a two-day absence.

Democrats and Republicans still disagree about the way to go about preventing future bailouts, cracking down on risky bets and ensuring consumers have stronger protection.

Sen. Christopher Dodd, D-Conn., and Sen. Richard Shelby, R-Ala., have been negotiating differences on the bill, but have yet to come up with a final compromise.