Charley Reese’s final column for the Orlando
Sentinel…
He has been a journalist for 49 years.
He is retiring and this
is HIS LAST COLUMN.

Be sure to read the Tax List at the end.

545 vs.
300,000,000 People
-By Charlie Reese

Politicians are the only
people in the world who create problems and then campaign against
them.

Have you ever wondered, if both the Democrats and the Republicans
are against deficits, WHY do we have deficits?

Have you ever wondered, if
all the politicians are against inflation and high taxes, WHY do we have
inflation and high taxes?

You and I don’t propose a federal budget. The
President does.

You and I don’t have the Constitutional authority to vote
on appropriations. The House of Representatives does.

You and I don’t
write the tax code, Congress does.

You and I don’t set fiscal policy,
Congress does.

You and I don’t control monetary policy, the Federal
Reserve Bank does.

One hundred senators, 435 congressmen, one President,
and nine Supreme Court justices equates to 545 human beings out of the 300
million are directly, legally, morally, and individually responsible for the
domestic problems that plague this country.

I excluded the members of the
Federal Reserve Board because that problem was created by the Congress. In 1913,
Congress delegated its Constitutional duty to provide a sound currency to a
federally chartered, but private, central bank.

I excluded all the
special interests and lobbyists for a sound reason. They have no legal
authority. They have no ability to coerce a senator, a congressman, or a
President to do one cotton-picking thing. I don’t care if they offer a
politician $1 million dollars in cash. The politician has the power to accept or
reject it. No matter what the lobbyist promises, it is the legislator’s
responsibility to determine how he votes.

Those 545 human beings spend
much of their energy convincing you that what they did is not their fault. They
cooperate in this common con regardless of party.

What separates a
politician from a normal human being is an excessive amount of gall. No normal
human being would have the gall of a Speaker, who stood up and criticized the
President for creating deficits. The President can only propose a budget. He
cannot force the Congress to accept it.

The Constitution, which is the
supreme law of the land, gives sole responsibility to the House of
Representatives for originating and approving appropriations and taxes. Who is
the speaker of the House now? He is the leader of the majority party.
He and fellow House members, not the President, can approve any budget they
want. If the President vetoes it, they can pass it over his veto if they agree
to.

It seems inconceivable to me that a nation of 300 million cannot
replace 545 people who stand convicted — by present facts — of incompetence
and irresponsibility. I can’t think of a single domestic problem that is not
traceable directly to those 545 people. When you fully grasp the plain truth
that 545 people exercise the power of the federal government, then it must
follow that what exists is what they want to exist.

If the tax code is
unfair, it’s because they want it unfair.

If the budget is in the red,
it’s because they want it in the red.

If the Army & Marines are in
Iraq and
Afghanistan
it’s because they want them in Iraq and Afghanistan …

If they do not
receive social security but are on an elite retirement plan not available to the
people, it’s because they want it that way.

There are no insoluble
government problems.

Do not let these 545 people shift the blame to
bureaucrats, whom they hire and whose jobs they can abolish; to lobbyists, whose
gifts and advice they can reject; to regulators, to whom they give the power to
regulate and from whom they can take this power. Above all, do not let them con
you into the belief that there exists disembodied mystical forces like “the
economy,” “inflation,” or “politics” that prevent them from doing what they take
an oath to do.

Those 545 people, and they alone, are
responsible.

They, and they alone, have the power.

They, and they
alone, should be held accountable by the people who are their bosses.  Provided
the voters have the gumption to manage their own employees…

We should
vote all of them out of office and clean up their
mess!

What you do with this article
now that you have read it… is up to you.
This might be funny if it weren’t
so true.
Be sure to read all the way to the end:

Tax his land,
Tax
his bed,
Tax the table,
At which he’s fed.

Tax his tractor,
Tax
his mule,
Teach him taxes
Are the rule.

Tax his work,
Tax his
pay,
He works for
peanuts anyway!

Tax his cow,
Tax his
goat,
Tax his pants,
Tax his coat.

Tax his ties,
Tax his
shirt,
Tax his work,
Tax his dirt.

Tax his tobacco,
Tax his
drink,
Tax him if he
Tries to think.

Tax his cigars,
Tax his
beers,
If he cries
Tax his tears.

Tax his car,
Tax his
gas,
Find other ways
To tax his ass.

Tax all he has
Then let him
know
That you won’t be done
Till he has no dough.

When he screams
and hollers;
Then tax him some more,
Tax him till
He’s good and
sore.

Then tax his coffin,
Tax his grave,
Tax the sod in
Which
he’s laid…

Put these words
Upon his tomb,
‘Taxes drove me
to
my doom…’

When he’s gone,
Do not relax,
Its time to apply
The
inheritance tax.

Accounts Receivable Tax
Building Permit Tax
CDL
license Tax
Cigarette Tax
Corporate Income Tax
Dog License
Tax
Excise Taxes
Federal Income Tax
Federal Unemployment Tax
(FUTA)
Fishing License Tax
Food License Tax
Fuel Permit Tax
Gasoline
Tax (currently 44.75 cents per gallon)
Gross Receipts Tax
Hunting License
Tax
Inheritance Tax
Inventory Tax
IRS Interest Charges IRS Penalties
(tax on top of tax)
Liquor Tax
Luxury Taxes
Marriage License
Tax
Medicare Tax
Personal Property Tax
Property Tax
Real Estate
Tax
Service Charge Tax
Social Security Tax
Road Usage
Tax
Recreational Vehicle Tax
Sales Tax
School Tax
State Income
Tax
State Unemployment Tax (SUTA)
Telephone Federal Excise
Tax
Telephone Federal Universal Service Fee Tax
Telephone Federal, State
and Local Surcharge Taxes
Telephone Minimum Usage Surcharge Tax
Telephone
Recurring and Nonrecurring Charges Tax
Telephone State and Local
Tax
Telephone Usage Charge Tax
Utility Taxes
Vehicle License
Registration Tax
Vehicle Sales Tax
Watercraft Registration Tax
Well
Permit Tax
Workers Compensation Tax

STILL THINK THIS IS
FUNNY?
Not one of these
taxes existed 100 years ago, & our nation was the most prosperous in the
world.
We had absolutely no national debt, had the largest middle class in
the world, and Mom
, if agreed, stayed home to raise the
kids.

What in the heck happened? Can you
spell ‘politicians?’

I hope this goes around THE USA at least
545 times!!! YOU can help it get there!!!

GO AHEAD. . . BE AN
AMERICAN!!!

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Deficitation

July 27, 2011

I thought I would only write 1 newsletter this week.

 

You know….

 

Keep it light…

 

Talk about the summer fun

 

 

As much as I am trying to enjoy this summer

 

I am finding that I once again have to speak up

 

 

 

I wrote several newsletters in the past

 

Discussing the deficit and government spending

 

 

It just amazes me that Washington

 

Is going out of their way

 

Not to bring a serious resolve to the issue

 

 

Short term……Long term

 

 

What steps must be taken?

 

 

Putting party politics aside

 

 

That will send a message to the financial world

 

That we are done drinking the kool aid

 

 

The US will take responsible steps

 

To control our cost

 

And bring our economy in line

 

 

We can no longer continue to borrow $.43 cent of every
dollar

 

To support our economy

 

 

The chart below shows the growth of government

Over the past 40 years

 

 

TotReceipt     Tot Expense  Surplus/Deficit

 

1970      $192B          $195B              $2.8B

 

1980      $517B        $590B               -$73B

 

1990      $1.031T     $1.253T         -$221B

 

2000      $2.025T   $1.788T        +$236B

 

2010      $2.165T   $3.833T     – $1.555T

 

 

They are talking of doing a short term deal

 

 

Cutting spending by $1.2T over the next 10 years

 

 

That’s about $120B a year

 

Although they say most of it is on the back end

 

 

Smoke and Mirrors….

 

 

Every family has to deal with budget issues

 

 

We are all held to responsible spending

 

 

Even when we borrow money

 

 

Banks look at acceptable levels of

 

Debt to Income

 

 

 

We are a great nation…

 

Difficult decisions have been made in the past

 

To bring us to where we are today

 

 

Let Washington send a strong message

 

 

That we are back…

 

 

And ready to do business responsibly.

As reported in Huffinton Post by Ryan Grim and Elise Foley

WASHINGTON — More than half the Senate was convened early Tuesday morning by Sen. Mark Warner (D-Va.) for a briefing on a deficit-reduction plan being negotiated by group of five senators from both parties once known as the “Gang of Six.”

The gang had previously comprised six lawmakers before Sen. Tom Coburn (R-Okla.) abandoned the talks, rebuking Democrats for being unwilling to cut Social Security or Medicare. Yet Coburn had heavy praise for the plan outlined Tuesday morning, raising hopes (and fears) that the gang may be getting back together.

Senators were effusive about the plan after the briefing meeting, calling it “great” and saying it would likely gain support from a majority of the Senate. The plan includes $1.5 trillion in tax cuts, managed by spending caps and cuts to government programs.

“We’ve gone from a Gang of Six to a mob of 50,” said Sen. Joe Manchin (D-W.V.) after the meeting.

More than half of the Senate arrived to hear about the debt-reduction plan Tuesday morning, and the general atmosphere was positive, said Sen. Susan Collins (R-Maine).

“Everyone felt a sense of relief that there was a bipartisan, carefully constructed plan before us,” she told reporters outside the meeting.

A Senate Democratic aide familiar with the negotiations with Coburn said that the Oklahoma senator had refused Democratic entreaties, even after cuts to entitlements were offered. But now that the five other Senators are moving forward without him, the aide said, Coburn is more interested in being involved again.

// “This type of a wider audience may make him less important, particularly if there are other Republicans willing to step up,” said the aide.

A different Senate aide said it remains unclear whether there is enough time to move forward with the plan before Aug. 2, the date the Treasury Department predicts the federal government could begin defaulting on its debt. But Collins said the Gang has completed enough work on their deal that it could be ready in time for a pre-Aug. 2 vote.

“They have done so much work that a lot of the issues have been gone through, and they’re in the midst of drafting statutory language,” Collins said. “I believe it should be considered in conjunction with the debt ceiling plan.”

Sen. Kay Bailey Hutchison (R-Texas) said the plan could gain traction in the Senate and even in the Republican-controlled House, which is committed to major spending cuts.

“I think if you look at the details here, they will see it does lots of things they’ve called for,” Hutchison told reporters.

“They have come up with a plan that can get a majority vote in the Senate, very likely 60,” she said, adding she would vote for the plan. “The House should like this plan because it has spending cuts.”

UPDATE 1:45 p.m.: President Barack Obama expressed some support of the Gang of Six plan during remarks to the press on Tuesday, calling the plan a “very significant step” that is “broadly consistent with the approach that I’ve urged.”

“What it says is we’ve got to be serious about reducing domestic spending, both in domestic and in defense,” he said. “We’ve got to be serious about tackling health care spending and entitlements in a serious way and we’ve got to have some additional revenue so we have an approach in which there is shared sacrifice.”

UPDATE 2:10 p.m.: The Gang of Six plan is laid out in a summary flyer obtained by HuffPost and details the group’s proposal for cutting the deficit by more than $3.6 trillion over the next decade.

The plan would immediately cut $500 billion in spending to bring down the deficit. It would also include major tax cuts, with about $1.5 trillion in overall tax savings, its authors say.

But that estimate factors in a $1.7 trillion cut to the alternative minimum tax — a tax Congress already eliminates much of every year. But even with the AMT cuts, the package raises only a net $200 billion compared to cuts of more than $3 trillion — not exactly a balanced approach.

Much of the Gang of Six plan would require other agencies and Congressional committees to work to find savings, setting up guidelines for $80 billion in armed service cuts and $70 billion from health, education, labor and pensions. Under the plan, the Budget Committee would be required to set spending caps that would extend over the next decade.

UPDATE 3:10 p.m.: Senate Majority Leader Harry Reid (D-Nev.) threw some cold water on the Gang of Six plan Tuesday, voicing doubts that the plan could be scored and passed before the Aug. 2 deadline for raising the debt ceiling.

Reid said he got a call from Congressional Budget Office Director Doug Elmendorf, who said the plan would take at least two weeks to score for cost and savings, putting the completion of that work just beyond the Aug. 2 deadline. Reid called the plan “wonderful” and said he does not want to diminish enthusiasm over it, but said alternatives still must be considered.

Reid said Sen. Mark Warner (D-Va.), a Gang of Six member, would meet with him in the next 24 hours with parts of the plan that can be incorporated into a deal brokered by Reid and Senate Minority Leader Mitch McConnell (R-Ky.) to raise the debt ceiling.

Michael McAuliff contributed to this report.

As printed in philly.com

 

LindaPeterson  of West Chester was eager to switch from Peco Energy Co. at the end of last year.
She signed up for an alternative electricity supplier offering avariable rate that would fluctuate depending upon market conditions.

AsPeterson  discovered, variable rates sure can vary.

For a few months this year, Peterson’s rate was very attractive, indeed. But it went up
58 percent from May to June. At 15.63 cents per kilowatt hour – that’s just the
generation charge – her last bill was about $23 more than it would have been had
she stayed with Peco.

“I knew there would be some variation, but that’s just a huge, huge increase,” said
Peterson, who is semi-retired.

A representative from her supplier, Palmco Power PA L.L.C., did not return a phone call about
Peterson’s bill. But its customer-service department, in an unsigned e-mail,
blamed an “unusual” wholesale price spike for the increase.

“Thankfully,however, shortly after the wholesale price increase, wholesale prices dropped,and our
price billed to our customers dropped accordingly,” it said.

In Pennsylvania’s buyer-beware world of deregulated utilities, Peterson can’t do much but switch to
another supplier. Her agreement, like most with variablerates, does not carry an
early cancellation fee.

According to the state Public Utility Commission, a supplier can bill a variable-rate customer
at whatever price it believes the market will bear, even if the customer
originally thought he or she was getting a discount.

A company also can offer different rates to different customers. The variable rate that is
on a customer’s bill does not have to be the same as the initial price posted on
the PUC’s website, http://PAPowerSwitch.com.

“A supplier could have one rate for PowerSwitch . . . while offering a different rate
door-to-door . . . yet a different rate for enrolling by mail,”Denise McCracken,
the PUC’s spokeswoman, said in an e-mail. “They could offer me one rate . . . my
neighbor a different rate (as long as they are not discriminatingon the basis of
race, gender, etc. of course).”

In Pennsylvania and New Jersey, where dozens of electrical suppliers are competing, customers
accustomed to a lifetime of regulated utility prices now face a dizzying array of
choices – fixed rates, variable rates, and”green” rates from renewable-power
generators. Next year, Peco customers will begin seeing rates that vary hourly,
according to the market.

More than 20 percent of Peco customers have switched since Jan. 1. But despite promises of
savings, most residential customers seem unwilling to leave the protective comfort of the regulated utility.

On Monday, the Retail Energy Supply Association launched a campaign to educate customers
about the benefits of switching, but it faces headwinds generated bycustomers such as Peterson, who share their experiences.

“My neighbors are very scared about switching,” said Peterson, a clinical social worker with a
small private practice.

Peterson was an early adopter of electricity choice. She had switched suppliers in the late
1990s, when limited deregulation was introduced into the Peco market. Competitive
suppliers eventually pulled out because they could no longer beat the utility’s
capped rates. But when Peco’s rate limits were lifted at the endof 2010,
competitive suppliers returned en masse.

Peterson signed up with Palmco, the marketing arm of a Brooklyn fuel-oil dealer, which posted a
price on the PUC’s website. She liked the company’s low-key marketing,compared
with the blustery direct-mail appeals she received from bigger suppliers.

“The fact that they weren’t doing a lot of heavy marketing, I guess I trusted them
a little,” she said. “I didn’t expect them to escalate the price like that.”

According to a review of Peterson’s bills, Palmco’s rate was very generous during the first
few months. It charged her an introductory rate of 5.78 cents perkilowatt hour,
clearly a below-market 42 percent off Peco’s rate. But by May,Palmco’s rate had
increased to 9.91 cents – just about the same rate Peco was charging.

And then in June came the whopping 58 percent increase – to 15.63 cents per kilowatt hour.
Peterson averages about 475 kilowatt hours a month.

The owner of Palmco, Robert Palmese, did not return a phone call. But his
company’scustomer-service department offered this response:

“Our family has been in the energy business since 1938, 73 years. We know from experience
that it is always in the best interest of our customers to keep prices for energy
as low as possible.”

In an interview in October, Palmese offered reassurance to customers who might consider
his company.

“We have very casual marketing,” he said. “We’d like our customers tolike us. Just try
us, you may like us.

“You are always free to leave.”

 

Our Perspective

HBS is a independent deregulated energy management consultant. We have been providing deregulated energy solutions to our clients since 2000. We have heard stories like the one experienced above, countless times.

While the energy market prices are at their low point, it would be smart to lock into a fixed price contract for natural gas or electric for a minimum of 1 year but also be willing to look at the 2 year option. Fixed priced contracts normally provide a 10% to 15% savings under what Peco ic currently charging.

Do not be fooled by the variable rate options.

It is a good marketing ploy….

no contract…

month to month float….

But you will only pay more in the long run.

 

To learn more about deregulated opportunities for yopur business email

george@hbsadvantage.com

Visit us on the web www.hutchinsonbusinesssolutions.com

Reported by Sam Stein for The Huffington Post

WASHINGTON — Sunday night’s much anticipated debt ceiling meeting between the president and congressional leadership managed to produce an outcome, just not the desirable one. Attendees did not find agreement on a package of cuts, revenues, or entitlement reforms. Instead, they settled on the decision to meet again and, perhaps after Monday’s meeting, again after that.

As the government approaches the August 2 date at which it will run out of cash, the need to hold meetings is the only thing both sides can agree on.

Sunday night proved no different, as lawmakers met in the Cabinet Room with no apparent budging from either end. According to multiple attendees, the discussion began with President Obama pressing, once more, for lawmakers to consider a “grand” bargain to end the debt ceiling debate, something that would combine $1 trillion in revenue raisers with $3 trillion in cuts, including reforms to Medicare and Medicaid and smaller tinkers to Social Security.

“The basic thrust of the meeting was the president making the case for why to do a big deal and putting it to everyone around the table: if not now, when? And if not the big deal, then what is the alternative, particularly given that it is the Republicans who have said we need to use this opportunity to do something serious about the deficit,” said a Democratic official briefed on the meeting. “The president is a bit frustrated too … He is out there. He is ready and willing to take political heat. He is already taking some heat.”

Less than 24 hours earlier, House Speaker John Boehner (R-Ohio) had formally rejected the very offer that Obama was pressing for, insinuating that it was too heavy a political lift and that negotiators would be better served building on the $2.4 trillion deal that Vice President Joseph Biden had been crafting in a series of bipartisan meetings with congressional leaders. Obama’s pitch did little to chip away at that opposition. The speaker, according to several sources briefed on Sunday’s meeting, did not say much during it, deferring instead to House Majority Leader Eric Cantor (R-Va.). But a Boehner aide made it clear after the fact that his boss hadn’t exactly been won over.

“The speaker told the group that he believes a package based on the work of the Biden group is the most viable option at this time for moving forward,” said the aide. “The speaker restated the fundamental principles that must be met for any increase in the debt limit: spending cuts and reforms that are greater than the amount of the increase, restraints on future spending, and no tax hikes.”

And so it went for roughly 75 minutes, as the eight congressional attendees, along with the president and vice president, spoke at varying lengths about not just the economic logic of their respective plans but the political arithmetic behind them.

Cantor and Senator Jon Kyl (R-Ariz.), the Senate minority whip, both insisted that a grand bargain did not have the votes needed to pass. “We should start talking about the Biden-type framework instead,” they added, according to a GOP source briefed on the meeting.

Biden, for his part, reminded the Republican attendees that the package they were now touting was one they had previously abandoned (both Cantor and Kyl walked away from the negotiating table when the talks turned to revenues). Besides that, he argued, it wasn’t really a package at all, but rather a list of goals with blanks requiring filling.

“The one really important point Biden made is that it is a bit of a fallacy to talk about the Biden framework as something that could just be taken off the shelf, because nothing was agreed to in those conversations and the vice president made it very clear that we weren’t going to [reach a deal] without revenues,” said the Democratic official briefed on the meeting.

If lawmakers wanted to go even smaller — say, take the $1 trillion in cuts that Biden and Republicans had pinpointed – they would have to convince the president first. Obama, according to a GOP aide, told attendees on Sunday that he would not sign a debt deal that didn’t go through 2013. He and Biden also made it clear that even the smaller packages would have to have a revenue component to earn their support.

For all the intractability, there were relatively few moments of tension on Sunday evening. According to those briefed on the exchanges, lawmakers took turns talking about their preferred approaches. There were some jabs thrown. Senate Majority Leader Harry Reid (D-Nev.), according to a Hill aide, accused the Republican Party of falling far short of their rhetorical bluster when the topic came to deficit reduction. He pointed to the fiscal commission, the Gang of Six negotiations, the Biden deal and Boehner’s refusal to craft a grand compromise with Obama as instances in which Republicans simply left the table when it came time to make tough choices. “Every time we try to do something big on this, you walk away,” the aide paraphrased him as saying.

By and large, however, the conversation was, as one Democratic official acknowledged, “cordial.” And that may be where the problem lies. With ten days to go before the president wants a bill presented — so that it can go through the legislative process in time to pass by August 2 — the sides are still dealing in broad strokes. Additionally, there isn’t a clear sense of what type of package could garner the necessary support. The president will be hosting a news conference on Monday before he meets with congressional negotiators once more. He left the meeting on Sunday telling them to have their schedules cleared or flexible for the full week.

“The president ended the meeting by saying we will come back here tomorrow and that we should be prepared to be here every day,” recalled the Democratic official briefed on the meeting. “He said, I want people to come back here tomorrow with an answer to the question: If not this, what is your plan and how are you going to get 218 votes [in the House] for it?”

By  Bruce Bartlett, Published: July 7

 

In recent months, the federal debt ceiling — last increased in February 2010 and now standing at $14.3 trillion — has become a matter of national debate and political hysteria. The ceiling must be raised by Aug. 2, Treasury says, or the government will run out of cash. Congressional Republicans counter that they won’t raise the debt limit unless Democrats agree to large budget cuts with no tax increases. President Obama insists that closing tax loopholes must be part of the package. Whom and what to believe in the great debt-limit debate? Here are some misconceptions that get to the heart of the battle.

1. The debt limit is an effective way to control spending and deficits.

Not at all. In 2003, Brian Roseboro, assistant secretary of the Treasury for financial markets, explained it best: “The plain truth is that the debt limit does not affect the deficits or surpluses. The critical revenue and spending decisions are made during the congressional budget process.”

The debt ceiling is a cap on the amount of securities the Treasury can issue, something it does to raise money to pay for government expenses. These expenses, and the deficit they’ve wrought, are a result of past actions by Congress to create entitlement programs, make appropriations and cut taxes. In that sense, raising the debt limit is about paying for past expenses, not controlling future ones. For Congress to refuse to let Treasury raise the cash to pay the bills that Congress itself has run up simply makes no sense.

Some supporters of the debt limit respond that there is virtue in forcing Congress to debate the national debt from time to time. This may have been true in the past, but the Budget Act of 1974 created a process that requires Congress to vote on aggregate levels of spending, revenue and deficits every year, thus making the debt limit redundant.

 

2. Opposition to raising the debt limit is a partisan issue.

Republicans are doing the squawking now because there is a Democrat in the White House. But back when there was a Republican president, Democrats did the squawking. On March 16, 2006, one Democratic senator in particular denounced George W. Bush’s request to raise the debt limit. “The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure,” the senator thundered. “Increasing America’s debt weakens us domestically and internationally. . . . Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren.”

That senator was Barack Obama, and he, along with most Democrats, voted against a higher limit that day. It passed only because almost every Republican voted for it, including many who are now among the strongest opponents of a debt-limit increase.

 

3. Financial markets won’t care much if interest payments are just a few days late — a “technical default.”

Some Republicansbelieve that bondholders know they will get their money eventually and will understand that a brief default — just a few days — might be necessary to reduce future deficits. “If a bondholder misses a payment for a day or two or three or four,” Rep. Paul Ryan (R-Wis.) told CNBC in May, “what is more important [is] that you’re putting the government in a materially better position to be able to pay their bonds later on.”

 

This is nothing but wishful thinking. The bond-rating agencies have repeatedly warned that any failure to pay interest or principal on a Treasury security exactly when due could cause the U.S. credit rating to be downgraded, which would push interest rates up as investors demand higher rates to compensate for the increased risk.

J.P. Morgan recently surveyed its clients and asked how much rates would rise if there was a delay in payments, even a very brief one. Domestic investors thought they would go up by 0.37 percentage points, but foreign buyers — who own close to half the publicly held debt — predicted an increase of more than half a percentage point. Any increase in this range would raise Treasury’s borrowing costs by tens of billions of dollars per year.

Some may think that a rise in rates would be temporary. But there was a case back in 1979 when a combination of a failure to increase the debt limit in time and a breakdown of Treasury’s machines for printing checks caused a two-week default. A 1989 academic study found that it raised interest rates by six-tenths of a percentage point for years afterward.

 

4. It’s worth risking default on the debt to prevent a tax increase, given the weak economy.

While Republicans’ concerns about higher taxes are not unreasonable, most economists believe that any fiscal contraction at this time would be dangerous. They note that a large cut in spending back in 1937 brought on a sharp recession, which undermined the recovery the country was making after the Great Depression.

Republicans respond that tax increases are especially harmful to growth. However, they made the same argument in 1982, when Ronald Reagan requested the largest peacetime tax increase in American history, and again in 1993, when Bill Clinton also asked for a large tax boost for deficit reduction. In both cases, conservative economists’ predictions of economic disaster were completely wrong, and strong economic growth followed.

 

5. Obama must accept GOP budget demands because he needs Republican support to raise the debt limit.

Republicans believe they have the president over a barrel. But their hand may be weaker than they think. A number of legal scholars point to Section 4of the 14th Amendment, which says, “The validity of the public debt of the United States . . . shall not be questioned.”

Some scholars, including Michael Abramowicz of George Washington University Law Schooland Garrett Epps of the University of Baltimore Law School, think this passage may make the debt limit unconstitutional because by definition, the limit calls into question the validity of the public debt. Thus Treasury may be able to just ignore the debt limit.

Other scholars, such as Michael McConnell of Stanford Law School, say the 14th Amendment will force Obama to prioritize debt payments and unilaterally slash spending to pay bondholders. But this would involve the violation of laws requiring government spending.

Either way, a failure to raise the debt limit would force the president to break the law. The only question is which one.

 

Bruce Bartlett, a former adviser to President Ronald Reagan and a Treasury official in the George W. Bush administration, is the author of “The New American Economy: The Failure of Reaganomics and a New Way Forward.” He will be online at 11 a.m. on Monday, July 11, to chat. Submit your questions and comments now.

Want to challenge everything you know? Visit our “Five myths” archive, including “Five myths about interest rates,” “Five myths about the Bush tax cuts,” “Five myths about defense spending,” and “Five myths about the deficit.”

Why You Pay More

July 8, 2011

Each year at the end of July or in early August,

 

the State of New Jersey

 

mails to all NJ employers

 

the updated Employer
Contribution Reports
.

 

 

This report notifies
employers of their new unemployment rate

 

For the next 12 months

 

 

This begins a yearly ritual.

 

The owner sends a copy to their accountant,

 

the account reviews it

 

and life goes on.

 

 

Unemployment is a necessary evil.

 

 

Did you know….

 

 

Unemployment is the 2nd highest employer mandated tax paid by a business?

 

 

It is the only tax that you have the opportunity to control
what you contribute?

 

 

 

Unemployment is similar to having a checking account with
the State.

 

 

With this report….

 

 

The State tells you how much is in your account (reserve
balance)

 

 

The State also show you how many dollars were paid out in
claims

 

(how much was taken
out of your checking account)

 

 

The State assigns a rate based on the reserves you are
carrying

 

As a percentage of the taxable wages you have paid over the
past 3 to 5 years

 

 

 

This rate determines how much you will contribute into the
unemployment fund

 

over the next 12 months.

 

 

 

Seems pretty simple….

 

 

 

You hear all the latest political buzz

 

 

 

Everyone is talking about the deficit….

 

 

What are we to do about the debt ceiling?

 

 

 

Reduce our cost…….

 

 

Don’t raise taxes……

 

 

 

My guess is that nobody wants to talk about

 

 

The unemployment
deficit!!!!!

 

 

 

Each month we get updated numbers on the job market

 

 

Unemployment is over 9%

 

 

How are we to support the growing number in unemployment?

 

 

 

Did anybody tell you

 

That you will be getting a tax increase

 

 

To help cover the shortfall?

 

 

 

 

In the NJ Unemployment Rate Table

 

There are 6 columns the State uses to determine employers’
rates

 

 

 

In 2009/2010.

 

NJ worked off column
B
to establish employer rates

 

 

Because of the rise in unemployment claims

 

The reserves became depleted

 

 

 

In order to build up the reserves in 2010/2011,

 

There was talk in NJ of working off column D.

 

 

The State chose to buffer the increase passed onto employers

 

and work off column C instead

 

 

 

That meant

 

last year every employer in NJ saw their rates go up
automatically

 

And pay more into the unemployment fund.

 

 

 

Did the shift from column  B to C help?

 

 

 

The state still has a shortfall

 

 

 

This year,

 

There is talk of using column
E

 

for 2011/2012

 

 

However, most feel again

 

this would be too much of an increase

 

 

 

Instead,

 

 

 

Governor Christie’s signed a bill last Friday (7/1/11)

 

to work from Column D

 

 

 

I must have missed
that phone call!!!!!

 

Wasn’t that the Friday
before the holiday weekend?

 

I think I was stuck in
a traffic jam…

 

 

 

Each year,

 

the state continues to increase taxes by

 

 

shifting the table
used to assign rates to each employer.

 

 

We are all supposed to sit back and accept this as

 

 

The cost of doing business???

 

 

 

Besides jumping around on the table charts

 

 

 

How does an employer
even know their rates are correct?

 

 

Well, the State sent
me this form and it said this is our new rate

 

 

 

 

 

If you are an employer

 

with over 100 employees,

 

 

you should be asking that question.

 

 

The new rate does
not affect just 1 employee

 

But all employees

 

Therefore businesses with a larger employee base

 

Are affected more

 

 

 

If you currently employ over 100 employees,

 

Take the time to question your new rate

 

when you receive your notice.

 

 

 

Did you know that NJ has close to a 10% error rate in the processing of claims?

 

Nationally the error rate is over 11%

 

 

If the State is paying too much out in claims…..

 

 

Are they taking too
much money out of your checking account?

 

 

 

Really, close to a 10%
error rate

 

Who is holding the
state accountable?

 

 

 

For the last 10 years

 

Hutchinson Business Solutions along with our strategic
partner DCR

 

Has been asking this question for our clients.

 

 

We are your public
advocate.

 

 

There have been multiple instances that we have found an
error

 

In the rate assigned by the State

 

 

This is just not a NJ issue,

 

We see this in all the states we currently service
unemployment

 

 

 

How do you know if your current unemployment rate is
correct?

 

 

We would like to validate your

 

 

New unemployment rate,
for no cost.

 

 

We currently service many of the major corporations in the
Tri State area

 

 

For over 20 years

 

 

HBS and DCR have been at the forefront of unemployment

 

Representing the clients interest

 

 

Now more than ever, employers need to be proactive

 

 

Take the time to contest claims

 

 

Verify that the amount paid out for claims are correct

 

 

As the cost of unemployment continues to rise

 

You must be diligent

 

And take the necessary steps to manage your reserves

 

 

 

 

There may be some instances you cannot control

 

 

The state switches columns and everyone is affected

 

 

However,

 

There are multiple rates within each column

 

 

 

That is something we can
manage
.

 

 

Our goal is to keep the dollars in your account

 

And achieve the best rate possible for our clients

 

 

 

Notice that the state will always contact you

 

If you owe taxes

 

 

Unfortunately,

 

They do not contact you,

 

 

If you are overpaying
taxes

 

 

The onus is on you

 

 

 

 

Let us help you

 

All you need to do is ask.

 

 

Let us validate your unemployment rate?

 

 

Many clients have been surprised at what we have found.

 

 

 

 

To learn more about how unemployment rates affect your
business, email

 

george@hbsadvantage.com
or call 856-857-1230

 

Visit us on the web www.hutchinsonbusinesssolutions.com

As reported in Huffington Post

WASHINGTON — President Barack Obama is renewing an old fight with the business community by insisting that $400 billion in tax increases be part of a deficit-reduction package. His proposals have languished on Capitol Hill, repeatedly blocked by Republicans, often with help from Democrats.

Some would raise big money. Limiting tax deductions for high-income families and small business owners could raise more than $200 billion over the next decade. Others are more symbolic, such as scaling back a tax break for companies that buy corporate jets.

The corporate jet proposal would raise $3 billion over the next decade, according to GOP congressional aides. That’s a relatively small sum in the big scheme of Washington budgets, but Obama and Democrats call attention to it repeatedly in their effort to portray Republicans as defenders of corporate fat cats.

No matter how Democrats characterize their proposals as revenue raisers or plugging tax loopholes, GOP leaders oppose them all, arguing that raising taxes in a bad economy would only make matters worse.

“If we choose to keep those tax breaks for millionaires and billionaires, if we choose to keep a tax break for corporate jet owners, if we choose to keep tax breaks for oil and natural gas companies that are making hundreds of billions of dollars,” Obama said this week, “then that means we’ve got to cut some kids off from getting a college scholarship, that means we’ve got to stop funding certain grants for medical research, that means that food safety may be compromised, that means that Medicare has to bear a greater part of the burden.”

The White House has identified about $600 billion in tax increases it wants over the next decade. About $400 billion of them were offered as part of deficit-reduction talks led by Vice President Joe Biden. That would be paired with more than $1 trillion in spending cuts.

Some of the tax proposals are vague and budget experts have yet to calculate just how much they would raise. For example, limiting deductions for high-income families and small businesses could raise anywhere between $210 billion and $290 billion, depending on what threshold is established as high income.

Obama is proposing to eliminate $41 billion in tax breaks for oil and natural gas companies, raise taxes on investment fund managers by $21 billion and change the way many businesses value their inventories for tax purposes. The change in inventory accounting would raise an estimated $70 billion over the next decade, hitting manufacturers and energy companies, among others.

Treasury Secretary Timothy Geithner has given Congress an Aug. 2 deadline for raising the current debt ceiling, currently $14.3 trillion, to avoid defaulting on the government’s financial obligations for the first time in the nation’s history. He warns that a default could trigger potentially dire consequences for an already anemic economy, including higher interest rates, tighter credit and new rounds of job layoffs. The government hit the debt ceiling in May and has been juggling accounts since then to make all its payments.

Obama says he is proposing a balanced approach that spreads the pain among people who rely on government services and those most able to finance them.

While Republican leaders argue that raising taxes is bad policy, bad politics and too unpopular to pass the Republican-controlled House, several GOP senators have said they are willing to consider eliminating unspecified tax breaks to reduce the deficit.

Two weeks ago, 33 Republican senators joined a 73-27 majority to repeal a $5 billion annual tax subsidy for ethanol gasoline blends. On Wednesday, Sen. Ron Johnson, R-Wis., said, “I would like to do away with special tax breaks but not legitimate business deductions.”

But GOP leaders insist there is no support among Republicans to impose the kind of tax increases Obama is proposing.

“The president is sorely mistaken if he believes a bill to raise the debt ceiling and raise taxes would pass the House,” Speaker John Boehner, R-Ohio, said. “The votes simply aren’t there, and they aren’t going to be there because the American people know tax hikes destroy jobs.”

Among the tax increases proposed by the White House and the amount they’d raise over the next decade:

_ Limit itemized deductions, including those for charitable contributions and mortgage interest, for families and small business owners making more than $500,000. Under current law, if a taxpayer’s top income tax rate is 35 percent – the highest rate – a $100 deduction is worth $35 in tax savings. For several years, Obama has proposed limiting itemized deductions for people making above $250,000 to 28 percent, meaning a $100 deduction would be worth only $28 in tax savings at most. That would raise $293 billion. Increasing the income threshold to $500,000 would raise “in the ballpark of $210 billion,” said Maryland Rep. Chris Van Hollen, one of the House Democratic negotiators in the Biden talks.

_ Change the way businesses value their inventory, raising an estimated $70 billion. Current law allows businesses to lower their taxable profits – and their tax bills – by using an accounting method that can inflate the cost of goods sold. Obama proposes to phase out the practice, known as last-in, first out, or LIFO.

_ Increase taxes on investment fund managers, mainly hedge funds and private equity firms, raising about $21 billion. Investment managers typically pay capital gains taxes on their fees, with a top rate of 15 percent. Obama wants to tax the fees as regular income, with a top tax rate of 35 percent.

_ Eliminate about $41 billion in tax breaks for oil and natural gas companies. Obama has called for eliminating tax breaks for all oil and gas companies every year since he took office in 2009. The biggest is a deduction for production expenses that is available to all manufacturers. In May, the Senate rejected a smaller proposal that targeted the five biggest companies: Shell Oil Co., ExxonMobil, ConocoPhillips, BP America and Chevron Corp.

___

Associated Press writers Jim Kuhnhenn, Andrew Taylor and Laurie Kellman contributed to this report.