So the fondest Washington hopes for a grand debt-limit deal have broken down over taxes. House Speaker John Boehner said late Saturday that he couldn't move ahead with a $4 trillion deal because President Obama was insisting on a $1 trillion tax increase, and the White House quickly denounced House Republicans for scuttling debt reduction and preventing "the very wealthiest and special interests from paying their fair share."
How dare Republicans not agree to break their campaign promises and raise taxes when the jobless rate is 9.2% and President Obama's economic recovery is in jeopardy?
We think Mr. Boehner is making the sensible choice. No one wants to reform the tax code more than we do, but passing a $1 trillion tax increase first on the promise of tax reform later is a political trap. If the President were really sincere about reform and a willingness to keep the top tax rate at or below 35%, he'd negotiate that at the same time he does a debt deal. Mr. Boehner will have a hard enough time getting any debt-limit increase through the House, much less one that raises tax rates.
Keep in mind that Mr. Obama has already signed the largest tax increase since 1993. While everyone focuses on the Bush tax rates that expire after 2012, other tax increases are already set to hit the economy thanks to the 2010 Affordable Care Act. As a refresher, here's a non-exhaustive list of ObamaCare's tax increases:
• Starting in 2013, the bill adds an additional 0.9% to the 2.9% Medicare tax for singles who earn more than $200,000 and couples making more than $250,000.
• For first time, the bill also applies Medicare's 2.9% payroll tax rate to investment income, including dividends, interest income and capital gains. Added to the 0.9% payroll surcharge, that means a 3.8-percentage point tax hike on "the rich." Oh, and these new taxes aren't indexed for inflation, so many middle-class families will soon be considered rich and pay the surcharge as their incomes rise past $250,000 due to tax-bracket creep. Remember how the Alternative Minimum Tax was supposed to apply only to a handful of millionaires?
Taxpayer cost over 10 years: $210 billion.
• Also starting in 2013 is a 2.3% excise tax on medical device manufacturers and importers. That's estimated to raise $20 billion.
• Already underway this year is the new annual fee on "branded" drug makers and importers, which will raise $27 billion.
• Another $15.2 billion will come from raising the floor on allowable medical deductions to 10% of adjusted gross income from 7.5%.
• Starting in 2018, the bill imposes a whopping 40% "excise tax" on high-cost health insurance plans. Though it only applies to two years in the 2010-2019 window of ObamaCare's original budget score, this tax would still raise $32 billion—and much more in future years.
• And don't forget a new annual fee on health insurance providers starting in 2014 and estimated to raise $60 billion. This tax, like many others on this list, will be passed along to consumers in higher health-care costs.
There are numerous other new taxes in the bill, all adding up to some $438 billion in new revenue over 10 years. But even that is understated because by 2019 the annual revenue increase is nearly $90 billion, or $900 billion in the 10 years after that. Yet Mr. Obama wants to add another $1 trillion in new taxes on top of this.
The economic ironies are also, well, rich. Mr. Obama is now pushing to reduce the payroll tax by two-percentage points for another year to boost the economy, but he's already built in a big increase in that same payroll tax for 2013. So if a payroll tax cut creates jobs this year, why doesn't a payroll tax increase destroy jobs after 2013?
Mr. Obama is also touting spending cuts he's willing to make in entitlements in return for bigger tax increases, yet the spending increases built into ObamaCare aren't even up for discussion in the debt-limit talks. The Affordable Care Act adds more than 30 million more Americans onto Medicaid's rolls, when that program is already growing by 6.5% this year. So Mr. Obama is willing to cut current entitlements on grounds that they are unaffordable, but he's taken what may be the most expensive entitlement off the table.
We think this was the President's spend-and-tax plan from the very first. Run up spending and debt in the name of stimulus and health-care reform, then count on Wall Street bond holders and the political establishment to browbeat Republicans into paying for it all. He apparently didn't figure on the rise of the tea party, or 1.9% GDP growth and 9.2% unemployment two years after the recession ended.
Last November Republicans won the House and landslide gains in many states in large part because of the deep unpopularity of the stimulus and ObamaCare. Mr. Boehner has a mandate for spending cuts and repealing the Affordable Care Act. If Republicans instead agree to raise taxes in return for future spending cuts that may or may not happen, they will simply be the tax collectors for Mr. Obama's much expanded entitlement society.
Showing posts with label WALL STREET JOURNAL. Show all posts
Showing posts with label WALL STREET JOURNAL. Show all posts
Tuesday, July 12, 2011
Friday, June 17, 2011
Restaurant Groups Sue Labor Department
Trade groups representing the restaurant industry are suing the U.S. Labor Department for allegedly not allowing them to comment on new rules governing the way restaurants pay their employees.
Many restaurants take "tip credits" that allow them to count employees' tips as part of their wages. In the past, employers only had to inform workers that their tips would be used as a credit toward the minimum wage.
In April, the Labor Department amended the regulations in the Fair Labor Standards Act to state that restaurant owners now have to explain to each employee, in detail, the exact amount of tips that will be credited toward the minimum wage.
The new rules, which took effect in May, also state that the tip credit won't apply to any employees who haven't received such notification from their employer. If the restaurant fails to notify the employee of the tip credit, it would be liable to pay the employee cash itself to ensure the worker receives the $7.25 federal minimum hourly wage.
Restaurants also could face civil penalties of $1,100 for each violation and potential criminal penalties.
The National Restaurant Association, the Council of State Restaurant Associations and the National Federation of Independent Business claim in a complaint filed Thursday in U.S. District Court in Washington, D.C., that the Labor Department instituted the final rules without allowing a public comment period.
The NRA met with the Labor Department on May 3 and asked that it either withdraw the tip-credit notice regulations or delay implementation by 90 days to allow the industry to submit comments, but it says the Labor Department refused.
A department spokeswoman said all affected parties, including the plaintiffs, had a chance to comment when the proposed rule change first came about in 2008 and that the final rule the department issued in April was based on those comments. "The plaintiffs were not among those that commented," the spokeswoman said in a statement.
The changes come at a difficult time in the restaurant industry. The economic downturn has resulted in fewer people dining out and customers spending less when they do go to restaurants. Restaurants also are facing more expenses associated with posting calorie counts to their menu boards.
The cost of almost every commodity, from gasoline to cheese, is on the rise, putting a further dent in restaurants' profits. And as part of the new health-care law that takes effect in 2014, employers with 50 or more full-time workers would have to provide affordable health insurance to those who work more than 30 hours per week.
The Labor Department first proposed making changes to the regulations in 2008, during which time there was a public-comment period. But the restaurant groups claim the proposed amendments regarding the tip credit were of a technical nature at that time and didn't state anything about having to explain the specifics of the tip credit to employees.
Restaurant owners "now face an unanticipated, increased and unnecessary regulatory burden and expense in complying with the new tip credit notice requirements," the trade groups claim in their complaint.
Angelo Amador, the NRA's vice president of labor and work-force policy, says laying out exactly how much of an employee's wages will be paid out of tips is burdensome because the amount differs for each employee and the amount of tips an employee collects changes from week to week.
"Under the new regulations, the additional information required is so specific and detailed that one small misstep by an employer can result in substantial liability while not providing employees with additional helpful information," Mr. Amador says.
Many restaurants take "tip credits" that allow them to count employees' tips as part of their wages. In the past, employers only had to inform workers that their tips would be used as a credit toward the minimum wage.
In April, the Labor Department amended the regulations in the Fair Labor Standards Act to state that restaurant owners now have to explain to each employee, in detail, the exact amount of tips that will be credited toward the minimum wage.
The new rules, which took effect in May, also state that the tip credit won't apply to any employees who haven't received such notification from their employer. If the restaurant fails to notify the employee of the tip credit, it would be liable to pay the employee cash itself to ensure the worker receives the $7.25 federal minimum hourly wage.
Restaurants also could face civil penalties of $1,100 for each violation and potential criminal penalties.
The National Restaurant Association, the Council of State Restaurant Associations and the National Federation of Independent Business claim in a complaint filed Thursday in U.S. District Court in Washington, D.C., that the Labor Department instituted the final rules without allowing a public comment period.
The NRA met with the Labor Department on May 3 and asked that it either withdraw the tip-credit notice regulations or delay implementation by 90 days to allow the industry to submit comments, but it says the Labor Department refused.
A department spokeswoman said all affected parties, including the plaintiffs, had a chance to comment when the proposed rule change first came about in 2008 and that the final rule the department issued in April was based on those comments. "The plaintiffs were not among those that commented," the spokeswoman said in a statement.
The changes come at a difficult time in the restaurant industry. The economic downturn has resulted in fewer people dining out and customers spending less when they do go to restaurants. Restaurants also are facing more expenses associated with posting calorie counts to their menu boards.
The cost of almost every commodity, from gasoline to cheese, is on the rise, putting a further dent in restaurants' profits. And as part of the new health-care law that takes effect in 2014, employers with 50 or more full-time workers would have to provide affordable health insurance to those who work more than 30 hours per week.
The Labor Department first proposed making changes to the regulations in 2008, during which time there was a public-comment period. But the restaurant groups claim the proposed amendments regarding the tip credit were of a technical nature at that time and didn't state anything about having to explain the specifics of the tip credit to employees.
Restaurant owners "now face an unanticipated, increased and unnecessary regulatory burden and expense in complying with the new tip credit notice requirements," the trade groups claim in their complaint.
Angelo Amador, the NRA's vice president of labor and work-force policy, says laying out exactly how much of an employee's wages will be paid out of tips is burdensome because the amount differs for each employee and the amount of tips an employee collects changes from week to week.
"Under the new regulations, the additional information required is so specific and detailed that one small misstep by an employer can result in substantial liability while not providing employees with additional helpful information," Mr. Amador says.
Wednesday, June 8, 2011
WSJ’s Moore: US Would Be Better Off Without Obama and Bernanke
Everything the Obama administration has done to right the country from the Great Recession has misfired, and any change of the guard after the 2012 elections will be a welcome one, says Stephen Moore, editorial board member and senior economics writer at The Wall Street Journal.
Federal Reserve Chairman Ben Bernanke needs to go as well, as his money-printing campaign, known as quantitative easing, hasn't lead to a more-lasting economic recovery.
“First of all, anyone’s policies would be an improvement over this president’s policies,” Moore tells Newsmax.TV. “Really, everything that Barack Obama has done on the economy — with very few exceptions — has actually hurt the economy.”
Government spending has been excessive and has failed to fuel meaningful growth, taxes are on the rise, and dependence on increasingly more expensive foreign oil shows no signs of abating, Moore says.
“Our public policies are completely out of whack, and they are working against growth and they are working against jobs. We need a dramatic, 180-degree turn away from what Obama has done toward tax cuts, debt reduction, spending reforms, regulatory relief and sound money,” Moore says.
Tax Relief Needed
Take taxes.
Current tax rates on millionaires comes to about 40 percent officially but when factoring in taxes that Obama has applied to the country via his healthcare-reform laws, increased regulation and payroll taxes, the figure jumps as high as 62 percent. That percentage, Moore says, means the economy will fail because taxes are hitting the very people who could hire workers and get the country out of the doldrums.
“About two-thirds of those people are the small-business owners, the operators and investors — they are the people who create the jobs,” Moore says.
“So if you’re going to take 62 cents out of every dollar they earn, they’re not going to have a lot of money left over to reinvest in the business and reinvest in job creation.”
For Moore, several Republicans look promising to replace Obama, including Mitt Romney, Herman Cain, Tim Pawlenty and Michele Bachmann.
“Just about any Republican who is running of the seven or eight that have thrown their names or hats in the ring has a much more pro-growth policy,” Moore says. “I think Republicans have very strong ideas about rebuilding this economy. And boy, does it need to be rebuilt.”
Whoever takes the country’s reins, the new president needs to fire Fed Chairman Ben Bernanke, Moore says.
Under Bernanke, quantitative easing hasn't made fundamental improvements to the economy but rather, artificially inflated it, putting everyone living here at risk to rising inflation rates. “Ben Bernanke has been running an extraordinarily inflationary monetary policy,” Moore says.
“We have to stop pretending that we can get out of this economic recession by printing money. It’s never worked in the United States. It didn’t work in Argentina, Bolivia, Mexico, Russia — all the countries that have tried this.”
Otherwise, the dollar will cease to be the world’s reserve currency, which could serve as a serious blow to the U.S. economy and financial system.
On a lighter note, the housing market appears to be bottoming out.
Home prices in 20 U.S. cities dropped in March to their lowest level since 2003, according to the most recent S&P/Case-Shiller index of property values. “I actually think that we are actually close to the bottom. I actually think that real estate and housing is a pretty good buy right now,” he said.
President Barack Obama, meanwhile, may want to make sure consumer sentiment rises between now and November 2012.
Weak consumer sentiment can ruin a president’s chances of getting re-elected like it did for Jimmy Carter and George H.W. Bush.
The consumer confidence index shrank in May to 60.8 from 66.0 in April due to growing pessimism about jobs and incomes, according to the Conference Board.
The index stood at 76.4 in May 1991 and at 96.0 in May 1979.
Analysts are taking note.
“There is plenty of time for the national mood to change, but the decline in income expectations is particularly telling,” says Steve Blitz, an economist at ITG Investment Research, The Wall Street Journal reports.
Federal Reserve Chairman Ben Bernanke needs to go as well, as his money-printing campaign, known as quantitative easing, hasn't lead to a more-lasting economic recovery.
“First of all, anyone’s policies would be an improvement over this president’s policies,” Moore tells Newsmax.TV. “Really, everything that Barack Obama has done on the economy — with very few exceptions — has actually hurt the economy.”
Government spending has been excessive and has failed to fuel meaningful growth, taxes are on the rise, and dependence on increasingly more expensive foreign oil shows no signs of abating, Moore says.
“Our public policies are completely out of whack, and they are working against growth and they are working against jobs. We need a dramatic, 180-degree turn away from what Obama has done toward tax cuts, debt reduction, spending reforms, regulatory relief and sound money,” Moore says.
Tax Relief Needed
Take taxes.
Current tax rates on millionaires comes to about 40 percent officially but when factoring in taxes that Obama has applied to the country via his healthcare-reform laws, increased regulation and payroll taxes, the figure jumps as high as 62 percent. That percentage, Moore says, means the economy will fail because taxes are hitting the very people who could hire workers and get the country out of the doldrums.
“About two-thirds of those people are the small-business owners, the operators and investors — they are the people who create the jobs,” Moore says.
“So if you’re going to take 62 cents out of every dollar they earn, they’re not going to have a lot of money left over to reinvest in the business and reinvest in job creation.”
For Moore, several Republicans look promising to replace Obama, including Mitt Romney, Herman Cain, Tim Pawlenty and Michele Bachmann.
“Just about any Republican who is running of the seven or eight that have thrown their names or hats in the ring has a much more pro-growth policy,” Moore says. “I think Republicans have very strong ideas about rebuilding this economy. And boy, does it need to be rebuilt.”
Whoever takes the country’s reins, the new president needs to fire Fed Chairman Ben Bernanke, Moore says.
Under Bernanke, quantitative easing hasn't made fundamental improvements to the economy but rather, artificially inflated it, putting everyone living here at risk to rising inflation rates. “Ben Bernanke has been running an extraordinarily inflationary monetary policy,” Moore says.
“We have to stop pretending that we can get out of this economic recession by printing money. It’s never worked in the United States. It didn’t work in Argentina, Bolivia, Mexico, Russia — all the countries that have tried this.”
Otherwise, the dollar will cease to be the world’s reserve currency, which could serve as a serious blow to the U.S. economy and financial system.
On a lighter note, the housing market appears to be bottoming out.
Home prices in 20 U.S. cities dropped in March to their lowest level since 2003, according to the most recent S&P/Case-Shiller index of property values. “I actually think that we are actually close to the bottom. I actually think that real estate and housing is a pretty good buy right now,” he said.
President Barack Obama, meanwhile, may want to make sure consumer sentiment rises between now and November 2012.
Weak consumer sentiment can ruin a president’s chances of getting re-elected like it did for Jimmy Carter and George H.W. Bush.
The consumer confidence index shrank in May to 60.8 from 66.0 in April due to growing pessimism about jobs and incomes, according to the Conference Board.
The index stood at 76.4 in May 1991 and at 96.0 in May 1979.
Analysts are taking note.
“There is plenty of time for the national mood to change, but the decline in income expectations is particularly telling,” says Steve Blitz, an economist at ITG Investment Research, The Wall Street Journal reports.
Sunday, June 5, 2011
WSJ Economist Moore: Obama Is Just Wrong on Debt Ceiling
The U.S. economy could cave in under a “mountain of debt” if Republican lawmakers “blink first” and agree to raise the government debt ceiling without taking concrete steps to reduce the ballooning deficit, a top economic reporter told Newsmax.TV.
Stephen Moore, senior economics correspondent for The Wall Street Journal, said members of Congress and the American people need to realize the seriousness of the potential crisis as an Aug. 2 deadline looms for the government to raise its debt limit or default on its obligations.
“I think the first thing people need to understand is this is not a fire drill — this is a real financial emergency,” Moore said.
His comments came as credit ratings agency Moody’s said Thursday that it may cut the United States’ top-notch credit rating if lawmakers don’t make serious progress in their negotiations by mid-July.
The U.S. government does need to raise the limit on the amount of money it can borrow, Moore said, adding the warning that it also must halt its runaway spending.
The government is laboring “under a mountain of debt that could collapse the U.S. economy,” he told Newsmax.TV.
The Obama administration wants to raise the debt ceiling without first accepting that it will have to reduce spending by significant amounts, he said.
“I think the White House has this completely wrong,” Moore said. “The Republicans are saying we are not going to let you have the increase in the debt until you get this spending under control.”
“If Republicans fold on this one, which I don’t think they are going to do, but if they blink first . . . that’s what put America at risk of a financial crisis and a potential run on the dollar and a run on U.S. bonds.”
Moore said he approves of Republican House Speaker John Boehner’s call to cut spending by every dollar the debt limit is raised. “That’s a good way of framing the issue,” he said, adding, “The real question is, how much is Obama willing to cut the budget?”
And he warned that the government needs to begin budgetary reform — and maybe even adopt a balanced-budget amendment — to avoid future crises. The United States won’t be able to maintain its position as the global economic leader if it doesn’t fix the problem, he said.
“China owns more of our debt than any other country,” Moore said. “That puts us in a precarious position as we try to compete with that emerging economy.”
Stephen Moore, senior economics correspondent for The Wall Street Journal, said members of Congress and the American people need to realize the seriousness of the potential crisis as an Aug. 2 deadline looms for the government to raise its debt limit or default on its obligations.
“I think the first thing people need to understand is this is not a fire drill — this is a real financial emergency,” Moore said.
His comments came as credit ratings agency Moody’s said Thursday that it may cut the United States’ top-notch credit rating if lawmakers don’t make serious progress in their negotiations by mid-July.
The U.S. government does need to raise the limit on the amount of money it can borrow, Moore said, adding the warning that it also must halt its runaway spending.
The government is laboring “under a mountain of debt that could collapse the U.S. economy,” he told Newsmax.TV.
The Obama administration wants to raise the debt ceiling without first accepting that it will have to reduce spending by significant amounts, he said.
“I think the White House has this completely wrong,” Moore said. “The Republicans are saying we are not going to let you have the increase in the debt until you get this spending under control.”
“If Republicans fold on this one, which I don’t think they are going to do, but if they blink first . . . that’s what put America at risk of a financial crisis and a potential run on the dollar and a run on U.S. bonds.”
Moore said he approves of Republican House Speaker John Boehner’s call to cut spending by every dollar the debt limit is raised. “That’s a good way of framing the issue,” he said, adding, “The real question is, how much is Obama willing to cut the budget?”
And he warned that the government needs to begin budgetary reform — and maybe even adopt a balanced-budget amendment — to avoid future crises. The United States won’t be able to maintain its position as the global economic leader if it doesn’t fix the problem, he said.
“China owns more of our debt than any other country,” Moore said. “That puts us in a precarious position as we try to compete with that emerging economy.”
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