David Cay Johnston: President Obama Has Out-Norquisted Grover Norquist
Granddaddy of tax gazetteers, David Cay Johnston, is poking at Grover Norquist again, this time over the quagmire that the Republicans find themselves in over President Obama’s payroll tax cut proposal. The very proposal that could make Obama the biggest Grinch of 2011. Ruined holidays aside, DCJ points out that if the Republicans shoot this down, they do so at the behest of what seems to be a very popular idea:
[N]umerous opinion polls show overwhelming public support for continuing tax cuts for workers and for raising taxes on millionaires. That has left Republican leaders no choice but to silently cry uncle and agree to the president’s request to extend and possibly expand the payroll tax cut.
The reason that Republicans aren’t so hot on the payroll tax cut is that it’s “temporary.” They’d rather see “permanent” tax cuts enacted, although those “permanent” tax cuts are never “permanent.” The “permanent” Bush tax cuts, for example, had to be “extended” last year because they were about to “expire” which basically makes them “temporary.” The payroll tax cut was originally enacted last year with the Bush tax cuts but as Paul Ryan says, it’s supposed to be like a holiday, which is to say, “We lived through it and we’ll just move on with our lives and never to speak of it again.” DCJ writes that this means Obama has beat the Republicans at their own game:
Having outsmarted Norquist, Obama gets to run for a second term as the champion of at least a $100 billion tax cut. Obama can even say that if Republicans had had their way, working people’s taxes would have gone up while taxes on billionaires would have gone down. And he gets to tell small business owners that, but for Republicans, their taxes would have gone down too.
This is a marketing fiasco for Republicans to rival the Ford Edsel and New Coke. Already more than 40 congressional Republicans have taken steps to distance themselves from Norquist, who scowls at the mere mention of what could have been his, but is now Obama’s, very popular tax cut.
In other words: Whose shorties are snagged now?
Republicans paint themselves into a tax-cut corner [DCJ/Reuters]
President Obama Just Might Ruin His Family Christmas for the Payroll Tax Cut
That’s what Harry Reid is saying anyway. I’m not a parent, so I’m not exactly sure how a man would explain to his daughters that they’ll have to spend Christmas on the beach without Dad but he can always Skype in from the West Wing, or he could take the Paul Ryan approach. [Reuters]
Romney Trumps Obama in Accounting Firm Donations to Presidential Candidates
You may have heard that there’s a bit of a campaign going on for the world’s worst job. For whatever reason, the process of electing the leader of our country’s government drags on like Titantic. Right around, erm, now you’re probably ready to gouge your eyes out with a rusty spoon every time you see an ad for a candidate or debate. Unfortunately we’re powerless to stop it, thanks t ycle.
ANYWAY, one of the more useful things we learn during this process is where the money comes from and who it goes to. Now, you may be screaming, “Koch Brothers!” or “George Soros!” and while they can afford to throw around some cash, these stories are old hat and are best left to political bomb throwers with jostling jowls.
For our purposes of informing you, dear GC readers, we’ll give you the lowdown on what kind of cash people from the largest accounting firms are throwing around and who they’re throwing it to. Accounting Today has a full report out today based on data available from the Federal Election Commission and here are the highlights:
• Ernst & Young – E&Y donated the most cash, with personnel contributing more than $89,000. 18% went to President Obama, Mitt Romney received 39% and Rick Perry 37%. Personally, I feel like this money would be better spent throwing it at people in Albany.
• Deloitte – Total of $57,490 in donations. Mittens received 41%; Obama 37%.
• PwC – $36,520 total donations. Romney received 51%; Obama 48%.
• KPMG – The one Obama stronghold. The President received 47% of the total $15,000 in donations. Romney received 32%; Perry 17%.
• Grant Thornton – Obama doesn’t win. GT peeps gave $23,050 and 97% went to Mitt Romney.
What about the other candidates? Well, Newt Gingrich received a grand total of zero dollars from anyone at these accounting firms. Ron Paul received less money than Jon Huntsman. Yes, I know you’ve never heard of him. It’s this guy. Google Rick Santorum just for fun. And check out Michelle Bachmann’s manicures. That’s about all you need to know.
So who gets your imaginary contributions? I imagine most of you out there in Internetland have no plans to fork over any of your meager bonuses to a Presidential candidate but IF YOU DID, who would it be? And feel free to discuss your firm’s generosity or political leanings as you see fit.
David Cay Johnston Impressed with Obama’s Wily Plan, Will Stand Up to Those Bullying Social Security
DCJ is putting the rubes (read: Republicans) on notice that A) Obama is one crafty SOB and B) if Rick Perry wants to throw around “Ponzi scheme” then two can play at that game.
Obama has also set a clever trap for anti-tax Republicans. Obama’s American Jobs Act would lower Social Security taxes for all workers and for all businesses in 2012. Republicans who vote against the bill would be voting against a tax cut. They would also be voting against a huge business tax break, letting business immediately write off all capital investments made in 2012. […] The latest assault on Social Security comes from Governor Rick Perry of Texas, a Republican presidential hopeful who insists that social insurance for widows, orphans, the disabled and the old is a Ponzi scheme. If Social Security is a Ponzi scheme then so are public education, businesses and the state government that has for decades employed Rick Perry.
Father Christmas seems a little surprised that the GOP would find a tax cut they didn’t like but as we know, many don’t find the Social Security tax cut to be their cup of tea because of its lack of eternal life.
More for the rich [DCJ/Reuters via TaxProf]
President Obama Would Like Those Critical of His Deficit Reduction Plan To Get a Nerdier Argument
By now, you’re probably heard about President Obama’s new plan for reducing our nation’s deficit. It involves raising taxes on the wealthiest of citizens including this new thing called the “Buffett Rule” which would force anyone making $1 million a year to pay a tax rate that is at least as high as the one paid by middle-income taxpayers. Predictably, Republicans have not warmed to the idea and are reacting on cue. Congressman Paul Ryan (WI) got feisty, saying the Buffett Rule was an example of “class warfare.”
The President, not always thrilled with criticism, sees it as slightly more complicated than that:
“This is not class warfare — it’s math,” Mr. Obama said from the White House Rose Garden, addressing GOP critiques of his plan head on.
Yeah Paul Ryan, Mr. Chairman of the House Budget Committee. If you’re not willing to get all nerdy about it, the President doesn’t want to hear it. Come back when you’ve got a blackboard filled with equations.
Is President Obama Insane When It Comes to Tax Policy?
Yesterday we learned how President Obama would pay for his jobs bill. If you make more $200k ($250k for marrieds), have carried interest income, have a corporate jet or are an oil & gas company, you probably won’t be too happy with the ideas put forth.
If any of these proposals sounds familiar, that’s because they’ve been put through the ringer already and they weren’t received warmly. It’s unlikely that this time around will be any different.
Considering all that, Christopher Bergin at Tax.com is perplexed:
What I can’t figure out is why the Obama administration keeps trying the same thing over and over again expecting different results.
Joe Kristan only goes so far to call these recycled ideas “lame” but if you hold Rita Mae Brown in high regard, then the President definitely has a screw loose.
President Obama’s Tax Plan: ‘No Games, No Politics, No Delays’ — No Chance [Christopher Bergin]
Grover Norquist Has a Suggestion for President Obama Since He Insists on Giving His Jobs Speech (aka “Campaign Event”) at the U.S. Capitol
“People who use public facilities for private purposes pay an appropriate rental fee so that taxpayers are not subsidizing a private event. The Library of Congress and the Smithsonian museums regularly rent out space for private functions. Perhaps they could suggest to the President and his campaign a reasonable price for use of the U.S. Capitol and the House chamber as a backdrop for his upcoming political rally.” [ATR]
Any Guesses on How President Obama Feels About Warren Buffett’s Op-Ed?
Stop me if you’ve heard this before.
Obama has often cited Buffett’s call for higher tax rates on the rich, and he seized on the Monday op-ed in the Times and the coverage it’s gotten on the web and on cable news to do so again.
“He said we’ve got to stop coddling billionaires like me,” Obama said. “That’s what Warren Buffett said.”
“He pointed out that he pays a lower tax rate than anybody in his office, including the secretary,” the president added. “He figured out that his tax bill, he paid about 17 percent. And the reason is because most of his wealth comes from capital gains.”
Not to be confused with Grover Norquist’s opinion on the matter.
Obama: Warren Buffett is right on the money [Politico]
Mitch McConnell Has Given Up on President Obama
Mr. McConnell said he concluded after the latest negotiations that the administration had “expressed a fundamental unwillingness” to agree to significant spending cuts.
“But after years of discussions and months of negotiations, I have little question that as long as this president is in the Oval Office, a real solution is unattainable,” Mr. McConnell said in a Senate floor speech. [WSJ]
Obama Gives Corporate Jet Owners, Hedge Fund Managers the Business About Their Taxes
From the press conference that is still going, “I don’t think it’s real radical” to ask corporate jet owners and millionaires to pay higher taxes, Obama said. “No-one wants to see the U.S default.”
And then:
You can’t reduce debt levels without… increasing revenue in some way,” Obama said. “That revenue is coming out of folks who are doing extraordinarily well, and enjoying the lowest tax rates since before I was born. If you are a wealthy CEO or hedge fund manager in America right now, your taxes are lower than they have ever been.”
Grover Norquist Advises Obama on How to Win Texas in 2012, Reaffirms Ability to Get Sassy
As we’ve noted before, you’d be wrong if you thought Ronald Reagan worshipper and ATR President Grover Norquist and his merry band of anti-tax orcs weren’t capable of a pinch of sass:
Obama should focus on winning the electoral votes of Texas. He could highlight his ongoing efforts to destroy the oil and gas industry through taxation and regulation. Also his hostility to the Second Amendment. And spending binges and tax hikes. The small-minded will not see the opportunity for Obama in Texas, but with enough money spent in the state and not frittered away in Virginia and Florida good things can happen for America.
Or a punch of sass.
President Obama Puts 1099 Reporting Requirement Down for the Dirt Nap
Today, I was pleased to take another step to relieve unnecessary burdens on small businesses by signing H.R. 4 into law. Small business owners are the engine of our economy and because Democrats and Republicans worked together, we can ensure they spend their time and resources creating jobs and growing their business, not filling out more paperwork. I look forward to continuing to work with Congress to improve the tax credit policy in this legislation and I am eager to work with anyone with ideas about how we can make health care better or more affordable. [WH]
Paul Ryan Practically Threw a Fit During President Obama’s Speech
Mr. Ryan sat in a front-row seat in the George Washington University auditorium Wednesday while Mr. Obama unveiled his plan to constrain growing levels of federal debt. Mr. Ryan grew visibly annoyed during the speech, shaking his head in disgust. He feverishly took notes, and when Mr. Obama finished he stood up and bolted from the auditorium. The only person apparently running faster towards the exit tugged on Mr. Ryan’s sleeve near the doorway and reached out to shake his hand. “Hi, Mr. Chairman, Gene Sperling,” Mr. Obama’s director of the National Economic Council said to Mr. Ryan in what appeared to be a conciliatory gesture. “Oh, I thought you were a reporter,” Mr. Ryan said, explaining why he didn’t immediately turn around when his name was called. [WSJ]
BREAKING: Republicans Don’t Like President Obama’s Tax Proposals
[K]ey Republicans have not responded positively to signals that President Obama will push for some tax increases in his deficit-reduction plan to be laid out this week. David Plouffe, a senior White House adviser, indicated Sunday that the president would reiterate his call to raise taxes on households making $250,000 and above and also signal a desire to look at other provisions in the tax code that wealthier taxpayers use to their advantage. In his fiscal 2012 budget, released in February, the president called for allowing the Bush tax cuts to expire for income above $200,000 for individuals and $250,000 for couples at the end of next year. That statement came roughly two months after a compromise with congressional Republicans had extended current tax rates for the richest taxpayers for two years. [The Hill]
More Appeasement in Obama’s Proposed Budget
President Obama presented his nearly $4 trillion budget, proposing to cut more than $1 trillion from Federal programs over the next ten years, with $200 billion in cuts to occur over the next two years. Although these cuts may appear, at first glance, significant to the average American, in light of the recently enacted tax cuts of $858 billion over the next two years, that $200 billion of proposed spending cuts leaves $658 billion of tho ted for.
In balancing our national budget, Obama and Congress are focusing on the wrong side of the financial equation. The projected deficit in 2011 is $1.65 trillion; however, the whole non-defense discretionary spending budget in 2010 was $477 billion. Even if all non-defense discretionary spending were eliminated, there would still remain a deficit of over $1.1 trillion. The math is clear that Congress cannot eliminate deficit spending by budget cuts. Taxes will need to be raised.
Some of the cuts that President Obama is proposing in his budget include $300 million for community block grants, $2.35 billion for low income home energy assistance program, and $400 billion from a five-year domestic spending freeze, as well as reductions in pell grants, graduate school loans, community access, etc. But all of these cuts do not come close to offsetting the lost revenues from the extension of the tax cuts to the rich.
A pattern has emerged in Obama’s dealings with the Republicans. Obama agreed with the Republican argument to give tax cuts to the rich to help the economy. Now he is proposing to cut programs for the middle class and the poor to balance the budget. In doing such, Obama is moving the political fulcrum to the right. His approach of pre-emptively offering something—whether it be tax cuts for the rich or budget cuts affecting the poor and middle class—instead of negotiating a quid pro quo, is effectively pushing the Republicans further to the right, seeing the prospect of gaining even more ground.
Although compromise is demanded in politics, leadership cannot be defined by compromise alone. There are principles worth fighting for; and leaders must be willing to mobilize public opinion in support of those principles. Since our political system is rigged because of campaign finance and lobbying, a leader professing change and reform needs to present a different narrative to the populace. Churchill, Teddy Roosevelt, and Franklin Roosevelt recognized the value of the bully pulpit. Despite his rhetorical skills, Obama has failed to do so. His posture of appeasement will in all likelihood allow the Republicans to balance the budget on the backs of the working class and low income Americans to the benefit of Wall Streeters and Multinational Corporations, who offshore jobs, brought about the financial crisis, and robbed trillions from the American people. Since Obama is seeking re-election in 2012, and is charting his own course, he will not lead the American people to the Promised Land.
America needs major tax reform. The extension of tax cuts to people who need them the least was the last thing Congress needed to do. Some Democrats want to cut $40 billion in subsidies to the oil companies for five years; however, Republicans refuse to cut these subsidies to the oil companies, preferring to cut programs for the poor and middle class. Moreover, in spite of two wars costing $120 billion per year and an inflation adjusted military budget larger than those in the Bush years and the Cold War, neither party desires to cut military spending, which constitutes 58% of the discretionary spending budget.
Reform will never come from Congress nor a President like Obama. It will require people outside of Washington working with allies inside Congress in order to stop this disconnect between what is transpiring in Washington and what this country needs. It will require people coming together as they did in Egypt in a pro-democracy movement. The question is, can and will the people of America come together before it is too late.
Obama’s Appeasement on Tax Cuts
The following post is republished from AccountingWEB, a source of accounting news, information, tips, tools, resources and insight — everything you need to help you prosper and enjoy the accounting profession.
For those of you unfamiliar with the history of World War II, Neville Chamberlain was the prime minister of Great Britain just prior to the advent of World War II. He is most remembered for his “Munich Agreement“, in which he deeded over Czechoslovakia to Nazi Germany with Germany’s promise that it would not pursue further aggression. Of course, this was making a deal with the devil; Adolf Hitler was Satan incarnate, for certain. Consequently, his name has become the emodiment of total naivete, if not utter stupidity and idiocy. You cannot make a deal with the devil. Shown here in the picture to the right is Neville Chamberlin upon his return from Munich in 1938 after meeting with Adolf Hitler with the scrap of paper that was to “ensure peace in our time”; the paper was signed by Hitler.
The question now is whether Barack Obama is another Neville Chamberlain. Obama is supporting the tax cuts for the rich, claiming that unless we agree to these demands by the Republicans, our economy may dip back into recession, as Chamberlain asserted that unless England and Europe gave Nazi Germany Czechoslovakia, that a war with Germany might occur. Whether you are for the tax cuts or against the tax cuts, the majority of Americans were surprised, if not flabbergasted, by Obama’s immediate acquiescence to Republican demands for inclusion of the rich in the tax cuts, including a very generous exemption from estate taxes: under the plan, as much as $10 million may be exempt from any estate tax, with the estate tax rate on any excess being reduced from 55% to 35%!
Certainly, Barack Obama is no Winston Churchill. Maybe he does his fighting only on a basketball court; however, he certainly did not fight the good fight before conceding to the Republican demands, merely accepting in return a 13 month extension of unemployment benefits for 2 million Americans, a reduction in payroll taxes, and an extension of a grab bag of tax credits for college tuition and other items. Like Chamberlain, who only received Hilter’s signature on a scrap of paper promising never to go to war again with England, Obama got very little in return for the big gift to the rich and privileged.
A recent CBS poll found 70% of Americans were not in favor of these tax cuts for the rich—resulting in huge deficits of $700 billion dollars—when our national debt is already $14 trillion. Many feel that no tax cuts would have been preferable to this agreement, since no deal would spare us from an additional $980 billion of debt.
Obama is justifying these tax cuts through a fear tactic: unless we give the rich these tax cuts, our country may lapse back into another recession.
Dear President Obama: for your information, we are still in this recession. And in 2012, we will still be in this recession in terms of unemployment. Jobs have been going overseas for years now and with the further consolidations of mega-size corporations, more layoffs are looming. Of course, the unemployment numbers will become meaningless since after a certain period of time, the long-term unemployed are no longer included in the current rate of unemployment.
After hearing Harvard’s Larry Sumners endorsement of these tax cuts for the rich and his prediction of another recession if they are not enacted, I suspect that President Obama may still be listening to the counsel of his former Economic Advisor. Consequently, I am not surprised by Obama’s use of fear tactics today to drum support for these tax cuts for the rich.
If this is the kind of way Obama negotiates with Republicans over tax cuts for the rich, imagine how he would negotiate with the Iranians and North Korea? LOL! And then imagine how Hillary Clinton would have negotiated if she had been elected President of the United States. In the immortal words of Yogi Berra, it’s deja vu [Neville Chamberlain] all over again.
New Obama Proposal Would Invest $30 Billion TARP Funds in Small Banks
One can only postulate that since there was no room in President Obama’s bloated 2010 budget for small business initiatives, he instead chose to apply some TARP money that’s just lying around to get small business working again. I wish Mr President the best of luck on that plan as he’ll be needing it.
WSJ:
President Barack Obama proposed a $30 billion small business lending program Tuesday, the latest in a series of administration efforts to jump-start hiring by the nation’s small businesses.
The program, which Mr. Obama detailed at an appearance in Nashua, N.H., would invest $30 billion from the government’s Troubled Asset Relief Program in community banks to encourage them to lend to small businesses. If approved by Congress, the program would incentivize small and midsize banks to provide loans valued at several times that figure.
Didn’t we invest $700 billion in the Too Big to Fail banks for this same purpose? Not that it matters, we’ll try it again with the hopes that community banks will be able to accomplish what TBTF couldn’t.
A proactive sort of administration, White House officials were already prepared to counter the argument that TARP was never intended as a general piggy bank for funding the administration’s whims:
“The law is very clear: The monies recouped from the TARP shall be paid into the general fund of the Treasury for the reduction of the public debt. It’s not for a piggy bank,” [Sen. Judd] Gregg said.
[White House Budget Director Peter] Orszag said new legislation would be required to create the new small-business plan. He said the cost of the plan would depend on the subsidy rate of new activity and wouldn’t amount to a net cost, in terms of the deficit, of $30 billion.
Considering that he’s referring to a deficit of $3.8 trillion, I guess $30 billion isn’t really anything to get stressed out about after all.
Meanwhile, can community banks counter the continued deterioration of commercial real estate weighing on their balance sheets? I guess we’ll have to wait it out and see.
Is Tim Flynn Being Vetted as the Next Secretary of the Treasury?
Welcome back, servants of the capital markets. We’ll dispense with anything substantive this morning in order to help you combat the depression. We’ll start off by presenting you with the following:
As you can see, this is the POTUS on vacation working in Hawaii with the entourage in tow. One member of said entourage just happens to be donning a KPMG cap and since not just anyone can get their hands on these coveted lids — and since the gentleman’s face is mostly obscured — we’re curious about a few things: 1) Is Tim Flynn leaving the Radio Station for a cabinet position and if so, which one? 2) Was Phil Mickelson joining the Prez for some time on the links and had a overwhelming urge to represent? 3) If this is just some Obama yes-man, did he receive the cap from a Klynveldian representative and is this a bold move to get KPMG representation in the President’s inner circle?
If you’ve got thoughts, theories, or wild-ass guesses, dispense them in the comments and again, welcome back.
Preliminary Analytics | 12.09.09
• Geithner Said to Be Seeking TARP Extension Until Next October – Timmay is expected to scribe a letter to Congress letting them know about the little extension. [Bloomberg]
• Standard Chartered Sees No ‘Material’ Impairments in Dubai – Let’s remember this for future reference. [WSJ]
• Lessons Lost – Gary Weiss links to GC in his remembrance of Enron. Does anyone else remember Enron? [Portfolio]
• Obama’s Stimulus II – BO wants to help small business by letting them “eliminate capital gains taxes on the sale of small firms, allow them to continue to expense capital investment, and give them tax breaks for hiring new workers.” Sounds nice but Howard Gleckman says, “It’s a bit like throwing a drowning man a 64-inch flat panel TV. He might love to have one, but not right now.” [Tax Policy Center]
• U.S. SEC Sues to Freeze Assets Of ‘Ponzi Scheme’ – Rockford Funding Group LLC, come on down! [DealBook]
Scoping | 07.23.09
• Obama Approval 49% Among U.S. Investors, 87% Overseas – “President Barack Obama has rock- star appeal among the investing class — except in his own country.” [Bloomberg]
• Investment Bank Helps Boost Credit Suisse’s Net Income – Reigning in on the company wide Shake Shack outings is probably helpful too. [WSJ]
• One-time gain boosts Ford results – Don’t call it a comeback [BBC]
• Manure means money to handlers gathered in Iowa – Sometimes there’s money in shit [AP via Miami Herald]
• Bardem Turns Down Role in ‘Wall Street’ Sequel – “The actor Javier Bardem has turned down a role in the sequel to Oliver Stone’s seminal 1980s treatise on greed, “Wall Street.” Mr. Bardem, who won an Oscar in 2008 for his performance in “No Country for Old Men,” was to have played the world’s villain du jour: a hedge fund manager.” [DealBook]