Friday, June 25, 2010

Should Middle Class Be Paying Higher Taxes?

Yesterday, I told you that Northampton County taxpayers, some of whom are unable to afford health insurance, are nevertheless footing the bill for health care coverage for County workers. And thanks to the federal health care overhaul, the price is going up, and could easily contribute to a tax increase next year.

We are in the middle of a recession that may be turning into a depression, especially if you look at the burgeoning number of sheriff sales and our 10% unemployment rate. So is this really a good time for a tax hike?

Democratic County Execs John Stoffa and Don Cunningham are doing their best to avoid that, and are actually working with their Republican legislative counterparts (Angle and Browning) in a refreshing display of bipartisanship. But at the much more partisan national level, House Democrat Majority leader Steny Hoyer is arguing that we need to raise taxes.

Of course, Republicans are furious. LV Congressman Charlie Dent lobbed a news release stating, “Raising taxes on American workers and small businesses – to pay for continued overspending in Washington-- is not only a mistake, it is doomed to failure as economic policy. The question is not whether government can ‘afford’ to let people keep their own money; it’s whether taxpayers can ‘afford’ the government’s reckless spending. And taxpayers deserve to know where John Callahan stands.”

Dent points out that his opponent, John Callahan, has already raked in $10,000 from Steny Hoyer. And it is fair to say that Callahan is very pro tax. In Bethlehem, he has signed off on four property tax increases plus a $52 municipal service tax, and his own budgets have increased spending by 54 percent in just six years. He reneged on a promise to cut taxes using casino host fees, and instead boosted spending by 12 percent just this year. Lest we forget, Callahan is also the leading proponent of increasing the local sales tax by 17 percent to pay for government overspending.

Of course, the notion of raising taxes smack dab in the middle of a recession is idiotic, so I'm with Dent on that point. But in a way, Hoyt and Dent are both right. We do need to cut spending. But we also need to raise taxes if we are serious about reducing the deficit.

Why do I say this?

For one thing, social security is now running at a deficit. According to Senate Majority Leader Harry Reid, that wasn't supposed to happen for another fifty years. But it did. That's what 2.7 million new claims and a deepening recession will do. So instead of borrowing from social security, as we've been doing for years, we now have to use general revenues just to keep it afloat.

That's a problem, but it pales in comparison to Medicare, where the deficit is a whopping $36.3 trillion, give or take a trillion.

When pols speak about our national debt, they conveniently ignore the cost of Medicare and social security, resulting in a an artificially low figure of somewhere around $13.5 trillion, although Obama's latest budget will add between $8.5 and $9.7 trillion to even that figure over the next ten years. When you add everything together, the real national debt, right now, is close to a $56.4 trillion sinkhole.

The only way we dig out of that is by a combination of cuts and tax hikes.

David Walker, who served as Comptroller General and headed the nonpartisan GAO under both Presidents Clinton and Bush, has a sobering assessment, along with some very specific suggestions. Here are some excerpts from one of his recent speeches.

39 comments:

Lighthouse said...

"Republicans are furious. LV Congressman Charlie Dent lobbed a news release stating, “Raising taxes on American workers and small businesses – to pay for continued overspending in Washington-- is not only a mistake, it is doomed to failure as economic policy"

Isn't this a little like the pot calling the kettle black? Like cutting taxes "to pay for continued overspending in Washington" worked during the Bush/GOP Congress days?

Problem is Americans punish the politicians who raise their taxes, and punish those that cut their "services." As I've said on LVR before, it doesn't really matter who has control of the cookie jar, as both parties raid it when its their turn hoping to get re-elected. . . but the cookies have been borrowed from China, et al, for quite some time.

Unfortunately, fiscal responsibility will not be one of the issues helping to distinguish the parties in November, despite the rhetoric and press releases.

PS, your link to "some excerpts" leads to a "page not found" when clicked on. . . kind of like the "fiscal responibility" not found in DC :>)

Lighthouse said...
This comment has been removed by the author.
Lighthouse said...

Date correction to deleted post.

"When pols speak about our national debt, they conveniently ignore the cost of Medicare and social security"

Again, the GOP President and GOP President added to that in the run up to the 2004 election with the prescription drug bill. BOTH parties have the red stain of deficits on them.

I like Dent better than Callahan, but this is not one of those issues I'd campaign on unless you are going for the notoriously short attention span of the typical American voter.

Bernie O'Hare said...

Lighthouse,

Some of the links are several months old and have probably been archived. I will look for fresher versions on Saturday.

Anonymous said...

Chuck is singing the Limbaugh anthem and America is getting tired of the no solution blues. Just attack and attack. No solutions just attack.

Yawn, an old, old song.

Anonymous said...

We need to raise taxes so that we can help people. It really is that simple.

Allentown Democrat Voter

Anonymous said...

Anon,

What America is tired of is the Obama Administration and the Democrat’s arrogant and destructive one party rule in Washington.
See you in November

Scott Armstrong

P.S. Who was the genius that served up the soft ball for Dent yesterday with that Callahan BP press conference?

Anonymous said...

Perhaps Callahan should also demand Dent take a stand on closing GITMO, ending the Homeland Security Act and getting our troops out of Iraq and Afgamastan.

Allentown Democrat Voter

Anonymous said...

eat the rich

Anonymous said...

Lighthouse -

You are correct about Republican involvement in the prescription drug bill. It was certainly a mistake.

However, you'd have to be living under a rock to think that "it doesn't really matter who has control of the cookie jar". The current administration and Congress could care less about their spending or the long-term ramifications resulting from it.

I don't really remember the Democrats trying to be "fiscally responsible" in 2004 and stop the prescription drug plan. The current Democrats have proven they will spend wildly.

While not perfect, the Republicans are the only chance we have to stop the spending. It's clear the Democrats don't get it and aren't listening.

Jon Geeting said...

It would be a big mistake to let those tax cuts expire for the middle class in the short term.

But I suspect this is just cover to argue against letting them expire on the wealthiest .02%, who were the primary beneficiaries of the unpaid-for Bush tax cuts. Considering that the very richest have totally rebounded from the recession no one should feel any compunction about letting marginal rates rise back up to Reagan levels.

There are a number of large factual errors in this post that I don't have time to get to right now, but the point about health care costs going up is especially misleading. Health care costs are going up anyway. Some insurance companies are hiking premiums now to try to squirrel away money for when they make less money after the ACA regulations kick in. But you can't blame that on the ACA. By all means put up a fight about it and try to publicly shame the insurance companies into lowering their premiums. But you're making a mistake by trying to compare the world with ACA to a world in which premiums stay flat. Premiums are going to keep rising no matter what, as they have been for years. The correct comparison is whether premiums are going to rise faster in a world without ACA than a world with ACA.

Bernie O'Hare said...

Mr Geeting, Between you and David Walker, I'll take Walker. It is wrong to suggest health casre costs are going up bc they are going up anyway? Talk to NC Fiscal Affairs. They are going up bc od the overhaul.

Anonymous said...

Republicans spent eight long years doing what they could to destroy the middle class and almost succeeded.

Anonymous said...

How can one even address government spending given the level of the defense budget and two costly Republican wars?

It seems irrational that we turn our backs on seniors and the uninsured to pay for these blackholes of cash.

We need to take care of each other and if that means raising my taxes, so be it. The people in my tax bracket are undertaxed yet are the most vocal about cutting taxes.

Me. Me. Me.

Anonymous said...

Anon 7:04 apparently would rather see senor citizens do without prescription drugs that help assuage their old age health issues. The prescription drug plan sucks because Repubs wrote it with industry ghost writers. If we'd write it correctly (and the healthcare overhaul) the federal government could negotiate pricing. God forbid we allow our government to offer the best services to the people. It's more important to line the pockets of corporate executives and their shareholders. It's despicable.

I got mine. Me. Me. Me.

Ivan Denisovich said...

The best way to keep the economy strong is to give money to those who can manage their money the best. Usually, this is middle class and above. Ever look at what the "poor" do with their money? They get tattoos or go to nail salons or take their kids to McDonald's three times a week or cash their checks at payday lenders and then complain they can't afford health insurance.

But, if people want to raise taxes under the guise of helping people, they need to first look back at the last 40 years to see how well it's been going. Someone once said that insanity is doing the same thing over and over again thinking that you'll eventually get a different outcome.

Allentown Democrat Voter offered a "simple" solution. Maybe that's the problem. It is easy to throw money at a problem. Maybe we need to work harder to help people. Put expectations on them. Set goals. Make them work (say this as a candidate and you're done).

But, enough with the raising taxes theme! It's not helping anything! Open your eyes! The poor will always p*ss their money away, that's why they're poor.

Clem said...

"He reneged on a promise to cut taxes using casino host fees, and instead boosted spending by 12 percent just this year."

Callahan lied from the get-go. He never planned to follow through on that promise. That much is obvious.

Truth is, neither side is honest or responsible enough to actually put new revenues toward reducing debt and/or providing tax relief.

Anonymous said...

I apologize if this gets long. The best job to have in the United States between 1946 and 2007 was as a US Senator or Representative. If you were a Democrat, you gave people more by promising greater benefits. If you were a Republican, you gave by lowering taxes. By 2008, as a country, the music stopped playing and the party was over. Public and private debt levels are now forcing the hard decisions.

Debt, however, is just a symptom, and not the problem. The problems we face will be with us until the habits driving it change. The USA is addicted to consuming cheap goods made in Asia on credit; Asia is overly dependent on selling us those goods and lending to the West.

We have a crisis that gives policy-makers - here and across the globe - to begin the process of re- balancing leverage and consumption patterns. You are correct, BOH, when you say we need to both raise taxes and curb spending. What needs to be done globally is beyond the scope of your post, there are a number of things that the USA needs to do to get its house in order.

1. Politicians need to be much less partisan and much more pragmatic/realistic. Dent making (another) argument of talking points and never having any concrete solutions makes me believe he is just a suit who takes his orders from some other clueless schmo (that's the technical term). Misinforming people for political gain does nobody any good. The problem is not that taxes are too high, the problems are structural in nature.

2. Deficits need to be dealt with over a large period of time and at a reasonable pace. Why? Econ101, that's why.

GDP = Consumption + Investments + Government Spending + (exports - imports). If we massively cut Government spending now, GDP will go down, which will lead to less tax revenues, which will lead to greater deficits, which will continue the spiral. Recession will be back and bigger than ever.

3. We need to have Government policies that encourage production here, not overseas. This includes spending money on R&D as well as tax policies that encourage manufacturing.

4. The size of Government needs to shrink. This is at all levels, not just Federal. All politicians should be asking what should we really be spending tax dollars on and getting rid everything else. Locally Dean Browning, Don Cunningham, John Stoffa, and Ron Angle appear to be doing this.

5. Benefits need to be cut. Social Security cannot last in its current form, just as NC workers and retirees getting the health benefits they get at the out of pocket cost they get it at will bankrupt the County.

6. We need to get off of our oil addiction. This would include spending on Energy R&D, Mass Transit, higher CAFE Standards, upgrading the energy grid, and higher gas taxes to help pay for it all. And if you drive a Hummer, Expedition, Suburban, or other monster-sized vehicle ... you are a big part of the problem.

7. Campaign Finance Reform.

We are all in this together and it is our shared responsibility to right the ship and there will be pain.

Publius

Anonymous said...

When pols speak about our national debt, they also rarely talk about the two wars we are in.

The U.S. spends more on its military than ALL OTHER NATIONS COMBINED.

Need a place to tighten the belt. That's where I'd start.

Anonymous said...

Just heard a Forks manufacturer told employees their old Cadillac health plan was going away.

When people see what happened to their take home pay at the end of the first week of next January, they'll be shocked.

The lowest federal payers will get the equivalent of an extra utility bill withdrawn from their take home. Middle payers are getting the equivalent of an unwanted car payment.

Obama absolutely must tax the largest pool of resources (i.e. the middle class) to pay for his breathtaking spending and exploding health care debacle. If he doesn't, he'll be forced to run for re-election with deficits that are billowing like the BP oil.

All we'll have left in our pockets is exactly what Obama and the Democrats promised: change.

Anonymous said...

Publius, I agree with most of your post but then you went and detracted from your credibility.

Your number 4, Stoffa and Angle, really??? Look, they have accomplished absolutely nothing together except more anarchy. Stoffa is weak and incompetent and Angle is a self-promoting ass.

As far as Cunningham and Browne, they seem to be quietly and efficiently working things out. In Northampton County that is hardly the case. Despite the Ohare puff blogging, the Northampton County government is a mess and has been on auto-pilot for some time.

Otherwise, I enjoyed your analysis.

Dr. Answer

Bernie O'Hare said...

Dr. Answer = The 3 AM Troll = a former Reibman administration official who got upset when Stoffa cut off his unemployment and has obviously gone bonkers.

Anonymous said...

Anon 8:55 & 8:59 -

You mention the two "Republican wars". Funny, but I seem to remember an awful lot of Democrats voting for those wars.

Also, don't the Democrats hold the White House? Haven't they held the Congress since 2006?

It seems like the Democrats could have cut off funding a long time ago if they really wanted to. They're just keep playing voters like you for fools.

By the way, how's your GITMO closing going?

Anonymous said...

What the Hell is going on? A 3AM troll that posts at 7:28?

Am I in the Twilight Zone or just Northampton County?

Thank you, thank you! I will be here all week.

Anonymous said...

It's almost 3AM. Do you know where your trolls are?

Anonymous said...

"Mr Geeting, Between you and David Walker, I'll take Walker. It is wrong to suggest health casre costs are going up bc they are going up anyway? Talk to NC Fiscal Affairs. They are going up bc od the overhaul"

our national healthcare costs have been increasing, as a percxentage of GDP, at TWICE the rate of every other western nation for the past ten years. it is disingenuous at best to assert THESE increases are suddenly a result of the overhaul.

Anonymous said...

Disingenuous? Tell the employees of Follett Corp. in Forks. Obama decimated their plan. Soon, they'll be on the dole, which is exactly where Democrats want them.

Anonymous said...

The Middle Class is about to get their change beginning 1-1-10.

The child tax credit will be cut in half from 41,000 to $500. That's a pay cut of $41.67 per month per child for those with children.

Prior to the enactment of the Bush tax cuts, 33 million Americans were non-taxpayers of the federal income tax. After the Bush tax cuts, total non-taxpayers of the federal income tax jumped to a staggering 52 million.

Thanks to Obama, these poor slobs are going to start paying - a lot - again.

With 10% unemployed, does Callahan support this largest tax increase in American history on the middle class? Or does he believe, as Obama, that the middle class needs to shut up and start paying up for all the goodies he's delivered and can't dream of paying for?

Anonymous said...

...from $1,000 to $500 ...

Anonymous said...

What bullshit, the hike in Northampton County healthcare costs came well ahead of Mr. Obama's plan. The hikes are mainly the result of the Blue Cross contract Mr. Stoffa signed. When he left Colonial to go with Blue Cross as a campaign favor he was given a teaser rate. Now the administrative costs are through the roof and the County is screwed.

It is understandable that Ohare would like to pin another example of Stoffa incompetence on President Obama.

Physician heal thyself.

Dr. Answer

Bernie O'Hare said...

"Dr. Answer" = "Tim" = former Reibman employee whose unemployment was cut by Stoffa.

jyoti said...

House Majority Leader Steny Hoyer (D-MD) told reporters that raising taxes on middle class families – despite the president's repeated promise not to do so – is necessary to feed Democrats' insatiable appetite for more government spending. Yes, you read that write: they don't have a budget, but Democrats want to raise your taxes…
Printers

Anonymous said...

It seems like the Democrats could have cut off funding a long time ago if they really wanted to. They're just keep playing voters like you for fools.

I see we have another unthinking nitwit here.

First, you can't just cut of a war that the Repubs started. We broke it and we need to fix it. Also, if you have been paying attention, nearly all combat troops have been withdrawn from Iraq. Gitmo would be closed already if it weren't for the NIMBY overreaction by Repub congressmen. What a shock. Obstruction by Repubs. Who votes for these jokers? Nitwits like you.

Anonymous said...

What bullshit, the hike in Northampton County healthcare costs came well ahead of Mr. Obama's plan.

So O'Hare is making things up again to prop up his Republican cronies? Not surprising.

Bernie O'Hare said...

There is a 43% hike in health care costs completely unrelated to the added cost of paying for adult children as well as the lifting of caps on retirees. Those costs are in addition to the increases that occurred in our first quarter, which is mostly after Pelosicare was passed.

You're going to have to try harder.

Anonymous said...

You seem to be the only person who opposes covering children up to age 26. It wasn't like it was a hidden component of the bill or one that was challenged in the least.

Anonymous said...

By the way, EVERYONE'S health care costs have been rising and it started WELL before Obama was President. It's shocking how you look at these issues on such a micro level without ever bothering to learn the big picture. It's all about the Slate Belt ...

Bernie O'Hare said...

I am by no means the only person who finds it outrageous that we should all pay for some 24 year old, who does not live w/ her parents and is no dependent, to get her tinted contacts. Most polls I've seen show that Americans uniformly opposes the excesses in this overhaul. You'll find out the hard way in November.

Anonymous said...

Anon 9:48 said:

"Also, if you have been paying attention, nearly all combat troops have been withdrawn from Iraq. Gitmo would be closed already if it weren't for the NIMBY overreaction by Repub congressmen. What a shock. Obstruction by Repubs.

***************************************

Anon -

Iraq was under control when Bush left office - thanks to the "surge" that Democrats opposed.

As to GITMO, I'll remind you that Democrats control both houses of Congress. For a year (until Kennedy's death and Brown's victory in MA) Democrats held a filibuster-proof majority in the Senate and still control Congress with a large majorities.

If the Democrats really wanted GITMO closed, they could have done it without a single Republican vote last year.

Keep voting Democrat, you nitwit.