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Obama's Deficit Cutting Plan: No Raise in Medicare Eligibility Age

President Obama took a stand for Democrats and seniors today. I'm canceling his pink slip notice.

Obama's plan to cut the nation's deficit is already being attacked by Republicans. The plan is in line with Democratic values. Why should those who make more than a million dollars a year pay tax only at the rate of 15%, when so many of us who earn far less are taxed at 35%? The Bush tax cuts should have been repealed a long time ago.

The plan also calls for $1 trillion in cuts for withdrawing troops from Afghanistan and Iraq. Most importantly:

The plan doesn't touch Social Security, and there is no proposed increase in the Medicare eligibility age -- a cost-saving plan the president was willing to agree to earlier in the year, to the dismay of liberals.

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Report: Obama Won't Seek to Raise Medicare Eligibility Age

I so hope this is true:

The plan includes no changes in Social Security and does not include an increase in the Medicare eligibility age, which the president had considered this summer.

If it's accurate, I'm withdrawing my pink slip to President Obama. I'll even thank him.

Update: Obama Deficit Plan Aimed at Democratic Base.

Stay tuned.

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Obama's New Economic Plan: "Buffet's Rule"

The New York Times has the details of the economic plan President Obama will introduce on Monday. It's mostly about taxes -- a minimum tax for millionaires. But then there's this:

Mr. Obama, in his plan, will call for more than $300 billion in 10-year savings from Medicare and Medicaid but not for changes in Social Security.

The increased taxes may not pass be accepted by Republicans. So what's the point?

The Obama proposal has little chance of becoming law unless Republican lawmakers bend. But by focusing on the wealthiest Americans, the president is sharpening the contrast between Republicans and Democrats with a theme he can carry into his bid for re-election in 2012.

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New Jobless Claims: 428K

Bad news:

Applications for unemployment benefits climbed to 428,000 in the week ended Sept. 10 from an upwardly revised 417,000 the prior week, the Labor Department said.

Exacerbating the problem is the rise in headline inflation:

The Labor Department said its Consumer Price Index increased 0.4 percent last month, after rising 0.5 percent in July. The reading was higher than the 0.2 percent rise expected, with food prices posting their biggest gain since March. Gasoline prices climbed 1.9 percent after jumping 4.7 percent the prior month. Food prices rose 0.5 percent after increasing 0.4 percent in July.

This is bad because the folks that want Austerity Now! get to yell Inflation! The reality is that core inflation is 2% due to slack demand. But energy and food prices go up more because demand for these items is inelastic. This is a toxic brew of economic news. Things are looking bleaker.

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AP Analysis: Obama's Job Plan is an IOU

The Associated Press has this analysis of Obama's assertion that his job bill pays for himself:

The jobs plan is an IOU from a president and lawmakers who may not even be in office down the road when the bills come due. Today's Congress cannot bind a later one for future spending. A future Congress could simply reverse it.

Anyone else notice Obama is proposing taxes on those who make $200,000 rather than $250,000? Is that gross income before deductions? Or taxable income? Or what?

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Business Owners Say Job Plan Won't Cause Them to Hire More Workers

From the New York Times: Business owners say Obama's jobs plan won't cause them to hire new workers.

That sentiment was echoed across numerous industries by executives in companies big and small on Friday, underscoring the challenge for the Obama administration as it tries to encourage hiring and perk up the moribund economy.

The stock market fell big time yesterday, wiping out all gains for the week. Guess Wall St. wasn't impressed either.[More...]

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Raising Medicare Eligibility Age: Who Gets Hurt?

Here's another report finding that raising Medicare's eligibility age won't money or cut health care costs. It will just shift the cost to seniors, states and employers. The full report is here.

Raising Medicare’s eligibility age from 65 to 67, which the new Joint Select Committee will likely consider this fall as a deficit-reduction measure, would not only fail to constrain health care costs across the economy; it would increase them.

While this proposal would save the federal government money, it would do so by shifting costs to most of the 65- and 66-year-olds who would lose Medicare coverage, to employers that provide health coverage for their retirees, to Medicare beneficiaries, to younger people who buy insurance through the new health insurance exchanges, and to states.

The report is based on the Kaiser Report I've cited previously: [More....]

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Obama's Plan: Spare Me the Tax Cuts, Give Me My Medicare

I'm finally learning the meaning of hope and change. Three years ago, hope and change seemed like a slogan to roll your eyes at. No more. Now it's becoming something to strive for. But it's not the hope and change Obama can bring us, he's already failed that test. It's the hope for change we have at the thought of him leaving and taking his ineffective administration with him.

Onto last night's speech. Obama is so transparent. His speech was all about construction workers, teachers, and veterans, and instilling fear of China and South Korea, because they are out to take our jobs. He went for the "heartland." As if all he has to do is proclaim South Koreans should be driving Fords and it will be so.

More importantly, as always, his plan leaves those on the fringe out to dry. And that includes seniors (who according to Obama are causing the health care system to implode by their sheer numbers), those who don't own businesses, and those who need affordable health care more than they need a $1,500 tax break. [More...]

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Obama to Propose $300 Billion Job Package

President Obama will give a speech Thursday. He's going to propose a $300 billion job package.

Obama will call on Congress to offset the cost of the short-term jobs measures by raising tax revenue in later years. This would be part of a long-term deficit reduction package, including spending and entitlement cuts as well as revenue increases, that he will present next week to the congressional panel charged with finding ways to reduce the nation’s debt.

Almost half the stimulus would come from tax cuts, which include an extension of a two-percentage-point reduction in the payroll tax paid by workers due to expire Dec. 31 and a new decrease in the portion of the tax paid by employers.

Will he mention raising the age for Medicare eligibility? Jay Carney said yesterday the speech would "include some new proposals that you have not heard us talk about.” We haven't heard Obama talk about raising the age for Medicare eligibility, only reports that he was okay with it. This better not be one of his proposals. If it is, his pink slip is coming.

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The Need For Fiscal Stimulus

AmericaBlog interviewed Joseph Stiglitz:

Yes, you have heard it all before. It's still true.

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Feds Issue New Reporting Rules for Lawyers and Merchants Accepting Credit Cards

Many lawyers offer their clients the convenience of paying by credit card. The Feds have just instituted new reporting rules (available here) on such paymnts.

The IRS has implemented new compliance requirements through Internal Revenue Code Section 6050W that will affect all merchants (including government and non-profit entities). Beginning in calendar year 2011, all merchants will be required to report gross payments received through debit or credit card transactions to the IRS on an annual basis. To verify this reporting, banks and merchant service providers will be required to provide both merchants and the IRS with Form 1099-K by January of 2012.

From now on, your merchant name on your credit account at the bank must match your legal name on your tax ID number. Banks will be instituting compliance measures to check.

Here are the final regulations.

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Fannie And Freddie To Sue Banks Over Mortgage Securites: Does Geithner Know?

NYTimes:

The federal agency that oversees the mortgage giants Fannie Mae and Freddie Mac is set to file suits against more than a dozen big banks, accusing them of misrepresenting the quality of mortgage securities they assembled and sold at the height of the housing bubble, and seeking billions of dollars in compensation. The Federal Housing Finance Agency suits, which are expected to be filed in the coming days in federal court, are aimed at Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, among others, according to three individuals briefed on the matter. [. . .] The suits will argue the banks, which assembled the mortgages and marketed them as securities to investors, failed to perform the due diligence required under securities law and missed evidence that borrowers’ incomes were inflated or falsified. When many borrowers were unable to pay their mortgages, the securities backed by the mortgages quickly lost value. Fannie and Freddie lost more than $30 billion, in part as a result of the deals, losses that were borne mostly by taxpayers.

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The Icelandic "Miracle"

Via Krugman, the IMF report (PDF) on how Iceland has put itself on the right path. This stuck out for me:

A new and significantly smaller banking system has emerged from the crisis, with substantial private sector involvement. The banking system now holds assets of about 200 percent of GDP (one-fifth the size of the system pre-crisis) and is comprised of 14 institutions (23 before the crisis). This downsizing was largely achieved by transferring domestic assets and deposits to new institutions and imposing losses on general unsecured creditors. Work to address legacy vulnerabilities in the financial system (including the high level of nonperforming loans, loan and deposit concentration, and financial imbalances) is progressing. In particular, household and corporate debt restructuring is finally advancing and will help restore bank and private sector balance sheets.

Facing up to reality of the banks' true financial condition worked in Iceland. Maybe it can work here.

Speaking for me only

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In A Zero Lower Bound Recession, A Payroll Tax Cut Is Not Stimulative

The Obama Administration wants to extend the temporary payroll tax cut it brokered with Mitch McConnell in December 2010 (it was part of the infamous Deal that extended the Bush tax cuts.) While some like Ezra Klein hailed this initiative as great stimulus, the record is mixed at best. Bruce Bartlett writes:

[T]here is no evidence that the lower payroll tax has done much of anything to stimulate either spending or hiring. There are a number of reasons for this. [. . .T]he tax cut only helps those with jobs. While many have low wages and undoubtedly are spending all their additional cash flow, those with the greatest need and most likely to spend any additional income are the unemployed.

[. . . E]ven if one assumes that the cost of employment has declined and employers can somehow capture some of the payroll tax cut, there’s little sign that labor costs are the principal factor holding back hiring. The main one is a lack of sales, as monthly surveys by the National Federation of Independent Business document. In the latest survey, 23 percent of businesses said poor sales were their No. 1 problem and only 4 percent cited the cost of labor.

(Emphasis supplied.) I'm not sure why the lack of demand in a zero bound recession is not recognized as the problem here by the VSP in this country. The issue is how to stimulate demand. For this purpose, spending, by the government, is what is required. It seems clear no one wants to understand this. Bartlett writes:

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Warren Buffett: Raise Taxes On The Rich

In the New York Times:

OUR leaders have asked for “shared sacrifice.” But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.

While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.

These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.

Here is an issue the President can easily make his. He could of done it last December of course, but it is not too late.

Speaking for me only

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