Why Obama Caved on the Bush Tax Cuts

By David Paul Kuhn

It's the liberal version of George H.W. Bush reneging on his "read my lips" tax pledge. Candidate Obama excoriated the Bush tax cuts for the wealthy. But Monday evening, President Obama tentatively agreed to extend those same tax cuts.

Call it compromise or call it caving, the deal will anger the Democratic base. It opens Obama to charges of hypocrisy. Perhaps Obama saw it as a raw deal. But he also likely believes it's the best deal he can get.

This partly comes down to votes. Democrats lack the 60-Senate votes to extend the tax cuts for earnings under $200,000. That left Democrats with two options: expire all or extend all.

Expiration was Obama's worst option. It amounted to bad policy and bad politics. Major tax hikes have a bad record in bad economies. And this economy has struggled to weather smaller headwinds. Democrats would also have to explain to all working Americans, not merely top earners, why their taxes rose in hard times.

Tax hikes have long been a political loser for Democrats. Many liberals argued that Democrats should blame Republicans for obstructing middle class tax cuts to win tax cuts for the rich. But Democrats retain control of Congress and the presidency (for a few more weeks). And they have learned a DC-axiom the hard way: the party that controls Washington accounts for Washington.

Imagine the Bush tax cuts expiring. The conservative Americans for Tax Reform currently have a "Countdown to the Biggest Tax Increase in American History." The most-cogent message wins debates. And Republicans have long had it on taxes.

Timing is another issue. Democrats waited until the eleventh hour to have this debate. Republicans were not going to let Democrats move to the next issue until the tax issue was resolved. This White House still hopes to ratify the new START treaty with Russia as well as end "don't ask, don't tell" this term. Republicans were also unwilling to extend unemployment benefits for about 2 million Americans without extending the tax cuts to the top income bracket. In the game of chicken, Democrats had more to lose. Democrats would also only have a worst hand next year, with a slimmer Senate majority and a Republican House.

The tentative deal was a political win for Republicans. But Obama has a deal he can stand on. If the deal comes to fruition, the package will extend the Bush tax breaks for two years in exchange for an additional 13 months of unemployment benefits. It will also cut payroll taxes to spur hiring.

The package will cost about $900 billion over the next two years. The deal comes only days after the deficit commission report, which urged serious action to combat America's long-term debt problem (or crisis).

Ironies abound. Democrats spent years railing against George W. Bush for not paying for his tax cuts. Democrats are now emulating the very actions they criticized. Republicans have spent two years preaching about the primacy of deficits. The GOP victory however means a tax deal that will likely prove more costly to the deficit than the stimulus package. This bi-partisan compromise is, oddly, politics as usual.

Obama said Monday evening the "framework" for the tax deal "was not perfect." Yet it's conceivable Obama saw an upside to losing this debate.

In Obama's ideal world, he would bolster programs like food stamps or extend the unemployment benefits independent of the tax cut debate. This is liberal orthodoxy. It is also however not without reason.

Consider the math of Mark Zandi, chief economist of Moody's Analytics and a past-advisor to both parties. Zandi calculates that every dollar spent on food stamps, for example, has a $1.74 impact on the economy (the money goes entirely to goods). The bang-for-buck for extending unemployment benefit is $1.61 (unemployed spend what little they have to stay afloat). By comparison, Zandi calculates that extending the Bush tax cuts will only have a 32-cent impact on the economy for every dollar (affluent earners feed government coffers but they are also more likely to save their tax cut, and therefore not greatly stimulate growth).

But Obama lacks the coalition to win his ideals. That ship sailed long ago. And Obama's political recovery is tied to the economic recovery. Obama will take what stimulus he can get.

Read More

Votes Happening Now Over Pelosi's One Last Political Stunt

House Democrats' maneuver blocks GOP amendments on tax vote

With their days numbered in control of the U.S. House, Democrats are planning a political stunt Thursday in hopes of embarrassing Republicans on a vote to raise taxes.

House Majority Leader Steny Hoyer (D-Md.) announced Democrats would disregard the Obama administration’s ongoing negotiations with congressional Republicans and force a vote on taxes. Democrats will use a procedural maneuver preventing the GOP from offering an amendment to extend all of the 2001 and 2003 tax cuts.

Republicans immediately voiced alarm at the move. While the vote would prevent tax hikes on Americans earning $250,000 or less, small businesses would face steep tax increases under the Democrats’ plan.

Without an opportunity to offer amendments, Republicans are expected to vote against the measure. By doing so they’ll give Speaker Nancy Pelosi (D-Calif.) one final opportunity to demagogue the issue. However, it will likely be a short-lived victory. The measure has little chance of passing in the Senate.

Read More: RS

UK Proposes All Paychecks Go to the State First

The UK's tax collection agency is putting forth a proposal that all employers send employee paychecks to the government, after which the government would deduct what it deems as the appropriate tax and pay the employees by bank transfer.

The proposal by Her Majesty's Revenue and Customs (HMRC) stresses the need for employers to provide real-time information to the government so that it can monitor all payments and make a better assessment of whether the correct tax is being paid.

Currently employers withhold tax and pay the government, providing information at the end of the year, a system know as Pay as You Earn (PAYE). There is no option for those employees to refuse withholding and individually file a tax return at the end of the year.

If the real-time information plan works, it further proposes that employers hand over employee salaries to the government first.

"The next step could be to use (real-time) information as the basis for centralizing the calculation and deduction of tax," HMRC said in a July discussion paper.

HMRC described the plan as "radical" as it would be a huge change from the current system that has been largely unchanged for 66 years.

Even though the centralized deductions proposal would provide much-needed oversight, there are some major concerns, George Bull, head of Tax at Baker Tilly, told CNBC.com.

"If HMRC has direct access to employees' bank accounts and makes a mistake, people are going to feel very exposed and vulnerable," Bull said.

And the chance of widespread mistakes could be high, according to Bull. HMRC does not have a good track record of handling large computer systems and has suffered high-profile errors with data, he said.

The system would be massive in terms of data management, larger than a recent attempt to centralize the National Health Service's data, which was later scrapped, Bull said.

If there's a mistake and the HMRC collects too much money, the difficulty of getting it back could be high with repayments of tax taking weeks or months, he said.

"There has to be some very clear understanding of how quickly repayments were made if there was a mistake," Bull said.

HMRC estimated the potential savings to employers from the introduction of the concept would be about £500 million ($780 million).

But the cost of implementing the new system would be "phenomenal," Bull pointed out.

"It's very clear that the system does need to be modernized… It's outdated, it's outmoded," Emma Boon, campaigner manager at the Tax Payers' Alliance, told CNBC.com.

Boon said that the Tax Payers' Alliance was in favor of simplifying tax collection, but stressed that a new complex computer system would add infrastructure and administration costs at a time when the government is trying to reduce spending.

There is a further concern, according to Bull. The centralized storage of so much data poises a security risk as the system may be open to cyber crime.

As well as security issues, there's a huge issue of transparency, according to Boon.

Boon also questioned HMCR's ability to handle to the role effectively.

The Institute of Directors (IoD), a UK organization created to promote the business agenda of directors and entreprenuers, said in a press release it had major concerns about the proposal to allow employees' pay to be paid directly to HMRC.

CNBC

If those who forget history are doomed to repeat It, then what happens to those who never learned it to begin with?

The Soak-the-Rich Catch-22

Tax reduction thus sets off a process that can bring gains for everyone, gains won by marshalling resources that would otherwise stand idle—workers without jobs and farm and factory capacity without markets. Yet many taxpayers seemed prepared to deny the nation the fruits of tax reduction because they question the financial soundness of reducing taxes when the federal budget is already in deficit. Let me make clear why, in today's economy, fiscal prudence and responsibility call for tax reduction even if it temporarily enlarged the federal deficit—why reducing taxes is the best way open to us to increase revenues.
—President John F. Kennedy,
Economic Report of the President,
January 1963

If only more of today's leaders thought like JFK. Sadly, in the debate over whether to extend the 2001 and 2003 tax cuts, and if so whether the cuts should be extended to those people who are in the highest tax bracket, there is a false presumption that higher tax rates on the top 1% of income earners will raise tax revenues.

Anyone who is familiar with the historical data available from the IRS knows full well that raising income tax rates on the top 1% of income earners will most likely reduce the direct tax receipts from the now higher taxed income—even without considering the secondary tax revenue effects, all of which will be negative. And who on Earth wants higher tax rates on anyone if it means larger deficits?

Columnist Kimberley Strassel discusses Nancy Pelosi's plan to have a tax vote before November, and OpinionJournal.com assistant editor Allysia Finley reports on the battle to reform state spending.

Since 1978, the U.S. has cut the highest marginal earned-income tax rate to 35% from 50%, the highest capital gains tax rate to 15% from about 50%, and the highest dividend tax rate to 15% from 70%. President Clinton cut the highest marginal tax rate on long-term capital gains from the sale of owner-occupied homes to 0% for almost all home owners. We've also cut just about every other income tax rate as well.

During this era of ubiquitous tax cuts, income tax receipts from the top 1% of income earners rose to 3.3% of GDP in 2007 (the latest year for which we have data) from 1.5% of GDP in 1978. Income tax receipts from the bottom 95% of income earners fell to 3.2% of GDP from 5.4% of GDP over the same time period. (See the chart).

These results shouldn't be surprising. The highest tax bracket income earners, when compared with those people in lower tax brackets, are far more capable of changing their taxable income by hiring lawyers, accountants, deferred income specialists and the like. They can change the location, timing, composition and volume of income to avoid taxation.

Just look at Sen. John Kerry's recent yacht brouhaha if you don't believe me. He bought and housed his $7 million yacht in Rhode Island instead of Massachusetts, where he is the senior senator and champion of higher taxes on the rich, avoiding some $437,500 in state sales tax and an annual excise tax of about $70,000.

Howard Metzenbaum, the former Ohio senator and liberal supporter of the death tax, chose to change his official residence to Florida just before he died because Florida does not have an estate tax while Ohio does. Goodness knows what creative devices former House Ways and Means Chairman Charlie Rangel has used to avoid paying taxes.
The stern of John Kerry's yacht

In short, the highest bracket income earners—even left-wing liberals—are far more sensitive to tax rates than are other income earners.

When President Kennedy cut the highest income tax rate to 70% from 91%, revenues also rose. Income tax receipts from the top 1% of income earners rose to 1.9% of GDP in 1968 from 1.3% in 1960. Even when Presidents Harding and Coolidge cut tax rates in the 1920s, tax receipts from the rich rose. Between 1921 and 1928 the highest marginal personal income tax rate was lowered to 25% from 73% and tax receipts from the top 1% of income earners went to 1.1% of GDP from 0.6% of GDP.

Or perhaps you'd like to see how the rich paid less in taxes under the bipartisan tax rate increases of Presidents Johnson, Nixon, Ford and Carter? Between 1968 and 1981 the top 1% of income earners reduced their total income tax payments to 1.5% of GDP from 1.9% of GDP.

And then there's the Hoover/Roosevelt Great Depression. The Great Depression was precipitated by President Hoover in early 1930, when he signed into law the largest ever U.S. tax increase on traded products—the Smoot-Hawley Tariff. President Hoover then thought it would be clever to try to tax America into prosperity. Using many of the same arguments that Barack Obama, Nancy Pelosi and Harry Reid are using today, President Hoover raised the highest personal income tax rate to 63% from 24% on Jan. 1, 1932. He raised many other taxes as well.

President Roosevelt then debauched the dollar with the 1933 Bank Holiday Act and his soak-the-rich tax increase on Jan. 1, 1936. He raised the highest personal income tax rate to 79% from 63% along with a whole host of other corporate and personal tax rates as well. The U.S. economy went into a double dip depression, with unemployment rates rising again to 20% in 1938. Over the course of the Great Depression, the government raised the top marginal personal income tax rate to 83% from 24%.

Is it any wonder that the Great Depression was as long and deep as it was? Whoever heard of a country taxing itself into prosperity? Not only did taxes as a share of GDP fall, but GDP fell as well. It was a double whammy. Tax receipts from the top 1% of income earners stayed flat as a share of GDP, going to 1% in 1940 from 1.1% in 1928, but at what cost?

We all know that there are lots of factors influencing tax revenues from the rich, but the number one factor has to be the statutory tax rates government tells the rich they have to pay. Not only do the direct income tax consequences of higher tax rates on those in the highest brackets lead to higher deficits, the indirect effects magnify the tax revenue losses many fold.

As a result of higher tax rates on those people in the highest tax brackets, there will be less employment, output, sales, profits and capital gains—all leading to lower payrolls and lower total tax receipts. There will also be higher unemployment, poverty and lower incomes, all of which require more government spending. It's a Catch-22.

Higher tax rates on the rich create the very poverty and unemployment that is used to justify their presence. It is a vicious cycle that well-trained economists should know to avoid.

Wall Street Journal

Williams: Taxes and Voting

According to the Tax Policy Center, a Washington, D.C., research organization, nearly half of U.S. households will pay no federal income taxes for 2009. That's up from the Tax Foundation's 2006 estimate that 41 percent of the American population, or 121 million Americans, were completely outside the federal income tax system. These Americans pay no federal income tax either because their incomes are too low or they have higher income but credits, deductions and exemptions that relieve them of tax liability. This lack of income tax liability stands in stark contrast to the top 10 percent of earners, those households earning an average of $366,400 in 2006, who paid about 73 percent of federal income taxes. The top 25 percent paid 86 percent. The bottom 50 percent of taxpayers paid less than 4 percent of federal income taxes collected.

Let's not dwell on the fairness of such an arrangement for financing the activities of the federal government. Instead, let's ask what kind of incentives and results such an arrangement produces and ask ourselves whether these results are good for our country. That's a question to be asked whether or not one has federal income tax liabilities.

Having 121 million Americans completely outside the federal income tax system, it's like throwing chum to political sharks. These Americans become a natural spending constituency for big-spending politicians. After all, if you have no income tax liability, how much do you care about deficits, how much Congress spends and the level of taxation? Political calls for tax cuts and spending restraints have little appeal. Survey polls revealed this. According to The Harris Poll taken in June 2003, 51 percent of Democrats thought the tax cuts enacted by Congress were a bad thing while 16 percent of Republicans thought so. Among Democrats, 67 percent thought the tax cuts were unfair while 32 percent of Republicans thought so. When asked whether the $350-billion tax cut package will help your family finances, 59 percent of those surveyed said no and 35 percent said yes. Tax cuts to many Americans mean just one thing: They pose a threat to the federal handouts they receive.

Here's my perhaps politically incorrect question: If one has no financial stake in our country, how much of a say-so should he have in its management? Let's put it another way: I do not own stock, and hence have no financial stake, in Ford Motor Company. Do you think I should have voting rights or any say-so in the management of the company?Let's put it another way: I do not own stock, and hence have no financial stake, in Ford Motor Company. Do you think I should have voting rights or any say-so in the management of the company? I'm guessing that the average sane person's answer is no. You say, "Williams, just where are you heading with this?" I'm not proposing that we take voting rights away from those who do not pay taxes. What I'm suggesting is that every American gets one vote in every federal election, plus another vote for each $20,000 he pays in federal taxes. With such a system, there'd be a modicum of linkage between one's financial stake in our country and his decision-making right. Of course, unequal voting power could be reduced by legislating lower taxes.


This is not a far-out idea. The founders worried about it. James Madison's concern about class warfare between the rich and the poor led him to favor the House of Representatives being elected by the people at large and the Senate elected by property owners. He said, "It is nevertheless certain, that there are various ways in which the rich may oppress the poor; in which property may oppress liberty; and that the world is filled with examples. It is necessary that the poor should have a defense against the danger. On the other hand, the danger to the holders of property cannot be disguised, if they be undefended against a majority without property."

Town Hall

The Foundry: How the Left Really Plans to Pay for Obamacare

According to the Congressional Budget Office (CBO), over half of President Barack Obama’s new $940 billion health care entitlement is paid for by price-fixing Medicare cuts. Never mind that the President’s own Centers for Medicare and Medicaid Services says that these cuts would cause “roughly 20 percent” of Medicare providers to go bankrupt in Obamacare’s first ten years. The CBO has to believe these cuts will happen because they are required, by law, to believe everything Congress tells them. The American people are not. So the American people ought to know that instead of cutting doctors’ Medicare reimbursement rates by 21% as required by law on April 1, the Centers for Medicare and Medicaid Services froze payments at current levels until Congress could come back after Easter recess and rescind those cuts. Again. As they have done every year but one since the cuts were first enacted in 1997.

This doc fix is big enough that, if it had been included as a cost of Obamacare, it would have sent the President’s bill into the red all by itself. But the half trillion dollars in Medicare cuts used to fund the rest of Obamacare are a much bigger problem. Even if we assume they all go as planned, President Obama’s budget would borrow 42 cents for each dollar spent in 2010; would run a $1.6 trillion deficit in 2010; and would leave permanent deficits that top $1 trillion as late as 2020. Add on the half trillion dollars in Medicare cuts that, given Congress’ track record, the American people would be naive to think will ever happen, and the federal government is looking at a pile of new debt.

The left’s solution to this problem has been simmering for some time now. Senate Budget Committee chairman Kent Conrad (D-ND) floated the idea to The Washington Post last May. Speaker Nancy Pelosi (D-CA) told Charlie Rose it was “on the table” in October. And yesterday White House adviser Paul Volcker told the New York Historical Society it should be considered. The “it” here is a Value Added Tax (VAT), which is a fancy way of saying national sales tax.

A VAT can be (and has been) structured in many different ways. But the real world results are always the same: higher taxes, more government spending, lower growth, fewer jobs and more special interest power.

Higher Taxes: Don’t believe for a second that a VAT will help offset other taxes. International evidence clearly shows that a VAT is likely to increase the aggregate burden of govern­ment. Europeans used to only have a slightly higher tax burden than the United States. But beginning in the late 1960s, European countries began to implement VATs. Since then, the overall tax burden in Europe has climbed rapidly. And once a VAT is in place, the evidence shows that the tax rate rises over time.

Higher Government Spending: Not surprisingly, with more revenues, European governments turn around and spend much more than the United States does. According to a study by the U.S. Chamber of Commerce, government spending grew 45 percent faster in VAT nations than in non-VAT countries.

Slower Growth: According to the academic literature, there is a strong negative relationship between govern­ment spending and economic performance. In other words, more government spending means less economic growth and fewer jobs. Economic growth is driven by individuals and entrepreneurs operating in free markets, not by Washington spending and regulations.

More Power to Washington: There is one economy that would greatly benefit from a VAT: Washington, DC. No VAT could ever be levied evenly on all goods and services. Due to political considerations, a VAT in addition to current taxes would likely exempt politically sensitive items like food, clothing, health care and housing. Industries would lobby heavily for exemptions from the VAT for the economic benefits described above. This would give Congress an even larger role in picking winners and losers in the marketplace. Success would depend less on ingenuity and hard work and more on the ability to gain political favor.

Our nation faces a financial crisis. But low revenues are not the problem. Spending is. Heritage fellow Brian Riedl explains:

Real federal spending remained steady at $21,000 per household throughout the 1980s and 1990s, before President Bush hiked it to $25,000 per household. Now, President Obama has a proposed a budget that would permanently spend a staggering $32,000 per household annually – and that’s before all the baby boomers retire and add another $10,000 per household in Social Security, Medicare, and Medicare costs to the bottom line.

So the problem is not declining revenues, but rather a spending spree unlike any in American history. If Washington insists on spending $32,000 per household, it will have to tax $32,000 per household – an unaffordable and unfair tax burden regardless what kind of tax collects it.

Rather than tax America into permanent economic stagnation, President Obama and Congress must rein in runaway federal spending. Simply bringing real federal spending back to the $21,000 per household average that prevailed in the 1980s and 1990s would balance the budget by 2012 without raising a single tax on anyone. Even returning spending to the pre-recession level of 20 percent of GDP would eliminate two-thirds of the projected 2019 budget deficit without raising taxes.

The Foundry

Health Care for ALL Americans . . . except senior officials and their staff

New Ledger writer and blogger Ben Domenech writes of a little discussed portion of the recent Health Care Legislation that exempts "senior Democrat staffers who wrote the bill from being forced to purchase health care plans in the same way as other Americans."

A major story during the course of the health care debate was whether members of Congress would commit to placing themselves in the same health care exchanges as average citizens, or whether they would hang on to their government plans — that’s why leadership chose to add this portion to the bill, serving as a guarantee that members would participate in the same health plans as the people. Here’s the relevant text:

(D) MEMBERS OF CONGRESS IN THE EXCHANGE-

(i) REQUIREMENT- Notwithstanding any other provision of law, after the effective date of this subtitle, the only health plans that the Federal Government may make available to Members of Congress and congressional staff with respect to their service as a Member of Congress or congressional staff shall be health plans that are–

(I) created under this Act (or an amendment made by this Act); or

(II) offered through an Exchange established under this Act (or an amendment made by this Act).

But as with a lot of legislative matters, the devil is in the details — or in this case, the definitions. As anyone who’s worked on Capitol Hill knows, the personal office staff for a member is governed by different rules than those who work on committees and in the leadership offices. It appears from the way this language is written that those staffers NOT in personal offices, such as those working and paid under the committee structure (such as those working for Chairman Henry Waxman) or those working on leadership staff (such as those working for Speaker Nancy Pelosi) would be exempt from these requirements (emphasis added).

(ii) DEFINITIONS- In this section:

(I) MEMBER OF CONGRESS- The term `Member of Congress’ means any member of the House of Representatives or the Senate.

(II) CONGRESSIONAL STAFF- The term `congressional staff’ means all full-time and part-time employees employed by the official office of a Member of Congress, whether in Washington, DC or outside of Washington, DC.

According to the Congressional Research Service, this definition of staff will only apply to those staffers employed within a member’s “personal office” — meaning that it will absolutely not apply to committee staff members, and may not apply to leadership staff.

This problem was acknowledged earlier in the process — last year, Senator Grassley tried to repair it, but he was rebuffed.

As Speaker Pelosi said a few weeks ago, it’s only after this legislation is passed that we’ll truly find out what’s in it.

For his part Senator Chuck Grassley is renewing his efforts to show the Democratic Leaders hypocrisy for what it is.

Grassley says health care reform should apply to President Obama, top administration officials


WASHINGTON – Senator Chuck Grassley today said he will offer an amendment during Senate debate on the health care reconciliation bill this week to apply the reform legislation to the President, Vice President, cabinet members and top White House staff.

“It’s pretty unbelieveable that the President and his closest advisors remain untouched by the reforms they pushed for the rest of the country. In other words, President Obama’s health care reform won’t apply to President Obama,” Grassley said. “Last December, the effort to apply any new law to administration political leaders was rejected by the Senate Majority Leader. But there’s no justification for the double standard, and I’ll continue to work to establish fairness.”

The Senate legislation passed last night by the House of Representatives includes an amendment Grassley sponsored and got adopted by the Finance Committee last fall to have members of Congress and their staffs get their health insurance through the same health insurance exchanges where health plans for the general public would be available. During the closed-door negotiations on the bill late last year, the Senate Majority Leader carved out Senate committee and leadership staff from this requirement.

Subsequently, Grassley and Senator Tom Coburn attempted to offer another amendment to restore the requirement during Senate debate on the health care bill, but the Senate Majority Leader would not let their amendment to fix this loophole even come up for a vote. In addition to Senate committee and leadership staff, the amendment Grassley and Coburn filed during the Senate debate would have made the President, the Vice President, top White House staff and cabinet members all get their health insurance through the newly created exchanges. It would not have applied to federal employees in the civil service.

Grassley said, “It’s only fair and logical that top administration officials, who fought so hard for passage of this overhaul of America’s health care system, experience it themselves. If it’s as good as promised, they’ll know it first-hand. If there are problems, they’ll be able to really understand them, as they should.”

Grassley said the motivation for his amendments is simple: public officials who make the laws or lead efforts to have laws changed should live under those laws.

“This is the same principle that motivated me to pursue legislation over 20 years ago to apply civil rights, labor and employment laws to Congress,” Grassley said. Before President Clinton signed into law Grassley’s long-sought Congressional Accountability Act of 1995, Congress had routinely exempted itself.

The Congressional Accountability Act made Congress subject to 12 laws, including the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, Title VII of the Civil Rights Act of 1964, the Employee Polygraph Protection Act of 1988, the Fair Labor Standards Act of 1938, the Family and Medical Leave Act of 1993, the Federal Service Labor-Management Relations Statute, the Occupational Safety and Health Act of 1970, the Rehabilitation Act of 1973, the Veteran’s Employment and Reemployment Rights at Chapter 43 of Title 38 of the U.S. Code, and the Worker Adjustment and Retraining Notification Act of 1989.

Today, Grassley is working to make sure Congress lives up to the same standards it imposes on others with legislation such as his Congressional Whistleblower Protection Act.

This would be funny if they weren't serious: Tax soda, pizza to cut obesity, researchers say

From Reuters today

Julie Steenhuysen

CHICAGO (Reuters) - U.S. researchers estimate that an 18 percent tax on pizza and soda can push down U.S. adults' calorie intake enough to lower their average weight by 5 pounds (2 kg) per year.

The researchers, writing in the journal Archives of Internal Medicine on Monday, suggested taxing could be used as a weapon in the fight against obesity, which costs the United States an estimated $147 billion a year in health costs.

"While such policies will not solve the obesity epidemic in its entirety and may face considerable opposition from food manufacturers and sellers, they could prove an important strategy to address overconsumption, help reduce energy intake and potentially aid in weight loss and reduced rates of diabetes among U.S. adults," wrote the team led by Kiyah Duffey of the University of North Carolina at Chapel Hill.

With two-thirds of Americans either overweight or obese, policymakers are increasingly looking at taxing as a way to address obesity on a population level.

California and Philadelphia have introduced legislation to tax soft drinks to try to limit consumption."
Read More

Not to be left out, Mississippi's food police continue working on this too.

JACKSON -- Legislation that would add a 24-cent tax on 12-ounce, sugar-laden soft drinks appeared dead Wednesday (February 17th), but not before the measure received a lengthy hearing about how strongly sugar contributes to Mississippi's distinction as the nation's most obese state.

"This is just the first batter in the first inning," the bill's sponsor, Rep. John Mayo, D-Clarksdale, said after a nearly two-hour hearing in the House Ways and Means Committee.

Mayo said he expected strong opposition to his Sweetened Beverages and Syrups Tax Law legislation from lobbyists for the state's soft drink association and businesses that would have to raise prices on the products and cut into their profits.

The legislation would require soft drink distributors and retailers to pay a tax of $2.56 a gallon, or two cents an ounce, for sweetened soft drinks.

The tax would amount to 24 cents per 12-ounce Coke, Pepsi or other soft drink sweetened with sugar.

Drinks that include artificial sweeteners would be exempt.

Business owners would have to pass the price increase on to consumers, and risk losing money, or absorb the increased cost themselves.

"I understand the position of private business," Mayo said. "But with a problem of this scope -- obesity -- private business will respond as a result of either implemented government policy or threatened government policy.

"It took us eight years to get movement on the tobacco tax, and if it takes another eight years on this, we'll get movement." See the rest of the article in The Commercial Appeal

Why don't we we just tax the fat people?

Pitching for America

By Patrick J. Buchanan

It was Father’s Day, 1964, when the Phillies’ Jim Bunning, a father of seven, took the mound against the Mets.

Ninety pitches later, Bunning had struck out 10 and allowed not one batter to reach first base. Twenty-seven up, 27 down. The first perfect game in 86 years in the National League, and the finest hour of the Hall of Famer’s baseball career.

Beginning last week, Jim Bunning took the Senate floor for five straight days to object to Harry Reid’s call for unanimous consent to waive through a $10 billion spending bill. First, the Kentucky senator demanded, show me how we’re going to pay for it.

His own leadership abandoned Bunning. Susan Collins of Maine assured the Senate and country that Republicans did not back their colleague: “Senator Bunning’s views do not represent a majority of the caucus. It’s important that the American people understand that there is bipartisan support for extending these vital programs.”

Vital programs?

Had Bunning blocked rescue flights to Port au Prince or Santiago, or ammunition for the Marines in Marja?

No. Bunning had held up for a couple of days a vote on a $10 billion bill to extend unemployment benefits, make payments to doctors under Medicare and extend satellite TV to rural America. Reportedly, some 2,000 Transportation Department workers were furloughed for a few days.

“If we cannot pay for a bill that all 100 senators support,” Bunning said, “how can we tell the American people with a straight face that we will ever pay for anything?”

Good question.

Indeed, the behavior of senators suggests that neither party appreciates the depth of the crisis we are in or the pain that will be required to get us out. Last week, Bunning did more than any senator in many moons to raise the consciousness of the country to the magnitude of the deficit-debt crisis.

His taking to the barricades may have inconvenienced some, but Bunning forced us all, briefly, to stare into the chasm.

Consider. Congress this year will spend $1.6 trillion more than it collects in revenue, with the largest outlays in that FY 2010 budget for defense at $719 billion and Social Security at $721 billion.

Thus, if the U.S. Government on Oct. 1, 2008, had shut down the Pentagon and furloughed every soldier and civilian here and around the world, and announced that it would not send out a Social Security check for a full year to any of the 50 million retired and elderly, we would still be $160 billion short of balancing the budget. If you zeroed out federal benefits to veterans for a full year, that, added in, would bring us close.

Such is the magnitude of the fiscal crisis facing the country.

To balance the budget this year would require a 43 percent across-the-board cut in every category of federal spending — defense, Social Security, Medicare, Medicaid, Homeland Security, highways, etc. — or, if one used taxes alone, a 72-percent increase in federal tax revenues.

Budget cuts of that magnitude are impossible. They would cause a revolution. And any attempt at tax hikes of that magnitude would drain off all available consumer capital and hurl the economy into another Depression.

For the foreseeable future, then, this nation is going deeper into debt.

And when Harry Reid and colleagues wave through yet another $10 billion for unemployment checks and making sure farm folks get yard dishes to see reruns of “The Sopranos,” the United States must go to Beijing, Tokyo or Riyadh and borrow the money.

That is the hole we are in.

And when one stares at some of those budget numbers, the priorities of the Obama administration seem almost surreal.

In George W. Bush’s last full year in office, we spent $29 billion for “international affairs.” The lion’s share of that was foreign aid. In FY 2011, the year for which Congress has begun to budget, spending for international affairs and foreign aid is to jump to $54 billion and continue to surge through the Obama years.

What is the rationale for the United States, the world’s greatest debtor nation, putting itself deeper in debt to China to send foreign aid to nations that will never repay us and that vote habitually with China and against us in the United Nations?

This city does not seem to grasp that the days of wine and roses are over. We are not in the 1950s or 1960s anymore. Then, we could throw open our markets to imports from the world. Then, we could dish out foreign aid and fight wars in Vietnam with 500,000 men, while maintaining 50,000 troops in Korea and 300,000 in Europe.

America is headed for a time when, like the British Empire, she is going to have to make painful choices, or have them forced upon us.

He may have been booed all last week, but Jim Bunning pitched one of the best games of his career.

Patrick J Buchanan

The Growth of Dependency on Government Threatens the Future of American Democracy

Today marks the seventh year that we have published the Index of Dependence on Government. And, for seven years running, our Index shows growing dependence. The Index now stands at 240, up from a value of 19 in 1962, or a nearly 13 fold increase since the Kennedy administration. The rate of growth, however, actually has increased over the last eight years. That period saw the second highest rate of growth in dependency creating programs: since 2001, the Index has increased 31 percent. Most disturbing of all, all of the evidence points to even more rapid increases in dependency ahead, which well could threaten democratic government.

From virtually the first day of his presidency, Barack Obama and his top deputies have advanced programs and initiatives that deepen and expand American citizens’ dependency on government. From new federal programs designed to boost economic activity to health care reform that could place the U.S. government at the center of the nation’s health care system, the central thrust of policy since January 2009 has been to increase Americans’ daily dependency on Washington.

However, the rapid expansion of dependency-creating programs did not begin with Barack Obama’s inauguration. Indeed, President Obama inherited substantial momentum toward greater dependency on government from the George W. Bush Administration and prior governments. President Bush’s years saw growth in all dependency creating categories, but particularly in programs aimed at health, education, and working-age income support.

The Heritage Foundation

Wyden, Gregg propose tax code overhaul

Two senators worked across party lines to develop a proposal to overhaul the tax code and rebuild it around a broader tax base and lower rates.

Sens. Ron Wyden (D-Ore.) and Judd Gregg (R-N.H.) contend they can build support for the measure by emphasizing the job-creation benefits of a simpler tax system.

Their plan, which isn't likely to go anywhere in this election-shortened legislative year, nonetheless could help frame the debate when Congress does get ready to tackle a tax overhaul.

It would lower the top corporate tax rate from 35 percent to 24 percent and would keep the top individual rate at 35 percent, even as most Democrats propose letting the top rate rise to 39.6 percent in 2011. It would also repeal the alternative minimum tax, triple the standard deduction and retain popular deductions for home mortgage interest and charitable contributions.

To offset the revenue lost through such moves, the senators would trim or eliminate dozens of preferences built into the tax code, especially those benefiting multinational corporations.

"We can take on a host of the special interests and write legislation that gives all Americans — individuals, businesses, all Americans — an opportunity to get ahead," said Wyden.

Congress.org