The national debt exceeded $21 trillion for the first time on Thursday, a little more than six months after it hit first $20 trillion on Sept. 8.
The national debt was $21.031 trillion on Thursday. The government releases total debt figures each business day, but it lags by one day.
Federal borrowing has been on the rise again since February, when Congress passed legislation to suspend the debt ceiling. That move allowed the government to borrow as much as it needs to fund the activities approved by Congress.
Under the law passed in February, the government will not face any borrowing limit until March 1, 2019. At its current pace, the government is on track to add at least $1 trillion to the national debt by then.
For example, the debt grew by more than half a trillion dollars in the six weeks since the debt ceiling was lifted on Feb. 9.
A large part of the national debt reflects the federal budget deficit, or the amount of spending above the revenues collected by the government. But the debt is rising faster than the amount of the budget deficit, as it also reflects things like federal lending for student loans and mortgage programs.
Peter G. Peterson Foundation President Michael Peterson said the milemarker is just the beginning, as Congress has just agreed to spend even more.
“Our national debt reached a staggering $21 trillion today, having grown by $1 trillion in just the past six months,” he said. “Worse yet, this unfortunate milestone has only just begun to include the effects of the recent fiscally irresponsible tax and spending legislation, which added more debt on top of an already unsustainable trajectory.”
Monetary policy conducted under the assumption of a NAIRU involves allowing just enough unemployment in the economy to prevent inflation rising above a given target figure. Prices are allowed to increase gradually and some unemployment is tolerated.
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Origins
An early form of NAIRU is found in the work of Abba P. Lerner (Lerner 1951, Chapter 14), who referred to it as “low full employment” attained via the expansion of aggregate demand, in contrast with the “high full employment” which adds incomes policies (wage and price controls) to demand stimulation.
The concept arose in the wake of the popularity of the Phillips curve which summarized the observed negative correlation between the rate of unemployment and the rate of inflation (measured as annual nominal wage growth of employees) for number of industrialised countries with more or less mixed economies. This correlation (previously seen for the U.S. by Irving Fisher) persuaded some analysts that it was impossible for governments simultaneously to target both arbitrarily low unemployment and price stability, and that, therefore, it was government’s role to seek a point on the trade-off between unemployment and inflation which matched a domestic social consensus.
During the 1970s in the United States and several other industrialized countries, Phillips curve analysis became less popular, because inflation rose at the same time that unemployment rose (see stagflation).
Worse, as far as many economists were concerned, was that the Phillips curve had little or no theoretical basis. Critics of this analysis (such as Milton Friedman and Edmund Phelps) argued that the Phillips curve could not be a fundamental characteristic of economic general equilibrium because it showed a correlation between a real economic variable (the unemployment rate) and a nominal economic variable (the inflation rate). Their counter-analysis was that government macroeconomic policy (primarily monetary policy) was being driven by a low unemployment target and that this caused expectations of inflation to change, so that steadily accelerating inflation rather than reduced unemployment was the result. The resulting prescription was that government economic policy (or at least monetary policy) should not be influenced by any level of unemployment below a critical level – the “natural rate” or NAIRU.[6]
The natural rate hypothesis
The idea behind the natural rate hypothesis put forward by Friedman was that any given labor market structure must involve a certain amount of unemployment, including frictional unemployment associated with individuals changing jobs and possibly classical unemployment arising from real wages being held above the market-clearing level by minimum wage laws, trade unions or other labour market institutions. Unexpected inflation might allow unemployment to fall below the natural rate by temporarily depressing real wages, but this effect would dissipate once expectations about inflation were corrected. Only with continuously accelerating inflation could rates of unemployment below the natural rate be maintained.
The analysis supporting the natural rate hypothesis was controversial, and empirical evidence suggested that the natural rate varied over time in ways that could not easily be explained by changes in labor market structures. As a result, the “natural rate” terminology was largely supplanted by that of the NAIRU, which referred to a rate of unemployment below which inflation would accelerate, but did not imply a commitment to any particular theoretical explanation, or a prediction that the rate would be stable over time.
Properties
If {\displaystyle U*} is the NAIRU and {\displaystyle U} is the actual unemployment rate, the theory says that:
if {\displaystyle U<U*} for a few years, inflationary expectations rise, so that the inflation rate tends to increase;
if {\displaystyle U>U*} for a few years, inflationary expectations fall, so that the inflation rate tends to slow (there is disinflation); and
if {\displaystyle U=U*}, the inflation rate tends to stay the same, unless there is an exogenous shock.
Okun’s law can be stated as saying that for every one percentage point by which the actual unemployment rate exceeds the so-called “natural” rate of unemployment, real gross domestic product is reduced by 2% to 3%.
Criticism
The NAIRU analysis assumes that if inflation increases, workers and employers can create contracts that take into account expectations of higher inflation and agree on a level of wage inflation that matches the expected level of price inflation to maintain constant real wages. Therefore, the analysis requires inflation to accelerate to maintain low unemployment. However, this argument implicitly assumes that workers and employers cannot contract to incorporate accelerating inflation into wage expectations, but there is no clear justification for assuming that expectations or contract structures are limited in this way aside from the fact that such wage arrangements are not commonly observed.
The NAIRU analysis is especially problematic if the Phillips curve displays hysteresis, that is, if episodes of high unemployment raise the NAIRU.[7] This could happen, for example, if unemployed workers lose skills so that employers prefer to bid up of the wages of existing workers when demand increases, rather than hiring the unemployed.
Others, such as Abba Lerner (1951, 1967) and Hyman Minsky (1965) have argued that a similar effect can be achieved without the human costs of unemployment via a job guarantee, where rather than being unemployed, those who cannot find work in the private sector should be employed by the government. This theory, and the policy of the job guarantee replaces the NAIRU with the NAIBER (non-accelerating-inflation-buffer employment ratio).[8]
Relationship to other economic theories
Most economists do not see the NAIRU theory as explaining all inflation. Instead, it is possible to move along a short run Phillips Curve (even though the NAIRU theory says that this curve shifts in the longer run) so that unemployment can rise or fall due to changes in inflation. Exogenous supply-shock inflation is also possible, as with the “energy crises” of the 1970s or the credit crunch of the early 21st century.
The NAIRU theory was mainly intended as an argument against active Keynesian demand management and in favor of free markets (at least on the macroeconomic level). There is, for instance, no theoretical basis for predicting the NAIRU. Monetarists instead support the generalized assertion that the correct approach to unemployment is through microeconomic measures (to lower the NAIRU whatever its exact level), rather than macroeconomic activity based on an estimate of the NAIRU in relation to the actual level of unemployment. Monetary policy, they maintain, should aim instead at stabilizing the inflation rate.
Naming
The NAIRU, non-accelerating inflation rate of unemployment, is actually misnamed. It is the price level that is accelerating (or decelerating), not the inflation rate. The inflation rate is just changing, not accelerating.[9]
Jump up^Snowdon, Brian; Vane, Howard R. (2005). Modern Macroeconomics: Its Origins, Development and Current State. Cheltenham: E. Elgar. p. 187. ISBN1-84376-394-X.
Jump up^Case, K.E. and Fair, R.C. and Oster, S.M. (2016). Principles of Macroeconomics. Pearson. ISBN9780133023671.
Further reading
Fair, Ray C. (2004). “Testing the NAIRU model”. Estimating How the Macroeconomy Works. Cambridge: Harvard University Press. pp. 67–79. ISBN0-674-01546-0.
Lerner, Abba P. (1951). “A Wage Policy for Full Employment”. The Economics of Employment. New York: McGraw-Hill. pp. 209–219.
The Phillips curve is a single-equation empirical model, named after A. W. Phillips, describing a historical inverse relationship between rates of unemployment and corresponding rates of inflation that result within an economy. Stated simply, decreased unemployment, (i.e., increased levels of employment) in an economy will correlate with higher rates of inflation.
While there is a short run tradeoff between unemployment and inflation, it has not been observed in the long run.[1] In 1968, Milton Friedman asserted that the Phillips curve was only applicable in the short-run and that in the long-run, inflationary policies will not decrease unemployment.[2][3] Friedman then correctly predicted that, in the 1973–75 recession, both inflation and unemployment would increase.[3] The long-run Phillips curve is now seen as a vertical line at the natural rate of unemployment, where the rate of inflation has no effect on unemployment.[4] Accordingly, the Phillips curve is now seen as too simplistic, with the unemployment rate supplanted by more accurate predictors of inflation based on velocity of moneysupply measures such as the MZM (“money zero maturity”) velocity,[5] which is affected by unemployment in the short but not the long term.[6]
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History
Rate of Change of Wages against Unemployment, United Kingdom 1913–1948 from Phillips (1958)
William Phillips, a New Zealand born economist, wrote a paper in 1958 titled The Relation between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861-1957, which was published in the quarterly journal Economica.[7] In the paper Phillips describes how he observed an inverse relationship between money wage changes and unemployment in the British economy over the period examined. Similar patterns were found in other countries and in 1960 Paul Samuelson and Robert Solow took Phillips’ work and made explicit the link between inflation and unemployment: when inflation was high, unemployment was low, and vice versa.[8]
In the 1920s, an American economist Irving Fisher noted this kind of Phillips curve relationship. However, Phillips’ original curve described the behavior of money wages.[9]
In the years following Phillips’ 1958 paper, many economists in the advanced industrial countries believed that his results showed that there was a permanently stable relationship between inflation and unemployment.[citation needed] One implication of this for government policy was that governments could control unemployment and inflation with a Keynesian policy. They could tolerate a reasonably high rate of inflation as this would lead to lower unemployment – there would be a trade-off between inflation and unemployment. For example, monetary policy and/or fiscal policy could be used to stimulate the economy, raising gross domestic product and lowering the unemployment rate. Moving along the Phillips curve, this would lead to a higher inflation rate, the cost of enjoying lower unemployment rates.[citation needed] Economist James Forder argues that this view is historically false and that neither economists nor governments took that view and that the ‘Phillips curve myth’ was an invention of the 1970s.[10]
Since 1974, seven Nobel Prizes have been given to economists for, among other things, work critical of some variations of the Phillips curve. Some of this criticism is based on the United States’ experience during the 1970s, which had periods of high unemployment and high inflation at the same time. The authors receiving those prizes include Thomas Sargent, Christopher Sims, Edmund Phelps, Edward Prescott, Robert A. Mundell, Robert E. Lucas, Milton Friedman, and F.A. Hayek.[11]
Stagflation
In the 1970s, many countries experienced high levels of both inflation and unemployment also known as stagflation. Theories based on the Phillips curve suggested that this could not happen, and the curve came under a concerted attack from a group of economists headed by Milton Friedman.[citation needed] Friedman argued that the Phillips curve relationship was only a short-run phenomenon. In this he followed eight years after Samuelson and Solow [1960] who wrote ” All of our discussion has been phrased in short-run terms, dealing with what might happen in the next few years. It would be wrong, though, to think that our Figure 2 menu that related obtainable price and unemployment behavior will maintain its same shape in the longer run. What we do in a policy way during the next few years might cause it to shift in a definite way.”[8] As Samuelson and Solow had argued 8 years earlier, he argued that in the long run, workers and employers will take inflation into account, resulting in employment contracts that increase pay at rates near anticipated inflation. Unemployment would then begin to rise back to its previous level, but now with higher inflation rates. This result implies that over the longer-run there is no trade-off between inflation and unemployment. This implication is significant for practical reasons because it implies that central banks should not set employment targets above the natural rate.[1]
More recent research has shown that there is a moderate trade-off between low-levels of inflation and unemployment. Work by George Akerlof, William Dickens, and George Perry,[12]implies that if inflation is reduced from two to zero percent, unemployment will be permanently increased by 1.5 percent. This is because workers generally have a higher tolerance for real wage cuts than nominal ones. For example, a worker will more likely accept a wage increase of two percent when inflation is three percent, than a wage cut of one percent when the inflation rate is zero.
Today
U.S. Inflation and Unemployment 1/2000 to 4/2013
Most economists no longer use the Phillips curve in its original form because it was shown to be too simplistic.[6] This can be seen in a cursory analysis of US inflation and unemployment data from 1953–92. There is no single curve that will fit the data, but there are three rough aggregations—1955–71, 1974–84, and 1985–92—each of which shows a general, downwards slope, but at three very different levels with the shifts occurring abruptly. The data for 1953–54 and 1972–73 do not group easily, and a more formal analysis posits up to five groups/curves over the period.[1]
But still today, modified forms of the Phillips Curve that take inflationary expectations into account remain influential. The theory goes under several names, with some variation in its details, but all modern versions distinguish between short-run and long-run effects on unemployment. Modern Phillips curve models include both a short-run Phillips Curve and a long-run Phillips Curve. This is because in the short run, there is generally an inverse relationship between inflation and the unemployment rate; as illustrated in the downward sloping short-run Phillips curve. In the long run, that relationship breaks down and the economy eventually returns to the natural rate of unemployment regardless of the inflation rate.[13]
The “short-run Phillips curve” is also called the “expectations-augmented Phillips curve”, since it shifts up when inflationary expectations rise, Edmund Phelps and Milton Friedman argued. In the long run, this implies that monetary policy cannot affect unemployment, which adjusts back to its “natural rate“, also called the “NAIRU” or “long-run Phillips curve”. However, this long-run “neutrality” of monetary policy does allow for short run fluctuations and the ability of the monetary authority to temporarily decrease unemployment by increasing permanent inflation, and vice versa. The popular textbook of Blanchard gives a textbook presentation of the expectations-augmented Phillips curve.[14]
An equation like the expectations-augmented Phillips curve also appears in many recent New Keynesiandynamic stochastic general equilibrium models. In these macroeconomic models with sticky prices, there is a positive relation between the rate of inflation and the level of demand, and therefore a negative relation between the rate of inflation and the rate of unemployment. This relationship is often called the “New Keynesian Phillips curve.” Like the expectations-augmented Phillips curve, the New Keynesian Phillips curve implies that increased inflation can lower unemployment temporarily, but cannot lower it permanently. Two influential papers that incorporate a New Keynesian Phillips curve are Clarida, Galí, and Gertler (1999),[15] and Blanchard and Galí (2007).[16]
Mathematics
There are at least two different mathematical derivations of the Phillips curve. First, there is the traditional or Keynesian version. Then, there is the new Classical version associated with Robert E. Lucas, Jr.
The traditional Phillips curve
The original Phillips curve literature was not based on the unaided application of economic theory. Instead, it was based on empirical generalizations. After that, economists tried to develop theories that fit the data.
Money wage determination
The traditional Phillips curve story starts with a wage Phillips Curve, of the sort described by A.W. Phillips himself. This describes the rate of growth of money wages (gW). Here and below, the operator g is the equivalent of “the percentage rate of growth of” the variable that follows.
{\displaystyle gW=gW^{T}-f(U)}
The “money wage rate” (W) is shorthand for total money wage costs per production employee, including benefits and payroll taxes. The focus is on only production workers’ money wages, because (as discussed below) these costs are crucial to pricing decisions by the firms.
This equation tells us that the growth of money wages rises with the trend rate of growth of money wages (indicated by the superscript “T”) and falls with the unemployment rate (U). The function f() is assumed to be monotonically increasing with U so that the dampening of money-wage increases by unemployment is shown by the negative sign in the equation above.
There are several possible stories behind this equation. A major one is that money wages are set by bilateral negotiations under partial bilateral monopoly: as the unemployment rate rises, all else constant worker bargaining power falls, so that workers are less able to increase their wages in the face of employer resistance.
During the 1970s, this story had to be modified, because (as the late Abba Lerner had suggested in the 1940s) workers try to keep up with inflation. Since the 1970s, the equation has been changed to introduce the role of inflationary expectations (or the expected inflation rate, gPex). This produces the expectations-augmented wage Phillips curve:
{\displaystyle gW=gW^{T}-f(U)+\lambda .gP^{ex}.}
The introduction of inflationary expectations into the equation implies that actual inflation can feed back into inflationary expectations and thus cause further inflation. The late economist James Tobin dubbed the last term “inflationary inertia,” because in the current period, inflation exists which represents an inflationary impulse left over from the past.
It also involved much more than expectations, including the price-wage spiral. In this spiral, employers try to protect profits by raising their prices and employees try to keep up with inflation to protect their real wages. This process can feed on itself, becoming a self-fulfilling prophecy.
The parameter λ (which is presumed constant during any time period) represents the degree to which employees can gain money wage increases to keep up with expected inflation, preventing a fall in expected real wages. It is usually assumed that this parameter equals unity in the long run.
In addition, the function f() was modified to introduce the idea of the Non-Accelerating Inflation Rate of Unemployment (NAIRU) or what’s sometimes called the “natural” rate of unemployment or the inflation-threshold unemployment rate:
[1] gW = gWT – f(U − U*) + λ·gPex.
Here, U* is the NAIRU. As discussed below, if U < U*, inflation tends to accelerate. Similarly, if U > U*, inflation tends to slow. It is assumed that f(0) = 0, so that when U = U*, the f term drops out of the equation.
In equation [1], the roles of gWT and gPex seem to be redundant, playing much the same role. However, assuming that λ is equal to unity, it can be seen that they are not. If the trend rate of growth of money wages equals zero, then the case where U equals U* implies that gW equals expected inflation. That is, expected real wages are constant.
In any reasonable economy, however, having constant expected real wages could only be consistent with actual real wages that are constant over the long haul. This does not fit with economic experience in the U.S. or any other major industrial country. Even though real wages have not risen much in recent years, there have been important increases over the decades.
An alternative is to assume that the trend rate of growth of money wages equals the trend rate of growth of average labor productivity (Z). That is:
[2] gWT = gZT.
Under assumption [2], when U equals U* and λ equals unity, expected real wages would increase with labor productivity. This would be consistent with an economy in which actual real wages increase with labor productivity. Deviations of real-wage trends from those of labor productivity might be explained by reference to other variables in the model.
Pricing decisions
Next, there is price behavior. The standard assumption is that markets are imperfectly competitive, where most businesses have some power to set prices. So the model assumes that the average business sets a unit price (P) as a mark-up (M) over the unit labor cost in production measured at a standard rate of capacity utilization (say, at 90 percent use of plant and equipment) and then adds in the unit materials cost.
The standardization involves later ignoring deviations from the trend in labor productivity. For example, assume that the growth of labor productivity is the same as that in the trend and that current productivity equals its trend value:
gZ = gZT and Z = ZT.
The markup reflects both the firm’s degree of market power and the extent to which overhead costs have to be paid. Put another way, all else equal, M rises with the firm’s power to set prices or with a rise of overhead costs relative to total costs.
So pricing follows this equation:
P = M × (unit labor cost) + (unit materials cost)
= M × (total production employment cost)/(quantity of output) + UMC.
UMC is unit raw materials cost (total raw materials costs divided by total output). So the equation can be restated as:
P = M × (production employment cost per worker)/(output per production employee) + UMC.
This equation can again be stated as:
P = M×(average money wage)/(production labor productivity) + UMC
= M×(W/Z) + UMC.
Now, assume that both the average price/cost mark-up (M) and UMC are constant. On the other hand, labor productivity grows, as before. Thus, an equation determining the price inflation rate (gP) is:
Then, combined with the wage Phillips curve [equation 1] and the assumption made above about the trend behavior of money wages [equation 2], this price-inflation equation gives us a simple expectations-augmented price Phillips curve:
gP = −f(U − U*) + λ·gPex.
Some assume that we can simply add in gUMC, the rate of growth of UMC, in order to represent the role of supply shocks (of the sort that plagued the U.S. during the 1970s). This produces a standard short-term Phillips curve:
gP = −f(U − U*) + λ·gPex + gUMC.
Economist Robert J. Gordon has called this the “Triangle Model” because it explains short-run inflationary behavior by three factors: demand inflation (due to low unemployment), supply-shock inflation (gUMC), and inflationary expectations or inertial inflation.
In the long run, it is assumed, inflationary expectations catch up with and equal actual inflation so that gP = gPex. This represents the long-term equilibrium of expectations adjustment. Part of this adjustment may involve the adaptation of expectations to the experience with actual inflation. Another might involve guesses made by people in the economy based on other evidence. (The latter idea gave us the notion of so-called rational expectations.)
Expectational equilibrium gives us the long-term Phillips curve. First, with λ less than unity:
gP = [1/(1 − λ)]·(−f(U − U*) + gUMC).
This is nothing but a steeper version of the short-run Phillips curve above. Inflation rises as unemployment falls, while this connection is stronger. That is, a low unemployment rate (less than U*) will be associated with a higher inflation rate in the long run than in the short run. This occurs because the actual higher-inflation situation seen in the short run feeds back to raise inflationary expectations, which in turn raises the inflation rate further. Similarly, at high unemployment rates (greater than U*) lead to low inflation rates. These in turn encourage lower inflationary expectations, so that inflation itself drops again.
This logic goes further if λ is equal to unity, i.e., if workers are able to protect their wages completely from expected inflation, even in the short run. Now, the Triangle Model equation becomes:
– f(U − U*) = gUMC.
If we further assume (as seems reasonable) that there are no long-term supply shocks, this can be simplified to become:
−f(U − U*) = 0 which implies that U = U*.
All of the assumptions imply that in the long run, there is only one possible unemployment rate, U* at any one time. This uniqueness explains why some call this unemployment rate “natural.”
To truly understand and criticize the uniqueness of U*, a more sophisticated and realistic model is needed. For example, we might introduce the idea that workers in different sectors push for money wage increases that are similar to those in other sectors. Or we might make the model even more realistic. One important place to look is at the determination of the mark-up, M.
New classical version
The Phillips curve equation can be derived from the (short-run) Lucas aggregate supply function. The Lucas approach is very different from that the traditional view. Instead of starting with empirical data, he started with a classical economic model following very simple economic principles.
where Y is log value of the actual output, Yn is log value of the “natural” level of output, a is a positive constant, P is log value of the actual price level, and Pe is log value of the expected price level. Lucas assumes that Yn has a unique value.
Note that this equation indicates that when expectations of future inflation (or, more correctly, the future price level) are totally accurate, the last term drops out, so that actual output equals the so-called “natural” level of real GDP. This means that in the Lucas aggregate supply curve, the only reason why actual real GDP should deviate from potential—and the actual unemployment rate should deviate from the “natural” rate—is because of incorrect expectations of what is going to happen with prices in the future. (The idea has been expressed first by Keynes, General Theory, Chapter 20 section III paragraph 4).
This differs from other views of the Phillips curve, in which the failure to attain the “natural” level of output can be due to the imperfection or incompleteness of markets, the stickiness of prices, and the like. In the non-Lucas view, incorrect expectations can contribute to aggregate demand failure, but they are not the only cause. To the “new Classical” followers of Lucas, markets are presumed to be perfect and always attain equilibrium (given inflationary expectations).
We re-arrange the equation into:
{\displaystyle P=P_{e}+{\frac {Y-Y_{n}}{a}}}
Next we add unexpected exogenous shocks to the world supply v:
{\displaystyle P=P_{e}+{\frac {Y-Y_{n}}{a}}+v}
Subtracting last year’s price levels P−1 will give us inflation rates, because
{\displaystyle P-P_{-1}\ \approx \pi }
and
{\displaystyle P_{e}-P_{-1}\ \approx \pi _{e}}
where π and πe are the inflation and expected inflation respectively.
There is also a negative relationship between output and unemployment (as expressed by Okun’s law). Therefore, using
{\displaystyle {\frac {Y-Y_{n}}{a}}=-b(U-U_{n})}
where b is a positive constant, U is unemployment, and Un is the natural rate of unemployment or NAIRU, we arrive at the final form of the short-run Phillips curve:
{\displaystyle \pi =\pi _{e}-b(U-U_{n})+v\,}
This equation, plotting inflation rate π against unemployment U gives the downward-sloping curve in the diagram that characterises the Phillips curve.
New Keynesian version
The New Keynesian Phillips curve was originally derived by Roberts in 1995,[17] and since been used in most state-of-the-art New Keynesian DSGE models like the one of Clarida, Galí, and Gertler (2000).[18][19]
where {\displaystyle \kappa ={\frac {\alpha [1-(1-\alpha )\beta ]\phi }{1-\alpha }}}. The current expectations of next period’s inflation are incorporated as {\displaystyle \beta E_{t}[\pi _{t+1}]}
NAIRU and rational expectations
Short-Run Phillips Curve before and after Expansionary Policy, with Long-Run Phillips Curve (NAIRU)
In the 1970s, new theories, such as rational expectations and the NAIRU (non-accelerating inflation rate of unemployment) arose to explain how stagflation could occur. The latter theory, also known as the “natural rate of unemployment“, distinguished between the “short-term” Phillips curve and the “long-term” one. The short-term Phillips Curve looked like a normal Phillips Curve, but shifted in the long run as expectations changed. In the long run, only a single rate of unemployment (the NAIRU or “natural” rate) was consistent with a stable inflation rate. The long-run Phillips Curve was thus vertical, so there was no trade-off between inflation and unemployment. Edmund Phelps won the Nobel Prize in Economics in 2006 in part for this. However, the expectations argument was in fact very widely understood before his work on it.[20]
In the diagram, the long-run Phillips curve is the vertical red line. The NAIRU theory says that when unemployment is at the rate defined by this line, inflation will be stable. However, in the short-run policymakers will face an inflation-unemployment rate tradeoff marked by the “Initial Short-Run Phillips Curve” in the graph. Policymakers can therefore reduce the unemployment rate temporarily, moving from point A to point B through expansionary policy. However, according to the NAIRU, exploiting this short-run tradeoff will raise inflation expectations, shifting the short-run curve rightward to the “New Short-Run Phillips Curve” and moving the point of equilibrium from B to C. Thus the reduction in unemployment below the “Natural Rate” will be temporary, and lead only to higher inflation in the long run.
Since the short-run curve shifts outward due to the attempt to reduce unemployment, the expansionary policy ultimately worsens the exploitable tradeoff between unemployment and inflation. That is, it results in more inflation at each short-run unemployment rate. The name “NAIRU” arises because with actual unemployment below it, inflation accelerates, while with unemployment above it, inflation decelerates. With the actual rate equal to it, inflation is stable, neither accelerating nor decelerating. One practical use of this model was to provide an explanation for stagflation, which confounded the traditional Phillips curve.
The rational expectations theory said that expectations of inflation were equal to what actually happened, with some minor and temporary errors. This in turn suggested that the short-run period was so short that it was non-existent: any effort to reduce unemployment below the NAIRU, for example, would immediately cause inflationary expectations to rise and thus imply that the policy would fail. Unemployment would never deviate from the NAIRU except due to random and transitory mistakes in developing expectations about future inflation rates. In this perspective, any deviation of the actual unemployment rate from the NAIRU was an illusion.
However, in the 1990s in the U.S., it became increasingly clear that the NAIRU did not have a unique equilibrium and could change in unpredictable ways. In the late 1990s, the actual unemployment rate fell below 4% of the labor force, much lower than almost all estimates of the NAIRU. But inflation stayed very moderate rather than accelerating. So, just as the Phillips curve had become a subject of debate, so did the NAIRU.
Furthermore, the concept of rational expectations had become subject to much doubt when it became clear that the main assumption of models based on it was that there exists a single (unique) equilibrium in the economy that is set ahead of time, determined independently of demand conditions. The experience of the 1990s suggests that this assumption cannot be sustained.
The Phillips curve started as an empirical observation in search of a theoretical explanation.[citation needed] Specifically, the Phillips curve tried to determine whether the inflation-unemployment link was causal or simply correlational. There are several major explanations of the short-term Phillips curve regularity.
To Milton Friedman there is a short-term correlation between inflation shocks and employment. When an inflationary surprise occurs, workers are fooled into accepting lower pay because they do not see the fall in real wages right away. Firms hire them because they see the inflation as allowing higher profits for given nominal wages. This is a movement along the Phillips curve as with change A. Eventually, workers discover that real wages have fallen, so they push for higher money wages. This causes the Phillips curve to shift upward and to the right, as with B. Some research underlines that some implicit and serious assumptions are actually in the background of the Friedmanian Phillips curve. This information asymmetry and a special pattern of flexibility of prices and wages are both necessary if one wants to maintain the mechanism told by Friedman. However, as it is argued, these presumptions remain completely unrevealed and theoretically ungrounded by Friedman.[21]
Economists such as Milton Friedman and Edmund Phelps reject this theory because it implies that workers suffer from money illusion. According to them, rational workers would only react to real wages, that is, inflation adjusted wages. However, one of the characteristics of a modern industrial economy is that workers do not encounter their employers in an atomized and perfect market. They operate in a complex combination of imperfect markets, monopolies, monopsonies, labor unions, and other institutions. In many cases, they may lack the bargaining power to act on their expectations, no matter how rational they are, or their perceptions, no matter how free of money illusion they are. It is not that high inflation causes low unemployment (as in Milton Friedman’s theory) as much as vice versa: Low unemployment raises worker bargaining power, allowing them to successfully push for higher nominal wages. To protect profits, employers raise prices.
Similarly, built-in inflation is not simply a matter of subjective “inflationary expectations” but also reflects the fact that high inflation can gather momentum and continue beyond the time when it was started, due to the objective price/wage spiral.
However, other economists, like Jeffrey Herbener, argue that price is market-determined and competitive firms cannot simply raise prices.[citation needed] They reject the Phillips curve entirely, concluding that unemployment’s influence is only a small portion of a much larger inflation picture that includes prices of raw materials, intermediate goods, cost of raising capital, worker productivity, land, and other factors.
The last reflects inflationary expectations and the price/wage spiral. Supply shocks and changes in built-in inflation are the main factors shifting the short-run Phillips Curve and changing the trade-off. In this theory, it is not only inflationary expectations that can cause stagflation. For example, the steep climb of oil prices during the 1970s could have this result.
Changes in built-in inflation follow the partial-adjustment logic behind most theories of the NAIRU:
Low unemployment encourages high inflation, as with the simple Phillips curve. But if unemployment stays low and inflation stays high for a long time, as in the late 1960s in the U.S., both inflationary expectations and the price/wage spiral accelerate. This shifts the short-run Phillips curve upward and rightward, so that more inflation is seen at any given unemployment rate. (This is with shift B in the diagram.)
High unemployment encourages low inflation, again as with a simple Phillips curve. But if unemployment stays high and inflation stays low for a long time, as in the early 1980s in the U.S., both inflationary expectations and the price/wage spiral slow. This shifts the short-run Phillips curve downward and leftward, so that less inflation is seen at each unemployment rate.
In between these two lies the NAIRU, where the Phillips curve does not have any inherent tendency to shift, so that the inflation rate is stable. However, there seems to be a range in the middle between “high” and “low” where built-in inflation stays stable. The ends of this “non-accelerating inflation range of unemployment rates” change over time.
Joke article
In 2008, Gregor Smith published a joke article in the prestigious Journal of Money, Credit and Banking titled “Japan’s Phillips Curve Looks Like Japan”. This article points out the uncanny resemblance between Japan’s Phillips curve and the country’s geographic shape.[22]
Jump up^Phillips, A. W. (1958). “The Relationship between Unemployment and the Rate of Change of Money Wages in the United Kingdom 1861-1957”. Economica. 25 (100): 283–299. doi:10.1111/j.1468-0335.1958.tb00003.x.
Jump up^Fisher, Irving (1973). “I discovered the Phillips curve: ‘A statistical relation between unemployment and price changes'”. Journal of Political Economy. The University of Chicago Press. 81 (2): 496–502. doi:10.1086/260048. JSTOR1830534. Reprinted from 1926 edition of International Labour Review.
Jump up^Akerlof, George A.; Dickens, William T.; Perry, George L. (2000). “Near-Rational Wage and Price Setting and the Long-Run Phillips Curve”. Brookings Papers on Economic Activity. 2000 (1): 1–60.
Jump up^Clarida, Richard; Galí, Jordi; Gertler, Mark (1999). “The science of monetary policy: a New-Keynesian perspective”. Journal of Economic Literature. American Economic Association. 37 (4): 1661–1707. doi:10.1257/jel.37.4.1661. JSTOR2565488.
Jump up^Blanchard, Olivier; Galí, Jordi (2007). “Real Wage Rigidities and the New Keynesian Model”. Journal of Money, Credit, and Banking. 39 (s1): 35–65. doi:10.1111/j.1538-4616.2007.00015.x.
Jump up^Forder, James (2010). “The historical place of the ‘Friedman-Phelps’ expectations critique”. European Journal of the History of Economic Thought. 17 (3): 493–511. doi:10.1080/09672560903114875.
Milton Friedman (July 31, 1912 – November 16, 2006) was an American economist who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory, and the complexity of stabilization policy.[4] With George Stigler and others, Friedman was among the intellectual leaders of the second generation of Chicago price theory, a methodological movement at the University of Chicago’s Department of Economics, Law School, and Graduate School of Business from the 1940s onward. Several students and young professors that were recruited or mentored by Friedman at Chicago went on to become leading economists; they include Gary Becker, Robert Fogel, Thomas Sowell,[5] and Robert Lucas, Jr.[6]
Friedman’s challenges to what he later called “naive Keynesian” theory[7] began with his 1950s reinterpretation of the consumption function. In the 1960s, he became the main advocate opposing Keynesian government policies,[8] and described his approach (along with mainstream economics) as using “Keynesian language and apparatus” yet rejecting its “initial” conclusions.[9] He theorized that there existed a “natural” rate of unemployment, and argued that employment above this rate would cause inflation to accelerate.[10] He argued that the Phillips curve was, in the long run, vertical at the “natural rate” and predicted what would come to be known as stagflation.[11] Friedman promoted an alternative macroeconomic viewpoint known as “monetarism“, and argued that a steady, small expansion of the money supply was the preferred policy.[12] His ideas concerning monetary policy, taxation, privatization and deregulation influenced government policies, especially during the 1980s. His monetary theory influenced the Federal Reserve’s response to the global financial crisis of 2007–08.[13]
Milton Friedman’s works include many monographs, books, scholarly articles, papers, magazine columns, television programs, and lectures, and cover a broad range of economic topics and public policy issues. His books and essays have had an international influence, including in former communist states.[18][19][20][21] A survey of economists ranked Friedman as the second-most popular economist of the twentieth century after John Maynard Keynes,[22] and The Economist described him as “the most influential economist of the second half of the 20th century … possibly of all of it”.[23]
Contents
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Early life
Friedman was born in Brooklyn, New York on July 31, 1912. His parents, Sára Ethel (née Landau) and Jenő Saul Friedman,[24] were Jewish immigrants from Beregszász in Carpathian Ruthenia, Kingdom of Hungary (now Berehove in Ukraine). They both worked as dry goods merchants. Shortly after Milton’s birth, the family relocated to Rahway, New Jersey. In his early teens, Friedman was injured in a car accident, which scarred his upper lip.[25] A talented student, Friedman graduated from Rahway High School in 1928, just before his 16th birthday.[26][27]
In 1932, Friedman graduated from Rutgers University, where he specialized in mathematics and economics and initially intended to become an actuary. During his time at Rutgers, Friedman became influenced by two economics professors, Arthur F. Burns and Homer Jones, who convinced him that modern economics could help end the Great Depression.
After graduating from Rutgers, Friedman was offered two scholarships to do graduate work—one in mathematics at Brown University and the other in economics at the University of Chicago.[28] Friedman chose the latter, thus earning a Master of Arts degree in 1933. He was strongly influenced by Jacob Viner, Frank Knight, and Henry Simons. It was at Chicago that Friedman met his future wife, economist Rose Director. During the 1933–1934 academic year he had a fellowship at Columbia University, where he studied statistics with renowned statistician and economist Harold Hotelling. He was back in Chicago for the 1934–1935 academic year, working as a research assistant for Henry Schultz, who was then working on Theory and Measurement of Demand. That year, Friedman formed what would prove to be lifelong friendships with George Stigler and W. Allen Wallis.[29]
Public service
Friedman was initially unable to find academic employment, so in 1935 he followed his friend W. Allen Wallis to Washington, where Franklin D. Roosevelt‘s New Deal was “a lifesaver” for many young economists.[30] At this stage, Friedman said that he and his wife “regarded the job-creation programs such as the WPA, CCC, and PWA appropriate responses to the critical situation,” but not “the price- and wage-fixing measures of the National Recovery Administration and the Agricultural Adjustment Administration.”[31] Foreshadowing his later ideas, he believed price controls interfered with an essential signaling mechanism to help resources be used where they were most valued. Indeed, Friedman later concluded that all government intervention associated with the New Deal was “the wrong cure for the wrong disease,” arguing that the money supply should simply have been expanded, instead of contracted.[32] Later, Friedman and his colleague Anna Schwartz wrote A Monetary History of the United States, 1867–1960, which argued that the Great Depression was caused by a severe monetary contraction due to banking crises and poor policy on the part of the Federal Reserve.[33]
During 1935, he began work for the National Resources Committee, which was then working on a large consumer budget survey. Ideas from this project later became a part of his Theory of the Consumption Function. Friedman began employment with the National Bureau of Economic Research during autumn 1937 to assist Simon Kuznets in his work on professional income. This work resulted in their jointly authored publication Incomes from Independent Professional Practice, which introduced the concepts of permanent and transitory income, a major component of the Permanent Income Hypothesis that Friedman worked out in greater detail in the 1950s. The book hypothesizes that professional licensing artificially restricts the supply of services and raises prices.
During 1940, Friedman was appointed an assistant professor teaching Economics at the University of Wisconsin–Madison, but encountered antisemitism in the Economics department and decided to return to government service.[34][35] From 1941 to 1943 Friedman worked on wartime tax policy for the Federal Government, as an advisor to senior officials of the United States Department of the Treasury. As a Treasury spokesman during 1942 he advocated a Keynesian policy of taxation. He helped to invent the payroll withholding tax system, since the federal government badly needed money in order to fight the war.[36] He later said, “I have no apologies for it, but I really wish we hadn’t found it necessary and I wish there were some way of abolishing withholding now.”[37]
Academic career
Early years
In 1940, Friedman accepted a position at the University of Wisconsin–Madison, but left because of differences with faculty regarding United States involvement in World War II. Friedman believed the United States should enter the war.[38] In 1943, Friedman joined the Division of War Research at Columbia University (headed by W. Allen Wallis and Harold Hotelling), where he spent the rest of World War II working as a mathematical statistician, focusing on problems of weapons design, military tactics, and metallurgical experiments.[38][39]
In 1945, Friedman submitted Incomes from Independent Professional Practice (co-authored with Kuznets and completed during 1940) to Columbia as his doctoral dissertation. The university awarded him a PhD in 1946. Friedman spent the 1945–1946 academic year teaching at the University of Minnesota (where his friend George Stigler was employed). On February 12, 1945, his son, David D. Friedman was born.
In 1946, Friedman accepted an offer to teach economic theory at the University of Chicago (a position opened by departure of his former professor Jacob Viner to Princeton University). Friedman would work for the University of Chicago for the next 30 years. There he contributed to the establishment of an intellectual community that produced a number of Nobel Prize winners, known collectively as the Chicago school of economics.
At that time, Arthur F. Burns, who was then the head of the National Bureau of Economic Research, asked Friedman to rejoin the Bureau’s staff. He accepted the invitation, and assumed responsibility for the Bureau’s inquiry into the role of money in the business cycle. As a result, he initiated the “Workshop in Money and Banking” (the “Chicago Workshop”), which promoted a revival of monetary studies. During the latter half of the 1940s, Friedman began a collaboration with Anna Schwartz, an economic historian at the Bureau, that would ultimately result in the 1963 publication of a book co-authored by Friedman and Schwartz, A Monetary History of the United States, 1867–1960.
Friedman spent the 1954–1955 academic year as a Fulbright Visiting Fellow at Gonville and Caius College, Cambridge. At the time, the Cambridge economics faculty was divided into a Keynesian majority (including Joan Robinson and Richard Kahn) and an anti-Keynesian minority (headed by Dennis Robertson). Friedman speculated that he was invited to the fellowship, because his views were unacceptable to both of the Cambridge factions. Later his weekly columns for Newsweek magazine (1966–84) were well read and increasingly influential among political and business people.[40] From 1968 to 1978, he and Paul Samuelson participated in the Economics Cassette Series, a biweekly subscription series where the economist would discuss the days’ issues for about a half-hour at a time.[41][42]
Friedman was an economic adviser to Republican presidential candidate Barry Goldwater during 1964.
Personal life
Retirement
In 1977, at the age of 65, Friedman retired from the University of Chicago after teaching there for 30 years. He and his wife moved to San Francisco where he became a visiting scholar at the Federal Reserve Bank of San Francisco. From 1977 on, he was affiliated with the Hoover Institution at Stanford University. During the same year, Friedman was approached by the Free To Choose Network and asked to create a television program presenting his economic and social philosophy.
The Friedmans worked on this project for the next three years, and during 1980, the ten-part series, titled Free to Choose, was broadcast by the Public Broadcasting Service (PBS). The companion book to the series (co-authored by Milton and his wife, Rose Friedman), also titled Free To Choose, was the bestselling nonfiction book of 1980 and has since been translated into 14 foreign languages.
Friedman served as an unofficial adviser to Ronald Reagan during his 1980 presidential campaign, and then served on the President’s Economic Policy Advisory Board for the rest of the Reagan Administration. Ebenstein says Friedman was “the ‘guru’ of the Reagan administration.”[43] In 1988 he received the National Medal of Science and Reagan honored him with the Presidential Medal of Freedom. Milton Friedman is known now as one of the most influential economists of the 20th century.[44][45] Throughout the 1980s and 1990s, Friedman continued to write editorials and appear on television. He made several visits to Eastern Europe and to China, where he also advised governments. He was also for many years a Trustee of the Philadelphia Society.[46][47][48]
Later life
According to a 2007 article in Commentary magazine, his “parents were moderately observant [Jews], but Friedman, after an intense burst of childhood piety, rejected religion altogether.”[49] He described himself as an agnostic.[50] Friedman wrote extensively of his life and experiences, especially in 1998 in his memoirs with his wife Rose, titled Two Lucky People.
Death
Friedman died of heart failure at the age of 94 years in San Francisco on November 16, 2006.[51] He was still a working economist performing original economic research; his last column was published in The Wall Street Journal the day after his death.[52] He was survived by his wife (who died on August 18, 2009) and their two children, David, known for the anarcho-capitalist book The Machinery of Freedom, and Janet.
Friedman was best known for reviving interest in the money supply as a determinant of the nominal value of output, that is, the quantity theory of money. Monetarism is the set of views associated with modern quantity theory. Its origins can be traced back to the 16th-century School of Salamanca or even further; however, Friedman’s contribution is largely responsible for its modern popularization. He co-authored, with Anna Schwartz, A Monetary History of the United States, 1867–1960 (1963), which was an examination of the role of the money supply and economic activity in the U.S. history. A striking conclusion of their research regarded the way in which money supply fluctuations contribute to economic fluctuations. Several regression studies with David Meiselman during the 1960s suggested the primacy of the money supply over investment and government spending in determining consumption and output. These challenged a prevailing, but largely untested, view on their relative importance. Friedman’s empirical research and some theory supported the conclusion that the short-run effect of a change of the money supply was primarily on output but that the longer-run effect was primarily on the price level.
Friedman was the main proponent of the monetarist school of economics. He maintained that there is a close and stable association between inflation and the money supply, mainly that inflation could be avoided with proper regulation of the monetary base’s growth rate. He famously used the analogy of “dropping money out of a helicopter.”,[53] in order to avoid dealing with money injection mechanisms and other factors that would overcomplicate his models.
Friedman’s arguments were designed to counter the popular concept of cost-push inflation, that the increased general price level at the time was the result of increases in the price of oil, or increases in wages; as he wrote,
Inflation is always and everywhere a monetary phenomenon.
Friedman rejected the use of fiscal policy as a tool of demand management; and he held that the government’s role in the guidance of the economy should be restricted severely. Friedman wrote extensively on the Great Depression, which he termed the Great Contraction, arguing that it had been caused by an ordinary financial shock whose duration and seriousness were greatly increased by the subsequent contraction of the money supply caused by the misguided policies of the directors of the Federal Reserve.
The Fed was largely responsible for converting what might have been a garden-variety recession, although perhaps a fairly severe one, into a major catastrophe. Instead of using its powers to offset the depression, it presided over a decline in the quantity of money by one-third from 1929 to 1933 … Far from the depression being a failure of the free-enterprise system, it was a tragic failure of government.
Friedman also argued for the cessation of government intervention in currency markets, thereby spawning an enormous literature on the subject, as well as promoting the practice of freely floating exchange rates. His close friend George Stigler explained, “As is customary in science, he did not win a full victory, in part because research was directed along different lines by the theory of rational expectations, a newer approach developed by Robert Lucas, also at the University of Chicago.”[56] The relationship between Friedman and Lucas, or new classical macroeconomics as a whole, was highly complex. The Friedmanian Phillips curve was an interesting starting point for Lucas, but he soon realized that the solution provided by Friedman was not quite satisfactory. Lucas elaborated a new approach in which rational expectations were presumed instead of the Friedmanian adaptive expectations. Due to this reformulation, the story in which the theory of the new classical Phillips curve was embedded radically changed. This modification, however, had a significant effect on Friedman’s own approach, so, as a result, the theory of the Friedmanian Phillips curve also changed.[57] Moreover, new classical Neil Wallace, who was a graduate student at the University of Chicago between 1960 and 1963, regarded Friedman’s theoretical courses as a mess.[58] This evaluation clearly indicates the broken relationship between Friedmanian monetarism and new classical macroeconomics.
Friedman was also known for his work on the consumption function, the permanent income hypothesis (1957), which Friedman himself referred to as his best scientific work.[59] This work contended that rational consumers would spend a proportional amount of what they perceived to be their permanent income. Windfall gains would mostly be saved. Tax reductions likewise, as rational consumers would predict that taxes would have to increase later to balance public finances. Other important contributions include his critique of the Phillips curve and the concept of the natural rate of unemployment (1968). This critique associated his name, together with that of Edmund Phelps, with the insight that a government that brings about greater inflation cannot permanently reduce unemployment by doing so. Unemployment may be temporarily lower, if the inflation is a surprise, but in the long run unemployment will be determined by the frictions and imperfections of the labor market.
Friedman’s essay “The Methodology of Positive Economics” (1953) provided the epistemological pattern for his own subsequent research and to a degree that of the Chicago School. There he argued that economics as science should be free of value judgments for it to be objective. Moreover, a useful economic theory should be judged not by its descriptive realism but by its simplicity and fruitfulness as an engine of prediction. That is, students should measure the accuracy of its predictions, rather than the ‘soundness of its assumptions’. His argument was part of an ongoing debate among such statisticians as Jerzy Neyman, Leonard Savage, and Ronald Fisher.[60]
Statistics
One of his most famous contributions to statistics is sequential sampling. Friedman did statistical work at the Division of War Research at Columbia, where he and his colleagues came up with the technique. It later became, in the words of The New Palgrave Dictionary of Economics, “the standard analysis of quality control inspection”. The dictionary adds, “Like many of Friedman’s contributions, in retrospect it seems remarkably simple and obvious to apply basic economic ideas to quality control; that however is a measure of his genius.”[61]
Due to its poor performance,[62] Friedman believed that the Federal Reserve Board should be abolished.[63][64] Friedman was deeply critical about Federal Reserve policies, even during the so-called ‘Volcker shock’ that was labelled ‘monetarist.’[65] He further believed that if the money supply was to be centrally controlled (as by the Federal Reserve System) that the preferable way to do it would be with a mechanical system that would keep the quantity of money increasing at a steady rate.
Exchange rates
Friedman was a strong advocate for floating exchange rates throughout the entire Bretton-Woods period. He argued that a flexible exchange rate would make external adjustment possible and allow countries to avoid Balance of Payments crises. He saw fixed exchange rates as an undesirable form of government intervention. The case was articulated in an influential 1953 paper, “The Case for Flexible Exchange Rates”, at a time, when most commentators regarded the possibility of floating exchange rates as a fantasy.[66][67]
School choice
In his 1955 article “The Role of Government in Education”[68] Friedman proposed supplementing publicly operated schools with privately run but publicly funded schools through a system of school vouchers.[69] Reforms similar to those proposed in the article were implemented in, for example, Chile in 1981 and Sweden in 1992.[70] In 1996, Friedman, together with his wife, founded the Friedman Foundation for Educational Choice to advocate school choice and vouchers. In 2016, the Friedman Foundation changed its name to EdChoice to honor the Friedmans’ desire to have the educational choice movement live on without their names attached to it after their deaths.[17]
Conscription
While Walter Oi is credited with establishing the economic basis for a volunteer military, Milton Friedman was a proponent, stating that the draft was “inconsistent with a free society.”[71][72] In Capitalism and Freedom, he argued that conscription is inequitable and arbitrary, preventing young men from shaping their lives as they see fit.[73] During the Nixon administration he headed the committee to research a conversion to paid/volunteer armed force. He would later state that his role in eliminating the conscription in the United States was his proudest accomplishment.[12] Friedman did, however, believe a nation could compel military training as a reserve in case of war time.[73]
Foreign policy
Biographer Lanny Ebenstein noted a drift over time in Friedman’s views from an interventionist to a more cautious foreign policy.[74] He supported US involvement in the Second World War and initially supported a hard line against Communism, but moderated over time.[74] He opposed the Gulf War and the Iraq War.[74] In a spring 2006 interview, Friedman said that the USA’s stature in the world had been eroded by the Iraq War, but that it might be improved if Iraq were to become a peaceful independent country.[75]
Libertarianism and the Republican Party
He served as a member of President Reagan’s Economic Policy Advisory Board starting at 1981. In 1988, he received the Presidential Medal of Freedom and the National Medal of Science. He said that he was a libertarian philosophically, but a member of the U.S. Republican Party for the sake of “expediency” (“I am a libertarian with a small ‘l’ and a Republican with a capital ‘R.’ And I am a Republican with a capital ‘R’ on grounds of expediency, not on principle.”) But, he said, “I think the term classical liberal is also equally applicable. I don’t really care very much what I’m called. I’m much more interested in having people thinking about the ideas, rather than the person.”[76]
Public goods and monopoly
Friedman was supportive of the state provision of some public goods that private businesses are not considered as being able to provide. However, he argued that many of the services performed by government could be performed better by the private sector. Above all, if some public goods are provided by the state, he believed that they should not be a legal monopoly where private competition is prohibited; for example, he wrote:
There is no way to justify our present public monopoly of the post office. It may be argued that the carrying of mail is a technical monopoly and that a government monopoly is the least of evils. Along these lines, one could perhaps justify a government post office, but not the present law, which makes it illegal for anybody else to carry the mail. If the delivery of mail is a technical monopoly, no one else will be able to succeed in competition with the government. If it is not, there is no reason why the government should be engaged in it. The only way to find out is to leave other people free to enter.
— Milton Friedman, Friedman, Milton & Rose D. Capitalism and Freedom, University of Chicago Press, 1982, p. 29
Social security, welfare programs, and negative income tax
Friedman proposed that if there had to be a welfare system of any kind, he would replace the existing U.S. welfare system with a negative income tax, a progressive tax system in which the poor receive a basic living income from the government.[78] According to the New York Times, Friedman’s views in this regard were grounded in a belief that while “market forces … accomplish wonderful things”, they “cannot ensure a distribution of income that enables all citizens to meet basic economic needs”.[78]
Drug policy
Friedman also supported libertarian policies such as legalization of drugs and prostitution. During 2005, Friedman and more than 500 other economists advocated discussions regarding the economic benefits of the legalization of marijuana.[79]
Gay rights
Friedman was also a supporter of gay rights.[80][81] He never specifically supported same-sex marriage, instead saying “I do not believe there should be any discrimination against gays.”[81]
Economic freedom
Michael Walker of the Fraser Institute and Friedman hosted a series of conferences from 1986 to 1994. The goal was to create a clear definition of economic freedom and a method for measuring it. Eventually this resulted in the first report on worldwide economic freedom, Economic Freedom in the World.[82] This annual report has since provided data for numerous peer-reviewed studies and has influenced policy in several nations.
Friedman argued for stronger basic legal (constitutional) protection of economic rights and freedoms to further promote industrial-commercial growth and prosperity and buttress democracy and freedom and the rule of law generally in society.[85]
Honors, recognition, and influence
George H. Nash, a leading historian of American conservatism, says that by, “the end of the 1960s he was probably the most highly regarded and influential conservative scholar in the country, and one of the few with an international reputation.”[86] Friedman allowed the libertarian Cato Institute to use his name for its biannual Milton Friedman Prize for Advancing Liberty beginning in 2001. A Friedman Prize was given to the late British economist Peter Bauer in 2002, Peruvian economist Hernando de Soto in 2004, Mart Laar, former Estonian Prime Minister in 2006 and a young Venezuelan student Yon Goicoechea in 2008. His wife Rose, sister of Aaron Director, with whom he initiated the Friedman Foundation for Educational Choice, served on the international selection committee.[87][88] Friedman was also a recipient of the Nobel Prize in Economics.
Upon Friedman’s death, Harvard President Lawrence Summers called him “The Great Liberator” saying “… any honest Democrat will admit that we are now all Friedmanites.” He said Friedman’s great popular contribution was “in convincing people of the importance of allowing free markets to operate.”[89]
In 2013 Stephen Moore, a member of the editorial forward of the Wall Street Journal said, “Quoting the most-revered champion of free-market economics since Adam Smith has become a little like quoting the Bible.” He adds, “There are sometimes multiple and conflicting interpretations.”[90]
Nobel Memorial Prize in Economic Sciences
Friedman won the Nobel Memorial Prize in Economic Sciences, the sole recipient for 1976, “for his achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy.”[4]
Hong Kong
Friedman once said, “If you want to see capitalism in action, go to Hong Kong.”[91] He wrote in 1990 that the Hong Kong economy was perhaps the best example of a free market economy.[92]
One month before his death, he wrote the article “Hong Kong Wrong – What would Cowperthwaite say?” in the Wall Street Journal, criticizing Donald Tsang, the Chief Executive of Hong Kong, for abandoning “positive noninterventionism.”[93] Tsang later said he was merely changing the slogan to “big market, small government,” where small government is defined as less than 20% of GDP. In a debate between Tsang and his rival, Alan Leong, before the 2007 Chief Executive election, Leong introduced the topic and jokingly accused Tsang of angering Friedman to death.
During 1975, two years after the military coup that brought military dictator President Augusto Pinochet to power and ended the government of Salvador Allende, the economy of Chile experienced a severe crisis. Friedman and Arnold Harberger accepted an invitation of a private Chilean foundation to visit Chile and speak on principles of economic freedom.[94] He spent seven days in Chile giving a series of lectures at the Universidad Católica de Chile and the (National) University of Chile. One of the lectures was entitled “The Fragility of Freedom” and according to Friedman, “dealt with precisely the threat to freedom from a centralized military government.”[95]
In an April 21, 1975, letter to Pinochet, Friedman considered the “key economic problems of Chile are clearly … inflation and the promotion of a healthy social market economy“.[96] He stated that “There is only one way to end inflation: by drastically reducing the rate of increase of the quantity of money …” and that “… cutting government spending is by far and away the most desirable way to reduce the fiscal deficit, because it … strengthens the private sector thereby laying the foundations for healthy economic growth”.[96] As to how rapidly inflation should be ended, Friedman felt that “for Chile where inflation is raging at 10–20% a month … gradualism is not feasible. It would involve so painful an operation over so long a period that the patient would not survive.” Choosing “a brief period of higher unemployment…” was the lesser evil.. and that “the experience of Germany, … of Brazil …, of the post-war adjustment in the U.S. … all argue for shock treatment“. In the letter Friedman recommended to deliver the shock approach with “… a package to eliminate the surprise and to relieve acute distress” and “… for definiteness let me sketch the contents of a package proposal … to be taken as illustrative” although his knowledge of Chile was “too limited to enable [him] to be precise or comprehensive”. He listed a “sample proposal” of 8 monetary and fiscal measures including “the removal of as many as obstacles as possible that now hinder the private market. For example, suspend … the present law against discharging employees”. He closed, stating “Such a shock program could end inflation in months”. His letter suggested that cutting spending to reduce the fiscal deficit would result in less transitional unemployment than raising taxes.
Sergio de Castro, a Chilean Chicago School graduate, became the nation’s Minister of Finance in 1975. During his six-year tenure, foreign investment increased, restrictions were placed on striking and labor unions, and GDP rose yearly.[97] A foreign exchange program was created between the Catholic University of Chile and the University of Chicago. Many other Chicago School alumni were appointed government posts during and after the Pinochet years; others taught its economic doctrine at Chilean universities. They became known as the Chicago Boys.[98]
Friedman did not criticize Pinochet’s dictatorship at the time, nor the assassinations, illegal imprisonments, torture, or other atrocities that were well known by then.[99] In 1976 Friedman defended his unofficial adviser position with: “I do not consider it as evil for an economist to render technical economic advice to the Chilean Government, any more than I would regard it as evil for a physician to give technical medical advice to the Chilean Government to help end a medical plague.”[100]
Friedman defended his activity in Chile on the grounds that, in his opinion, the adoption of free market policies not only improved the economic situation of Chile but also contributed to the amelioration of Pinochet’s rule and to the eventual transition to a democratic government during 1990. That idea is included in Capitalism and Freedom, in which he declared that economic freedom is not only desirable in itself but is also a necessary condition for political freedom. In his 1980 documentary Free to Choose, he said the following: “Chile is not a politically free system, and I do not condone the system. But the people there are freer than the people in Communist societies because government plays a smaller role. … The conditions of the people in the past few years has been getting better and not worse. They would be still better to get rid of the junta and to be able to have a free democratic system.”[101][102] In 1984, Friedman stated that he has “never refrained from criticizing the political system in Chile.”[95] In 1991 he said: “I have nothing good to say about the political regime that Pinochet imposed. It was a terrible political regime. The real miracle of Chile is not how well it has done economically; the real miracle of Chile is that a military junta was willing to go against its principles and support a free market regime designed by principled believers in a free market. […] In Chile, the drive for political freedom, that was generated by economic freedom and the resulting economic success, ultimately resulted in a referendum that introduced political democracy. Now, at long last, Chile has all three things: political freedom, human freedom and economic freedom. Chile will continue to be an interesting experiment to watch to see whether it can keep all three or whether, now that it has political freedom,that political freedom will tend to be used to destroy or reduce economic freedom.”[103] He stressed that the lectures he gave in Chile were the same lectures he later gave in China and other socialist states.[104]
During the 2000 PBS documentary The Commanding Heights (based on the book), Friedman continued to argue that “free markets would undermine [Pinochet’s] political centralization and political control.”,[105][106] and that criticism over his role in Chile missed his main contention that freer markets resulted in freer people, and that Chile’s unfree economy had caused the military government. Friedman advocated for free markets which undermined “political centralization and political control”.[107]
Iceland
Friedman visited Iceland during the autumn of 1984, met with important Icelanders and gave a lecture at the University of Iceland on the “tyranny of the status quo.” He participated in a lively television debate on August 31, 1984 with socialist intellectuals, including Ólafur Ragnar Grímsson, who later became the president of Iceland.[108] When they complained that a fee was charged for attending his lecture at the University and that, hitherto, lectures by visiting scholars had been free-of-charge, Friedman replied that previous lectures had not been free-of-charge in a meaningful sense: lectures always have related costs. What mattered was whether attendees or non-attendees covered those costs. Friedman thought that it was fairer that only those who attended paid. In this discussion Friedman also stated that he did not receive any money for delivering that lecture.
Estonia
Although Friedman never visited Estonia, his book Free to Choose exercised a great influence on that nation’s then 32-year-old prime minister, Mart Laar, who has claimed that it was the only book on economics he had read before taking office. Laar’s reforms are often credited with responsibility for transforming Estonia from an impoverished Soviet Republic to the “Baltic Tiger.” A prime element of Laar’s program was introduction of the flat tax. Laar won the 2006 Milton Friedman Prize for Advancing Liberty, awarded by the Cato Institute.[109]
United Kingdom
After 1950 Friedman was frequently invited to lecture in Britain, and by the 1970s his ideas had gained widespread attention in conservative circles. For example, he was a regular speaker at the Institute of Economic Affairs (IEA), a libertarian think tank. Conservative politician Margaret Thatcher closely followed IEA programs and ideas, and met Friedman there in 1978. He also strongly influenced Keith Joseph, who became Thatcher’s senior advisor on economic affairs, as well as Alan Walters and Patrick Minford, two other key advisers. Major newspapers, including the Daily Telegraph,The Times, and The Financial Times all promulgated Friedman’s monetarist ideas to British decision-makers. Friedman’s ideas strongly influenced Thatcher and her allies when she became Prime Minister in 1979.[110][111]
Criticism
Econometrician David Hendry criticized part of Friedman’s and Anna Schwartz’s 1982 Monetary Trends.[112] When asked about it during an interview with Icelandic TV in 1984,[113] Friedman said that the criticism referred to a different problem from that which he and Schwartz had tackled, and hence was irrelevant,[114] and pointed out the lack of consequential peer review amongst econometricians on Hendry’s work.[115] In 2006, Hendry said that Friedman was guilty of “serious errors” of misunderstanding that meant “the t-ratios he reported for UK money demand were overstated by nearly 100 per cent”, and said that, in a paper published in 1991 with Neil Ericsson,[116] he had refuted “almost every empirical claim […] made about UK money demand” by Friedman and Schwartz.[117] A 2004 paper updated and confirmed the validity of the Hendry–Ericsson findings through 2000.[118]
Although KeynesianNobel laureatePaul Krugman praised Friedman as a “great economist and a great man” after Friedman’s death in 2006, and acknowledged his many, widely accepted contributions to empirical economics, Krugman had been, and remains, a prominent critic of Friedman. Krugman has written that “he slipped all too easily into claiming both that markets always work and that only markets work. It’s extremely hard to find cases in which Friedman acknowledged the possibility that markets could go wrong, or that government intervention could serve a useful purpose.”[119]
In her book The Shock Doctrine, author and social activist Naomi Klein criticized Friedman’s economic liberalism, identifying it with the principles that guided the economic restructuring that followed the military coups in countries such as Chile and Indonesia. Based on their assessments of the extent to which what she describes as neoliberal policies contributed to income disparities and inequality, both Klein and Noam Chomsky have suggested that the primary role of what they describe as neoliberalism was as an ideological cover for capital accumulation by multinational corporations.[120]
Visit to Chile
Because of his involvement with the Pinochet government, there were international protests when Friedman was awarded the Nobel Prize in 1976.[121] Friedman was accused of supporting the military dictatorship in Chile because of the relation of economists of the University of Chicago to Pinochet, and a controversial six-day trip[122] he took to Chile during March 1975 (less than two years after the coup that deposed President Salvador Allende). Friedman answered that he never was an adviser to the dictatorship, but only gave some lectures and seminars on inflation, and met with officials, including Augusto Pinochet, while in Chile.[123]
Chilean economist Orlando Letelier asserted that Pinochet’s dictatorship resorted to oppression because of popular opposition to Chicago School policies in Chile.[124] After a 1991 speech on drug legalisation, Friedman answered a question on his involvement with the Pinochet regime, saying that he was never an advisor to Pinochet (also mentioned in his 1984 Iceland interview[95]), but that a group of his students at the University of Chicago were involved in Chile’s economic reforms. Friedman credited these reforms with high levels of economic growth and with the establishment of democracy that has subsequently occurred in Chile.[125][126] In October 1988, after returning from a lecture tour of China during which he had met with Zhao Ziyang, Friedman wrote to The Stanford Daily asking if he should anticipate a similar “avalanche of protests for having been willing to give advice to so evil a government? And if not, why not?”[127]
Capitalism and Freedom
Capitalism and Freedom is a seminal work by Friedman. In the book, Friedman talks about the need to move to a classically liberal society, that free markets would help nations and individuals in the long-run and fix the efficiency problems currently faced by the United States and other major countries of the 1950s and 1960s. He goes through the chapters specifying a specific issue in each respective chapter from the role of government and money supply to social welfare programs to a special chapter on occupational licensure. Friedman concludes Capitalism and Freedom with his “classical liberal” stance, that government should stay out of matters that do not need and should only involve itself when absolutely necessary for the survival of its people and the country. He recounts how the best of a country’s abilities come from its free markets while its failures come from government intervention.[77]
“The Role of Monetary Policy.” American Economic Review, Vol. 58, No. 1 (Mar., 1968), pp. 1–17 JSTOR presidential address to American Economics Association
Jump up^Among macroeconomists, the “natural” rate has been increasingly replaced by James Tobin‘s NAIRU, the non-accelerating inflation rate of unemployment, which is seen as having fewer normative connotations.
Jump up^Nobel prize winner Paul Krugman stated that, “In 1968 in one of the decisive intellectual achievements of postwar economics, Friedman not only showed why the apparent tradeoff embodied in the idea of the Phillips curve was wrong; he also predicted the emergence of combined inflation and high unemployment … dubbed ‘stagflation.” Paul Krugman, Peddling Prosperity: Economic Sense and Nonsense in an Age of Diminished Expectations (1995) p. 43 online
Jump up^Edward Nelson, “Friedman’s Monetary Economics in Practice,” Finance and Economics Discussion Series, Divisions of Research & Statistics and Monetary Affairs, Federal Reserve Board, April 13, 2011. Nelson stated, “in important respects, the overall monetary and financial policy response to the crisis can be viewed as Friedman’s monetary economics in practice.” and “Friedman’s recommendations for responding to a financial crisis largely lined up with the principal financial and monetary policy measures taken since 2007.” Nelson, “Review,” in Journal of Economic Literature (Dec, 2012) 50#4 pp. 1106–09
Jump up^Leonard Ross and Richard Zeckhauser (December 1970). “Review: Education Vouchers”. The Yale Law Journal. 80 (2): 451–61. doi:10.2307/795126. JSTOR795126.
Jump up^Martin Carnoy (August 1998). “National Voucher Plans in Chile and Sweden: Did Privatization Reforms Make for Better Education?”. Comparative Education Review. 42 (3): 309–37. doi:10.1086/447510. JSTOR1189163.
Jump up^Ebenstein, Lanny (2007). Milton Friedman: a biography. New York: St. Martin’s Press. p. 243. ISBN978-0-230-60409-4.
Jump up^“Friedman and Freedom“. Queen’s Journal. Archived from the original on August 11, 2006. Retrieved February 20, 2008., Interview with Peter Jaworski. The Journal, Queen’s University, March 15, 2002 – Issue 37, Volume 129
Jump up^Letter from Arnold Harberger to Stig Ramel as reprinted in the Wall Street Journal 12/10/1976, and in Two Lucky People: Memoirs By Milton Friedman, Rose D. Friedman. Appendix A, pp. 598–99. Accessible at books.google.com
^ Jump up to:ab[http:// Two Lucky People: Memoirs By Milton Friedman, Rose D. Friedman. Appendix A, pp. 591–93. Letter from Friedman to Pinochet, April 21, 1975.]
Jump up^Mask II, William Ray (May 2013). The Great Chilean Recovery: Assigning Responsibility For The Chilean Miracle(s) (Thesis). California State University, Fresno.
Jump up^Subroto Roy & John Clarke, eds., Margaret Thatcher’s Revolution: How it Happened and What it Meant (Continuum 2005)
Jump up^David F. Hendry; Neil R. Ericsson (October 1983). “Assertion without Empirical Basis: An Econometric Appraisal of ‘Monetary Trends in … the United Kingdom’ by Milton Friedman and Anna Schwartz,” in Monetary Trends in the United Kingdom, Bank of England Panel of Academic Consultants, Panel Paper No. 22, pp. 45–101.See also Federal Reserve International Finance Discussion Paper No. 270 (December 1985), which is a revised and shortened version of Hendry–Ericsson 1983.
Jump up^Feldman, Burton (2000). “Chapter 9: The Economics Memorial Prize”. The Nobel Prize: A History of Genius, Controversy, and Prestige. New York: Arcade Publishing. p. 350. ISBN1-55970-537-X.
Jump up^The Drug War as a Socialist Enterprise, Milton Friedman, From: Friedman & Szasz on Liberty and Drugs, edited and with a Preface by Arnold S. Trebach and Kevin B. Zeese. Washington, D.C.: The Drug Policy Foundation, 1992.
In the 1960s, Canada, of which Mundell is a native, floated its exchange: this caused Mundell to begin investigating the results of floating exchange rates, a phenomenon not widely seen since the 1930s “Stockholm School” successfully lobbied Sweden to leave the gold standard.
In 1962, along with Marcus Fleming, he co-authored the Mundell–Fleming model of exchange rates, and noted that it was impossible to have domestic autonomy, fixed exchange rates, and free capital flows: no more than two of those objectives could be met. The model is, in effect, an extension of the IS/LM model applied to currency rates.
Demand side fiscal policy would be ineffective in restraining central banks under a floating exchange rate system.
Single currency zones relied, therefore, on similar levels of price stability, where a single monetary policy would suffice for all.
His analysis led to his conclusion that it was a disagreement between Europe and the United States over the rate of inflation, partially to finance the Vietnam War, and that Bretton Woods disintegrated because of the undervaluing of gold and the consequent monetary discipline breakdown. There is a famous point/counterpoint over this issue between Mundell and Milton Friedman.[14]
This work later led to the creation of the euro and his prediction that leaving the Bretton Woods system would lead to “stagflation” so long as highly progressive income tax rates applied. In 1974, he advocated a drastic tax reduction and a flattening of income tax rates.
Mundell, though lionized by some conservatives, has many of his harshest critics from the right: he denies the need for a fixed gold based currency or currency board[citation needed] (he still often recommends this as a policy in hyperinflationary environments) and he is both a fiscal and balance of payments deficit hawk. He is well known for stating that in a floating exchange rate system, expansion of the money supply can come about only by a positive balance of payments.
In 2000, he predicted that before 2010, the euro zone would expand to cover 50 countries, while the dollar would spread throughout Latin America, and much of Asia would look towards the yen.[15] Such predictions have proved highly inaccurate.
Nobel Prize winner
Mundell won the Nobel Memorial Prize in Economic Science in 1999 and gave as his prize lecture a speech titled “A Reconsideration of the Twentieth Century”. According to the Nobel Prize Committee, he got the honor for “his analysis of monetary and fiscal policy under different exchange rate regimes and his analysis of optimum currency areas”.
Mundell concluded in that lecture that “the international monetary system depends only on the power configuration of the countries that make it up”. He divided the entire twentieth century into three parts by different periods of time:
The first third of the century, from its beginning to the Great Depression of the 1930s, economics was dominated by the confrontation of the Federal Reserve System with the gold standard.
The second third of the century was from World War II to 1973, when the international monetary system was dominated by fixing the price of gold with the US dollar.
The last third of the century started with the destruction of the old monetary system due to the problem of inflation.
With the destruction of the old monetary system, a new international monetary system was finally founded. Controlling inflation by each country became a main topic during this era.
Mundell started the Pearl Spring Chess Tournament, a double round robin tournament with six players. The first tournament in 2008 was won by the Bulgarian, Veselin Topalov. The next two: 2009–2010 was won by the Norwegian, Magnus Carlsen.
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LAS VEGAS, NV – OCTOBER 13: (L-R) Democratic presidential candidates Jim Webb, U.S. Sen. Bernie Sanders (I-VT), Hillary Clinton, Martin O’Malley and Lincoln Chafee take the stage for a presidential debate sponsored by CNN and Facebook at Wynn Las Vegas on October 13, 2015 in Las Vegas, Nevada. The five candidates are participating in the party’s first presidential debate. (Photo by Joe Raedle/Getty Images)
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The real scandal surrounding Democratic presidential hopeful Hillary Clinton’s private email system may be that she was running, in concert with a private consulting firm tied closely to George Soros, an outsourced and parallel State Department answerable only to her and not President Obama, the Congress, or the American people.
Who Won The First Democratic Debate In Terms Of Body Language?
Carol Kinsey Goman
The major story of the first televised presidential debate in 1960 became the photogenic appeal of John F. Kennedy versus the sickly look of his opponent, Richard Nixon, who refused to wear makeup although his recent illness had left him with a pallid complexion. In addition, Kennedy looked directly at the camera when answering questions (rather that at the journalists who asked them), which made viewers see him as someone who was talking right to them and giving straight answers. To make matters worse, the cameras caught Nixon wiping perspiration from his forehead while Kennedy was pressing him on the issues.
When the debate ended, a large majority of television viewers recognized Kennedy as the winner. Radio listeners, who heard the debate but hadn’t seen it, gave the victory to Nixon.
Never again would politicians under estimate the importance of physical appearance and body language – especially when appearing on television. Today’s political figures are fully aware of, and heavily coached on, the impact of nonverbal communication.
And when it comes to nonverbal cues, everything matters: Gender, age, skin color, hair style, attractiveness, height, clothing, facial expressions, hand gestures, posture — audiences judge it all. Superficial? Maybe. But this potent (and often unconscious) process is also hardwired in the human brain.
There are two sets of nonverbal signals that are especially important for candidates to project: warmth and authority. Warmth cues project likeability and candor and authority cues denote power and status. The most appealing politicians (at least from a body language standpoint) are those whose behaviors encompass both sets of signals.
Which brings me to the first Democratic debate of the 2016 election cycle — and how I would grade the body language of the debaters.
Hillary Clinton, former secretary of state
Grade: A-
How she did it: Clinton is often described, by both supporters and critics, as strong, tough, and aggressive. So it was no surprise to see those qualities exhibited in her body language through expansive gestures, erect posture, and well-prepared responses.
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But Clinton’s body language won the debate by doing more than displaying authority. She successfully “warmed up” her image, with smiles, head nods in agreement/support of other’s comments, and (at one point) even laughter.
Visually, being the only woman on stage was also to her advantage. The contrast between Clinton and the rest of the (white, male) candidates was visually striking – especially for someone who wants to show how she would be different from previous presidents.
Bernie Sanders, senator of Vermont
Grade: B+
How he did it: Unlike Clinton, who (for better or worse) is a known national figure, Sanders needed to give the audience a clear picture of who he is and what he stands for – and he was very effective doing so last night. Sanders was animated and used gestures (like finger pointing and palms rotated down) to effectively emphasize his resolve – although at times, his movements were a bit jerky, instead of smooth. And for those who were wondering if a 74-year old could keep his energy high for two hours, the answer was a resounding “yes.”
Sanders nonverbal negatives include his leaning too often on the lectern (as if he needed physical support) and in his lack of warm cues. He is much more expressive when showing anger, disgust, and impatience – but rarely does he display joy or express optimism.
Martin O’Malley, former governor Maryland
Grade: C
How he did it: While he never had the “break through” moment his campaign was hoping for, nonverbally O’Malley had a significant nonverbal advantage: He looked fit and athletic – and he was the tallest person in the line up. Don’t discount the effect of these seemingly trivial facts. We are biased toward attractive, healthy people, and we unconsciously attribute leadership characteristics to tall people. (The effects of this are seen not only in politics, but in business. For example, in the U.S. population, 14.5% men are 6’ tall and over, but with CEOs of Fortune 500 companies, that statistic climbs to 58%.) But his softer, slower communication style often lacked the energy and passion needed to support his rhetoric. And his deadpan, almost angry expression when other candidates were speaking was tweeted about as the “death stare” – not a good look for someone who is usually seen as upbeat and happy.
Jim Webb, former senator of Virginia
Grade C-
How he did it: Webb is known as being “gruff” and “stiff,” and both of those qualities were displayed nonverbally: Outside of a slight lean backward and a shoulder shrug now and then, he rarely moved his body – adding to his stoic image.
Lincoln Chaffee, former governor of Rhode Island
Grade: D
How he did it: Chafee’s body language was filled with nervous facial gestures (lip licking was especially prevalent) and conflicting nonverbal messages, the most noticeable being a smile with tightened or compressed lips that made the otherwise warm signal look forced and inauthentic.
The only missing contender in last night’s debate was Vice President Joe Biden, who hasn’t declared his intention to run. Too bad. He is passionate and expressive. He would have been interesting to watch.
EVIDENCE SHOWS CLINTON RAN A PARALLEL, OUTSOURCED STATE DEPT.
Clinton received help from George Soros to run shadow gov’t
The real scandal surrounding Democratic presidential hopeful Hillary Clinton’s private email system may be that she was running, in concert with a private consulting firm tied closely to George Soros, an outsourced and parallel State Department answerable only to her and not President Obama, the Congress, or the American people.
The media has tried to separate two dubious operations of Mrs. Clinton while she was at the State Department. The first is the private email server located in her Chappaqua, New York residence. The second is the fact that her government-paid State Department personal assistant, Huma Abedin, wife of disgraced New York “sexting” congressman Anthony Weiner, was simultaneously on the payroll of Teneo, a corporate intelligence firm that also hired former President Bill Clinton and former British Prime Minister Tony Blair as advisers. Abedin has been linked to the Muslim Brotherhood, which has recently buried the hatchet with longtime rival Saudi Arabia and common cause against the Assad government in Syria, the Houthi rebels in Yemen, and Iran.
It is clear that Mrs. Clinton used her private email system to seek advice on major foreign policy issues, from her friend and paid Clinton Foundation adviser Sidney Blumenthal providing private intelligence on Libya’s post-Qaddafi government and possible business ventures to Clinton friend Lanny Davis seeking favors from Mrs. Clinton. It should be noted that Davis was a paid lobbyist for the military junta of Honduras that overthrew democratically-elected President Manuel Zelaya in 2009. It also should be noted that Mrs. Clinton voiced her personal dislike for the late Libyan leader Muammar Qaddafi, when, after he was assassinated by U.S.-armed jihadist rebels, boasted, “We came, we saw, he died!”
It was highly unusual for Abedin to receive a U.S. government paycheck while also receiving a consultant’s salary from Teneo. Teneo was founded in 2011 by Doug Band, a former counselor to Bill Clinton. Teneo, which is as much a private intelligence firm as it is an investment company and “governance” consultancy, has its headquarters in New York and branches in Washington DC, Brussels, São Paulo, London, Dublin, Dubai, Hong Kong, Beijing, and Melbourne. With the exception of its investment arm, Teneo closely resembles the former CIA-connected firm where Barack Obama worked after he graduated from Columbia, Business International Corporation (BIC). Teneo’s marketing claims match those made by BIC during its heyday: Teneo works “exclusively with the CEOs and senior leaders of many of the world’s largest and most complex companies and organizations.”
Teneo has staked a position in the international news media with its recent purchase of the London-based firm Blue Rubicon, formed in part by the former home news editor for Channel 4 News in the United Kingdom. Teneo also recently acquired London’s Stockwell Group, which provides consultancy services to the National Bank of Greece and Pireaus Bank. It appears that Mrs. Clinton’s friends are cashing in on the global banking austerity being levied against Greece.
The head of Teneo Intelligence is Jim Shinn, a former assistant secretary for Asia for the Defense Department. What is troubling is that Teneo has been offering statements to the media designed to heighten tensions between NATO and Turkey on one side and Russia on the other over Russia’s military attacks on the Islamic State in Syria. Shinn’s intelligence chief in Teneo’s London office, Wolfgango Piccoli, who has worked for the Soros-linked Eurasia Group consultancy, told CNN that Russia’s “reinforcement of the Assad regime and the consolidation of separate areas of control is more likely to prolong the conflict by forcing a stalemate.” The Teneo statement came in a CNN report that suggests members of the Bashar al Assad government in Syria and Russian President Vladimir Putin and his government could be charged by international or “national” tribunals for war crimes in a manner similar to those convened on members of the Yugoslavian and Serbian governments.
The entire International Criminal Court (ICC) in The Hague and in Africa has fallen under the control of George Soros and his operatives. Soros has made no secret of his support for overthrowing Assad and Putin and he has resorted to a “weapon of mass migration” of Syrian, Iraqi, and other refugees into Europe in order to destabilize the entire continent and endanger its Christian culture and social democratic traditions. Mrs. Clinton and Soros extensively used Mrs. Clinton’s private email system to exchange, among other things, information on the political situation in Albania, a country where Soros’s operatives are plentiful and powerful. Soros is a major donor to the Clinton Foundation and Mrs. Clinton’s presidential campaign.
Soros also pressed Mrs. Clinton for State Department support for his American University of Central Asia, which, as seen with Soros’s Central European University in Budapest and its graduate ranks of pro-U.S. leaders throughout central and eastern Europe, is designed to manufacture a new generation of pro-U.S. leaders in the Central Asian states of the former Soviet Union.
The “wiping” of Mrs. Clinton’s email systems’ hard drives appear to be part of a classic case of an intelligence operation destroying data after being exposed.
The Clinton outsourcing of U.S. foreign policy not only involves Teneo but also the Clinton Foundation, for which Mrs. Clinton solicited donations from foreign sources while she served as Secretary of State. Moreover, in a classic example of racketeering, Bill Clinton was paid by Teneo as an adviser while his Clinton Foundation hired Teneo as as a consultant. The Clinton Foundation is directed by Bill and Hillary Clinton, along with their daughter Chelsea Clinton Mezvinsky. Mrs. Clinton’s private email use also extended to Clinton Foundation chief financial officer Andrew Kessel and longtime Bill Clinton friend Bruce Lindsey.
One of the emails sent via Mrs. Clinton’s private system was from her State Department counsel Cheryl Mills to Amitabh Desai, the head of foreign policy for the Clinton Foundation. Mills wanted Desai to arrange a meeting between Rwandan dictator Paul Kagame with the Democratic Republic of Congo strongman Joseph Kabila during Kagame’s visit to Kinshasa in 2012. This effort was conducted outside the State Department with the sole exception that Assistant Secretary of State for African Affairs Johnnie Carson, a close friend of Mrs. Clinton, was involved in the email exchange with Mills and Desai.
Other private email use involved Hollywood magnate Haim Saban, Loews heir Andrew Tisch, and Lynn de Rothschild, all of whom were peddling Israel’s interests to Hillary and Bill Clinton in return for sizable donations to the Clinton Foundation and Mrs. Clinton’s presidential campaign.
Under the Clinton Giustra Enterprise Partnership, the Clinton Foundation received generous financial support totaling some $31 million from Frank Giustra, a Canadian uranium mining magnate. Giustra relied on the Clintons to use their influence to open up lucrative uranium exploitation opportunities in places like Kazakhstan and Africa.
Senator Chuck Grassley (R-IA) has been stonewalled in his attempt to obtain more information about Teneo’s relationship with Mrs. Clinton, the Clinton Foundation, and Bill Clinton.
Wayne Madsen is an investigative journalist who consistently exposes cover-ups from deep within the government. Want to be the first to learn the latest scandal? Go to WayneMadsenReport.com subscribe today!
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The Lovin’ Spoonful – Do You Believe In Magic – 1965
Do You Believe In Magic – The Lovin’ Spoonful – Lyrics
Lyrics
Do you believe in magic, in a young girl’s heart?
How the music can free her, whenever it starts
And it’s magic, if the music is groovy
It makes you feel happy like an old-time movie
I’ll tell you about the magic and it’ll free your soul
But it’s like tryin’ to tell a stranger ’bout rock and roll
If you believe in magic, don’t bother to choose
If it’s jug band music or rhythm and blues
Just go and listen, it’ll start with a smile
It won’t wipe off your face, no matter how hard you try
Your feet start tapping and you can’t seem to find
How you got there, so just blow your mind
If you believe in magic, come along with me
We’ll dance until mornin’ ’til there’s just you and me
And maybe, if the music is right
I’ll meet you tomorrow, sort of late at night
And we’ll go dancing, baby, then you’ll see
How the magic’s in the music and the music’s in me
Yeah, do you believe in magic?
Yeah, believe in the magic of a young girl’s soul
Believe in the magic of rock and roll
Believe in the magic that can set you free
Oh, talkin’ ’bout magic
Do you believe in magic?
(Do you believe like I believe?)
Do you believe, believer?
(Do you believe like I believe?)
Do you believe in magic?
(Do you believe like I believe?)
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The Lovin’ Spoonful – Did You Ever Have To Make Up Your Mind
Lyrics
Did You Ever Have To Make Up Your Mind
Lovin’ Spoonful
Did you ever have to make up your mind
Pick up on one and leave the other behind
It’s not often easy and not often kind
Did you ever have to make up your mind
Did you ever have to finally decide
Say yes to one and let the other one ride
There’s so many changes and tears you must hide
Did you ever have to finally decide
Sometimes there’s one with big blue eyes, cute as a bunny
With hair down to here, and plenty of money
And just when you think she’s that one in the world
You heart gets stolen by some mousey little girl
And then you know you’d better make up your mind…
Sometimes you really dig a girl the moment you kiss her
And then you get distracted by her older sister
When in walks her father and takes you a line
And says, “You better go home, son, and make up your mind”
And then you bet you’d better finally decide..
“Summer in the City” – Loving Spoonful – HQ Audio
John Sebastian — The Lovin’ Spoonful
.
John Sebastian – Younger Generation @ Woodstock 1969
John Sebastian – Darling Be Home Soon @ Woodstock 1969
Ep. 12: AN ANIMATED FILM ON THE DEBT & THE DEFICIT | Marshall Curry
US Debt Crisis – Perfectly Explained
The Collapse of The American Dream Explained in Animation
George Carlin on the American Dream
The bar chart comes directly from the Monthly Treasury Statement published by the U. S. Treasury Department..The “Debt Total” bar chart is generated from the Treasury Department’s “Debt Report” found on the Treasury Direct web site. It has links to search the debt for any given date range, and access to debt interest information. It is a direct source to government provided budget information.
— “Deficit” vs. “Debt”—Suppose you spend more money this month than your income. This situation is called a “budget deficit”. So you borrow (ie; use your credit card). The amount you borrowed (and now owe) is called your debt. You have to pay interest on your debt. If next month you spend more than your income, another deficit, you must borrow some more, and you’ll still have to pay the interest on your debt (now larger). If you have a deficit every month, you keep borrowing and your debt grows. Soon the interest payment on your loan is bigger than any other item in your budget. Eventually, all you can do is pay the interest payment, and you don’t have any money left over for anything else. This situation is known as bankruptcy.
“Reducing the deficit” is a meaningless soundbite. If theDEFICIT is any amount more than ZERO, we have to borrow more and the DEBT grows.
Each year since 1969, Congress has spent more money than its income. The Treasury Department has to borrow money to meet Congress’s appropriations. Here is a direct link to the Congressional Budget Office web site’s deficit analysis. We have to pay interest* on that huge, growing debt; and it dramatically cuts into our budget.
Sen Rand Paul on Baseline Budgeting
Ending Baseline Budgeting | House GOP Twitter Response
2014 U.S. Federal Budget: Taxes & Revenue
2014 U.S. Federal Budget: Budget Process
2014 U.S. Federal Budget: Social Insurance, Earned Benefits, & Entitlements
2014 U.S. Federal Budget: Debt and Deficit
US Congress has raised the debt ceiling 78 times since 1960
Baseline Budgeting
Rep. Louie Gohmert Applauds The Baseline Reform Act
Baseline Budgeting Explained
Underwhelming Spending Cuts from Congress and Obama
Understanding the National Debt and Budget Deficit
Part 1
FairTax: Fire Up Our Economic Engine (Official HD)
The FairTax: It’s Time
Flat Tax vs. National Sales Tax
Dan Mitchell Discussing Federal Tax Burden on CNBC
Eight Reasons Why Big Government Hurts Economic Growth
Dan Mitchell Explaining How Government Screws Up Everything
What is the FairTax legislation?
Cato Institute Senior Fellow Daniel J. Mitchell
How does the FairTax rate compare to today’s?
What assumptions does the FairTax make about government spending?
How does the FairTax rate compare to today’s?
Is the FairTax truly progressive?
How does the “prebate” work?
Will the prebate create a massive new entitlement system?
Wouldn’t it be more fair to exempt food and medicine from the FairTax?
Is it fair for rich people to get the same prebate as poor people?
If people bring home their whole paychecks how can prices fall?
How does the FairTax impact the middle class?
Why is the FairTax better than a flat income tax?
Is the FairTax rate really 23%?
Is consumption a reliable source of revenue?
How does the FairTax affect compliance costs?
Isn’t it a stretch to say the IRS will go away?
Can I pretend to be a business to avoid the sales tax?
How does the FairTax affect tax preparers and CPAs?
Are any significant economies funded by a sales tax?
How will the FairTax affect state sales tax systems?
Can’t Americans just cross the border to avoid the FairTax
How will Social Security payments be calculated under the FairTax?
Will the FairTax impact tax deferred retirement accounts like 401(k)s?
How will the FairTax® make the tax system fair for everyone?
What’s the difference between the FairTax® and the income tax?
How will the FairTax® help me save money?
Why Should Grandparents support FairTax®?
Congressman Woodall Discusses the FairTax
“The Case for the Fair Tax”
Freedom from the IRS! – FairTax Explained in Detail
John Stossel speaks to the Fair Tax Rally
Sen. Moran Discusses FairTax Legislation on U.S. Senate Floor
Mind blowing speech by Robert Welch in 1958
Robert Welch Speaks: In One Generation (1974)
GOP Taxonomy: The Flat Taxers and the Fair Taxers
by Aman Batheja
During his last run for president, Rick Perry often pulled a postcard out of his jacket pocket. “The best representation of my plan is this postcard, which taxpayers will be able to fill out to file their taxes,” Perry said. While Perry proposed an optional 20 percent flat tax on all income levels, the other Texan running that cycle, Ron Paul, wanted to get rid of the income tax altogether. The former Surfside congressman sometimes suggested replacing it and other federal taxes with a sales tax, a concept often described as the Fair Tax. As the 2016 landscape begins taking shape, potential Republican candidates are suggesting an interest in being both flat and fair, embracing some version of Perry’s 2012 proposal as the first step toward reaching Paul’s ideal. Take U.S. Sen. Ted Cruz, R-Texas, whose talk on taxes has sounded strikingly similar to Perry’s at times. “We should let taxes become so simple that they could be filled out on a postcard,” Cruz wrote in a column for USA Today in October. Yet while Cruz has called for converting the country’s progressive income tax system to a flat tax, his office confirmed that the Fair Tax is his long-term goal. “The senator supports a Fair Tax, ultimately,” spokeswoman Catherine Frazier said. “However, the most immediate, effective way to implement comprehensive tax reform is to pass a simple flat tax — so simple that Americans can file on a postcard. This should be the starting point for reform, and once it’s in place we should pursue a Fair Tax.” Another presidential contender, U.S. Sen. Rand Paul, R-Ky., has also voiced support for a flat tax, but still prefers the vision of his libertarian father, Ron Paul. “I’ve never said I don’t support a sales tax,” Rand Paul told The Texas Tribune recently while in Dallas. He explained that he viewed moving the federal tax system to a flat tax as “an easier concept to get through a legislature because you’re modifying the existing code.” More broadly, Rand Paul said he was interested in stimulating economic growth by reducing the federal taxes overall. “We’ve kind of lost that argument in recent years because many Republicans, including many in Washington, now simply argue for revenue neutral tax reform, which stimulates nothing,” Paul said. For former Arkansas Gov. Mike Huckabee, those talking about the flat tax as a bridge to the Fair Tax are missing the point. “Gov. Huckabee has said many times the Fair Tax is a flat tax, but it’s based on consumption rather than on punishing our productivity,” spokeswoman Alice Stewart said. Another potential presidential contender, former Florida Gov. Jeb Bush, delivered a speech on taxes and income inequality this week in Detroit that reportedly included support for simplifying the tax code, but did not include specific policy proposals. Critics of both flat tax and Fair Tax proposals dismiss them as regressive plans that would amount to tax cuts for higher-income households while increasing the tax burden on middle-class households. But conservatives argue that dramatically simplifying the tax code, or moving to a tax system focused more on consumption than earnings, would be more transparent, simpler and better for the economy in the long run. Cal Jillson, a political science professor at Southern Methodist University, said discussion of flat taxes and consumption taxes works well politically with Republican voters, but described them as “pie-in-the-sky, no-way-in-hell” proposals that won’t ever muster enough support in Congress. “When you talk about tax reform in an environment that is politically polarized as ours, it’s hard to see how you get majority support, let alone a bipartisan package that could be taken to the public by both parties,” Jillson said. “It’s a way of saying, ‘I have no sense of doing anything practical.’ ” While Cruz and Rand Paul have already signaled their positions, Perry, who has been meeting with dozens of policy experts to prepare for a second White House run, may end up tweaking his earlier flat tax plan. “He supports simplifying the tax code, lowering rates for working families, and closing loopholes,” spokeswoman Lucy Nashed said. “Gov. Perry is continuing to work on policy proposals and will announce specific ideas at the appropriate time.” http://www.texastribune.org/2015/02/08/flat-tax-fair-tax/
National Review: The FairTax Makes a Comeback
by: Ryan Lovelace
Republican senator David Perdue of Georgia sounds an awful lot like President Obama when he describes his plan to overhaul the tax code, which would repeal federal taxes and replace them with a consumption tax known as the “FairTax.” “[The FairTax] really levels the playing field in that regardless of who you are, where you are, you’ll pay your fair share, and it will be the same amount,” Perdue tells NRO. “It will be equitable.” Perdue couches his description of the FairTax in rhetorical terms — “levels the playing field,” “pay your fair share,” “equitable” — that could’ve come straight out of Obama’s State of the Union address, and that’s no accident. Whatever the political prospects of the proposal — it has failed over and over again when proposed in the past, and it is expected to meet a similar fate this time around — it could allow the GOP to seize the mantle of economic populism from the Democrats, and, in so doing, to “win” tax reform in the eyes of voters. That’s important, because tax-reform legislation is one of the few big, ostensibly bipartisan efforts the new Congress is expected to undertake, and the scramble to take credit for it ahead of the 2016 presidential election will be fierce. The FairTax legislation put forward in the Senate by Perdue, his fellow Georgia Republican Johnny Isakson, and their colleague Jerry Moran (R., Kan.), was written with 2016 in mind. Perdue says that on Tuesday, before listening to Obama announce his desire to raise taxes once again, he and Isakson discussed the importance of their work in influencing the debate on tax reform. Perdue — the successful manager known for his ability to turn around businesses and revive brands – says he hopes to help move 2016 GOP presidential candidates in the direction of the FairTax. The proposal itself is relatively simple: It would eliminate all federal income, payroll, gift, and estate taxes, and replace them with a 23 percent national sales tax. In addition to making the U.S. economy more competitive on a global scale and putting people back to work, the plan would strip the IRS of its ability to interfere in the lives of ordinary Americans, according to the conservative freshman from Georgia. Other longtime proponents of the idea agree, and argue that by replacing a system that taxes an individual’s earnings with one that exclusively taxes that same individual’s spending, it would allow each citizen the freedom to determine his own tax burden. Perdue’s hopes for 2016 notwithstanding, the FairTax has not been a winning issue in past Republican presidential primaries. A number of GOP primary candidates, from Mike Huckabee in 2008 to Herman Cain in 2012, have failed to win the nomination while championing the proposal. And it will still be a loser come 2016, says Ryan Ellis, the tax-policy director at Grover Norquist’s Americans for Tax Reform. “If this thing [the FairTax] was going to catch on as the next great hot thing, it would have,” Ellis says. “It’s not a practical tax-reform plan for governing, it’s something that people wish, aspirationally, they could put out there.” The tax-reform proposals with the best chance of succeeding in Congress — and helping Republican candidates win in 2016 — are those that move incrementally toward the FairTax’s goals without overhauling the system in one fell swoop, Ellis says. Such proposals would likely combine some of the FairTax’s reforms — such as repealing the death tax and capital-gains taxes — with measures aimed at broadening the tax base of higher-income individuals. The winning formula to achieve fundamental tax reform, according to Ellis, is a plan that is pro-growth, pro-family, and “paid for by, as much as you can, rich guys.” But those who warn that the FairTax lacks political viability only give more motivation to Rob Woodall (R., Ga.), the lead sponsor of FairTax legislation in the House of Representatives. “That’s what I love about this bill: Washington hates this bill,” Woodall says. “There are all sorts of forces in town that discourage this kind of giant reform, but it’s being marketed at a grassroots level.” Woodall’s Georgia district has a history of electing FairTax proponents to Congress. Woodall’s seat was previously occupied by John Linder, a tireless champion who first introduced the FairTax bill in 1999, and reintroduced it in each new Congress until he retired in 2011. He never succeeded in changing the law, but he did quite a bit to build support in his home state. As Americans for Fair Taxation president Steve Hayes tells it, Atlanta-based radio talk-show host Neal Boortz is largely responsible for getting the idea off the ground. Boortz wrote The FairTax Book with Linder and trumpeted his support for the reform to a southeastern audience who readily took to the idea. Hayes’s organization works to garner more support for the idea across the United States. The “power base” of the FairTax proposal has moved out of the Southeast and into the Midwest, Woodall says. Moran’s support as a lead co-sponsor has helped the idea gain traction in Kansas. A top Moran aide who worked on the FairTax bill tells NRO that Moran began laying the groundwork to lead on this issue last year, as former Georgia senator Saxby Chambliss was preparing to retire. Chambliss was a staunch supporter of the FairTax, and the aide says the two offices worked behind the scenes to ensure that the push for tax reform would live on. Woodall thinks the geographical shift in support will help the idea flourish in California and the Northwest. Moreover, he wants to gather supporters in key 2016 Republican-primary states and grow grassroots support in order to influence the GOP’s agenda. But the effort to sell the FairTax primarily to devoted conservatives has left others in the dark as to its possible benefits. Laurence Kotlikoff, an economics professor at Boston University, has studied the FairTax and thinks it is a more progressive proposal than people realize. Kotlikoff says lawmakers’ lack of experience in public finance has led to a misunderstanding of the FairTax. He adds that he thinks Democratic minority leader Nancy Pelosi might even come around to the idea, if she realized that it would help some of the people she purports to care about most: workers. After years toiling under former Senate majority leader Harry Reid (D., Nev.), some conservatives have grown excited by the Senate’s movement on this issue. The Moran staffer thinks a total of 10 or 11 senators may ultimately support the proposal, including new members and others who have changed their minds. The number of original co-sponsors of the FairTax in the House has increased during each of the last three Congresses, peaking this year with 57 total supporters. Barring an unforeseen shift in Congress’s priorities, though, the FairTax appears doomed to fail yet again. Woodall knows the effort is ill-fated, and says he won’t look someone in the eye and tell them that a GOP-led Congress will put the FairTax on the president’s desk — or that the president would ever sign it. For the time being, his goal is more modest: He hopes to harness the relatively small but growing support for the proposal, and to take its message to voters across the country, showing his fellow Republicans that populist economic policies can win back the White House in 2016. “This is a mission to change the way people think about the tax code,” he says. “It’s kind of a crazy idea until you look at it and you say, ‘Golly, why haven’t we done that already?’ Because we know that we can’t win Washington until we win the American voter across the country.” – https://fairtax.org/articles/the-fairtax-makes-a-comeback
Story 1, Part 1 of 3: An American Renaissance, The Road To Peace and Prosperity: Faith, Family, Friends, and Freedom ~ First — Videos
FairTax: Fire Up Our Economic Engine (Official HD)
The FairTax: It’s Time
Flat Tax vs. National Sales Tax
Dan Mitchell Discussing Federal Tax Burden on CNBC
Eight Reasons Why Big Government Hurts Economic Growth
Dan Mitchell Explaining How Government Screws Up Everything
What is the FairTax legislation?
Cato Institute Senior Fellow Daniel J. Mitchell
How does the FairTax rate compare to today’s?
What assumptions does the FairTax make about government spending?
How does the FairTax rate compare to today’s?
Is the FairTax truly progressive?
How does the “prebate” work?
Will the prebate create a massive new entitlement system?
Wouldn’t it be more fair to exempt food and medicine from the FairTax?
Is it fair for rich people to get the same prebate as poor people?
If people bring home their whole paychecks how can prices fall?
How does the FairTax impact the middle class?
Why is the FairTax better than a flat income tax?
Is the FairTax rate really 23%?
Is consumption a reliable source of revenue?
How does the FairTax affect compliance costs?
Isn’t it a stretch to say the IRS will go away?
Can I pretend to be a business to avoid the sales tax?
How does the FairTax affect tax preparers and CPAs?
Are any significant economies funded by a sales tax?
How will the FairTax affect state sales tax systems?
Can’t Americans just cross the border to avoid the FairTax
How will Social Security payments be calculated under the FairTax?
Will the FairTax impact tax deferred retirement accounts like 401(k)s?
How will the FairTax® make the tax system fair for everyone?
What’s the difference between the FairTax® and the income tax?
How will the FairTax® help me save money?
Why Should Grandparents support FairTax®?
Congressman Woodall Discusses the FairTax
“The Case for the Fair Tax”
Freedom from the IRS! – FairTax Explained in Detail
John Stossel speaks to the Fair Tax Rally
Sen. Moran Discusses FairTax Legislation on U.S. Senate Floor
Mind blowing speech by Robert Welch in 1958
Robert Welch Speaks: In One Generation (1974)
GOP Taxonomy: The Flat Taxers and the Fair Taxers
by Aman Batheja
During his last run for president, Rick Perry often pulled a postcard out of his jacket pocket.
“The best representation of my plan is this postcard, which taxpayers will be able to fill out to file their taxes,” Perry said.
While Perry proposed an optional 20 percent flat tax on all income levels, the other Texan running that cycle, Ron Paul, wanted to get rid of the income tax altogether. The former Surfside congressman sometimes suggested replacing it and other federal taxes with a sales tax, a concept often described as the Fair Tax.
As the 2016 landscape begins taking shape, potential Republican candidates are suggesting an interest in being both flat and fair, embracing some version of Perry’s 2012 proposal as the first step toward reaching Paul’s ideal.
Take U.S. Sen. Ted Cruz, R-Texas, whose talk on taxes has sounded strikingly similar to Perry’s at times.
“We should let taxes become so simple that they could be filled out on a postcard,” Cruz wrote in a column for USA Today in October.
Yet while Cruz has called for converting the country’s progressive income tax system to a flat tax, his office confirmed that the Fair Tax is his long-term goal.
“The senator supports a Fair Tax, ultimately,” spokeswoman Catherine Frazier said. “However, the most immediate, effective way to implement comprehensive tax reform is to pass a simple flat tax — so simple that Americans can file on a postcard. This should be the starting point for reform, and once it’s in place we should pursue a Fair Tax.”
Another presidential contender, U.S. Sen. Rand Paul, R-Ky., has also voiced support for a flat tax, but still prefers the vision of his libertarian father, Ron Paul.
“I’ve never said I don’t support a sales tax,” Rand Paul told The Texas Tribune recently while in Dallas. He explained that he viewed moving the federal tax system to a flat tax as “an easier concept to get through a legislature because you’re modifying the existing code.”
More broadly, Rand Paul said he was interested in stimulating economic growth by reducing the federal taxes overall.
“We’ve kind of lost that argument in recent years because many Republicans, including many in Washington, now simply argue for revenue neutral tax reform, which stimulates nothing,” Paul said.
For former Arkansas Gov. Mike Huckabee, those talking about the flat tax as a bridge to the Fair Tax are missing the point.
“Gov. Huckabee has said many times the Fair Tax is a flat tax, but it’s based on consumption rather than on punishing our productivity,” spokeswoman Alice Stewart said.
Another potential presidential contender, former Florida Gov. Jeb Bush, delivered a speech on taxes and income inequality this week in Detroit that reportedly included support for simplifying the tax code, but did not include specific policy proposals.
Critics of both flat tax and Fair Tax proposals dismiss them as regressive plans that would amount to tax cuts for higher-income households while increasing the tax burden on middle-class households. But conservatives argue that dramatically simplifying the tax code, or moving to a tax system focused more on consumption than earnings, would be more transparent, simpler and better for the economy in the long run.
Cal Jillson, a political science professor at Southern Methodist University, said discussion of flat taxes and consumption taxes works well politically with Republican voters, but described them as “pie-in-the-sky, no-way-in-hell” proposals that won’t ever muster enough support in Congress.
“When you talk about tax reform in an environment that is politically polarized as ours, it’s hard to see how you get majority support, let alone a bipartisan package that could be taken to the public by both parties,” Jillson said. “It’s a way of saying, ‘I have no sense of doing anything practical.’ ”
While Cruz and Rand Paul have already signaled their positions, Perry, who has been meeting with dozens of policy experts to prepare for a second White House run, may end up tweaking his earlier flat tax plan.
“He supports simplifying the tax code, lowering rates for working families, and closing loopholes,” spokeswoman Lucy Nashed said. “Gov. Perry is continuing to work on policy proposals and will announce specific ideas at the appropriate time.”
Republican senator David Perdue of Georgia sounds an awful lot like President Obama when he describes his plan to overhaul the tax code, which would repeal federal taxes and replace them with a consumption tax known as the “FairTax.”
“[The FairTax] really levels the playing field in that regardless of who you are, where you are, you’ll pay your fair share, and it will be the same amount,” Perdue tells NRO. “It will be equitable.”
Perdue couches his description of the FairTax in rhetorical terms — “levels the playing field,” “pay your fair share,” “equitable” — that could’ve come straight out of Obama’s State of the Union address, and that’s no accident. Whatever the political prospects of the proposal — it has failed over and over again when proposed in the past, and it is expected to meet a similar fate this time around — it could allow the GOP to seize the mantle of economic populism from the Democrats, and, in so doing, to “win” tax reform in the eyes of voters. That’s important, because tax-reform legislation is one of the few big, ostensibly bipartisan efforts the new Congress is expected to undertake, and the scramble to take credit for it ahead of the 2016 presidential election will be fierce.
The FairTax legislation put forward in the Senate by Perdue, his fellow Georgia Republican Johnny Isakson, and their colleague Jerry Moran (R., Kan.), was written with 2016 in mind. Perdue says that on Tuesday, before listening to Obama announce his desire to raise taxes once again, he and Isakson discussed the importance of their work in influencing the debate on tax reform. Perdue — the successful manager known for his ability to turn around businesses and revive brands – says he hopes to help move 2016 GOP presidential candidates in the direction of the FairTax.
The proposal itself is relatively simple: It would eliminate all federal income, payroll, gift, and estate taxes, and replace them with a 23 percent national sales tax. In addition to making the U.S. economy more competitive on a global scale and putting people back to work, the plan would strip the IRS of its ability to interfere in the lives of ordinary Americans, according to the conservative freshman from Georgia. Other longtime proponents of the idea agree, and argue that by replacing a system that taxes an individual’s earnings with one that exclusively taxes that same individual’s spending, it would allow each citizen the freedom to determine his own tax burden.
Perdue’s hopes for 2016 notwithstanding, the FairTax has not been a winning issue in past Republican presidential primaries. A number of GOP primary candidates, from Mike Huckabee in 2008 to Herman Cain in 2012, have failed to win the nomination while championing the proposal. And it will still be a loser come 2016, says Ryan Ellis, the tax-policy director at Grover Norquist’s Americans for Tax Reform. “If this thing [the FairTax] was going to catch on as the next great hot thing, it would have,” Ellis says. “It’s not a practical tax-reform plan for governing, it’s something that people wish, aspirationally, they could put out there.”
The tax-reform proposals with the best chance of succeeding in Congress — and helping Republican candidates win in 2016 — are those that move incrementally toward the FairTax’s goals without overhauling the system in one fell swoop, Ellis says. Such proposals would likely combine some of the FairTax’s reforms — such as repealing the death tax and capital-gains taxes — with measures aimed at broadening the tax base of higher-income individuals. The winning formula to achieve fundamental tax reform, according to Ellis, is a plan that is pro-growth, pro-family, and “paid for by, as much as you can, rich guys.”
But those who warn that the FairTax lacks political viability only give more motivation to Rob Woodall (R., Ga.), the lead sponsor of FairTax legislation in the House of Representatives.
“That’s what I love about this bill: Washington hates this bill,” Woodall says. “There are all sorts of forces in town that discourage this kind of giant reform, but it’s being marketed at a grassroots level.”
Woodall’s Georgia district has a history of electing FairTax proponents to Congress. Woodall’s seat was previously occupied by John Linder, a tireless champion who first introduced the FairTax bill in 1999, and reintroduced it in each new Congress until he retired in 2011. He never succeeded in changing the law, but he did quite a bit to build support in his home state.
As Americans for Fair Taxation president Steve Hayes tells it, Atlanta-based radio talk-show host Neal Boortz is largely responsible for getting the idea off the ground. Boortz wrote The FairTax Book with Linder and trumpeted his support for the reform to a southeastern audience who readily took to the idea. Hayes’s organization works to garner more support for the idea across the United States.
The “power base” of the FairTax proposal has moved out of the Southeast and into the Midwest, Woodall says. Moran’s support as a lead co-sponsor has helped the idea gain traction in Kansas. A top Moran aide who worked on the FairTax bill tells NRO that Moran began laying the groundwork to lead on this issue last year, as former Georgia senator Saxby Chambliss was preparing to retire. Chambliss was a staunch supporter of the FairTax, and the aide says the two offices worked behind the scenes to ensure that the push for tax reform would live on. Woodall thinks the geographical shift in support will help the idea flourish in California and the Northwest. Moreover, he wants to gather supporters in key 2016 Republican-primary states and grow grassroots support in order to influence the GOP’s agenda.
But the effort to sell the FairTax primarily to devoted conservatives has left others in the dark as to its possible benefits. Laurence Kotlikoff, an economics professor at Boston University, has studied the FairTax and thinks it is a more progressive proposal than people realize. Kotlikoff says lawmakers’ lack of experience in public finance has led to a misunderstanding of the FairTax. He adds that he thinks Democratic minority leader Nancy Pelosi might even come around to the idea, if she realized that it would help some of the people she purports to care about most: workers.
After years toiling under former Senate majority leader Harry Reid (D., Nev.), some conservatives have grown excited by the Senate’s movement on this issue. The Moran staffer thinks a total of 10 or 11 senators may ultimately support the proposal, including new members and others who have changed their minds. The number of original co-sponsors of the FairTax in the House has increased during each of the last three Congresses, peaking this year with 57 total supporters.
Barring an unforeseen shift in Congress’s priorities, though, the FairTax appears doomed to fail yet again. Woodall knows the effort is ill-fated, and says he won’t look someone in the eye and tell them that a GOP-led Congress will put the FairTax on the president’s desk — or that the president would ever sign it. For the time being, his goal is more modest: He hopes to harness the relatively small but growing support for the proposal, and to take its message to voters across the country, showing his fellow Republicans that populist economic policies can win back the White House in 2016.
“This is a mission to change the way people think about the tax code,” he says. “It’s kind of a crazy idea until you look at it and you say, ‘Golly, why haven’t we done that already?’ Because we know that we can’t win Washington until we win the American voter across the country.” –
Story 1: Economic Illiterate Obama On Life’s Lottery Winners — Wealth, Job and Income Creators Pay Over 70% of Federal Income Taxes — Obama Wants More — Greedy Progressive Politicians Use Government To Steal Other People’s Money — Videos
“But how is this legal plunder to be identified?
Quite simply. See if the law takes from some persons what belongs to them and gives it to other persons to whom it does not belong.
See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.”
“The state is that great fiction by which everyone tries to live at the expense of everyone else.”
~Frédéric Bastiat
Obama Dismisses Wealthy Americans As ‘Society’s Lottery Winners’
Obama: Tax Hedge Funds More
EAT THE RICH!
IDIOTS – Who pays the most taxes – Franklin vs Marx
Why the Rich Never Pay Taxes
Why The Rich Pay Lower Taxes
Summary of Latest Federal Income Tax Data
December 22, 2014
By Kyle Pomerleau,Andrew Lundeen
The Internal Revenue Service has recently released new data on individual income taxes for calendar year 2012, showing the number of taxpayers, adjusted gross income, and income tax shares by income percentiles.[1]
The data demonstrates that the U.S. individual income tax continues to be very progressive, borne mainly by the highest income earners.
In 2012, 136.1 million taxpayers reported earning $9.04 trillion in adjusted gross income and paid $1.1 trillion in income taxes.
All income groups increased their income and taxes paid over the previous year.
The top 1 percent of taxpayers earned their largest share of income since 2007 at 21.9 percent of total AGI and paid their largest share of the income tax burden since the same year at 38.1 percent of total income taxes.
In 2012, the top 50 percent of all taxpayers (68 million filers) paid 97.2 percent of all income taxes while the bottom 50 percent paid the remaining 2.8 percent.
The top 1 percent (1.3 million filers) paid a greater share of income taxes (38.1 percent) than the bottom 90 percent (122.4 million filers) combined (29.8 percent).
The top 1 percent of taxpayers paid a higher effective income tax rate than any other group at 22.8 percent, which is nearly 7 times higher than taxpayers in the bottom 50 percent (3.28 percent).
Taxpayers Reported $9.04 Trillion in Adjusted Gross Income and Paid $1.19 Trillion in Income Taxes in 2012
Taxpayers reported $9.04 trillion in adjusted gross income (AGI) on 136.1 million tax returns in 2012. This represents $725 billion in additional income over 2011 on 500,000 fewer tax returns. While the majority of the income gain went to the top 5 percent of taxpayers (those making $175,817 or more), every income group experienced an increase in income in 2012. Due to the increase in incomes, taxes paid increased by $142 billion to $1.185 trillion in 2012. Taxes paid increased for all income groups.
The share of income earned by the top 1 percent increased to 21.9 percent of total AGI, the highest level since the peak year of 2007 (22.9 percent of total AGI). The share of the income tax burden for the top 1 percent increased to 38.1 percent from 35.1 percent in 2011, also the highest level since the peak in 2007 (39.8 percent).
Table 1. Summary of Federal Income Tax Data, 2012
Number of Returns*
AGI ($ millions)
Income Taxes Paid ($ millions)
Group’s Share of Total AGI (IRS)
Group’s Share of Income Taxes
Income Split Point
Average Tax Rate
All Taxpayers
136,080,353
9,041,744
1,184,978
100.0%
100.0%
Top 1%
1,360,804
1,976,738
451,328
21.9%
38.1%
> $434,682
22.8%
1-5%
5,443,214
1,354,206
247,215
15.0%
20.9%
18.3%
Top 5%
6,804,018
3,330,944
698,543
36.8%
58.9%
> $175,817
21.0%
5-10%
6,804,017
996,955
132,902
11.0%
11.2%
13.3%
Top 10%
13,608,035
4,327,899
831,445
47.9%
70.2%
> $125,195
19.2%
10-25%
20,412,053
1,933,778
192,601
21.4%
16.3%
10.0%
Top 25%
34,020,088
6,261,677
1,024,046
69.3%
86.4%
> $73,354
16.4%
25-50%
34,020,089
1,776,123
128,017
19.6%
10.8%
7.2%
Top 50%
68,040,177
8,037,800
1,152,063
88.9%
97.2%
> $36,055
14.3%
Bottom 50%
68,040,177
1,003,944
32,915
11.1%
2.8%
< $36,055
3.3%
*Does not include dependent filers.
Top 50 Percent of All Taxpayers Paid 97.2 Percent of All Federal Income Taxes; Top 1 Percent Paid 38.1 Percent; and Bottom 90 Percent Paid 29.7 Percent of All Federal Income Taxes
Figure 1 shows the distribution of AGI and income taxes paid by income percentiles in 2012. In 2012, the bottom 50 percent of taxpayers (those with AGIs below $36,055) earned 11.1 percent of total AGI. This group of taxpayers paid approximately $33 billion in taxes, or 2.8 percent of all income taxes in 2012.
In contrast, the top 1 percent of all taxpayers (taxpayers with AGIs of $434,682 and above), earned 21.9 percent of all AGI in 2012, but paid 38.1 percent of all federal income taxes.
Combined, the top 1 percent of taxpayers (those with AGIs above $434,682) accounted for more income taxes paid than the bottom 90 percent (those with AGIs below $125,195) combined. In 2012, the top 1 percent of taxpayers paid $451 billion in income taxes, or 38.1 percent of all income taxes while the bottom 90 percent paid $353 billion in income taxes, or 29.8 percent of all income taxes paid.
The Top 1 Percent’s Effective Tax Rate Is Nearly Seven Times Higher than the Bottom 50 percent’s
The 2012 IRS data shows that taxpayers with higher incomes pay much higher effective income tax rates than lower-income taxpayers.
The bottom 50 percent of taxpayers (taxpayers with AGIs under $36,055) faced an average effective income tax rate of 3.3 percent. As taxpayer AGI increases, the IRS data shows that average income tax rates rise. For example, taxpayers with AGIs between the 10th and 5th percentile ($125,195 and $175,817) pay an average effective rate of 13.3 percent—four times the rate paid by those in the bottom 50 percent.
The top 1 percent of taxpayers (AGI of $434,682 and higher) paid the highest effective income tax rate at 22.8 percent, 6.9 times the rate faced by the bottom 50 percent of taxpayers. The top 1 percent’s average effective tax rate for 2012 of 22.8 percent was slightly lower than that of 2011 (23.5 percent).
Taxpayers at the very top of the income distribution, the top 0.1 percent, which includes taxpayers with incomes over $2.2 million, actually paid a slightly lower income tax rate than the top 1 percent (21.7 percent versus 22.8 percent). This is due to the fact that very high income taxpayers are more likely to report a greater share of their income as taxable capital gains income. This leads to a slightly lower effective tax rate because capital gains and dividends income faces a lower top income tax rate (23.8 percent) than wage and business income (39.6 percent). It is important to note, however, that capital gains taxes at the individual level are the second layer of tax after the corporate income tax (which is 35 percent).
Appendix
Table 2. Number of Federal Individual Income Tax Returns Filed 1980–2012 (In thousands)
Year
Total
Top 0.1%
Top 1%
Top 5%
Between 5% & 10%
Top 10%
Between 10% & 25%
Top 25%
Between 25% & 50%
Top 50%
Bottom 50%
1980
93,239
932
4,662
4,662
9,324
13,986
23,310
23,310
46,619
46,619
1981
94,587
946
4,729
4,729
9,459
14,188
23,647
23,647
47,293
47,293
1982
94,426
944
4,721
4,721
9,443
14,164
23,607
23,607
47,213
47,213
1983
95,331
953
4,767
4,767
9,533
14,300
23,833
23,833
47,665
47,665
1984
98,436
984
4,922
4,922
9,844
14,765
24,609
24,609
49,218
49,219
1985
100,625
1,006
5,031
5,031
10,063
15,094
25,156
25,156
50,313
50,313
1986
102,088
1,021
5,104
5,104
10,209
15,313
25,522
25,522
51,044
51,044
Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
1987
106,155
1,062
5,308
5,308
10,615
15,923
26,539
26,539
53,077
53,077
1988
108,873
1,089
5,444
5,444
10,887
16,331
27,218
27,218
54,436
54,436
1989
111,313
1,113
5,566
5,566
11,131
16,697
27,828
27,828
55,656
55,656
1990
112,812
1,128
5,641
5,641
11,281
16,922
28,203
28,203
56,406
56,406
1991
113,804
1,138
5,690
5,690
11,380
17,071
28,451
28,451
56,902
56,902
1992
112,653
1,127
5,633
5,633
11,265
16,898
28,163
28,163
56,326
56,326
1993
113,681
1,137
5,684
5,684
11,368
17,052
28,420
28,420
56,841
56,841
1994
114,990
1,150
5,749
5,749
11,499
17,248
28,747
28,747
57,495
57,495
1995
117,274
1,173
5,864
5,864
11,727
17,591
29,319
29,319
58,637
58,637
1996
119,442
1,194
5,972
5,972
11,944
17,916
29,860
29,860
59,721
59,721
1997
121,503
1,215
6,075
6,075
12,150
18,225
30,376
30,376
60,752
60,752
1998
123,776
1,238
6,189
6,189
12,378
18,566
30,944
30,944
61,888
61,888
1999
126,009
1,260
6,300
6,300
12,601
18,901
31,502
31,502
63,004
63,004
2000
128,227
1,282
6,411
6,411
12,823
19,234
32,057
32,057
64,114
64,114
IRS changed methodology, so data above and below this line not strictly comparable
2001
119,371
119
1,194
5,969
5,969
11,937
17,906
29,843
29,843
59,685
59,685
2002
119,851
120
1,199
5,993
5,993
11,985
17,978
29,963
29,963
59,925
59,925
2003
120,759
121
1,208
6,038
6,038
12,076
18,114
30,190
30,190
60,379
60,379
2004
122,510
123
1,225
6,125
6,125
12,251
18,376
30,627
30,627
61,255
61,255
2005
124,673
125
1,247
6,234
6,234
12,467
18,701
31,168
31,168
62,337
62,337
2006
128,441
128
1,284
6,422
6,422
12,844
19,266
32,110
32,110
64,221
64,221
2007
132,655
133
1,327
6,633
6,633
13,265
19,898
33,164
33,164
66,327
66,327
2008
132,892
133
1,329
6,645
6,645
13,289
19,934
33,223
33,223
66,446
66,446
2009
132,620
133
1,326
6,631
6,631
13,262
19,893
33,155
33,155
66,310
66,310
2010
135,033
135
1,350
6,752
6,752
13,503
20,255
33,758
33,758
67,517
67,517
2011
136,586
137
1,366
6,829
6,829
13,659
20,488
34,146
34,146
68,293
68,293
2012
136,080
136
1,361
6,804
6,804
13,608
20,412
34,020
34,020
68,040
68,040
Source: Internal Revenue Service.
Table 3. Adjusted Gross Income of Taxpayers in Various Income Brackets, 1980–2012 ($Billions)
Year
Total
Top 0.1%
Top 1%
Top 5%
Between 5% & 10%
Top 10%
Between 10% & 25%
Top 25%
Between 25% & 50%
Top 50%
Bottom 50%
1980
$1,627
$138
$342
$181
$523
$400
$922
$417
$1,339
$288
1981
$1,791
$149
$372
$201
$573
$442
$1,015
$458
$1,473
$318
1982
$1,876
$167
$398
$207
$605
$460
$1,065
$478
$1,544
$332
1983
$1,970
$183
$428
$217
$646
$481
$1,127
$498
$1,625
$344
1984
$2,173
$210
$482
$240
$723
$528
$1,251
$543
$1,794
$379
1985
$2,344
$235
$531
$260
$791
$567
$1,359
$580
$1,939
$405
1986
$2,524
$285
$608
$278
$887
$604
$1,490
$613
$2,104
$421
Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
1987
$2,814
$347
$722
$316
$1,038
$671
$1,709
$664
$2,374
$440
1988
$3,124
$474
$891
$342
$1,233
$718
$1,951
$707
$2,658
$466
1989
$3,299
$468
$918
$368
$1,287
$768
$2,054
$751
$2,805
$494
1990
$3,451
$483
$953
$385
$1,338
$806
$2,144
$788
$2,933
$519
1991
$3,516
$457
$943
$400
$1,343
$832
$2,175
$809
$2,984
$532
1992
$3,681
$524
$1,031
$413
$1,444
$856
$2,299
$832
$3,131
$549
1993
$3,776
$521
$1,048
$426
$1,474
$883
$2,358
$854
$3,212
$563
1994
$3,961
$547
$1,103
$449
$1,552
$929
$2,481
$890
$3,371
$590
1995
$4,245
$620
$1,223
$482
$1,705
$985
$2,690
$938
$3,628
$617
1996
$4,591
$737
$1,394
$515
$1,909
$1,043
$2,953
$992
$3,944
$646
1997
$5,023
$873
$1,597
$554
$2,151
$1,116
$3,268
$1,060
$4,328
$695
1998
$5,469
$1,010
$1,797
$597
$2,394
$1,196
$3,590
$1,132
$4,721
$748
1999
$5,909
$1,153
$2,012
$641
$2,653
$1,274
$3,927
$1,199
$5,126
$783
2000
$6,424
$1,337
$2,267
$688
$2,955
$1,358
$4,314
$1,276
$5,590
$834
IRS changed methodology, so data above and below this line not strictly comparable
2001
$6,116
$492
$1,065
$1,934
$666
$2,600
$1,334
$3,933
$1,302
$5,235
$881
2002
$5,982
$421
$960
$1,812
$660
$2,472
$1,339
$3,812
$1,303
$5,115
$867
2003
$6,157
$466
$1,030
$1,908
$679
$2,587
$1,375
$3,962
$1,325
$5,287
$870
2004
$6,735
$615
$1,279
$2,243
$725
$2,968
$1,455
$4,423
$1,403
$5,826
$908
2005
$7,366
$784
$1,561
$2,623
$778
$3,401
$1,540
$4,940
$1,473
$6,413
$953
2006
$7,970
$895
$1,761
$2,918
$841
$3,760
$1,652
$5,412
$1,568
$6,980
$990
2007
$8,622
$1,030
$1,971
$3,223
$905
$4,128
$1,770
$5,898
$1,673
$7,571
$1,051
2008
$8,206
$826
$1,657
$2,868
$905
$3,773
$1,782
$5,555
$1,673
$7,228
$978
2009
$7,579
$602
$1,305
$2,439
$878
$3,317
$1,740
$5,058
$1,620
$6,678
$900
2010
$8,040
$743
$1,517
$2,716
$915
$3,631
$1,800
$5,431
$1,665
$7,096
$944
2011
$8,317
$737
$1,556
$2,819
$956
$3,775
$1,866
$5,641
$1,716
$7,357
$961
2012
$9,042
$1,017
$1,977
$3,331
$997
$4,328
$1,934
$6,262
$1,776
$8,038
$1,004
Source: Internal Revenue Service.
Table 4. Total Income Tax after Credits, 1980–2012 ($Billions)
Year
Total
Top 0.1%
Top 1%
Top 5%
Between 5% & 10%
Top 10%
Between 10% & 25%
Top 25%
Between 25% & 50%
Top 50%
Bottom 50%
1980
$249
$47
$92
$31
$123
$59
$182
$50
$232
$18
1981
$282
$50
$99
$36
$135
$69
$204
$57
$261
$21
1982
$276
$53
$100
$34
$134
$66
$200
$56
$256
$20
1983
$272
$55
$101
$34
$135
$64
$199
$54
$252
$19
1984
$297
$63
$113
$37
$150
$68
$219
$57
$276
$22
1985
$322
$70
$125
$41
$166
$73
$238
$60
$299
$23
1986
$367
$94
$156
$44
$201
$78
$279
$64
$343
$24
Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
1987
$369
$92
$160
$46
$205
$79
$284
$63
$347
$22
1988
$413
$114
$188
$48
$236
$85
$321
$68
$389
$24
1989
$433
$109
$190
$51
$241
$93
$334
$73
$408
$25
1990
$447
$112
$195
$52
$248
$97
$344
$77
$421
$26
1991
$448
$111
$194
$56
$250
$96
$347
$77
$424
$25
1992
$476
$131
$218
$58
$276
$97
$374
$78
$452
$24
1993
$503
$146
$238
$60
$298
$101
$399
$80
$479
$24
1994
$535
$154
$254
$64
$318
$108
$425
$84
$509
$25
1995
$588
$178
$288
$70
$357
$115
$473
$88
$561
$27
1996
$658
$213
$335
$76
$411
$124
$535
$95
$630
$28
1997
$727
$241
$377
$82
$460
$134
$594
$102
$696
$31
1998
$788
$274
$425
$88
$513
$139
$652
$103
$755
$33
1999
$877
$317
$486
$97
$583
$150
$733
$109
$842
$35
2000
$981
$367
$554
$106
$660
$164
$824
$118
$942
$38
IRS changed methodology, so data above and below this line not strictly comparable
2001
$885
$139
$294
$462
$101
$564
$158
$722
$120
$842
$43
2002
$794
$120
$263
$420
$93
$513
$143
$657
$104
$761
$33
2003
$746
$115
$251
$399
$85
$484
$133
$617
$98
$715
$30
2004
$829
$142
$301
$467
$91
$558
$137
$695
$102
$797
$32
2005
$932
$176
$361
$549
$98
$647
$145
$793
$106
$898
$33
2006
$1,020
$196
$402
$607
$108
$715
$157
$872
$113
$986
$35
2007
$1,112
$221
$443
$666
$117
$783
$170
$953
$122
$1,075
$37
2008
$1,029
$187
$386
$597
$115
$712
$168
$880
$117
$997
$32
2009
$863
$146
$314
$502
$101
$604
$146
$749
$93
$842
$21
2010
$949
$170
$355
$561
$110
$670
$156
$827
$100
$927
$22
2011
$1,043
$168
$366
$589
$123
$712
$181
$893
$120
$1,012
$30
2012
$1,185
$220
$451
$699
$133
$831
$193
$1,024
$128
$1,152
$33
Source: Internal Revenue Service.
Table 5. Adjusted Gross Income Shares, 1980–2012 (percent of total AGI earned by each group)
Year
Total
Top 0.1%
Top 1%
Top 5%
Between 5% & 10%
Top 10%
Between 10% & 25%
Top 25%
Between 25% & 50%
Top 50%
Bottom 50%
1980
100%
8.46%
21.01%
11.12%
32.13%
24.57%
56.70%
25.62%
82.32%
17.68%
1981
100%
8.30%
20.78%
11.20%
31.98%
24.69%
56.67%
25.59%
82.25%
17.75%
1982
100%
8.91%
21.23%
11.03%
32.26%
24.53%
56.79%
25.50%
82.29%
17.71%
1983
100%
9.29%
21.74%
11.04%
32.78%
24.44%
57.22%
25.30%
82.52%
17.48%
1984
100%
9.66%
22.19%
11.06%
33.25%
24.31%
57.56%
25.00%
82.56%
17.44%
1985
100%
10.03%
22.67%
11.10%
33.77%
24.21%
57.97%
24.77%
82.74%
17.26%
1986
100%
11.30%
24.11%
11.02%
35.12%
23.92%
59.04%
24.30%
83.34%
16.66%
Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
1987
100%
12.32%
25.67%
11.23%
36.90%
23.85%
60.75%
23.62%
84.37%
15.63%
1988
100%
15.16%
28.51%
10.94%
39.45%
22.99%
62.44%
22.63%
85.07%
14.93%
1989
100%
14.19%
27.84%
11.16%
39.00%
23.28%
62.28%
22.76%
85.04%
14.96%
1990
100%
14.00%
27.62%
11.15%
38.77%
23.36%
62.13%
22.84%
84.97%
15.03%
1991
100%
12.99%
26.83%
11.37%
38.20%
23.65%
61.85%
23.01%
84.87%
15.13%
1992
100%
14.23%
28.01%
11.21%
39.23%
23.25%
62.47%
22.61%
85.08%
14.92%
1993
100%
13.79%
27.76%
11.29%
39.05%
23.40%
62.45%
22.63%
85.08%
14.92%
1994
100%
13.80%
27.85%
11.34%
39.19%
23.45%
62.64%
22.48%
85.11%
14.89%
1995
100%
14.60%
28.81%
11.35%
40.16%
23.21%
63.37%
22.09%
85.46%
14.54%
1996
100%
16.04%
30.36%
11.23%
41.59%
22.73%
64.32%
21.60%
85.92%
14.08%
1997
100%
17.38%
31.79%
11.03%
42.83%
22.22%
65.05%
21.11%
86.16%
13.84%
1998
100%
18.47%
32.85%
10.92%
43.77%
21.87%
65.63%
20.69%
86.33%
13.67%
1999
100%
19.51%
34.04%
10.85%
44.89%
21.57%
66.46%
20.29%
86.75%
13.25%
2000
100%
20.81%
35.30%
10.71%
46.01%
21.15%
67.15%
19.86%
87.01%
12.99%
IRS changed methodology, so data above and below this line not strictly comparable
2001
100%
8.05%
17.41%
31.61%
10.89%
42.50%
21.80%
64.31%
21.29%
85.60%
14.40%
2002
100%
7.04%
16.05%
30.29%
11.04%
41.33%
22.39%
63.71%
21.79%
85.50%
14.50%
2003
100%
7.56%
16.73%
30.99%
11.03%
42.01%
22.33%
64.34%
21.52%
85.87%
14.13%
2004
100%
9.14%
18.99%
33.31%
10.77%
44.07%
21.60%
65.68%
20.83%
86.51%
13.49%
2005
100%
10.64%
21.19%
35.61%
10.56%
46.17%
20.90%
67.07%
19.99%
87.06%
12.94%
2006
100%
11.23%
22.10%
36.62%
10.56%
47.17%
20.73%
67.91%
19.68%
87.58%
12.42%
2007
100%
11.95%
22.86%
37.39%
10.49%
47.88%
20.53%
68.41%
19.40%
87.81%
12.19%
2008
100%
10.06%
20.19%
34.95%
11.03%
45.98%
21.71%
67.69%
20.39%
88.08%
11.92%
2009
100%
7.94%
17.21%
32.18%
11.59%
43.77%
22.96%
66.74%
21.38%
88.12%
11.88%
2010
100%
9.24%
18.87%
33.78%
11.38%
45.17%
22.38%
67.55%
20.71%
88.26%
11.74%
2011
100%
8.86%
18.70%
33.89%
11.50%
45.39%
22.43%
67.82%
20.63%
88.45%
11.55%
2012
100%
11.25%
21.86%
36.84%
11.03%
47.87%
21.39%
69.25%
19.64%
88.90%
11.10%
Source: Internal Revenue Service.
Table 6. Total Income Tax Shares, 1980–2012 (percent of federal income tax paid by each group)
Year
Total
Top 0.1%
Top 1%
Top 5%
Between 5% & 10%
Top 10%
Between 10% & 25%
Top 25%
Between 25% & 50%
Top 50%
Bottom 50%
1980
100%
19.05%
36.84%
12.44%
49.28%
23.74%
73.02%
19.93%
92.95%
7.05%
1981
100%
17.58%
35.06%
12.90%
47.96%
24.33%
72.29%
20.26%
92.55%
7.45%
1982
100%
19.03%
36.13%
12.45%
48.59%
23.91%
72.50%
20.15%
92.65%
7.35%
1983
100%
20.32%
37.26%
12.44%
49.71%
23.39%
73.10%
19.73%
92.83%
7.17%
1984
100%
21.12%
37.98%
12.58%
50.56%
22.92%
73.49%
19.16%
92.65%
7.35%
1985
100%
21.81%
38.78%
12.67%
51.46%
22.60%
74.06%
18.77%
92.83%
7.17%
1986
100%
25.75%
42.57%
12.12%
54.69%
21.33%
76.02%
17.52%
93.54%
6.46%
Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
1987
100%
24.81%
43.26%
12.35%
55.61%
21.31%
76.92%
17.02%
93.93%
6.07%
1988
100%
27.58%
45.62%
11.66%
57.28%
20.57%
77.84%
16.44%
94.28%
5.72%
1989
100%
25.24%
43.94%
11.85%
55.78%
21.44%
77.22%
16.94%
94.17%
5.83%
1990
100%
25.13%
43.64%
11.73%
55.36%
21.66%
77.02%
17.16%
94.19%
5.81%
1991
100%
24.82%
43.38%
12.45%
55.82%
21.46%
77.29%
17.23%
94.52%
5.48%
1992
100%
27.54%
45.88%
12.12%
58.01%
20.47%
78.48%
16.46%
94.94%
5.06%
1993
100%
29.01%
47.36%
11.88%
59.24%
20.03%
79.27%
15.92%
95.19%
4.81%
1994
100%
28.86%
47.52%
11.93%
59.45%
20.10%
79.55%
15.68%
95.23%
4.77%
1995
100%
30.26%
48.91%
11.84%
60.75%
19.62%
80.36%
15.03%
95.39%
4.61%
1996
100%
32.31%
50.97%
11.54%
62.51%
18.80%
81.32%
14.36%
95.68%
4.32%
1997
100%
33.17%
51.87%
11.33%
63.20%
18.47%
81.67%
14.05%
95.72%
4.28%
1998
100%
34.75%
53.84%
11.20%
65.04%
17.65%
82.69%
13.10%
95.79%
4.21%
1999
100%
36.18%
55.45%
11.00%
66.45%
17.09%
83.54%
12.46%
96.00%
4.00%
2000
100%
37.42%
56.47%
10.86%
67.33%
16.68%
84.01%
12.08%
96.09%
3.91%
IRS changed methodology, so data above and below this line not strictly comparable
2001
100%
15.68%
33.22%
52.24%
11.44%
63.68%
17.88%
81.56%
13.54%
95.10%
4.90%
2002
100%
15.09%
33.09%
52.86%
11.77%
64.63%
18.04%
82.67%
13.12%
95.79%
4.21%
2003
100%
15.37%
33.69%
53.54%
11.35%
64.89%
17.87%
82.76%
13.17%
95.93%
4.07%
2004
100%
17.12%
36.28%
56.35%
10.96%
67.30%
16.52%
83.82%
12.31%
96.13%
3.87%
2005
100%
18.91%
38.78%
58.93%
10.52%
69.46%
15.61%
85.07%
11.35%
96.41%
3.59%
2006
100%
19.24%
39.36%
59.49%
10.59%
70.08%
15.41%
85.49%
11.10%
96.59%
3.41%
2007
100%
19.84%
39.81%
59.90%
10.51%
70.41%
15.30%
85.71%
10.93%
96.64%
3.36%
2008
100%
18.20%
37.51%
58.06%
11.14%
69.20%
16.37%
85.57%
11.33%
96.90%
3.10%
2009
100%
16.91%
36.34%
58.17%
11.72%
69.89%
16.85%
86.74%
10.80%
97.54%
2.46%
2010
100%
17.88%
37.38%
59.07%
11.55%
70.62%
16.49%
87.11%
10.53%
97.64%
2.36%
2011
100%
16.14%
35.06%
56.49%
11.77%
68.26%
17.36%
85.62%
11.50%
97.11%
2.89%
2012
100%
18.60%
38.09%
58.95%
11.22%
70.17%
16.25%
86.42%
10.80%
97.22%
2.78%
Source: Internal Revenue Service.
Table 7. Dollar Cut-Off, 1980–2012 (minimum AGI for tax return to fall into various percentiles; thresholds not adjusted for inflation)
Year
Top 0.1%
Top 1%
Top 5%
Top 10%
Top 25%
Top 50%
1980
$80,580
$43,792
$35,070
$23,606
$12,936
1981
$85,428
$47,845
$38,283
$25,655
$14,000
1982
$89,388
$49,284
$39,676
$27,027
$14,539
1983
$93,512
$51,553
$41,222
$27,827
$15,044
1984
$100,889
$55,423
$43,956
$29,360
$15,998
1985
$108,134
$58,883
$46,322
$30,928
$16,688
1986
$118,818
$62,377
$48,656
$32,242
$17,302
Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
1987
$139,289
$68,414
$52,921
$33,983
$17,768
1988
$157,136
$72,735
$55,437
$35,398
$18,367
1989
$163,869
$76,933
$58,263
$36,839
$18,993
1990
$167,421
$79,064
$60,287
$38,080
$19,767
1991
$170,139
$81,720
$61,944
$38,929
$20,097
1992
$181,904
$85,103
$64,457
$40,378
$20,803
1993
$185,715
$87,386
$66,077
$41,210
$21,179
1994
$195,726
$91,226
$68,753
$42,742
$21,802
1995
$209,406
$96,221
$72,094
$44,207
$22,344
1996
$227,546
$101,141
$74,986
$45,757
$23,174
1997
$250,736
$108,048
$79,212
$48,173
$24,393
1998
$269,496
$114,729
$83,220
$50,607
$25,491
1999
$293,415
$120,846
$87,682
$52,965
$26,415
2000
$313,469
$128,336
$92,144
$55,225
$27,682
IRS changed methodology, so data above and below this line not strictly comparable
2001
$1,393,718
$306,635
$132,082
$96,151
$59,026
$31,418
2002
$1,245,352
$296,194
$130,750
$95,699
$59,066
$31,299
2003
$1,317,088
$305,939
$133,741
$97,470
$59,896
$31,447
2004
$1,617,918
$339,993
$140,758
$101,838
$62,794
$32,622
2005
$1,938,175
$379,261
$149,216
$106,864
$64,821
$33,484
2006
$2,124,625
$402,603
$157,390
$112,016
$67,291
$34,417
2007
$2,251,017
$426,439
$164,883
$116,396
$69,559
$35,541
2008
$1,867,652
$392,513
$163,512
$116,813
$69,813
$35,340
2009
$1,469,393
$351,968
$157,342
$114,181
$68,216
$34,156
2010
$1,634,386
$369,691
$161,579
$116,623
$69,126
$34,338
2011
$1,717,675
$388,905
$167,728
$120,136
$70,492
$34,823
2012
$2,161,175
$434,682
$175,817
$125,195
$73,354
$36,055
Source: Internal Revenue Service.
Table 8. Average Tax Rate, 1980–2012 (percent of AGI paid in income taxes)
Year
Total
Top 0.1%
Top 1%
Top 5%
Between 5% & 10%
Top 10%
Between 10% & 25%
Top 25%
Between 25% & 50%
Top 50%
Bottom 50%
1980
15.31%
34.47%
26.85%
17.13%
23.49%
14.80%
19.72%
11.91%
17.29%
6.10%
1981
15.76%
33.37%
26.59%
18.16%
23.64%
15.53%
20.11%
12.48%
17.73%
6.62%
1982
14.72%
31.43%
25.05%
16.61%
22.17%
14.35%
18.79%
11.63%
16.57%
6.10%
1983
13.79%
30.18%
23.64%
15.54%
20.91%
13.20%
17.62%
10.76%
15.52%
5.66%
1984
13.68%
29.92%
23.42%
15.57%
20.81%
12.90%
17.47%
10.48%
15.35%
5.77%
1985
13.73%
29.86%
23.50%
15.69%
20.93%
12.83%
17.55%
10.41%
15.41%
5.70%
1986
14.54%
33.13%
25.68%
15.99%
22.64%
12.97%
18.72%
10.48%
16.32%
5.63%
Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
1987
13.12%
26.41%
22.10%
14.43%
19.77%
11.71%
16.61%
9.45%
14.60%
5.09%
1988
13.21%
24.04%
21.14%
14.07%
19.18%
11.82%
16.47%
9.60%
14.64%
5.06%
1989
13.12%
23.34%
20.71%
13.93%
18.77%
12.08%
16.27%
9.77%
14.53%
5.11%
1990
12.95%
23.25%
20.46%
13.63%
18.50%
12.01%
16.06%
9.73%
14.36%
5.01%
1991
12.75%
24.37%
20.62%
13.96%
18.63%
11.57%
15.93%
9.55%
14.20%
4.62%
1992
12.94%
25.05%
21.19%
13.99%
19.13%
11.39%
16.25%
9.42%
14.44%
4.39%
1993
13.32%
28.01%
22.71%
14.01%
20.20%
11.40%
16.90%
9.37%
14.90%
4.29%
1994
13.50%
28.23%
23.04%
14.20%
20.48%
11.57%
17.15%
9.42%
15.11%
4.32%
1995
13.86%
28.73%
23.53%
14.46%
20.97%
11.71%
17.58%
9.43%
15.47%
4.39%
1996
14.34%
28.87%
24.07%
14.74%
21.55%
11.86%
18.12%
9.53%
15.96%
4.40%
1997
14.48%
27.64%
23.62%
14.87%
21.36%
12.04%
18.18%
9.63%
16.09%
4.48%
1998
14.42%
27.12%
23.63%
14.79%
21.42%
11.63%
18.16%
9.12%
16.00%
4.44%
1999
14.85%
27.53%
24.18%
15.06%
21.98%
11.76%
18.66%
9.12%
16.43%
4.48%
2000
15.26%
27.45%
24.42%
15.48%
22.34%
12.04%
19.09%
9.28%
16.86%
4.60%
IRS changed methodology, so data above and below this line not strictly comparable
2001
14.47%
28.17%
27.60%
23.91%
15.20%
21.68%
11.87%
18.35%
9.20%
16.08%
4.92%
2002
13.28%
28.48%
27.37%
23.17%
14.15%
20.76%
10.70%
17.23%
8.00%
14.87%
3.86%
2003
12.11%
24.60%
24.38%
20.92%
12.46%
18.70%
9.69%
15.57%
7.41%
13.53%
3.49%
2004
12.31%
23.06%
23.52%
20.83%
12.53%
18.80%
9.41%
15.71%
7.27%
13.68%
3.53%
2005
12.65%
22.48%
23.15%
20.93%
12.61%
19.03%
9.45%
16.04%
7.18%
14.01%
3.51%
2006
12.80%
21.94%
22.80%
20.80%
12.84%
19.02%
9.52%
16.12%
7.22%
14.12%
3.51%
2007
12.90%
21.42%
22.46%
20.66%
12.92%
18.96%
9.61%
16.16%
7.27%
14.19%
3.56%
2008
12.54%
22.67%
23.29%
20.83%
12.66%
18.87%
9.45%
15.85%
6.97%
13.79%
3.26%
2009
11.39%
24.28%
24.05%
20.59%
11.53%
18.19%
8.36%
14.81%
5.76%
12.61%
2.35%
2010
11.81%
22.84%
23.39%
20.64%
11.98%
18.46%
8.70%
15.22%
6.01%
13.06%
2.37%
2011
12.54%
22.82%
23.50%
20.89%
12.83%
18.85%
9.70%
15.82%
6.98%
13.76%
3.13%
2012
13.11%
21.67%
22.83%
20.97%
13.33%
19.21%
9.96%
16.35%
7.21%
14.33%
3.28%
Source: Internal Revenue Service.
(1) For data prior to 2001, all tax returns that have a positive AGI are included, even those that do not have a positive income tax liability. For data from 2001 forward, returns with negative AGI are also included, but dependent returns are excluded.
(2) Income tax after credits (the tax measure above) does not account for the refundable portion of EITC. If it were included (as is often the case with other organizations), the tax share of the top income groups would be higher. The refundable portion is legally classified as a spending program by the Office of Management and Budget and therefore is not included by the IRS in these figures.
(3) The only tax analyzed here is the federal individual income tax, which is responsible for about 25 percent of the nation’s taxes paid (at all levels of government). Federal income taxes are much more progressive than payroll taxes, which are responsible for about 20 percent of all taxes paid (at all levels of government), and are more progressive than most state and local taxes (depending upon the economic assumption made about property taxes and corporate income taxes).
(4) AGI is a fairly narrow income concept and does not include income items like government transfers (except for the portion of Social Security benefits that is taxed), the value of employer-provided health insurance, underreported or unreported income (most notably that of sole proprietors), income derived from municipal bond interest, net imputed rental income, worker’s compensation benefits, and others.
(5) Tax return is the unit of analysis, which is broader than households, especially for those at the bottom end, many of which are dependent returns (prior to 2001). Some dependent returns are included in the figures here prior to 2001, and under other units of analysis (like the Treasury Department’s Family Economic Unit) would likely be paired with their parents’ returns.
(6) These figures represent the legal incidence of the income tax, although most distributional tables (such as those from CBO, Tax Policy Center, Citizens for Tax Justice, the Treasury Department, and JCT) assume that the entire economic incidence of personal income taxes falls on the income earner.
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WHAT IT MEANS IF FED NO LONGER SAYS IT’S ‘PATIENT’ ON RATES
BY MARTIN CRUTSINGER
For the Federal Reserve, patience may no longer be a virtue.
Surrounding the Fed’s policy meeting this week is the widespread expectation that it will no longer use the word “patient” to describe its stance on raising interest rates from record lows.
The big question is: What will that mean?
Many economists say the dropping of “patience” would signal that the Fed plans to start raising rates in June to reflect a steadily strengthening U.S. job market. Others foresee no rate hike before September. And a few predict no increase before year’s end at the earliest.
Complicating the decision is a surging U.S. dollar, which is keeping inflation far below the Fed’s target rate and posing a threat to U.S. corporate profits and possibly to the economy. A rate increase could send the dollar even higher.
In a statement it will issue when its meeting ends Wednesday and in a news conference Chair Janet Yellen will hold afterward, the Fed isn’t likely to telegraph its timetable. Yellen has said that any decision to raise rates will reflect the latest economic data and that the Fed must remain flexible.
Still, nervous investors have been selling stocks out of concern that a rate increase – which could slow borrowing and spending and weigh on the economy – is coming soon.
“I think the odds are better than 50-50 that the Fed … will drop the word `patient’ at the March meeting, and that would put an initial rate hike in play, perhaps as early as the June meeting,” said David Jones, author of several books about the Fed.
Historically, the Fed raises rates as the economy strengthens in order to control growth and prevent inflation from overheating. Over the past 12 months, U.S. employers have added a solid 200,000-plus jobs every month. And unemployment has reached a seven-year low of 5.5 percent, the top of the range the Fed has said is consistent with a healthy economy.
The trouble is that the Fed isn’t meeting its other major policy goal – achieving stable inflation, which it defines as annual price increases of around 2 percent. According to the Fed’s preferred inflation gauge, prices rose just 0.2 percent over the past 12 months. In part, excessively low U.S. inflation reflects sinking energy prices and the dollar’s rising value, which lowers the prices of goods imported to the United States.
It isn’t just inflation that remains below optimal levels. Though the job market has been strong, the overall economy has yet to regain full health. The economy slowed to a tepid 2.2 percent annual rate in the October-December quarter, and economists generally think the current quarter might be even weaker. Manufacturers are struggling with falling exports, partly because of the strong dollar, and consumers – the drivers of the economy – have seemed reluctant to spend their windfall savings from cheaper energy.
What’s more, pay for many workers remains stagnant, and there are 6.6 million part-timers who can’t find full-time jobs – nearly 50 percent more than in 2007, before the recession began.
For those reasons, some analysts think it would be premature to raise rates soon.
“The last thing the Fed wants to do right now is spook the markets and the economy into an even slower growth trajectory,” said Brian Bethune, an economics professor at Tufts University.
After it met in December, the Fed said for the first time that it would be “patient’ about raising rates. Yellen said that meant there would be no increase at the Fed’s next two meetings. And in testimony to Congress last month, she cautioned that even when “patient” is dropped, it won’t necessarily signal an imminent rate hike – only that the Fed will think the economy has improved enough for it to consider a rate increase on a “meeting-by-meeting basis.”
Some economists say the Fed may tweak its policy statement this week to signal that a higher inflation outlook would be needed before any rate hike. And they expect the Fed to go further in coming months to ready investors for the inevitable.
“The process is going to be glacial,” said Diane Swonk, chief economist at Mesirow Financial in Chicago. “They want to prepare the markets for change, but they don’t want to scare them.”
Though Swonk thinks the Fed will drop “patient” from its statement this week, she doesn’t expect a rate hike before September. Even then, she foresees only small increases in its benchmark rate.
Sung Won Sohn, an economics professor at the Martin Smith School of Business at California State University, suggested that the Fed’s strategy in beginning to raise rates won’t be to slow the economy. Rather, he thinks the goal will be to manage the expectations of investors, some of whom weren’t even in business in 2004, the last time the Fed began raising rates.
“The Fed is just trying to send a message that the world is about to enter a new age after a long period of low interest rates to a period of rising rates,” Sohn said.
The End of “Patient” and Questions for Yellen, by Tim Duy: FOMC meeting with week, with a subsequent press conference with Fed Chair Janet Yellen. Remember to clear your calendar for this Wednesday. It is widely expected that the Fed will drop the word “patient” from its statement. Too many FOMC participants want the opportunity to debate a rate hike in June, and thus “patient” needs to go. The Fed will not want this to imply that a rate hike is guaranteed at the June meeting, so look for language emphasizing the data-dependent nature of future policy. This will also be stressed in the press conference. Of interest too will be the Fed’s assessment of economic conditions since the last FOMC meeting. On net, the data has been lackluster – expect for the employment data, of course. The latter, however, is of the highest importance to the Fed. I anticipate that they will view the rest of the data as largely noise against the steadily improving pace of underlying activity as indicated by employment data. That said, I would expect some mention of recent softness in the opening paragraph of the statement. I don’t think the Fed will alter its general conviction that low readings on inflation are largely temporary. They may even cite improvement in market-based measures of inflation compensation to suggest they were right not to panic at the last FOMC meeting. I am also watching for how they describe the international environment. I would not expect explicit mention of the dollar, but maybe we will see a coded reference. Note that in her recent testimony, Yellen said:
But core PCE inflation has also slowed since last summer, in part reflecting declines in the prices of many imported items and perhaps also some pass-through of lower energy costs into core consumer prices.
Stronger dollar means lower prices of imported items. The press conference will be the highlight of the meeting. Presumably, Yellen will continue to build the case for a rate hike. Since the foundation of that case rests on the improvement in labor markets and the subsequent impact on inflationary pressures, it is reasonable to ask:
On a scale of zero to ten, with ten being most confident, how confident is the Committee that inflation will rise toward target on the basis on low – and expected lower – unemployment?
Considering that low wage growth suggests it is too early to abandon Yellen’s previous conviction that unemployment is not the best measure of labor market tightness, we should consider:
Is faster wage growth a precondition to raising interest rates?
I expect the answer would be “no, wages are a lagging indicator.” The Federal Reserve seems to believe that policy will still remain very accommodative even after the first rate hike. We should ask for a metric to quantify the level of accommodation:
What is the current equilibrium level of interest rates? Where do you see the equilibrium level of interest rates in one year?
A related question regards the interpretation of the yield curve:
Do you consider low interest long-term interest rates to be indicative of loose monetary conditions, or a signal that the Federal Reserve needs to temper its expectations of the likely path of interest rates as indicated in the “dot plot”?
The dollar is appreciating at the fastest rate in many years. Is the appreciating dollar a drag on the US economy, or is any negative impact offset by the positive demand impact of looser monetary policy abroad? How much will the dollar need to appreciate before it impacts the direction of monetary policy?
Given that the Fed seems determined to raise interest rates, we should probably be considering some form of the following as a standard question:
Consider the next six months. Which is greater – the risk of moving too quickly to normalize policy, or the risk of delay? Please explain, with specific reference to both risks.
Finally, a couple of communications questions. First, the Fed is signaling that they do not intend to raise rates on a preset, clearly communicated path like the last hike cycle. Hence, we should not expect “patient” to be replaced with “measured.” But it seems like the FOMC is too contentious to expect them to shift from no hike one meeting to 25bp the next, then back to none – or maybe 50bp. So, let’s ask Yellen to explain the plan:
There appears to be an effort on the part of the FOMC to convince financial markets that rate hikes, when they begin, will not be on a pre-set path. Given the need for consensus building on the FOMC, how can you credibly commit to renegotiate the direction of monetary policy at each FOMC meeting? How do you communicate the likely direction of monetary policy between meetings?
Finally, as we move closer to policy normalization, the Fed should be rethinking the “dot plot,” which was initially conceived to show the Fed was committed to a sustained period of low rates. Given that the dot-plot appears to be fairly hawkish relative to market expectations, it may not be an appropriate signal in a period of rising interest rates. Time for a change? But is the Fed considering a change, and when will we see it? This leads me to:
Cleveland Federal Reserve President Loretta Mester has suggested revising the Summary of Economic Projections to explicitly link the forecasts of individual participants with their “dots” in the interest rate projections. Do you agree that this would be helpful in describing participants’ reaction functions? When will this or any other revisions to the Summary of Economic Projections be considered?
Bottom Line: By dropping “patient” the Fed will be taking another step toward the first rate hike of this cycle. But how long do we need to wait until that first hike? That depends on the data, and we will be listening for signals as to how, or how not, the Fed is being impacted by recent data aside from the positive readings on the labor market. http://economistsview.typepad.com/economistsview/fed_watch/
Patient’ is History: The February employment report almost certainly means the Fed will no longer describe its policy intentions as “patient” at the conclusion of the March FOMC meeting. And it also keep a June rate hike in play. But for June to move from “in play” to “it’s going to happen,” I still feel the Fed needs a more on the inflation side. The key is the height of that inflation bar. The headline NFP gain was a better-than-expected 295k with 18k upward adjustment for January. The 12-month moving average continues to trend higher:
Unemployment fell to 5.5%, which is the top of the central range for the Fed’s estimate of NAIRU. Still, wage growth remains elusive:
Is wage growth sufficient to stay the Fed’s hand? I am not so sure. Irecently wrote:
My take is this: To get a reasonably sized consensus to support a rate hike, two conditions need to be met. One is sufficient progress toward full-employment with the expectation of further progress. I think that condition has already been met. The second condition is confidence that inflation will indeed trend toward target. That condition has not been met. To meet that condition requires at least one of the following sub-conditions: Rising core-inflation, rising market-based measures of inflation compensation, or accelerating wage growth. If any were to occur before June, I suspect it would be the accelerating wage growth.
I am less confident that we will see accelerating wage growth by June, although I should keep in mind we still have three more employment reports before that meeting. Note, however, low wage growth does not preclude a rate hike. The Fed hiked rates in 1994 in a weak wage growth environment:
And again in 2004 liftoff occurred on the (correct) forecast of accelerating wage growth:
So wage growth might not be there in June to support a rate hike. And, as I noted earlier this weaker, I have my doubts on whether core-inflation would support a rate hike either. That leaves us with market-based measures of inflation compensation. And at this point, that just might be the key:
If bond markets continue to reverse the oil-driven inflation compensation decline, the Fed may see a way clear to hiking rates in June. But the pace and timing of subsequent rate hikes would still be data dependent. I would anticipate a fairly slow, halting path of rate hikes in the absence of faster wage growth. Bottom Line: “Patient” is out. Tough to justify with unemployment at the top of the Fed’s central estimates of NAIRU. Pressure to begin hiking rates will intensify as unemployment heads lower. The inflation bar will fall, and Fed officials will increasingly look for reasons to hike rates rather than reasons to delay. They may not want to admit it, but I suspect one of those reasons will be fear of financial instability in the absence of tighter policy. June is in play.
Story 1: Breaking: Obama’s Department of Justice (DOJ) Seeks Emergency Court Stay Order To Restart Immoral, Illegal and Unconstitutional Program To Give 4-5 Illegal Aliens Work Permits — Time To Impeach The Tyrant — Videos
U.S. Justice Department seeks to block Texas immigration ruling – LoneWolf Sager
Fed Judge Blocks Pres Obama Immigration Plan – Andrew Napolitano – Sen Ted Cruz – The Kelly File
Immigration Showdown – Texas Judge Stalls Obama Executive Action – Special Report All Star Panel
Fed Judge Blocks Pres’ Deferred Deportations For Illegal Immigrants – Sheriff Joe Arpaio – Cavuto
Justice Department to seek stay in Texas immigration ruling
By Evan Perez
The Justice Department plans to ask a federal judge to allow the Obama administration to continue its plans to implement President Barack Obama’s executive order on immigration while it appeals the judge’s ruling blocking the order.
White House spokesman Josh Earnest said Friday the department will ask for a stay of the ruling by U.S. District Judge Andrew Hanen, who ruled this week to temporarily stop the Homeland Security Department from proceeding with the President’s order.
The stay request will be filed by Monday, Earnest said. Justice Department officials plan to seek an expedited hearing of their appeal, hoping that it can be resolved in the next few months. A stay would allow the administration to continue to prepare to implement the order. DHS said it suspended all such preparation after Hanen’s ruling.
The stay request is widely considered a long shot, at least when it first goes to Hanen. If denied a stay, the Justice Department could then ask for the 5th U.S. Circuit Court of Appeals based in New Orleans, which leans conservative, to intervene and put Hanen’s ruling on hold.
Obama issued the order late last year to shield as many as 5 million undocumented immigrants from deportation.
Hanen ruled in a lawsuit brought by 26 states that the administration had failed to comply with the Administrative Procedure Act, which calls for the White House to afford a longer notification and comment period before taking action.
Hanen’s ruling for now accomplishes what Republicans in Congress have sought to do to block funding for DHS to implement the executive order. A standoff in the Senate with Democrats has threatened to cause a partial shutdown of DHS at month’s end because of the funding issue.
Depending on how long it takes to resolve the appeals court fight, the fate of executive order may not be decided until President Obama’s term in office is drawing to a close.
Obama to seek emergency order restarting immigration programs
By Mike Lillis
Officials at the Department of Justice (DOJ) plan to seek what is known as an emergency stay that would essentially undo a Texas-based federal judge’s injunction from earlier this week. If the stay is granted, the government could restart a pair of executive programs that will shield millions of undocumented immigrants from deportation.
White House press secretary Josh Earnest said DOJ will file for the stay by “Monday at the latest.”
The emergency stay had been sought by immigrant rights advocates, who want to get the programs up and running as soon as possible while the appeals process plays out.
“We — as immigrants and as Americans — have waited for nearly a quarter century for these much-needed improvements to our broken immigration system,” Marielena Hincapié, head of the National Immigration Law Center (NILC), said Friday in a statement. “We should not allow a flawed legal decision to delay these changes any longer.”
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Making good on earlier vows, DOJ will also file a separate appeal seeking to restart the executive programs.
“We will seek that appeal because we believe when you evaluate the legal merits of the arguments, that there is a solid legal foundation for the president to take the steps he announced last year to help reform our immigration system,” Earnest said.
At issue are two new initiatives launched unilaterally by Obama on Nov. 20.
The first expands eligibility for the president’s 2012 Deferred Action for Childhood Arrivals (DACA) program, which halts deportations and allows work permits for certain undocumented immigrants brought to the country as children. The second, known as DAPA, would extend similar benefits to the parents of U.S. citizens and permanent legal residents.
Combined, the programs could affect as many as 5 million immigrants living in the country illegally.
Many states, however, were quick to object. And Texas — joined by 25 other states — filed a lawsuit contending the programs marked an abuse of executive authority that would cripple their budgets with exorbitant new costs.
In a decision announced near midnight on Monday, U.S. District Judge Andrew S. Hanen agreed, arguing that the administration failed to comply with a federal law governing the adoption of new federal rules.
Hanen has not yet ruled on the merits of the states’ complaints, but said they have a significant enough case that both the DAPA and expanded DACA programs should be put on hold until the legal challenges are resolved.
The effects of the decision were immediate, as administration officials quickly announced that they would not begin accepting applications for either program until the court decisions are final.
Before the ruling, the Homeland Security Department was poised to begin accepting applications for the expanded-DACA program this week, and the for the DAPA program in May. Both have been suspended indefinitely.
Hanen’s injunction does not affect the original DACA program, which remains up and running.
BREAKING: Obama to Defy Federal Court – Seeks Emergency Order to Re-Start Amnesty Executive Order
By Reagan Wilson
As we reported earlier this week, a federal judge in Texas issued an injunction that would prevent President Obama’s “Executive Amnesty” program, which would essentially grant immigration amnesty to as many as five million illegal aliens currently living in the United States.
Now, we are getting reports that the President is seeking an emergency order (on Friday afternoon of course) that would allow the programs to continue effective immediately.
The Obama administration will seek an emergency court order to move forward with President Obama’s executive action on immigration.
Officials at the Department of Justice (DOJ) plan to seek what is known as an emergency stay that would essentially undo a Texas-based federal judge’s injunction from earlier this week. If the stay is granted, the government could restart a pair of executive programs that will shield millions of undocumented immigrants from deportation.
White House press secretary Josh Earnest said DOJ will file for the stay by “Monday at the latest.”
The emergency stay had been sought by immigrant rights advocates, who want to get the programs up and running as soon as possible while the appeals process plays out.
“We — as immigrants and as Americans — have waited for nearly a quarter century for these much-needed improvements to our broken immigration system,” Marielena Hincapié, head of the National Immigration Law Center (NILC), said Friday in a statement. “We should not allow a flawed legal decision to delay these changes any longer.”
Warning, when you check out, be on the lookout for pickpockets.
The latest green movement cause du jour is the banning or taxing of disposable plastic and paper bags. These laws or city ordinances are designed to nudge or coerce customers to bring their own reusable tote bag when they shop for groceries and other merchandise.
A number of United States cities including Washington, D.C., Los Angeles, San Francisco, Portland, Seattle, Boulder, Austin and now unfortunately Dallas have either banned or taxed disposable plastic and/or paper bags or so-called “single-use carryout bags.” According to the Earth Policy Institute, over 20 million people are currently covered by 132 city and county plastic bag bans or fee ordinances in the U.S.
For decades most American and European businesses have provided their customers bags, at no additional charge, to carryout and transport their purchase. In the 1980s businesses began to give their customers a choice of paper or plastic.
On March 26, 2014, the Dallas City Council passed an 8 to 6 City Ordinance No. 29307. It requires business establishments that provide their customers “single-use carryout bags” to register with the city annually each location providing these bags and charge their customers an “environment fee” of 5 cents per bag to promote a “culture of clean” and “to protect the natural environment, the economy and the health of its residences.”
Give me a break. It is a new tax to raise millions in new tax revenue for the City of Dallas. Who are the elected Dallas-8 council member watermelons (green on the outside, red on the inside) that ordained this tax on the people and businesses of Dallas? The names of the Dallas-8 are Tennell Atkins, Carolyn R. Davis, Scott Griggs, Adam Medrano, Dwaine R. Caraway, Sandy Greyson, Philip T. Kingston, and Mayor Mike Rawlings.
The Dallas-8 are led by council member Caraway, who wanted to completely ban plastic and paper single-use carryout bags. Instead they decided to shake down Dallas businesses and their customers with a new highly regressive tax. Caraway refuses to call it a tax and claims the new ordinance which went in effect on January 1 is “a ban with a fee, such as other cities are doing across the United States.”
The eight-page ordinance includes the definition and standards that reusable carryout bags must satisfy: “A reusable carryout bag must meet the minimum reuse testing standard of 100 reuses carrying 16 pound.” Reusable bags may be made of cloth, washable fabric, durable materials, recyclable plastic with a minimum thickness of 4.0 mil or recyclable paper that contains a minimum of 40 percent recycled content.
All of the above reusable bags must have handles with the exception of small bags with a height of less than 14 inches and a width of less than 8 inches.
Business establishments can either provide or sell reusable carryout bags to its customer or to any person.
The city ordinance exempts some bags from the single-use carryout definition including:
Plastic bags used for produce, meats, nuts, grains and other bulk items inside grocery or other retail stores,
Single-use plastic bags used by restaurants to take away prepared food only where necessary to prevent moisture damage from soups, sauces, gravies or dressings,
Recyclable paper bags used by restaurants to take away prepared food,
Recyclable paper bags from pharmacies or veterinarians for prescription drugs,
Laundry, dry cleaning or garment bags,
Biodegradable door-hanger and newspaper bags, and
Bags for trash, yard debris and pet waste.
The Dallas 5 cent paper and plastic bag tax or environment fee applies only to single-use carryout bags defined as bags not meeting the requirements of a reusable bag.
Businesses that violate the ordinance can be fined up to a maximum of $500 per day.
Lee Califf, executive director of the American Progressive Bag Alliance, a bag manufacturing group, said “This legislation applies to a product that is less than 0.5 percent of municipal waste in the United States and typically less than 1 percent of litter in studies conducted across the country;” “Placing a fee on a product with such a minuscule contribution to the waste and litter streams will not help the environment: but it will cost Dallas consumers millions more per year on their grocery bills, while hurting small business and threatening the livelihoods of the 4,500 Texans who work in the plastic bag and recycling industry.”
Stop the shakedown of Dallas businesses and their customers. Repeal the inconvenient tax on paper and plastic disposable bags by voting out of office the Dallas-8 city council members who voted for this tax, Dwaine Caraway. Support your Texas state representatives in passing a new law that would prohibit cities such as Dallas and Austin from banning or taxing paper and plastic carryout bags.
On January 1, 2015, the Carryout Bag Ordinance will start in Dallas.
Are you ready?
RETAILERS
CUSTOMERS
Retailers offering single-use bags to customers must:
Register ELECTRONICALLYHERE; works best on Chrome or Firefox (if you need to register using a paper form via USPS, clickhere)
Assess a five-cent environmental fee for each single-use bag; the environmental fee is not subject to sales tax
Print total number of bags and fee on each receipt
Keep records available for inspectors
Post signs in controlled parking lots reminding customers to bring their bags
Post signs in the store, within six feet of each register, per the ordinance SAMPLE HERE
The full link to the Code Compliance carryout bag website, with forms and additional information, is here
Retailers offering only reusable bags, as defined by the ordinance, have different requirements.
All retailers should look at their operations and determine if their bags are single-use, reusable, or exempted from the single-use definition. Consult the full ordinance for all details pertaining to the ordinance and what is expected for each type of bag including thickness, language on the bag, durability, signage, and other considerations.
Customers, you are encouraged to bring your bagand keep your change.Single-use carryout bags have a five-cent per bag environmental fee. A single-use bag can be paper or plastic.Reusable bags do not have the environmental fee, though stores may charge you to offset costs. Reusable bags stores offer can be made from cloth or other washable woven materials, recyclable paper, or recyclable plastic so long as they meet certain requirements. However, any bag you bring with you to use is considered reusable since you are reusing it.There are some bags that are exempted from the single-use bag definition:
Laundry, dry cleaning or garment bags;
Biodegradable door-hanger and newspaper bags;
Bags for trash, yard debris or pet waste;
Plastic bags used for produce, meats, nuts, grains and other bulk items inside grocery or other retail stores;
Recyclable paper bags from pharmacies or veterinarians for prescription drugs; and,
Recyclable paper bags used by restaurants to take away prepared food.
Single-use plastic bags used by restaurants to take away prepared food only where necessary to prevent moisture damage from soups, sauces, gravies or dressings.
Remember to recycle the bags you can recycle appropriately.
Many wonder why the City passed this ordinance. The Dallas City Council passed the ordinance to help improve the environment and keep our city clean. The City is currently spending nearly $4 million dollars to remove litter from our community to keep it beautiful and thriving.
The Carryout Bag ordinance is intended to encourage shoppers to use reusable bags to carry goods from stores, restaurants, and other locations to reduce the number of bags that can end up loose in the environment as litter.
To help you understand, we have created this list of frequently asked question.
The carryout bag ordinance outlines the City’s “desire to protect the natural environment, the economy and the health of its residents,” and the “negative impact on the environment caused by improper disposal of single-use carryout bags.” The Dallas City Council approved the ordinance on March 26, 2014.
The ordinance takes effect on January 1, 2015.
Retailers and customers should be ready and know all the details. This website and the City’s Code Compliance Services website have details to help retailers prepare. The links to the Code website on DallasCityHall.com are below.
Some are still unclear how the ordinance may impact them.
Businesses will have to register each location with the City in order to offer single-use bags. No registration is necessary if a business is only offering reusable bags or bags that are exempted from the single-use bag definition in the ordinance. Businesses must be registered before distributing single-use carryout bags starting January 1, 2015. Businesses are required to collect a five-cent environmental fee for every single-use bag used by a customer.
Customers will be charged a five-cent environmental fee for each single-use bag, paper or plastic, they receive from retailers. Again, reusable bags and bags exempted from the definition of single-use bags do not carry the environmental fee. You can avoid the environmental fee by bringing your own bags with you. The five cent fee assessed for the single-use bag is not subject to sales tax.
Will I still be able to get plastic carryout bags?
Yes, provided your retailer chooses to offer them and collect the environmental fee.
Can I bring my own reusable bags to carry out items I purchased?
Yes. Customers are encouraged to bring their own reusable bags to carry out their items instead of paying the five-cent environmental fee per single-use plastic or paper bag.
If I reuse a single-use carryout bag, will I have to pay the fee again?
Whatever bag you bring — tote bag, golf bag, diaper bag, satchel, purse, or produce bag — if you bring it with you to reuse, you do not have to pay the environmental fee.
Where does the money go?
A portion of the fees will be used to pay for enforcement of the ordinance and for public education efforts. Stores keep 10 percent of the five-cent fee to help offset administrative costs.
Does this ordinance apply to all businesses?
All retailers that offer single-use carryout bags in Dallas are subject to this ordinance.
What about non-profits or charities?
If the non-profit or charity offers food, groceries, clothing, or other household items free of charge to clients, they may still use single-use carryout bags for the specific function of distributing those items. However, the ordinance will apply to any bags used at the point of sale for any goods sold through the non-profit or charity.
Additionally, any non-profit or charity that collects goods for donation from the public or which leaves informational material for the public must be sure any door-hanger bags left for collecting those goods or providing that informational material are biodegradable.
Does the ordinance include all bags?
The ordinance applies to single-use paper or plastic carryout bags used by businesses as defined in the ordinance language.
What if businesses don’t follow the ordinance?
Businesses that violate the ordinance could face fines of up to $500 per day.
How will the ordinance be enforced?
City Code Compliance inspectors will respond to complaints and provide proactive enforcement.
How can the City know if businesses aren’t complying with the law? Will they be doing more inspections?
There will be proactive enforcement and periodic audits. Additionally, the City will respond to complaints from residents.
Will the ban on single-use bags at city facilities apply to retailers at American Airlines Center, city museums, the Omni Dallas Hotel, and Fair Park?
Yes. The City Attorney’s Office will work with Code Enforcement to determine which facilities are affected and how.
Whom should I contact if I have additional questions?
Call 3-1-1, the Office of Environmental Quality, Code Compliance or email us atgreendallas@dallascityhall.com.
NEW⇒ Where can I find the forms? Forms and more information are available on the Code Compliance website dedicated to the Carryout Bag Ordinance here.
But beginning January 1 retailers will have to charge customers who want them “an environmental fee” of five cents per bag, and they will get to keep 10 percent of that money. The ordinance also says retailers who want to keep handing out plastic and paper bags will have to register with the city and keep track of bags sold.
The city says the money raised from the bag fees will help go toward funding enforcement and education efforts that assistant city manager Jill Jordan told the council could cost around $250,000 and necessitate the hiring of up to 12 additional staff members.
Wednesday’s vote came a year after council member Dwaine Caraway asked the city attorney to draft an ordinance that completely banned the bag. The council member says the ordinance passed today was a compromise born out of “a fair process” that included environmentalists, bag manufactures and retailers. Several of his colleagues wanted to send the proposed ordinances back to committee for further debate. But Caraway wanted a vote now.
“You get to a point where it’s time to make decisions, decisions that will have a great impact on the city of Dallas and our environmental status … and the beautification of our city,” he said. The process has “been pretty tough. it’s been back and forth. We listened and listened fairly.”
But six of his colleagues disagreed: Sheffie Kadane said the fee-based ban will result in a lawsuit from retailers and manufacturers. Rick Callahan called it a “government intrusion.” Jennifer Staubach Gates said it wouldn’t do any good, because in five years the reusable bags supported by the environmentalists will end up in landfills too. And Jerry Allen said the three options being considered by council, including a full-out ban, represented “a lack of clear conviction,” which he found disappointing.
And then there was Lee Kleinman, who on Friday indicated he supported the fee-based ordinance. Five days later he’d changed his mind and said he no longer cared what happened in his colleagues’ districts.
“I would personally probably stay more focused on my own district, which does not have the same trash problems as others,” he said, to the amazement of some of his southern sector colleagues. “Why should I care if someone is shopping like at Southwest Center Mall and they want a plastic bag? If people in that community are satisfied with the conditions around that mall, why should I utilize my position in North Dallas to improve those conditions? I should just focus my energies on North Dallas redevelopment projects and not help another improve quality of life in other areas of the city.”
That entire speech is above, thanks to my colleague Scott Goldstein.
Vonciel Jones Hill, who has said in the past she opposes any ban or bag tax, was no present for today’s vote. Monica Alonzo also voted against it, but said nothing.
In a statement released following the vote, the American Progressive Bag Alliance said it’s “a move that will fail to accomplish any environmental goals while jeopardizing 4,500 Texas jobs and hurting consumers.”
Its executive director, Lee Califf, said in a statement that “the vote to approve a 5-cent plastic and paper grocery bag fee in Dallas is another example of environmental myths and junk science driving poor policy in the plastic bag debate.”
But it’s not clear if the state will allow Dallas’ new bag “ban” — or bag tax, more appropriately.
Attorney General Greg Abbott is going to weigh in on the legality of bag bans, following a request by state Rep. Dan Flynn of Canton on behalf of the Texas Retailers Association. Jerry Allen asked Dallas City Attorney Warren Ernst if the state allows bag bans.
“We are ready to defend that position,” Ernst said. “If it’s the will of the council to pass the ordinance, we’ll defend that as a legal action by the city.”
Allen was not convinced, insisting “there’s a tremendous amount of uncertainty.” Ernst appeared to agree.
Those council members opposed to the ordinance said Dallas needs to do a better job of enforcing its litter laws. Jordan told the council that the city spends $4 million annually on trash pick-up, “and we still have litter.”
In the end, said council member Scott Griggs, “this is just one step. We tackle the bags then we can move on to Styrofoam and other issues that cause trash. This is a large elephant we’ll have to take on as a city and a council.”
Kroger’s Gary Huddleston, also of the Texas Retailers Association, shared a hug with Dwaine Caraway following today’s council vote.
Following the vote, Gary Huddleston, head of the Texas Retailers Association, said he wasn’t sure whether his organization would sue the city. He noted that they are awaiting the attorney general’s ruling on the legality of a fee.
“It will affect the retailers in the city of Dallas and it will affect our customers,” Huddleston said. “They’ll have to pay for their paper and plastic bags or they bring in their reusable bags.”
“We personally believe the solution to litter in the city of Dallas is a strong recycling program and also punishing the people that litter and not punishing the retailer,” Huddleston said.
The fee means that businesses will have to institute additional programming and training in order to enforce ordinance and track the fees. Customers will “have to pay a nickel a bag, whereas maybe they use that nickel to buy more product in my store.”
But Huddleston’s concerns didn’t stop him from hugging Caraway outside chambers. The two men smiled and embraced in front of television cameras.
The council member said he was pleased with the result of more than a year of work. He refused to call the fee a “tax.”
“It’s a ban with a fee, such as other cities are doing across the United States,” Caraway said.
He said it’s important for residents to know the ban does not cover a variety of bags, such as those in the produce section of grocery stores or at restaurants
“Folks need to understand that these are single-use carryout bags,” Caraway said. “These are simply those thin, flimsy bags that take flight and that are undesirable and bad for the environment.”
Staff writer Scott Goldstein contributed to this report.
Dallas Will Charge Fees for Plastic Bag Use
By Josh Ault and Ken Kalthoff
The City of Dallas has implemented new rules for plastic grocery bags, imposing a 5 cent fee on single-use plastic or paper grocery bags. The rules go into effect in January. (Published Wednesday, Mar 26, 2014)
Thursday, Mar 27, 2014 • Updated at 5:56 AM CST
The Dallas City Council has passed a proposal ordering retailers to charge a fee for one-time use plastic bags while partially banning them from city-owned facilities.
In a 8-6 vote, the council passed the ordinance requiring retailers to charge customers a $0.05 fee if they request single-use plastic or paper bags.
Dallas Plastic Bag Ban Vote Wednesday[DFW] Dallas Plastic Bag Ban Vote Wednesday
The Dallas City Council is expected to vote on plastic bag ban issue on Wednesday. (Published Monday, Mar 24, 2014)
Dallas City Councilman Dwaine Caraway accepted the compromise of a bag fee after spending a year fighting for a ban on single-use bags.
“This is an opportunity for us to clean our city, to clean our environment and to move forward, and to be like the other cities across the country and around the world,” Caraway said.
Zac Trahan with Texas Campaign for The Environment said Austin and eight smaller Texas cities have taken stronger action by banning single-use bags, but he still supported the Dallas regulations.
“It’s still a step in the right direction because it will still result in a huge reduction in the number of bags that will be distributed,” he said.
The ordinance also requires those retailers to register with the city and track the number of single-use bags sold.
The retailer would keep 10 percent of the environmental fee with the remainder going to the city to fund enforcement and education efforts.
Lee Califf, the executive director of the bag manufacturers’ group American Progressive Bag Alliance, released the following statement after the ordinance was passed.
“The vote to approve a 5-cent plastic and paper grocery bag fee in Dallas is another example of environmental myths and junk science driving poor policy in the plastic bag debate. This legislation applies to a product that is less than 0.5% of municipal waste in the United States and typically less than 1% of litter in studies conducted across the country. The City Council rushed through a flawed bill to appease its misguided sponsor, despite the fact that 70% of Dallas residents opposed this legislation in a recent poll.
“Placing a fee on a product with such a minuscule contribution to the waste and litter streams will not help the environment; but it will cost Dallas consumers millions more per year on their grocery bills, while hurting small businesses and threatening the livelihoods of the 4,500 Texans who work in the plastic bag manufacturing and recycling industry. Councilman Caraway may view this vote as a victory for his political career, but there are no winners with today’s outcome.”
Several Council Members opposed any new restrictions.
Rick Callahan said grocery bags are only a small part of the Dallas litter problem and better recycling education is needed.
“Banning something or adding a fee, putting more regulation on business is not the answer,” Callahan said.
The ordinance does ban single-use plastic or paper bags at city-owned facilities and events.
It still allows distributing multi-use, or stronger, paper or plastic bags for free so stores can get around charging the fee by offering better bags.
The ordinance goes into effect Jan. 1, 2015.
After more than a year of considering a ban on disposable shopping bags, the Dallas City Council voted instead last week to impose a 5-cent “environmental fee” on each bag.
In previous columns, Steve Blow had opposed a ban, while Jacquielynn Floyd had supported it. Today, they debate the council’s new approach.
Steve: Leave it to the Dallas City Council to take a bad idea and find a way to make it worse. I thought a ban on shopping bags was a bad idea, but slapping a new tax on Dallas shoppers is even more pointless.
This isn’t just a new tax, it’s a new mini-bureaucracy at City Hall. There’s talk of hiring 12 new people to run the program. And I’m sure someone is already writing a job description for a Deputy Junior Assistant City Manager for Retail Packaging Assessment and Oversight.
Good grief. I had little faith that a ban would accomplish much. I’m even more dubious about a bag tax — except as a tool of government growth.
Jacquielynn: Dude, it’s a nickel. Nobody’s getting taxed into bankruptcy here.
I hope, in fact, that this modest 5 cents is enough to assign at least minimal value to these awful bags. The reason they end up on fences, in fields and as tree garbage is that they’re so free and plentiful.
Almost everybody collects them every day — yet they have virtually no value. It’s human nature to take something for free, then toss it or lose track if you don’t need it.
Like it or not, this is the direction cities are headed. Los Angeles has had a ban in effect for more than a year. New York and Chicago are talking about either banning or limiting plastic bags.
I don’t think this is a case of forcing people to bow to the authoritarian rule of government overlords — we’re asking for a very minor change in their habits. It makes environmental sense, like other conservation and recycling measures that have become routine.
Steve: They don’t end up as litter because they’re free and plentiful. They end up as litter because a few dopes among us litter. A nickel is not going to transform those dopes into responsible citizens. Anyone careless with trash is not going to suddenly become careful with 5-cent trash.
On a fundamental level, this issue chaps my inner libertarian. I don’t think “government regulation” is automatically a dirty word. But I firmly believe the need must be obvious and compelling before we add more regulation.
Jack, you may be fixated on plastic bags as you drive around, but I promise they make up a small percentage of the litter that’s out there. I see more cups than anything. Will we be required to carry around reusable cups next? Or pay a cups tax?
Jacquielynn: Steve, I agree that clueless dolts dump all kinds of garbage, from burger wrappers to moldy old sofas.
Plastic bags are a particular problem, though, for the very qualities that make them such a successful consumer product: They’re cheap, durable, lightweight and water-resistant. They’re mobile, easily blown into trees, creeks, fences and even for miles out into rural areas. A farmer who lives outside Dallas told me this week he hates plastic bags because when they land on his property, baby calves can choke on them.
Most of us don’t have calf problems, but the bags’ weightlessness makes them vulnerable to any breeze. Even if they’re responsibly discarded, they’ll blow out of open trash cans, trucks, you name it.
They’re not just a blight — they’re a highly contagious blight.
Steve: Oh, c’mon. How am I supposed to rebut choking baby calves?
I will point out that Washington, D.C., has a real paradox on its hands. It implemented a 5-cent fee on disposable bags in 2010. And in a survey last year, residents reported using 60 percent fewer bags.
But get this: Tax revenue from the bags has been going up, not down as was expected. The city had originally projected to collect $1.05 million in fiscal 2013. Instead, bag fees topped $2 million.
The dollars don’t lie. More bags are being used after four years. Sure, some people will switch to reusable bags. But this sure isn’t going to make plastic bags disappear. Is a regressive new tax really worth it?
Jacquielynn: I’d be happy to sidestep the entire “tax” issue by banning bags outright. If you want groceries, make sure you have a way to get them home.
But if cities aren’t ready to take that step, and they actually see a windfall out of bag taxes, maybe that should be dedicated to cleanup efforts.
Ideally, though, stores wouldn’t have the things at all. They can make boxes available (a la Costco). They can sell heavier plastic multiple-use bags for 25 or 50 cents. Shoppers buying just one or two items could learn to use the flexible appendages at the ends of their arms to carry stuff away.
The mail I’ve received from angry readers makes it plain that a lot of people loathe this plan, whether you call it a ban or a tax.
But I just don’t think we’re asking for a dramatic change in the way we live our lives. If we don’t stop assuming that everything we send to the landfill magically disappears, the landfill is going to start coming to us. Do you really want to live in a city that has garbage in the trees?
Steve: No, it’s not a drastic change. Just a needless one. And I’m looking out my office window at six or seven trees with nary a bag in sight. Except for a few spots, the litter problem has been overblown.
I just wish we had tried a major public-awareness campaign before imposing more taxes and more regulation. 1. Recycle bags where you get them. 2. Try reusable bags. 3. Don’t litter, you dope.
Jacquielynn: On those points, we’re in wholehearted agreement.
Don’t bag it. Butt out. That’s the message Wednesday to Attorney General Greg Abbott from supporters of efforts to ban the use of plastic bags in Texas. The Attorney General has been asked to determine whether or not city ordinances like the one in Austin go too far and violate state law. While Abbott was told to back off, the state lawmaker who asked the Attorney General to get involved explained why he made the request.
It’s no longer legal in Austin for a retailer to provide customers with plastic bags. Wednesday, those who want to keep the bag ban on the books gathered at the state capitol to send a message.
“We call on the Attorney General today to keep his nose out of local government’s business of protecting the health of their residents and local communities, and leave well enough alone,” said Robin Schneider who is the Executive Director of Texas Campaign for the Environment.
The group is filing a legal brief to convince the Attorney General that cities in Texas have the Home-Rule authority to out-law plastic bags. Austin is among nearly a dozen towns that have passed bag ban ordinances. Wednesday is the deadline to weigh in before the Attorney General issues an opinion. The question is whether or not a municipal ban violates the state health and safety code.
The state lawmaker who requested the legal opinion, state Rep. Dan Flynn (R) Vann said his concern is not necessarily about the use of plastic bags but about the perceived abuse of power.
“The last this particular law was looked at was about 20 years ago,” said Rep. Flynn.
The Republican from Van heads up a House Committee created to make government more transparent. According to Flynn, he made the request for a legal opinion after getting several calls asking for clarification.
“It’s not about Austin, it’s all about state authority and the power grab by some cities over state law, that’s just about the easiest way to say it.”
When a ban on plastic bags was approved in Austin, the lack of a similar, free, option spurred much of the opposition. Shoppers are required to buy their own reusable cloth of thick plastic bags. Some stores in Austin do provide paper bags but typically charge for them,” said Flynn.
“They’re not charging in Fort Stockton,” said Darren Hodges, Mayor Pro Tem of that west Texas town.
The Fort Stockton city council worked with local retailers before being one of the first to pass a ban. According to Hodges, free biodegradable bags are offered to Fort Stockton shoppers. That kind of option, he agreed, could help reduce back lash in communities considering similar action.
“It’s best to get with your big bag people and work with them on something that they can live with, at least get everyone involved in the process and see if you can move forward,” said Hodges.
An A.G. ruling against bag bans will not strike down any ordinance. It could provide a legal foot-hold for any group that takes a city to court.
The Dallas city council, earlier Wednesday, considered its own bag ban. Instead of out-lawing them, in a close vote, the Dallas council passed an environmental fee ordinance, which is essentially a new tax.
Starting next year shoppers in Dallas will be charged 5-cents for every plastic and paper bag that they use.
In reaction to the Dallas council vote, the American Progressive Bag Alliance issued the following statement:
“The vote to approve a 5-cent plastic and paper grocery bag fee in Dallas is another example of environmental myths and junk science driving poor policy in the plastic bag debate. This legislation applies to a product that is less than 0.5% of municipal waste in the United States and typically less than 1% of litter in studies conducted across the country. The City Council rushed through a flawed bill to appease its misguided sponsor, despite the fact that 70% of Dallas residents opposed this legislation in a recent poll.”
Los Angeles rang in the 2014 New Year with a ban on the distribution of plastic bags at the checkout counter of big retailers, making it the largest of the 132 cities and counties around the United States with anti-plastic bag legislation. And a movement that gained momentum in California is going national. More than 20 million Americans live in communities with plastic bag bans or fees. Currently 100 billion plastic bags pass through the hands of U.S. consumers every year—almost one bag per person each day. Laid end-to-end, they could circle the equator 1,330 times. But this number will soon fall as more communities, including large cities like New York and Chicago, look for ways to reduce the plastic litter that blights landscapes and clogs up sewers and streams.
While now ubiquitous, the plastic bag has a relatively short history. Invented in Sweden in 1962, the single-use plastic shopping bag was first popularized by Mobil Oil in the 1970s in an attempt to increase its market for polyethylene, a fossil-fuel-derived compound. Many American customers disliked the plastic bag when it was introduced in 1976, disgusted by the checkout clerks having to lick their fingers when pulling the bags from the rack and infuriated when a bag full of groceries would break or spill over. But retailers continued to push for plastic because it was cheaper and took up less space than paper, and now a generation of people can hardly conceive of shopping without being offered a plastic bag at the checkout counter.
The popularity of plastic grocery bags stems from their light weight and their perceived low cost, but it is these very qualities that make them unpleasant, difficult, and expensive to manage. Over one third of all plastic production is for packaging, designed for short-term use. Plastic bags are made from natural gas or petroleum that formed over millions of years, yet they are often used for mere minutes before being discarded to make their way to a dump or incinerator—if they don’t blow away and end up as litter first. The amount of energy required to make 12 plastic bags could drive a car for a mile.
In landfills and waterways, plastic is persistent, lasting for hundreds of years, breaking into smaller pieces and leaching out chemical components as it ages, but never fully disappearing. Animals that confuse plastic bags with food can end up entangled, injured, or dead. Recent studies have shown that plastic from discarded bags actually soaks up additional pollutants like pesticides and industrial waste that are in the ocean and delivers them in large doses to sea life. The harmful substances then can move up the food chain to the food people eat. Plastics and the various additives that they contain have been tied to a number of human health concerns, including disruption of the endocrine and reproductive systems, infertility, and a possible link to some cancers.
California—with its long coastline and abundant beaches where plastic trash is all too common—has been the epicenter of the U.S. movement against plastic bags. San Francisco was the first American city to regulate their use, starting with a ban on non-compostable plastic bags from large supermarkets and chain pharmacies in 2007. As part of its overall strategy to reach “zero waste” by 2020 (the city now diverts 80 percent of its trash to recyclers or composters instead of landfills), it extended the plastic bag ban to other stores and restaurants in 2012 and 2013. Recipients of recycled paper or compostable bags are charged at least 10ȼ, but—as is common in cities with plastic bag bans—bags for produce or other bulk items are still allowed at no cost. San Francisco also is one of a number of Californian cities banning the use of polystyrene (commonly referred to as Styrofoam) food containers, and it has gone a step further against disposable plastic packaging by banning sales of water in plastic bottles in city property.
All told, plastic bag bans cover one-third of California’s population. Plastic bag purchases by retailers have reportedly fallen from 107 million pounds in 2008 to 62 million pounds in 2012, and bag producers and plastics manufacturers have taken note. Most of the ordinances have faced lawsuits from plastics industry groups like the American Chemistry Council (ACC). Even though the laws have largely held up in the courts, the threat of legal action has deterred additional communities from taking action and delayed the process for others.
Ironically, were it not for the intervention of the plastics industry in the first place, California would likely have far fewer outright plastic bag bans. Instead, more communities might have opted for charging a fee per bag, but this option was prohibited as part of industry-supported state-wide legislation in 2006 requiring Californian grocery stores to institute plastic bag recycling programs. Since a first attempt in 2010, California has come close to introducing a statewide ban on plastic bags, but well-funded industry lobbyists have gotten in the way. A new bill will likely go up for a vote in 2014 with the support of the California Grocers Association as well as state senators who had opposed an earlier iteration.
Seattle’s story is similar. In 2008 the city council passed legislation requiring groceries, convenience stores, and pharmacies to charge 20ȼ for each one-time-use bag handed out at the cash register. A $1.4 million campaign headed by the ACC stopped the measure via a ballot initiative before it went into effect, and voters rejected the ordinance in August 2009. But the city did not give up. In 2012 it banned plastic bags and added a 5ȼ fee for paper bags. Attempts to gather signatures to repeal this have been unsuccessful. Eleven other Washington jurisdictions have also banned plastic bags, including the state capital, Olympia. (See database of U.S. plastic bag initiatives and a timeline history.)
A number of state governments have entertained proposals for anti-plastic bag legislation, but not one has successfully applied a statewide charge or banned the bags. Hawaii has a virtual state prohibition, as its four populated counties have gotten rid of plastic bags at grocery checkouts, with the last one beginning enforcement in July 2015. Florida, another state renowned for its beaches, legally preempts cities from enacting anti-bag legislation. The latest attempt to remove this barrier was scrapped in April 2014, although state lawmakers say they will revisit the proposal later in the year.
Opposition to plastic bags has emerged in Texas, despite the state accounting for 44 percent of the U.S. plastics market and serving as the home to several important bag manufacturers, including Superbag, one of America’s largest. Eight cities and towns in the state have active plastic bag bans, and others, like San Antonio, have considered jumping on the bandwagon. Austin banned plastic bags in 2013, hoping to reduce the more than $2,300 it was spending each day to deal with plastic bag trash and litter. The smaller cities of Fort Stockton and Kermit banned plastic bags in 2011 and 2013, respectively, after ranchers complained that cattle had died from ingesting them. Plastic bags have also been known to contaminate cotton fields, getting caught up in balers and harming the quality of the final product. Plastic pollution in the Trinity River Basin, which provides water to over half of all Texans, was a compelling reason for Dallas to pass a 5ȼ fee on plastic bags that will go into effect in 2015.
Washington, D.C., was the first U.S. city to require food and alcohol retailers to charge customers 5ȼ for each plastic or paper bag. Part of the revenue from this goes to the stores to help them with the costs of implementation, and part is designated for cleanup of the Anacostia River. Most D.C. shoppers now routinely bring their own reusable bags on outings; one survey found that 80 percent of consumers were using fewer bags and that over 90 percent of businesses viewed the law positively or neutrally.
Montgomery County in Maryland followed Washington’s example and passed a 5ȼ charge for bags in 2011. A recent study that compared shoppers in this county with those in neighboring Prince George’s County, where anti-bag legislation has not gone through, found that reusable bags were seven times more popular in Montgomery County stores. When bags became a product rather than a freebie, shoppers thought about whether the product was worth the extra nickel and quickly got into the habit of bringing their own bags.
One strategy of the plastics industry—concerned about declining demand for its products—is an attempt to change public perception of plastic bags by promoting recycling. Recycling, however, is also not a good long-term solution. The vast majority of plastic bags—97 percent or more in some locales—never make it that far. Even when users have good intentions, bags blow out of outdoor collection bins at grocery stores or off of recycling trucks. The bags that reach recycling facilities are the bane of the programs: when mixed in with other recyclables they jam and damage sorting machines, which are very costly to repair. In San Jose, California, where fewer than 4 percent of plastic bags are recycled, repairs to bag-jammed equipment cost the city about $1 million a year before the plastic bag ban went into effect in 2012.
Proposed plastic bag restrictions have been shelved in a number of jurisdictions, including New York City, Philadelphia, and Chicago, in favor of bag recycling programs. New York City may, however, move ahead with a bill proposed in March 2014 to place a city-wide 10ȼ fee on single-use bags. Chicago is weighing a plastic bag ban.
In their less than 60 years of existence, plastic bags have had far-reaching effects. Enforcing legislation to limit their use challenges the throwaway consumerism that has become pervasive in a world of artificially cheap energy. As U.S. natural gas production has surged and prices have fallen, the plastics industry is looking to ramp up domestic production. Yet using this fossil fuel endowment to make something so short-lived, which can blow away at the slightest breeze and pollutes indefinitely, is illogical—particularly when there is a ready alternative: the reusable bag.
A Short History of the Plastic Bag: Selected Dates of Note in the United States and Internationally
1933
Polyethylene is discovered by scientists at Imperial Chemical Industries, a British company.
1950
Total global plastics production stands at less than 2 million metric tons.
1965
Sten Thulin’s 1962 invention of the T-shirt bag, another name for the common single-use plastic shopping bag, is patented by Swedish company Celloplast.
1976
Mobil Oil introduces the plastic bag to the United States. To recognize the U.S. Bicentennial, the bag’s designs are in red, white, and blue.
1982
Safeway and Kroger, two of the biggest U.S. grocery chains, start to switch from paper to plastic bags.
1986
Plastic bags already account for over 80 percent of the market in much of Europe, with paper holding on to the remainder. In the United States, the percentages are reversed.
June 1986
The half-million-member-strong General Federation of Women’s Clubs starts a U.S.-wide letter writing campaign to grocers raising concerns about the negative environmental effects of plastic bags.
Late 1980s
Plastic bag usage estimated to catch up to paper in U.S. groceries.
1989
Maine passes a law requiring retailers to only hand out plastic bags if specifically requested; this is replaced in 1991 by a statewide recycling initiative.
1990
The small Massachusetts island of Nantucket bans retail plastic bags.
1994
Denmark begins taxing retailers for plastic bags.
1996
Four of every five grocery bags used in the United States are made of plastic.
1997
Captain Charles Moore discovers the “Great Pacific Garbage Patch” in the remote North Pacific, where plastic is estimated to outweigh zooplankton six to one, drawing global attention to the accumulation of plastics in the ocean.
2000
Mumbai, India, bans plastic bags, with limited enforcement.
2002
Global plastics production tops 200 million metric tons.
March 2002
Ireland becomes the first country to tax consumers’ use of plastic bags directly.
March 2002
Bangladesh becomes the first country to ban plastic bags. Bags had been blamed for exacerbating flooding.
2006
Italy begins efforts to pass a national ban on plastic bags; due to industry complaints and legal issues, these efforts are ongoing.
April 2007
San Francisco becomes the first U.S. city to ban plastic grocery bags, later expanding to all retailers and restaurants.
2007-2008
The ACC spends $5.7 million on lobbying in California, much of it to oppose regulations on plastic bags.
June 2008
China’s plastic bag ban takes effect before Beijing hosts the Olympic Games.
September 2008
Rwanda passes a national ban on plastic bags.
2009
Plastics overtake paper and paperboard to become the number one discarded material in the U.S. waste stream.
July 2009
Hong Kong’s levy on plastic bags takes effect in chains, large groceries, and other more sizable stores; it is later expanded to all retailers.
August 2009
Seattle’s attempt to impose a 20ȼ fee on both paper and plastic bags is defeated before it can take effect by a referendum financed largely by the American Chemistry Council (ACC).
December 2009
Madison, Wisconsin, mandates that households recycle plastic bags rather than disposing of them with their trash.
January 2010
Washington, D.C., begins requiring all stores that sell food or alcohol to charge 5ȼ for plastic and paper checkout bags.
2010
Major bag producer Hilex Poly spends over $1 million in opposition to a proposed statewide plastic bag ban in California.
2010
Plastic bags appear in the Guinness World Records as the world’s “most ubiquitous consumer item.”
October 2011
In Oregon, Portland’s ban on plastic bags at major groceries and certain big-box stores begins.
May 2012
Honolulu County approves a plastic bag ban (to go into effect in July 2015), completing a de facto state-wide ban in Hawaii.
July 2012
Seattle’s plastic bag ban takes effect nearly three years after the first tax attempt failed.
March 2013
A bag ban takes effect in Austin, TX.
September-October 2013
During the Ocean Conservancy’s 2013 Coastal Cleanup event, more than 1 million plastic bags were picked up from coasts and waterways around the world.
January 2014
Los Angeles becomes the largest U.S. city to ban plastic bags.
April 2014
Members of the European Parliament back new rules requiring member countries to cut plastic bag use 50 percent by 2017 and 80 percent by 2019.
April 2014
Over 20 million people are covered under 132 city and county plastic bag bans or fee ordinances in the United States.
Selected Plastic Bag Regulations in the United States
Boulder, CO
Boulder grocery stores charge 10ȼ for plastic and paper bags. The city’s reasons for applying the fee to both were that plastic bags are difficult to recycle and paper bag production is also energy- and water-intensive. Stores keep 4ȼ and the rest of the money goes to the city to cover administrative costs, to provide residents with free reusable bags, and to otherwise minimize the impacts of bag waste. Just six months after the fee began in 2013, the city announced that bag use had dropped by 68 percent.
Chicago, IL
The Chicago City Council has visited the idea of limiting plastic bags giveaways several times over the last six years. In 2008 a proposed bag ban was rejected in favor of a bag recycling program. A bill banning plastic bags at most retailers is under consideration.
Dallas, TX
Plastic bags and bottles make up about 40 percent of all the trash in the Trinity River that provides water to over half of all Texans, including those living in Dallas-Fort Worth and Houston, according to estimates by Peter Payton, Executive Director of Groundwork Dallas, a group that does monthly cleanups in the watershed. In March 2014, a 5ȼ fee on plastic and paper bags at all grocery and retail stores, along with a ban on plastic bags at all city events, facilities, and properties, was approved by the City Council. It will go into effect in January 2015. Nine tenths of the revenue generated from bag sales will go to the city.
Hawaii
In April 2012, Honolulu County joined the counties of Maui, Kauai, and Hawaii in banning non-biodegradable plastic bags. This amounts to a de facto statewide bag ban—a first for the United States. The ordinances state that plastic bag use must be regulated “to preserve health, safety, welfare, and scenic and natural beauty.” Retailers have until mid-2015 to comply.
Los Angeles County (Unincorporated), CA
In July 2011, a ban on plastic bags in large stores took effect in the unincorporated area of Los Angeles County, home to 1.1 million people. In January 2012, that ban expanded to include small stores, like pharmacies and convenience marts. Nearly 800 retail stores are affected. This was the first in California to add a 10ȼ charge for paper bags; since its enactment, all other California municipalities have included a paper bag charge. In December 2013, the Department of Public Works announced that the ordinance had resulted in a sustained 90 percent reduction in single-use bag use at large stores.
Los Angeles, CA
In June 2013, the City Council of Los Angeles voted to ban stores from providing plastic carryout bags to customers, as well as to require stores to charge 10ȼ for paper bags. Large retailers are affected in January 2014; smaller retailers are affected in July 2014. The city was spending $2 million a year cleaning up plastic bags.
Manhattan Beach, CA
After passing a plastic bag ban in 2008, the city became the first to be sued by the Save the Plastic Bag Coalition—a group of plastic bag manufacturers and distributors—for not preparing an environmental impact report as required under the California Environmental Quality Act. The Coalition claimed a shift from plastic to recycled paper bags would harm the environment. Two lower courts sided with the Coalition and ruled that a report was required, but in 2011, on appeal, the California Supreme Court said that any increased use of paper bags in a small city like Manhattan Beach would have negligible environmental impact and therefore a report was unnecessary. This precedent allowed many California cities to proceed with banning plastic bags without such a report.
Nantucket Island, MA
Nantucket, a small seasonal tourist town, banned non-biodegradable plastic bags in 1990. Facing a growing waste disposal problem, the town envisioned building a facility where as much material as possible could be diverted from the landfill to be recycled or composted; such a facility would only be able to accept biodegradable bags.
New York City, NY
Former Mayor Michael Bloomberg proposed a 5ȼ tax on plastic bags in 2009, but the idea was later dropped in a budget agreement with the City Council. In March 2014, the City Council began to consider a proposal mandating a 10ȼ charge per plastic and paper bag at most stores.
San Francisco, CA
San Francisco was the first U.S. city to regulate plastic bags. The original ordinance, which was adopted in April 2007, banned non-compostable plastic bags at all large supermarkets and chain pharmacies. In October 2012 the law was applied to all stores, and in October 2013 the law expanded to restaurants. The Save the Plastic Bag Coalition sued the city, contesting the extensions to the ban, but those were upheld by the First District Court of Appeal in December 2013. In April 2014, the Supreme Court of California denied the Coalition’s first appeal, allowing the city to keep its bag ban.
Santa Monica, CA
Santa Monica has banned plastic bags from all retailers since September 2011. Grocery, liquor, and drug stores may offer paper bags for 10ȼ each, while department stores and restaurants may provide paper bags for no fee. Because the Save the Plastic Bag Coalition had sued other cities for not conducting an environmental impact review prior to the announcements of their bag bans, Santa Monica conducted a review and thus avoided a lawsuit. Plastic bags for carryout food items from restaurants and reusable bags made from polyethylene are allowed.
Seattle, WA
In July 2008 the Seattle government approved a 20ȼ charge on all paper and plastic checkout bags, but opponents collected enough signatures to put the ordinance up for a vote on the August 2009 primary ballot. The Coalition to Stop the Seattle Bag Tax—consisting of the American Chemistry Council’s Progressive Bag Affiliates, 7-Eleven, and the Washington Food Industry—spent $1.4 million on the referendum campaign (15 times more than fee supporters), and voters chose to reject the ordinance. It took until July 2012 for the city to enact its current ban on plastic bags and place a 5ȼ fee on paper bags. Seattle residents are largely in favor of the ban, and attempts to gather signatures to repeal it have not been successful.
Washington, DC
In January 2010, Washington, D.C., began requiring a 5ȼ charge for plastic and paper carryout bags at all retailers that sell food or alcohol. Businesses keep a portion of the fee, and the remainder goes to The Anacostia River Clean Up and Protection Fund. A survey conducted in early 2013 found that four out of five District households are using fewer bags since the tax came into effect. Almost 60 percent of residents reported carrying reusable bags with them “always” or “most of the time” when they shop. Two thirds of District residents reported seeing less plastic bag litter since the tax came into effect. One half of businesses reported saving money because of the fee.
Story 1: Part II More On Jonathan Gruber, Basically PhD (Piled Higher and Deeper) on Healthcare, Obamacare and Lack of Transparency — The American Voters Were Not Stupid And Rejected Democrats Who Supported Obamacare By Voting Them Out of Office — But The Democratic Progressive Elitist Establishment Are Liars and Losers — Stupid Is As Stupid Does — Death Knell of Socialized Medicine — Repeal Obamacare Now! — Videos
Stupid Is As Stupid Does
“This bill was written in a tortured way to make sure CBO did not score the mandate as taxes. If CBO [Congressional Budget Office] scored the mandate as taxes, the bill dies. Okay, so it’s written to do that. In terms of risk rated subsidies, if you had a law which said that healthy people are going to pay in – you made explicit healthy people pay in and sick people get money, it would not have passed… Lack of transparency is a huge political advantage. And basically, call it the stupidity of the American voter or whatever, but basically that was really really critical for the thing to pass….Look, I wish Mark was right that we could make it all transparent, but I’d rather have this law than not.”
~Jonathan Gruber
Stupid is as stupid does, Mrs. Blue..
How Did The Media Cover Jonathan Gruber
SMOKING GUN! Gruber Admits Obama Was in Room During Planning of Cadillac Lie
Gruber’s ObamaCare Remarks?
CNN airs New Video of Jonathan Gruber: Exploit the Lack of American Voters’ Economic Understanding
Trey Gowdy on Gruber comments
Megyn Kelly: Democrats Committed Fraud By Not Representing Obamacare as a Tax
Greater Boston Video: Jonathan Gruber Pushes Back
Krauthammer rips Jonathan Gruber: “We’re hearing the true voice of liberal arrogance”
GRUBER: “Lack of transparency is a huge political advantage.”
The Worst of Jonathan Gruber
Flashback: Obama: Transparency and the rule of law will be the touchstones of this presidency.
The Changing Touchstone of Transparency
Nets Ignore ObamaCare Architect Crediting Law’s Passage On ‘The Stupidity Of The American Voter’
Megyn Slams ObamaCare Architect Who Declined to Appear on ‘Kelly File’
WHY IS OBAMA NOT IN PRISON FOR STEALING TAXPAYER MONEY?
ObamaCare: Bill’s architect Gruber admits lies, deception necessary because Americans are stupid
Dems including Harry Reid, Sebelius, and Obama admit Single Payer Healthcare is ultimate goal
Democrats Push for a Single Payer Health Care System Katie Pavlich Charles Payne 8 12 13
Socialize Medicine! – Influential Democrat Calling For Single Payer System Amid Obamacare Trouble
“If you like your plan, you can keep your plan.” – Barack Obama
Jon Stewart on You Can Keep Your Plan. Period.
Jonathan Gruber on MSNBC says he “regrets” calling the American voter stupid
Conversation: “Health Care Reform,” The Comic Book
Gruber Files- Harvard University
The Cadillac Tax
Obama admits he DID raise taxes
Obamacare’s Cadillac Tax Pushing People To Plans With High Deductible- Union You Got What You Wanted
Jonathan Gruber brags about the “basic exploitation” of American voters
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Unions & Cadilac Health Care Plans
Obama’s Health Care Lies And Reversals
Obama lies about “cadillac” plan taxation.
Rep Joe Courtney Discusses “Cadillac Tax” with Neil Cavuto on Fox Business News Channel
HealthCare Reform – Modified Community Rating Part 1 – Federal Marketplace
HealthCare Reform – Modified Community Rating Part 2 – Federal Marketplace
Community Rating – How the Affordable Care Act Impacts Small Business Owners
Forrest Gump TRAILER
Honest Trailers – Forrest Gump
Forrest Gump’s most beautiful quote
Funeral Toll & Peal, Mount Angel Abbey
When a monk passes away during the night, the toll is sounded early the following morning. It is repeated after the funeral Mass, when the monks process down to the cemetery, and ends with a peal of all the bells. These are the last few tolls of the sequence on the largest bell in the Pacific Northwest.
Please pray for the eternal repose of the soul of this monk, that he may enter into everlasting life with Christ.
Martin Luther King – For whom the bell tolls
Nancy Pelosi says she doesn’t know who Jonathan Gruber is. She touted his work in 2009.
Many have pointed out since then that Pelosi’s office has cited Gruber’s work in the past. That’s notable, but it’s very unlikely Pelosi herself wrote those press releases herself or even participated in their drafting.
But then there’s this: Pelosi herself has also mentioned Gruber and his work — back in November 2009, at the height of the Obamacare debate.
Here’s the transcript, via Nexis:
Q: As you know, the Republicans released their health- care bill this week. And I wanted to get your comment on the bill, and specifically on the CBO analysis that it would cost significantly less than the Democratic plan and that it would lower premiums.
PELOSI: Let me just say this. Anything you need to know about the difference between the Democratic bill and the Republican bill is that the Republicans do not end the health insurance companies’ discrimination against people with preexisting conditions. They let that stand. That’s scandalous, the fact that it exists. I don’t understand why they have not heard the American people, who have said preexisting conditions should not be a source of discrimination.
And secondly, the Republican plan ensures about 3 million more people than now, and ours does 36 million people. So that’s a very big difference in that.
We’re not finished getting all of our reports back from CBO, but we’ll have a side by side to compare. But our bill brings down rates. I don’t know if you have seen Jonathan Gruber of MIT’s analysis of what the comparison is to the status quo versus what will happen in our bill for those who seek insurance within the exchange. And our bill takes down those costs, even some now, and much less preventing the upward spiral.
So again, we’re confident about what we set out to do in the bill: middle class affordability, security for our seniors, and accountability to our children.
Pelosi’s office told the Washington Post that the minority leader meant that she didn’t know Gruber personally.
“She said she doesn’t ‘know who he is,’ not that she’s never heard of him,” Pelosi spokesman Drew Hammill said.
Hammill added: “We’ve cited the work of dozens upon dozens of economists over the years. As the leader said today, Mr. Gruber played no role in drafting our bill.”
Pelosi clearly wants to distance herself and Obamacare from Gruber, given Gruber’s controversial comments about “the stupidity of the American voter,” and Democrats are going to argue that Gruber wasn’t instrumental in the bill. But, as an architect of the Massachusetts health-care law and a consultant to the White House on Obamacare, he’s been regularly cited by Democrats as an authority on this issue — including, apparently, by Pelosi.
This Philly-Based Investment Adviser Has Become Obamacare’s Digital Menace
Sam Stein
You could pardon Rich Weinstein for gloating. These past few days, he’s enjoyed the type of journalistic high that comes with unearthing a particularly meaty scoop.
Except Weinstein is no journalist. He’s a Philadelphia-based investment adviser approaching 50 who, until a half-year ago, was unknown to the political world. A set of videos he found of Jonathan Gruber, a Massachusetts Institute of Technology economist who played an important role in drafting the Affordable Care Act, changed all that. The videos have become rich context for a legal challenge to the law now heading to the Supreme Court, and they’ve made Weinstein the celebration of conservative circles.
“This is going to sound a little cocky and I don’t want it to be,” Weinstein told The Huffington Post Tuesday in one of the the media interviews he’s given on his feat. “But I’m not partially responsible for finding those clips. I’m completely responsible.”
Weinstein’s story, in some respects, would be the stuff of a made-for-TV movie — if the director is a member of the tea party and eager to dramatize the Affordable Care Act’s unraveling (those two points, admittedly, are redundant).
Weinstein, who runs his own company, and his family lost their health insurance after Obamacare forced higher standards for policies. On the exchange, the only plan with similar benefits was twice the cost of his old one. Irritated, he began looking into who put together the Affordable Care Act, searching Google with the term “ACA architects.” Days consumed with researching old videos became nights.
“Remember when the husbands used to come home at night in the ’50s and ’60s and grab a newspaper and read it?” said Weinstein. “Well, I’m like that with the iPad. It was a lot of time. For the past year, I put a lot of time into this.”
His break came last winter. An op-ed in the Wall Street Journal by Scott Pruitt, the attorney general of Oklahoma, outlined a long-shot legal argument that said a direct interpretation of Affordable Care Act precluded giving subsidies to people on federally run exchanges. Weinstein had seen that argument before, albeit from a different vantage point. Months earlier, he had stumbled across video of Gruber stating that the subsidies to help low-income Americans buy insurance are reserved for state-established exchanges, if only to give states an incentive to establish an exchange
Weinstein had a smoking gun, but no one to show it to.
“I’ve got the tinfoil hat,” Weinstein said, excusing the reporters who ignored his early entreaties. “People in the media must be overwhelmed with idiots like me who think they have something.”
So he took time off — three to four months — and watched his kids play lacrosse. Then, in July, two conservative justices on a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit ruled that the subsidies for those shopping on federally run exchanges were, indeed, illegal. People were talking about the issue again.
Weinstein dropped comments about his Gruber video onto The Washington Post’s Volokh Conspiracy blog. Eventually, Ryan Radia, of the Competitive Enterprise Institute, a libertarian think tank, noticed and turned it into a blog post.
Dominos began to fall. Weinstein’s first video was included in the legal challenge to Obamacare. And that challenge — King v. Burwell — ended up making its way to the Supreme Court. “Which is crazy,” Weinstein said. “Crazy because I found it. Not crazy because it is a crazy legal case.”
This week, another of Weinstein’s videos emerged. This one is of Gruber saying that a bit of budgetary deception helped Obamacare pass in Congress (“call it the stupidity of the American voter, or whatever,” said the professor). This, too, found its way into the mainstream conversation. Gruber on Tuesday went on MSNBC to apologize for his language, though he may have return. Weinstein said he has another video of a similar comment that he will soon release.
Should the Supreme Court ultimately rule against subsidies being available on federally run insurance exchanges, it would, in some ways, make the perfect ending to a conservative-inspired Horatio Alger story.
“I’m kind of a nobody,” said Weinstein. “And, I think, people who are out there, just the average person who gets hacked off about something or has an interest about something, I think I’m a perfect lesson that any one person can make a difference. Anybody. Even guy with the tinfoil hat in his mom’s basement.”
Except life and politics aren’t that simple. There is texture. Weinstein doesn’t live in his mom’s basement. He just says it for rhetorical flair. For those who would like to dismiss him as a knee-jerk partisan, he’s not that, either. He voted for Bill Clinton, he said, before he cast a ballot for Ross Perot and, most recently, Mitt Romney. Certainly, he’s no longer a “nobody” in the fight against Obamacare. Elements of the conservative movement have geared up to both promote and protect his work.
Phil Kerpen, who founded the group American Commitment and formerly was vice president for the Koch-funded Americans for Prosperity, helped spread the second of Weinstein’s videos. Once Kerpen found out an article was in the works, he sent a tweet suggesting The Huffington Post was “doxxing” Weinstein for attacking Gruber. The tweet came just minutes after The Huffington Post asked Weinstein whether he had used an online alias before commenting on The Volokh Conspiracy.
But the real nuance is in the history and the policy details. Gruber was an architect of Obamacare. But he wasn’t the only architect. The staffs to former Sen. Max Baucus (D-Mont.) and Rep. Henry Waxman (D-Calif.), among others, deserve their fair share of credit or blame, depending on one’s perspective.
On the issue of subsidies, the Gruber statement that Weinstein unearthed remains a gem for a reason. It’s because it’s rare (Gruber called it a “speak-o” — like a typo). There has been one other instance unearthed of Gruber discussing tax incentives as a means of compelling a state to set up an exchange.
For defenders of the law, that’s still thin gruel compared with the widely accepted belief during and after the crafting of the bill that subsidies would be universal. (The IRS ruled this way in May 2012, five months after Gruber’s speech.)
For critics, it’s proof enough.
“I don’t think he misspoke at all. I don’t think he was taken out of context and I don’t think he misspoke,” said Weinstein.
And then there is the issue of practical outcomes. Weinstein became a digital archaeologist after the cost of his insurance went up two-fold. Should a lawsuit succeed in eliminating subsidies for those buying insurance on federally run exchanges, it would result in many people confronting similar, or worse, price hikes. It’s an outcome that Weinstein admitted weighs on him, even as he keeps scanning the Web for more Gruberisms.
“It does,” Weinstein said. “But the way you say it makes it sound like nothing else will happen. Like it is a straight line. Subsidies are taken away and the world ends. And I think that’s not fair. I think there will most certainly be a disruption. No doubt about it. I think some states will go build their own exchanges quickly. But, I think the markets would find a way to adjust.”
“It does bother me,” he added later. “I get it. I’m not an evil person. I just think people should see these videos. I just think people should know what’s going on. “
Hearings floated as Hill Republicans seize on Gruber Obamacare comments
By Robert Costa and Jose A. DelReal
Congressional Republicans seized Wednesday on controversial commentsmade by a former health-care consultant to the Obama administration, with one leading House conservative suggesting that hearings could be called in response as part of the GOP effort to dismantle the law in the next Congress and turn public opinion ahead of the 2016 election.
“We may want to have hearings on this,” said Rep. Jim Jordan (R-Ohio), an influential voice among GOP hardliners and a member of the House Oversight and Government Reform Committee, in an interview at the Capitol. “We shouldn’t be surprised they were misleading us.”
The firestorm began when a video emerged showing Jonathan Gruber, a high-profile architect of the Affordable Care Act and one of its fiercest advocates, suggesting that the health reform law passed through Congress because of the “stupidity of the American voter” and a “lack of transparency” over its funding mechanisms. The remarks were originally made in 2013 during a panel discussion at the University of Pennsylvania but began heavy circulation on social media Monday.
“This bill was written in a tortured way to make sure CBO did not score the mandate as taxes,” Gruber said. “Lack of transparency is a huge political advantage. And basically, call it the ‘stupidity of the American voter’ or whatever, but basically that was really, really critical to getting the thing to pass.”
Gruber apologized for his incendiary remarks in an on-air interview with MSNBC Tuesday afternoon, calling his comments inappropriate and saying he was speaking “off the cuff.” On Tuesday evening, Fox News’ Megyn Kelly aired a second video, of Gruber calling voters stupid, also from 2013.
The controversy has lit a fire under conservatives eager to dismantle the law and has raised eyebrows among the law’s defenders, who are concerned that such comments will further damage the law’s already shaky standing with American voters. It also comes after a sweeping electoral victory for Republicans last Tuesday, who won control of the Senate and bolstered the size of their majority in the House.
Jordan said House Republicans have been sending each other a blizzard of e-mails and text messages this week, and he expects the interest in “bringing [Gruber] up here to talk” will gain traction as members return to Washington. House Republicans will gather Thursday evening for their first series of votes since the election.
“I just had a colleague text me saying, ‘We’ve got to look into this!” Jordan said as he glanced at his phone outside the House floor Wednesday morning.
The chatter among lawmakers echoes the outrage among the conservative grassroots over the comments. Sen. Ted Cruz in a speech last week said targeting ACA must remain the party’s top priority. “Now is the time to go after and do everything humanely possible to repeal Obamacare,” he said.
House GOP leadership aides expressed new optimism that their desire to target the ACA could get some momentum. While rhetorically committed to full repeal, in order to keep the party’s right flank on board, the party is looking more seriously at undermining specific parts of the law as it navigates divided government next year. Those moves could include repealing the medical device tax; watering down a requirement that employers offer full time workers coverage, which takes effect in January; and changing the definition of a full-time worker from someone who works at least 30 hours a week to someone who works at least 40 — all proposals which could win some Democratic support.
On the other side of the Capitol, Sen. Jeff Sessions (R-Ala.), who is slated to become chairman of the powerful Senate budget committee, also threw his support behind possible hearings. In a furious gaggle with reporters, Sessions said Gruber’s comments could make dealings with the White House more difficult, days after Republican leaders said they would seek areas of common ground.
“The strategy was to hide the truth from the American people,” Sessions said. “I’m not into this post-modern world where you can say whatever you want to in order to achieve your agenda. That is a threat to the American republic… This is far deeper and more significant than the fact that he just spoke.”
Other Senate Republicans expressed similar discomfort with Gruber, but warned conservatives to not get their hopes up about repealing the health-care law while President Obama remains in office, underscoring the tonal difference between the more rabble-rousing House GOP and the new and more even-tempered Republican Senate majority.
Heading into a party luncheon on Wednesday, retiring Sen. Tom Coburn (R-Okla.) said the health care law “is going to still be there regardless because we don’t have the votes” to undo it.
“We can talk all we want but he is going to veto whatever we send him,” Coburn said. “That’s the reality.”
Sen. Ron Johnson (R-Wis.) said he was unsure of how Senate Republicans would use the Gruber kerfuffle to go after the law, if at all. For the moment, he said, Republicans should focus on using the episode to highlight how the national press has covered the president’s signature policy.
“What Gruber said should be read and reported on by every news organization,” he said. “People should be aware of how this administration thinks.”
Several Democrats said Wednesday that they were unaware of Gruber’s comments and declined to speculate on whether there could be political consequences, underscoring how much of the discussion is being driven by Republicans. One, however, did distance herself from the arguably aloof phrasing used by Gruber. “I have not seen them,” said Sen. Patty Murrary (D-Wash). “But I do think voters are pretty smart.”
The challenge for Republicans will be balancing the conservative ire surrounding Gruber with the leaders’ political imperative to establish themselves as a governing congressional majority. House Speaker John Boehner (R-Ohio) and incoming Senate Majority Leader McConnell (R-Ky.) have pledged to bring another repeal bill to floor, but are also focused on achieving incremental legislative gains on Keystone XL and trade agreements.
POSTED AT 6:01 PM ON NOVEMBER 11, 2014 BY NOAH ROTHMAN
On Saturday, Newsbusters was the first major website to feature a video posted to YouTube by AmericanCommitment of Obamacare architect Jonathan Gruber boasting in 2013 how he helped deceive the public via a lack of transparency about that bill. Some readers were anxious about that video being made better known to the public since at the time the article was published, there were only a couple of dozen views of the video on YouTube.
Well they needn’t have worried because since then the video has gone over the top viral to the extent that Rush Limbaugh led his show talking about it at length this morning as did Sean Hannity on his radio show. In addition, the video made it into the mainstream media other than Fox News when Jake Tapper showed the video today on The Lead and The Hill has an article about it as well. As of this writing the video has over 177,000 views and growing fast. Reason today had an excellent analysis of the Gruber revelations:
Massachusetts Institute of Technology Professor Jonathan Gruber was, by most accounts, one of the key figures in constructing the Affordable Care Act, better known as Obamacare. He helped designed the Massachusetts health care law on which it was modeled, assisted the White House in laying out the foundation of the law, and, according to The New York Times, was eventually sent to Capitol Hill “to help Congressional staff members draft the specifics of the legislation.” He provided the media with a stream of supportive quotes, and was paid almost $400,000 for his consulting work.
Jonathan Gruber, in other words, knows exactly what it took to get the health care law passed.
And that’s why you should take him seriously when he says, in the following video, that it was critical to not be transparent about the law’s costs and true effects, and to take advantage of the “stupidity of the American voter” in order to get it passed:
Here’s the full quote:
“This bill was written in a tortured way to make sure CBO did not score the mandate as taxes. If CBO [Congressional Budget Office] scored the mandate as taxes, the bill dies. Okay, so it’s written to do that. In terms of risk rated subsidies, if you had a law which said that healthy people are going to pay in – you made explicit healthy people pay in and sick people get money, it would not have passed… Lack of transparency is a huge political advantage. And basically, call it the stupidity of the American voter or whatever, but basically that was really really critical for the thing to pass….Look, I wish Mark was right that we could make it all transparent, but I’d rather have this law than not.”
This validates much of what critics have said about the health care law, and the tactics used to pass it, for years.
For one thing, it is an explicit admission that the law was designed in such a way to avoid a CBO score that would have tanked the bill. Basically, the Democrats who wrote the bill knowingly gamed the CBO process.
It’s also an admission that the law’s authors understood that one of the effects of the bill would be to make healthy people pay for the sick, but declined to say this for fear that it would kill the bill’s chances. In other words, the law’s supporters believed the public would not like some of the bill’s consequences, and knowingly attempted to hide those consequences from the public.
Most importantly, however, it is an admission that Gruber thinks it’s acceptable to deceive people if he believes that’s the only way to achieve his policy preference. That’s not exactly surprising, given that he failed to disclose payments from the administration to consult on Obamacare even while providing the media with supposedly independent assessments of the law.
…Gruber may believe that American voters are stupid, but he was the one who was dumb enough to say all this on camera.
Now that various MSM outlets have begun to pay attention to the Gruber Obamacare deception video, it will be fascinating to see what type of excuses will be made by the pundits to cover for what he admitted. Bonus points to Jonathan Cohn at New Republic or Politico or any of a vast number of liberal sources for whoever can dream up the most entertaining spin control to explain away this viral video.
p.s. Did I mention that Newsbusters was the first major website to feature this video?
Dr. Jonathan Gruber is a Professor of Economics at the Massachusetts Institute of Technology, where he has taught since 1992. He is also the Director of the Health Care Program at the National Bureau of Economic Research, where he is a Research Associate. He is an Associate Editor of both the Journal of Public Economics and the Journal of Health Economics. In 2009 he was elected to the Executive Committee of the American Economic Association. He is also a member of the Institute of Medicine, the American Academy of Arts and Sciences, and the National Academy of Social Insurance.
Dr. Gruber received his B.S. in Economics from MIT, and his Ph.D. in Economics from Harvard University. Dr. Gruber’s research focuses on the areas of public finance and health economics. He has published more than 140 research articles, has edited six research volumes, and is the author of Public Finance and Public Policy, a leading undergraduate text, and Health Care Reform, a graphic novel. In 2006 he received the American Society of Health Economists Inaugural Medal for the best health economist in the nation aged 40 and under. During the 1997-1998 academic year, Dr. Gruber was on leave as Deputy Assistant Secretary for Economic Policy at the Treasury Department. From 2003-2006 he was a key architect of Massachusetts’ ambitious health reform effort, and in 2006 became an inaugural member of the Health Connector Board, the main implementing body for that effort. In that year, he was named the 19th most powerful person in health care in the United States by Modern Healthcare Magazine.
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Healthcare Reform 101 Part 2.
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Jonathan Gruber on Obamacare: Part 2 of 3
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Lec 1 | MIT 14.01SC Principles of Microeconomics
Meet Jonathan Gruber, the man who’s willing to say what everyone else is only thinking about Obamacare
By Jason Millman
Jonathan Gruber might not be a household name, but in the world of health care policy, he’s a pretty big deal. And now he’s also known as the guy who’s credited “the stupidity of the American voter” for the passage of the Affordable Care Act.
An old video surfaced this week of Gruber saying that a lack of transparency was one of the reasons Obamacare got through Congress in 2010. Gruber, a Massachusetts Institute of Technology health economist who’s credited as one of the intellectual godfathers of the Affordable Care Act, has apologized for speaking off the cuff, but critics of the law are eagerly highlighting his comments.
That’s because of what Gruber represents. He was one of the architects of the 2006 Massachusetts health care law, which became the basis for the ACA, and he helped craft the federal legislation that used a similar scheme of guaranteed coverage, financial assistance and insurance mandates. He was far from the only person who helped shape the ACA, but he has been one of its most vocal academic defenders in the nearly five years since it passed. (And he’s the only one to write a comic book about the law.)
It’s easy to see why Gruber’s comments get pored over by ACA opponents. There’s plenty of misunderstanding about what’s in the ACA and mistrust of the motivations for passing the law — just recall Nancy Pelosi’s infamous line about needing to pass the bill to find out what’s in it. So when someone like Gruber, who’s supposed to know the law inside and out, seemingly confirms critics’ worst suspicions, that makes for a powerful anecdote.
Gruber, who’s fiercely intelligent and passionate about the health reforms he helped create, also isn’t one to always sugarcoat things.
Earlier this year, a pretty important health policy study showed that the expansion of Medicaid coverage in Oregon was associated with a spike in emergency room visits. The research potentially undercut an argument by supporters of the law who said it would save money since giving more people health insurance meant patients would rely more on primary care providers, rather than expensive trips to the ER. And Gruber, commenting on the study, offered an uncomfortable truth.
“I would view [the study] as part of a broader set of evidence that covering people with health insurance doesn’t save money,” Gruber told the Washington Post at the time. “That was sometimes a misleading motivator for the Affordable Care Act. The law isn’t designed to save money. It’s designed to improve health, and that’s going to cost money.”
You may also remember Gruber from the last presidential campaign, when there was plenty of debate over just how similar Obamacare and Romneycare actually were to one another. It was Gruber who artfully cleared up the confusion. “They’re the same f—— bill,” he told Capital New York in what became a widely circulated interview three years ago. It’s probably what ACA supporters wanted to say all along, but only Gruber went ahead and did it.
His most potentially damaging comments surfaced just over the summer, when Gruber seemingly gave credence to the ACA challenge just taken up by the Supreme Court last week — a challenge that if successful couldtorpedo the law.
The case revolves around whether residents in states that refused to set up their own health insurance marketplaces should still be able to claim tax subsidies to help them afford their insurance. Opponents say no, Congress intentionally didn’t allow that under the law. Democrats say they never intended for people in these 36 states to not have access to the financial assistance.
Here was Gruber again, in January 2012, telling a health-care conference that states refusing to set up their own exchanges would deny their residents premium tax credits. The video wasn’t widely viewed until June of this year, but this is what he said at the time:
I think what’s important to remember politically about this, is if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits. But your citizens still pay the taxes that support this bill. So you’re essentially saying to your citizens, you’re going to pay all the taxes to help all the other states in the country. I hope that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these Exchanges, and that they’ll do it. But you know, once again, the politics can get ugly around this.
Here’s the video, with these comments near the 31:30 mark:
Critics of the law jumped on those comments as further validation of their challenge to the subsidies in the 36 states relying on the federal-run insurance marketplaces, or exchanges. Gruber later said that he misspoke, and that his own work always assumed all exchanges — whether run by the states or the federal government — would be eligible for subsidies.
Gruber’s latest comments have surfaced at an especially inopportune time for the Obama administration. The next enrollment period is approaching this weekend with lowered expectations, just as Republicans reclaimed the Senate and the Supreme Court agreed to hear a new Obamacare challengethat could seriously weaken the law.
The Democrats, realizing how harmful Gruber’s latest comments have become, are already out doing damage control. Former Vermont Gov. Howard Dean was on MSNBC’s “Morning Joe” today to put distance between Gruber and the health-care law, saying he’s not even sure that Gruber ever met with President Obama.
“He’s a consultant, not the architect [of Obamacare,” Dean said. “I’m not excusing the language — it’s terrible.”
Jonathan Holmes Gruber is a professor of economics at the Massachusetts Institute of Technology, where he has taught since 1992. He is also the director of the Health Care Program at the National Bureau of Economic Research, where he is a research associate. He is an associate editor of both the Journal of Public Economics and the Journal of Health Economics.
Gruber’s research has focused on public finance and health economics. He has published more than 140 research articles, and has edited six research volumes. He is a co-editor of the Journal of Public Economics, an associate editor of the Journal of Health Economics, and the author of Public Finance and Public Policy.[3] and Health Care Reform, a graphic novel delineating the Affordable Care Act.[citation needed]
Public service
During the 1997–1998 academic year, Gruber was on leave as Deputy Assistant Secretary for Economic Policy at the Treasury Department. From 2003–06 he was a key architect of Massachusetts health care reform, also known as “Romneycare”. In 2006 he became an inaugural member of the Health Connector Board, the main implementing body for that effort. In that year, he was named the 19th most powerful person in health care in the United States by Modern Healthcare magazine. During the 2008 election he was a consultant to the Clinton, Edwards and Obama presidential campaigns.
Patient Protection and Affordable Care Act
In 2009–10 Gruber served as a technical consultant to the Obama Administration and worked with both the administration and Congress to help craft the Patient Protection and Affordable Care Act, often referred to as the ACA or “Obamacare”.[4] The act was signed into law in March 2010, and Gruber has been described as an “architect”, “writer”, and “consultant” of the legislation. He was widely interviewed and quoted during the roll-out of the legislation. [5][6][7][8][9]
One heavily-scrutinized part of the ACA reads that subsidies should be given to healthcare recipients who are enrolled “through an Exchange established by the State”. Some have read this to mean that subsidies can be given only in states that have chosen to create their own healthcare exchanges, and do not use the federal exchange, while the Obama administration says that the wording applies to all states. This dispute is currently part of an ongoing series of lawsuits referred to collectively as King v. Burwell. In July 2014, two separate recordings of Gruber, both from January 2012, surfaced in which he seemed to contradict the administration’s position.[4] In one, Gruber states, in response to an audience question, that “if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits”,[14] while in the other he says, “if your governor doesn’t set up an exchange, you’re losing hundreds of millions of dollars of tax credits to be delivered to your citizens.”[15] When these recordings emerged, Gruber called these statements mistaken, describing them as “just a speak-o — you know, like a typo”.[14]
In a panel discussion about the ACA at the University of Pennsylvania in October 2013, Gruber stated that the bill was deliberately written “in a tortured way” to disguise the fact that it created a system in which “healthy people pay in and sick people get money”. He stated that this obfuscation was necessary, due to “the stupidity of the American voter or whatever”, in order to get the bill passed and that a “lack of transparency is a huge political advantage.”[16] His comments caused controversy after a video of them was placed on YouTubein November 2014.[17][18][19][20]
Published works
On February 15, 2006, the Center on Budget and Policy Priorities published an article by Gruber entitled “The Cost and Coverage Impact of the President’s Health Insurance Budget Proposals”[21]
In a December 4, 2008 New York Times op-ed, “Medicine for the Job Market”, he claimed that expanding health insurance, even in difficult financial times would stimulate the economy.[22]
On February 9, 2011, the Center for American Progress published an article by Gruber titled “Health Care Reform Without the Individual Mandate,” analyzing the health insurance coverage impacts of alternative policy options for encouraging purchase of health insurance under the Patient Protection and Affordable Care Act, including the mandate, a late penalty, and auto-enrollment.[23]
In 2006, Gruber received the American Society of Health Economists Inaugural Medal for the best health economist in the nation aged 40 and under.[25] He was elected a member of the Institute of Medicine in 2005.[26] In 2009 he was elected to the Executive Committee of the American Economic Association.
In 2011 he was named “One of the Top 25 Most Innovative and Practical Thinkers of Our Time” by Slate Magazine. In both 2006 and 2012 he was rated as one of the top 100 most powerful people in health care in the United States by Modern Healthcare Magazine.
Story 1: Part II More On Jonathan Gruber, Basically PhD (Piled Higher and Deeper) on Healthcare, Obamacare and Lack of Transparency — The American Voters Were Not Stupid And Rejected Democrats Who Supported Obamacare By Voting Them Out of Office — But The Democratic Progressive Elitist Establishment Are Liars and Losers — Stupid Is As Stupid Does — Death Knell of Socialized Medicine — Repeal Obamacare Now! — Videos
Stupid Is As Stupid Does
“This bill was written in a tortured way to make sure CBO did not score the mandate as taxes. If CBO [Congressional Budget Office] scored the mandate as taxes, the bill dies. Okay, so it’s written to do that. In terms of risk rated subsidies, if you had a law which said that healthy people are going to pay in – you made explicit healthy people pay in and sick people get money, it would not have passed… Lack of transparency is a huge political advantage. And basically, call it the stupidity of the American voter or whatever, but basically that was really really critical for the thing to pass….Look, I wish Mark was right that we could make it all transparent, but I’d rather have this law than not.”
~Jonathan Gruber
Stupid is as stupid does, Mrs. Blue..
How Did The Media Cover Jonathan Gruber
SMOKING GUN! Gruber Admits Obama Was in Room During Planning of Cadillac Lie
Gruber’s ObamaCare Remarks?
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When a monk passes away during the night, the toll is sounded early the following morning. It is repeated after the funeral Mass, when the monks process down to the cemetery, and ends with a peal of all the bells. These are the last few tolls of the sequence on the largest bell in the Pacific Northwest.
Please pray for the eternal repose of the soul of this monk, that he may enter into everlasting life with Christ.
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Nancy Pelosi says she doesn’t know who Jonathan Gruber is. She touted his work in 2009.
Many have pointed out since then that Pelosi’s office has cited Gruber’s work in the past. That’s notable, but it’s very unlikely Pelosi herself wrote those press releases herself or even participated in their drafting.
But then there’s this: Pelosi herself has also mentioned Gruber and his work — back in November 2009, at the height of the Obamacare debate.
Here’s the transcript, via Nexis:
Q: As you know, the Republicans released their health- care bill this week. And I wanted to get your comment on the bill, and specifically on the CBO analysis that it would cost significantly less than the Democratic plan and that it would lower premiums.
PELOSI: Let me just say this. Anything you need to know about the difference between the Democratic bill and the Republican bill is that the Republicans do not end the health insurance companies’ discrimination against people with preexisting conditions. They let that stand. That’s scandalous, the fact that it exists. I don’t understand why they have not heard the American people, who have said preexisting conditions should not be a source of discrimination.
And secondly, the Republican plan ensures about 3 million more people than now, and ours does 36 million people. So that’s a very big difference in that.
We’re not finished getting all of our reports back from CBO, but we’ll have a side by side to compare. But our bill brings down rates. I don’t know if you have seen Jonathan Gruber of MIT’s analysis of what the comparison is to the status quo versus what will happen in our bill for those who seek insurance within the exchange. And our bill takes down those costs, even some now, and much less preventing the upward spiral.
So again, we’re confident about what we set out to do in the bill: middle class affordability, security for our seniors, and accountability to our children.
Pelosi’s office told the Washington Post that the minority leader meant that she didn’t know Gruber personally.
“She said she doesn’t ‘know who he is,’ not that she’s never heard of him,” Pelosi spokesman Drew Hammill said.
Hammill added: “We’ve cited the work of dozens upon dozens of economists over the years. As the leader said today, Mr. Gruber played no role in drafting our bill.”
Pelosi clearly wants to distance herself and Obamacare from Gruber, given Gruber’s controversial comments about “the stupidity of the American voter,” and Democrats are going to argue that Gruber wasn’t instrumental in the bill. But, as an architect of the Massachusetts health-care law and a consultant to the White House on Obamacare, he’s been regularly cited by Democrats as an authority on this issue — including, apparently, by Pelosi.
This Philly-Based Investment Adviser Has Become Obamacare’s Digital Menace
Sam Stein
You could pardon Rich Weinstein for gloating. These past few days, he’s enjoyed the type of journalistic high that comes with unearthing a particularly meaty scoop.
Except Weinstein is no journalist. He’s a Philadelphia-based investment adviser approaching 50 who, until a half-year ago, was unknown to the political world. A set of videos he found of Jonathan Gruber, a Massachusetts Institute of Technology economist who played an important role in drafting the Affordable Care Act, changed all that. The videos have become rich context for a legal challenge to the law now heading to the Supreme Court, and they’ve made Weinstein the celebration of conservative circles.
“This is going to sound a little cocky and I don’t want it to be,” Weinstein told The Huffington Post Tuesday in one of the the media interviews he’s given on his feat. “But I’m not partially responsible for finding those clips. I’m completely responsible.”
Weinstein’s story, in some respects, would be the stuff of a made-for-TV movie — if the director is a member of the tea party and eager to dramatize the Affordable Care Act’s unraveling (those two points, admittedly, are redundant).
Weinstein, who runs his own company, and his family lost their health insurance after Obamacare forced higher standards for policies. On the exchange, the only plan with similar benefits was twice the cost of his old one. Irritated, he began looking into who put together the Affordable Care Act, searching Google with the term “ACA architects.” Days consumed with researching old videos became nights.
“Remember when the husbands used to come home at night in the ’50s and ’60s and grab a newspaper and read it?” said Weinstein. “Well, I’m like that with the iPad. It was a lot of time. For the past year, I put a lot of time into this.”
His break came last winter. An op-ed in the Wall Street Journal by Scott Pruitt, the attorney general of Oklahoma, outlined a long-shot legal argument that said a direct interpretation of Affordable Care Act precluded giving subsidies to people on federally run exchanges. Weinstein had seen that argument before, albeit from a different vantage point. Months earlier, he had stumbled across video of Gruber stating that the subsidies to help low-income Americans buy insurance are reserved for state-established exchanges, if only to give states an incentive to establish an exchange
Weinstein had a smoking gun, but no one to show it to.
“I’ve got the tinfoil hat,” Weinstein said, excusing the reporters who ignored his early entreaties. “People in the media must be overwhelmed with idiots like me who think they have something.”
So he took time off — three to four months — and watched his kids play lacrosse. Then, in July, two conservative justices on a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit ruled that the subsidies for those shopping on federally run exchanges were, indeed, illegal. People were talking about the issue again.
Weinstein dropped comments about his Gruber video onto The Washington Post’s Volokh Conspiracy blog. Eventually, Ryan Radia, of the Competitive Enterprise Institute, a libertarian think tank, noticed and turned it into a blog post.
Dominos began to fall. Weinstein’s first video was included in the legal challenge to Obamacare. And that challenge — King v. Burwell — ended up making its way to the Supreme Court. “Which is crazy,” Weinstein said. “Crazy because I found it. Not crazy because it is a crazy legal case.”
This week, another of Weinstein’s videos emerged. This one is of Gruber saying that a bit of budgetary deception helped Obamacare pass in Congress (“call it the stupidity of the American voter, or whatever,” said the professor). This, too, found its way into the mainstream conversation. Gruber on Tuesday went on MSNBC to apologize for his language, though he may have return. Weinstein said he has another video of a similar comment that he will soon release.
Should the Supreme Court ultimately rule against subsidies being available on federally run insurance exchanges, it would, in some ways, make the perfect ending to a conservative-inspired Horatio Alger story.
“I’m kind of a nobody,” said Weinstein. “And, I think, people who are out there, just the average person who gets hacked off about something or has an interest about something, I think I’m a perfect lesson that any one person can make a difference. Anybody. Even guy with the tinfoil hat in his mom’s basement.”
Except life and politics aren’t that simple. There is texture. Weinstein doesn’t live in his mom’s basement. He just says it for rhetorical flair. For those who would like to dismiss him as a knee-jerk partisan, he’s not that, either. He voted for Bill Clinton, he said, before he cast a ballot for Ross Perot and, most recently, Mitt Romney. Certainly, he’s no longer a “nobody” in the fight against Obamacare. Elements of the conservative movement have geared up to both promote and protect his work.
Phil Kerpen, who founded the group American Commitment and formerly was vice president for the Koch-funded Americans for Prosperity, helped spread the second of Weinstein’s videos. Once Kerpen found out an article was in the works, he sent a tweet suggesting The Huffington Post was “doxxing” Weinstein for attacking Gruber. The tweet came just minutes after The Huffington Post asked Weinstein whether he had used an online alias before commenting on The Volokh Conspiracy.
But the real nuance is in the history and the policy details. Gruber was an architect of Obamacare. But he wasn’t the only architect. The staffs to former Sen. Max Baucus (D-Mont.) and Rep. Henry Waxman (D-Calif.), among others, deserve their fair share of credit or blame, depending on one’s perspective.
On the issue of subsidies, the Gruber statement that Weinstein unearthed remains a gem for a reason. It’s because it’s rare (Gruber called it a “speak-o” — like a typo). There has been one other instance unearthed of Gruber discussing tax incentives as a means of compelling a state to set up an exchange.
For defenders of the law, that’s still thin gruel compared with the widely accepted belief during and after the crafting of the bill that subsidies would be universal. (The IRS ruled this way in May 2012, five months after Gruber’s speech.)
For critics, it’s proof enough.
“I don’t think he misspoke at all. I don’t think he was taken out of context and I don’t think he misspoke,” said Weinstein.
And then there is the issue of practical outcomes. Weinstein became a digital archaeologist after the cost of his insurance went up two-fold. Should a lawsuit succeed in eliminating subsidies for those buying insurance on federally run exchanges, it would result in many people confronting similar, or worse, price hikes. It’s an outcome that Weinstein admitted weighs on him, even as he keeps scanning the Web for more Gruberisms.
“It does,” Weinstein said. “But the way you say it makes it sound like nothing else will happen. Like it is a straight line. Subsidies are taken away and the world ends. And I think that’s not fair. I think there will most certainly be a disruption. No doubt about it. I think some states will go build their own exchanges quickly. But, I think the markets would find a way to adjust.”
“It does bother me,” he added later. “I get it. I’m not an evil person. I just think people should see these videos. I just think people should know what’s going on. “
Hearings floated as Hill Republicans seize on Gruber Obamacare comments
By Robert Costa and Jose A. DelReal
Congressional Republicans seized Wednesday on controversial commentsmade by a former health-care consultant to the Obama administration, with one leading House conservative suggesting that hearings could be called in response as part of the GOP effort to dismantle the law in the next Congress and turn public opinion ahead of the 2016 election.
“We may want to have hearings on this,” said Rep. Jim Jordan (R-Ohio), an influential voice among GOP hardliners and a member of the House Oversight and Government Reform Committee, in an interview at the Capitol. “We shouldn’t be surprised they were misleading us.”
The firestorm began when a video emerged showing Jonathan Gruber, a high-profile architect of the Affordable Care Act and one of its fiercest advocates, suggesting that the health reform law passed through Congress because of the “stupidity of the American voter” and a “lack of transparency” over its funding mechanisms. The remarks were originally made in 2013 during a panel discussion at the University of Pennsylvania but began heavy circulation on social media Monday.
“This bill was written in a tortured way to make sure CBO did not score the mandate as taxes,” Gruber said. “Lack of transparency is a huge political advantage. And basically, call it the ‘stupidity of the American voter’ or whatever, but basically that was really, really critical to getting the thing to pass.”
Gruber apologized for his incendiary remarks in an on-air interview with MSNBC Tuesday afternoon, calling his comments inappropriate and saying he was speaking “off the cuff.” On Tuesday evening, Fox News’ Megyn Kelly aired a second video, of Gruber calling voters stupid, also from 2013.
The controversy has lit a fire under conservatives eager to dismantle the law and has raised eyebrows among the law’s defenders, who are concerned that such comments will further damage the law’s already shaky standing with American voters. It also comes after a sweeping electoral victory for Republicans last Tuesday, who won control of the Senate and bolstered the size of their majority in the House.
Jordan said House Republicans have been sending each other a blizzard of e-mails and text messages this week, and he expects the interest in “bringing [Gruber] up here to talk” will gain traction as members return to Washington. House Republicans will gather Thursday evening for their first series of votes since the election.
“I just had a colleague text me saying, ‘We’ve got to look into this!” Jordan said as he glanced at his phone outside the House floor Wednesday morning.
The chatter among lawmakers echoes the outrage among the conservative grassroots over the comments. Sen. Ted Cruz in a speech last week said targeting ACA must remain the party’s top priority. “Now is the time to go after and do everything humanely possible to repeal Obamacare,” he said.
House GOP leadership aides expressed new optimism that their desire to target the ACA could get some momentum. While rhetorically committed to full repeal, in order to keep the party’s right flank on board, the party is looking more seriously at undermining specific parts of the law as it navigates divided government next year. Those moves could include repealing the medical device tax; watering down a requirement that employers offer full time workers coverage, which takes effect in January; and changing the definition of a full-time worker from someone who works at least 30 hours a week to someone who works at least 40 — all proposals which could win some Democratic support.
On the other side of the Capitol, Sen. Jeff Sessions (R-Ala.), who is slated to become chairman of the powerful Senate budget committee, also threw his support behind possible hearings. In a furious gaggle with reporters, Sessions said Gruber’s comments could make dealings with the White House more difficult, days after Republican leaders said they would seek areas of common ground.
“The strategy was to hide the truth from the American people,” Sessions said. “I’m not into this post-modern world where you can say whatever you want to in order to achieve your agenda. That is a threat to the American republic… This is far deeper and more significant than the fact that he just spoke.”
Other Senate Republicans expressed similar discomfort with Gruber, but warned conservatives to not get their hopes up about repealing the health-care law while President Obama remains in office, underscoring the tonal difference between the more rabble-rousing House GOP and the new and more even-tempered Republican Senate majority.
Heading into a party luncheon on Wednesday, retiring Sen. Tom Coburn (R-Okla.) said the health care law “is going to still be there regardless because we don’t have the votes” to undo it.
“We can talk all we want but he is going to veto whatever we send him,” Coburn said. “That’s the reality.”
Sen. Ron Johnson (R-Wis.) said he was unsure of how Senate Republicans would use the Gruber kerfuffle to go after the law, if at all. For the moment, he said, Republicans should focus on using the episode to highlight how the national press has covered the president’s signature policy.
“What Gruber said should be read and reported on by every news organization,” he said. “People should be aware of how this administration thinks.”
Several Democrats said Wednesday that they were unaware of Gruber’s comments and declined to speculate on whether there could be political consequences, underscoring how much of the discussion is being driven by Republicans. One, however, did distance herself from the arguably aloof phrasing used by Gruber. “I have not seen them,” said Sen. Patty Murrary (D-Wash). “But I do think voters are pretty smart.”
The challenge for Republicans will be balancing the conservative ire surrounding Gruber with the leaders’ political imperative to establish themselves as a governing congressional majority. House Speaker John Boehner (R-Ohio) and incoming Senate Majority Leader McConnell (R-Ky.) have pledged to bring another repeal bill to floor, but are also focused on achieving incremental legislative gains on Keystone XL and trade agreements.
POSTED AT 6:01 PM ON NOVEMBER 11, 2014 BY NOAH ROTHMAN
On Saturday, Newsbusters was the first major website to feature a video posted to YouTube by AmericanCommitment of Obamacare architect Jonathan Gruber boasting in 2013 how he helped deceive the public via a lack of transparency about that bill. Some readers were anxious about that video being made better known to the public since at the time the article was published, there were only a couple of dozen views of the video on YouTube.
Well they needn’t have worried because since then the video has gone over the top viral to the extent that Rush Limbaugh led his show talking about it at length this morning as did Sean Hannity on his radio show. In addition, the video made it into the mainstream media other than Fox News when Jake Tapper showed the video today on The Lead and The Hill has an article about it as well. As of this writing the video has over 177,000 views and growing fast. Reason today had an excellent analysis of the Gruber revelations:
Massachusetts Institute of Technology Professor Jonathan Gruber was, by most accounts, one of the key figures in constructing the Affordable Care Act, better known as Obamacare. He helped designed the Massachusetts health care law on which it was modeled, assisted the White House in laying out the foundation of the law, and, according to The New York Times, was eventually sent to Capitol Hill “to help Congressional staff members draft the specifics of the legislation.” He provided the media with a stream of supportive quotes, and was paid almost $400,000 for his consulting work.
Jonathan Gruber, in other words, knows exactly what it took to get the health care law passed.
And that’s why you should take him seriously when he says, in the following video, that it was critical to not be transparent about the law’s costs and true effects, and to take advantage of the “stupidity of the American voter” in order to get it passed:
Here’s the full quote:
“This bill was written in a tortured way to make sure CBO did not score the mandate as taxes. If CBO [Congressional Budget Office] scored the mandate as taxes, the bill dies. Okay, so it’s written to do that. In terms of risk rated subsidies, if you had a law which said that healthy people are going to pay in – you made explicit healthy people pay in and sick people get money, it would not have passed… Lack of transparency is a huge political advantage. And basically, call it the stupidity of the American voter or whatever, but basically that was really really critical for the thing to pass….Look, I wish Mark was right that we could make it all transparent, but I’d rather have this law than not.”
This validates much of what critics have said about the health care law, and the tactics used to pass it, for years.
For one thing, it is an explicit admission that the law was designed in such a way to avoid a CBO score that would have tanked the bill. Basically, the Democrats who wrote the bill knowingly gamed the CBO process.
It’s also an admission that the law’s authors understood that one of the effects of the bill would be to make healthy people pay for the sick, but declined to say this for fear that it would kill the bill’s chances. In other words, the law’s supporters believed the public would not like some of the bill’s consequences, and knowingly attempted to hide those consequences from the public.
Most importantly, however, it is an admission that Gruber thinks it’s acceptable to deceive people if he believes that’s the only way to achieve his policy preference. That’s not exactly surprising, given that he failed to disclose payments from the administration to consult on Obamacare even while providing the media with supposedly independent assessments of the law.
…Gruber may believe that American voters are stupid, but he was the one who was dumb enough to say all this on camera.
Now that various MSM outlets have begun to pay attention to the Gruber Obamacare deception video, it will be fascinating to see what type of excuses will be made by the pundits to cover for what he admitted. Bonus points to Jonathan Cohn at New Republic or Politico or any of a vast number of liberal sources for whoever can dream up the most entertaining spin control to explain away this viral video.
p.s. Did I mention that Newsbusters was the first major website to feature this video?
Dr. Jonathan Gruber is a Professor of Economics at the Massachusetts Institute of Technology, where he has taught since 1992. He is also the Director of the Health Care Program at the National Bureau of Economic Research, where he is a Research Associate. He is an Associate Editor of both the Journal of Public Economics and the Journal of Health Economics. In 2009 he was elected to the Executive Committee of the American Economic Association. He is also a member of the Institute of Medicine, the American Academy of Arts and Sciences, and the National Academy of Social Insurance.
Dr. Gruber received his B.S. in Economics from MIT, and his Ph.D. in Economics from Harvard University. Dr. Gruber’s research focuses on the areas of public finance and health economics. He has published more than 140 research articles, has edited six research volumes, and is the author of Public Finance and Public Policy, a leading undergraduate text, and Health Care Reform, a graphic novel. In 2006 he received the American Society of Health Economists Inaugural Medal for the best health economist in the nation aged 40 and under. During the 1997-1998 academic year, Dr. Gruber was on leave as Deputy Assistant Secretary for Economic Policy at the Treasury Department. From 2003-2006 he was a key architect of Massachusetts’ ambitious health reform effort, and in 2006 became an inaugural member of the Health Connector Board, the main implementing body for that effort. In that year, he was named the 19th most powerful person in health care in the United States by Modern Healthcare Magazine.
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Lec 1 | MIT 14.01SC Principles of Microeconomics
Meet Jonathan Gruber, the man who’s willing to say what everyone else is only thinking about Obamacare
By Jason Millman
Jonathan Gruber might not be a household name, but in the world of health care policy, he’s a pretty big deal. And now he’s also known as the guy who’s credited “the stupidity of the American voter” for the passage of the Affordable Care Act.
An old video surfaced this week of Gruber saying that a lack of transparency was one of the reasons Obamacare got through Congress in 2010. Gruber, a Massachusetts Institute of Technology health economist who’s credited as one of the intellectual godfathers of the Affordable Care Act, has apologized for speaking off the cuff, but critics of the law are eagerly highlighting his comments.
That’s because of what Gruber represents. He was one of the architects of the 2006 Massachusetts health care law, which became the basis for the ACA, and he helped craft the federal legislation that used a similar scheme of guaranteed coverage, financial assistance and insurance mandates. He was far from the only person who helped shape the ACA, but he has been one of its most vocal academic defenders in the nearly five years since it passed. (And he’s the only one to write a comic book about the law.)
It’s easy to see why Gruber’s comments get pored over by ACA opponents. There’s plenty of misunderstanding about what’s in the ACA and mistrust of the motivations for passing the law — just recall Nancy Pelosi’s infamous line about needing to pass the bill to find out what’s in it. So when someone like Gruber, who’s supposed to know the law inside and out, seemingly confirms critics’ worst suspicions, that makes for a powerful anecdote.
Gruber, who’s fiercely intelligent and passionate about the health reforms he helped create, also isn’t one to always sugarcoat things.
Earlier this year, a pretty important health policy study showed that the expansion of Medicaid coverage in Oregon was associated with a spike in emergency room visits. The research potentially undercut an argument by supporters of the law who said it would save money since giving more people health insurance meant patients would rely more on primary care providers, rather than expensive trips to the ER. And Gruber, commenting on the study, offered an uncomfortable truth.
“I would view [the study] as part of a broader set of evidence that covering people with health insurance doesn’t save money,” Gruber told the Washington Post at the time. “That was sometimes a misleading motivator for the Affordable Care Act. The law isn’t designed to save money. It’s designed to improve health, and that’s going to cost money.”
You may also remember Gruber from the last presidential campaign, when there was plenty of debate over just how similar Obamacare and Romneycare actually were to one another. It was Gruber who artfully cleared up the confusion. “They’re the same f—— bill,” he told Capital New York in what became a widely circulated interview three years ago. It’s probably what ACA supporters wanted to say all along, but only Gruber went ahead and did it.
His most potentially damaging comments surfaced just over the summer, when Gruber seemingly gave credence to the ACA challenge just taken up by the Supreme Court last week — a challenge that if successful couldtorpedo the law.
The case revolves around whether residents in states that refused to set up their own health insurance marketplaces should still be able to claim tax subsidies to help them afford their insurance. Opponents say no, Congress intentionally didn’t allow that under the law. Democrats say they never intended for people in these 36 states to not have access to the financial assistance.
Here was Gruber again, in January 2012, telling a health-care conference that states refusing to set up their own exchanges would deny their residents premium tax credits. The video wasn’t widely viewed until June of this year, but this is what he said at the time:
I think what’s important to remember politically about this, is if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits. But your citizens still pay the taxes that support this bill. So you’re essentially saying to your citizens, you’re going to pay all the taxes to help all the other states in the country. I hope that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these Exchanges, and that they’ll do it. But you know, once again, the politics can get ugly around this.
Here’s the video, with these comments near the 31:30 mark:
Critics of the law jumped on those comments as further validation of their challenge to the subsidies in the 36 states relying on the federal-run insurance marketplaces, or exchanges. Gruber later said that he misspoke, and that his own work always assumed all exchanges — whether run by the states or the federal government — would be eligible for subsidies.
Gruber’s latest comments have surfaced at an especially inopportune time for the Obama administration. The next enrollment period is approaching this weekend with lowered expectations, just as Republicans reclaimed the Senate and the Supreme Court agreed to hear a new Obamacare challengethat could seriously weaken the law.
The Democrats, realizing how harmful Gruber’s latest comments have become, are already out doing damage control. Former Vermont Gov. Howard Dean was on MSNBC’s “Morning Joe” today to put distance between Gruber and the health-care law, saying he’s not even sure that Gruber ever met with President Obama.
“He’s a consultant, not the architect [of Obamacare,” Dean said. “I’m not excusing the language — it’s terrible.”
Jonathan Holmes Gruber is a professor of economics at the Massachusetts Institute of Technology, where he has taught since 1992. He is also the director of the Health Care Program at the National Bureau of Economic Research, where he is a research associate. He is an associate editor of both the Journal of Public Economics and the Journal of Health Economics.
Gruber’s research has focused on public finance and health economics. He has published more than 140 research articles, and has edited six research volumes. He is a co-editor of the Journal of Public Economics, an associate editor of the Journal of Health Economics, and the author of Public Finance and Public Policy.[3] and Health Care Reform, a graphic novel delineating the Affordable Care Act.[citation needed]
Public service
During the 1997–1998 academic year, Gruber was on leave as Deputy Assistant Secretary for Economic Policy at the Treasury Department. From 2003–06 he was a key architect of Massachusetts health care reform, also known as “Romneycare”. In 2006 he became an inaugural member of the Health Connector Board, the main implementing body for that effort. In that year, he was named the 19th most powerful person in health care in the United States by Modern Healthcare magazine. During the 2008 election he was a consultant to the Clinton, Edwards and Obama presidential campaigns.
Patient Protection and Affordable Care Act
In 2009–10 Gruber served as a technical consultant to the Obama Administration and worked with both the administration and Congress to help craft the Patient Protection and Affordable Care Act, often referred to as the ACA or “Obamacare”.[4] The act was signed into law in March 2010, and Gruber has been described as an “architect”, “writer”, and “consultant” of the legislation. He was widely interviewed and quoted during the roll-out of the legislation. [5][6][7][8][9]
One heavily-scrutinized part of the ACA reads that subsidies should be given to healthcare recipients who are enrolled “through an Exchange established by the State”. Some have read this to mean that subsidies can be given only in states that have chosen to create their own healthcare exchanges, and do not use the federal exchange, while the Obama administration says that the wording applies to all states. This dispute is currently part of an ongoing series of lawsuits referred to collectively as King v. Burwell. In July 2014, two separate recordings of Gruber, both from January 2012, surfaced in which he seemed to contradict the administration’s position.[4] In one, Gruber states, in response to an audience question, that “if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits”,[14] while in the other he says, “if your governor doesn’t set up an exchange, you’re losing hundreds of millions of dollars of tax credits to be delivered to your citizens.”[15] When these recordings emerged, Gruber called these statements mistaken, describing them as “just a speak-o — you know, like a typo”.[14]
In a panel discussion about the ACA at the University of Pennsylvania in October 2013, Gruber stated that the bill was deliberately written “in a tortured way” to disguise the fact that it created a system in which “healthy people pay in and sick people get money”. He stated that this obfuscation was necessary, due to “the stupidity of the American voter or whatever”, in order to get the bill passed and that a “lack of transparency is a huge political advantage.”[16] His comments caused controversy after a video of them was placed on YouTubein November 2014.[17][18][19][20]
Published works
On February 15, 2006, the Center on Budget and Policy Priorities published an article by Gruber entitled “The Cost and Coverage Impact of the President’s Health Insurance Budget Proposals”[21]
In a December 4, 2008 New York Times op-ed, “Medicine for the Job Market”, he claimed that expanding health insurance, even in difficult financial times would stimulate the economy.[22]
On February 9, 2011, the Center for American Progress published an article by Gruber titled “Health Care Reform Without the Individual Mandate,” analyzing the health insurance coverage impacts of alternative policy options for encouraging purchase of health insurance under the Patient Protection and Affordable Care Act, including the mandate, a late penalty, and auto-enrollment.[23]
In 2006, Gruber received the American Society of Health Economists Inaugural Medal for the best health economist in the nation aged 40 and under.[25] He was elected a member of the Institute of Medicine in 2005.[26] In 2009 he was elected to the Executive Committee of the American Economic Association.
In 2011 he was named “One of the Top 25 Most Innovative and Practical Thinkers of Our Time” by Slate Magazine. In both 2006 and 2012 he was rated as one of the top 100 most powerful people in health care in the United States by Modern Healthcare Magazine.
Story 1: Jonathan Gruber, PhD (Piled Higher and Deeper) on Healthcare, Obamacare and Lack of Transparency — The American Voters Were Not Stupid And Rejected Democrats Who Supported Obamacare By Voting Them Out of Office — But The Democratic Progressive Elitist Establishment Are Liars and Losers — Stupid Is As Stupid Does — Death Knell of Socialized Medicine — Repeal Obamacare Now! — Videos
Stupid Is As Stupid Does
“This bill was written in a tortured way to make sure CBO did not score the mandate as taxes. If CBO [Congressional Budget Office] scored the mandate as taxes, the bill dies. Okay, so it’s written to do that. In terms of risk rated subsidies, if you had a law which said that healthy people are going to pay in – you made explicit healthy people pay in and sick people get money, it would not have passed… Lack of transparency is a huge political advantage. And basically, call it the stupidity of the American voter or whatever, but basically that was really really critical for the thing to pass….Look, I wish Mark was right that we could make it all transparent, but I’d rather have this law than not.”
~Jonathan Gruber
Stupid is as stupid does, Mrs. Blue..
Trey Gowdy on Gruber comments
Megyn Kelly: Democrats Committed Fraud By Not Representing Obamacare as a Tax
Krauthammer rips Jonathan Gruber: “We’re hearing the true voice of liberal arrogance”
GRUBER: “Lack of transparency is a huge political advantage.”
The Worst of Jonathan Gruber
Flashback: Obama: Transparency and the rule of law will be the touchstones of this presidency.
The Changing Touchstone of Transparency
Nets Ignore ObamaCare Architect Crediting Law’s Passage On ‘The Stupidity Of The American Voter’
Megyn Slams ObamaCare Architect Who Declined to Appear on ‘Kelly File’
WHY IS OBAMA NOT IN PRISON FOR STEALING TAXPAYER MONEY?
ObamaCare: Bill’s architect Gruber admits lies, deception necessary because Americans are stupid
President Obama in 2009: Mandate is Not a Tax
“If you like your plan, you can keep your plan.” – Barack Obama
Jon Stewart on You Can Keep Your Plan. Period.
Jonathan Gruber on MSNBC says he “regrets” calling the American voter stupid
Conversation: “Health Care Reform,” The Comic Book
Gruber Files- Harvard University
HealthCare Reform – Modified Community Rating Part 1 – Federal Marketplace
HealthCare Reform – Modified Community Rating Part 2 – Federal Marketplace
Community Rating – How the Affordable Care Act Impacts Small Business Owners
Forrest Gump TRAILER
Honest Trailers – Forrest Gump
Forrest Gump’s most beautiful quote
Funeral Toll & Peal, Mount Angel Abbey
When a monk passes away during the night, the toll is sounded early the following morning. It is repeated after the funeral Mass, when the monks process down to the cemetery, and ends with a peal of all the bells. These are the last few tolls of the sequence on the largest bell in the Pacific Northwest.
Please pray for the eternal repose of the soul of this monk, that he may enter into everlasting life with Christ.
Martin Luther King – For whom the bell tolls
Hearings floated as Hill Republicans seize on Gruber Obamacare comments
By Robert Costa and Jose A. DelReal
Congressional Republicans seized Wednesday on controversial commentsmade by a former health-care consultant to the Obama administration, with one leading House conservative suggesting that hearings could be called in response as part of the GOP effort to dismantle the law in the next Congress and turn public opinion ahead of the 2016 election.
“We may want to have hearings on this,” said Rep. Jim Jordan (R-Ohio), an influential voice among GOP hardliners and a member of the House Oversight and Government Reform Committee, in an interview at the Capitol. “We shouldn’t be surprised they were misleading us.”
The firestorm began when a video emerged showing Jonathan Gruber, a high-profile architect of the Affordable Care Act and one of its fiercest advocates, suggesting that the health reform law passed through Congress because of the “stupidity of the American voter” and a “lack of transparency” over its funding mechanisms. The remarks were originally made in 2013 during a panel discussion at the University of Pennsylvania but began heavy circulation on social media Monday.
“This bill was written in a tortured way to make sure CBO did not score the mandate as taxes,” Gruber said. “Lack of transparency is a huge political advantage. And basically, call it the ‘stupidity of the American voter’ or whatever, but basically that was really, really critical to getting the thing to pass.”
Gruber apologized for his incendiary remarks in an on-air interview with MSNBC Tuesday afternoon, calling his comments inappropriate and saying he was speaking “off the cuff.” On Tuesday evening, Fox News’ Megyn Kelly aired a second video, of Gruber calling voters stupid, also from 2013.
The controversy has lit a fire under conservatives eager to dismantle the law and has raised eyebrows among the law’s defenders, who are concerned that such comments will further damage the law’s already shaky standing with American voters. It also comes after a sweeping electoral victory for Republicans last Tuesday, who won control of the Senate and bolstered the size of their majority in the House.
Jordan said House Republicans have been sending each other a blizzard of e-mails and text messages this week, and he expects the interest in “bringing [Gruber] up here to talk” will gain traction as members return to Washington. House Republicans will gather Thursday evening for their first series of votes since the election.
“I just had a colleague text me saying, ‘We’ve got to look into this!” Jordan said as he glanced at his phone outside the House floor Wednesday morning.
The chatter among lawmakers echoes the outrage among the conservative grassroots over the comments. Sen. Ted Cruz in a speech last week said targeting ACA must remain the party’s top priority. “Now is the time to go after and do everything humanely possible to repeal Obamacare,” he said.
House GOP leadership aides expressed new optimism that their desire to target the ACA could get some momentum. While rhetorically committed to full repeal, in order to keep the party’s right flank on board, the party is looking more seriously at undermining specific parts of the law as it navigates divided government next year. Those moves could include repealing the medical device tax; watering down a requirement that employers offer full time workers coverage, which takes effect in January; and changing the definition of a full-time worker from someone who works at least 30 hours a week to someone who works at least 40 — all proposals which could win some Democratic support.
On the other side of the Capitol, Sen. Jeff Sessions (R-Ala.), who is slated to become chairman of the powerful Senate budget committee, also threw his support behind possible hearings. In a furious gaggle with reporters, Sessions said Gruber’s comments could make dealings with the White House more difficult, days after Republican leaders said they would seek areas of common ground.
“The strategy was to hide the truth from the American people,” Sessions said. “I’m not into this post-modern world where you can say whatever you want to in order to achieve your agenda. That is a threat to the American republic… This is far deeper and more significant than the fact that he just spoke.”
Other Senate Republicans expressed similar discomfort with Gruber, but warned conservatives to not get their hopes up about repealing the health-care law while President Obama remains in office, underscoring the tonal difference between the more rabble-rousing House GOP and the new and more even-tempered Republican Senate majority.
Heading into a party luncheon on Wednesday, retiring Sen. Tom Coburn (R-Okla.) said the health care law “is going to still be there regardless because we don’t have the votes” to undo it.
“We can talk all we want but he is going to veto whatever we send him,” Coburn said. “That’s the reality.”
Sen. Ron Johnson (R-Wis.) said he was unsure of how Senate Republicans would use the Gruber kerfuffle to go after the law, if at all. For the moment, he said, Republicans should focus on using the episode to highlight how the national press has covered the president’s signature policy.
“What Gruber said should be read and reported on by every news organization,” he said. “People should be aware of how this administration thinks.”
Several Democrats said Wednesday that they were unaware of Gruber’s comments and declined to speculate on whether there could be political consequences, underscoring how much of the discussion is being driven by Republicans. One, however, did distance herself from the arguably aloof phrasing used by Gruber. “I have not seen them,” said Sen. Patty Murrary (D-Wash). “But I do think voters are pretty smart.”
The challenge for Republicans will be balancing the conservative ire surrounding Gruber with the leaders’ political imperative to establish themselves as a governing congressional majority. House Speaker John Boehner (R-Ohio) and incoming Senate Majority Leader McConnell (R-Ky.) have pledged to bring another repeal bill to floor, but are also focused on achieving incremental legislative gains on Keystone XL and trade agreements.
POSTED AT 6:01 PM ON NOVEMBER 11, 2014 BY NOAH ROTHMAN
On Saturday, Newsbusters was the first major website to feature a video posted to YouTube by AmericanCommitment of Obamacare architect Jonathan Gruber boasting in 2013 how he helped deceive the public via a lack of transparency about that bill. Some readers were anxious about that video being made better known to the public since at the time the article was published, there were only a couple of dozen views of the video on YouTube.
Well they needn’t have worried because since then the video has gone over the top viral to the extent that Rush Limbaugh led his show talking about it at length this morning as did Sean Hannity on his radio show. In addition, the video made it into the mainstream media other than Fox News when Jake Tapper showed the video today on The Lead and The Hill has an article about it as well. As of this writing the video has over 177,000 views and growing fast. Reason today had an excellent analysis of the Gruber revelations:
Massachusetts Institute of Technology Professor Jonathan Gruber was, by most accounts, one of the key figures in constructing the Affordable Care Act, better known as Obamacare. He helped designed the Massachusetts health care law on which it was modeled, assisted the White House in laying out the foundation of the law, and, according to The New York Times, was eventually sent to Capitol Hill “to help Congressional staff members draft the specifics of the legislation.” He provided the media with a stream of supportive quotes, and was paid almost $400,000 for his consulting work.
Jonathan Gruber, in other words, knows exactly what it took to get the health care law passed.
And that’s why you should take him seriously when he says, in the following video, that it was critical to not be transparent about the law’s costs and true effects, and to take advantage of the “stupidity of the American voter” in order to get it passed:
Here’s the full quote:
“This bill was written in a tortured way to make sure CBO did not score the mandate as taxes. If CBO [Congressional Budget Office] scored the mandate as taxes, the bill dies. Okay, so it’s written to do that. In terms of risk rated subsidies, if you had a law which said that healthy people are going to pay in – you made explicit healthy people pay in and sick people get money, it would not have passed… Lack of transparency is a huge political advantage. And basically, call it the stupidity of the American voter or whatever, but basically that was really really critical for the thing to pass….Look, I wish Mark was right that we could make it all transparent, but I’d rather have this law than not.”
This validates much of what critics have said about the health care law, and the tactics used to pass it, for years.
For one thing, it is an explicit admission that the law was designed in such a way to avoid a CBO score that would have tanked the bill. Basically, the Democrats who wrote the bill knowingly gamed the CBO process.
It’s also an admission that the law’s authors understood that one of the effects of the bill would be to make healthy people pay for the sick, but declined to say this for fear that it would kill the bill’s chances. In other words, the law’s supporters believed the public would not like some of the bill’s consequences, and knowingly attempted to hide those consequences from the public.
Most importantly, however, it is an admission that Gruber thinks it’s acceptable to deceive people if he believes that’s the only way to achieve his policy preference. That’s not exactly surprising, given that he failed to disclose payments from the administration to consult on Obamacare even while providing the media with supposedly independent assessments of the law.
…Gruber may believe that American voters are stupid, but he was the one who was dumb enough to say all this on camera.
Now that various MSM outlets have begun to pay attention to the Gruber Obamacare deception video, it will be fascinating to see what type of excuses will be made by the pundits to cover for what he admitted. Bonus points to Jonathan Cohn at New Republic or Politico or any of a vast number of liberal sources for whoever can dream up the most entertaining spin control to explain away this viral video.
p.s. Did I mention that Newsbusters was the first major website to feature this video?
Dr. Jonathan Gruber is a Professor of Economics at the Massachusetts Institute of Technology, where he has taught since 1992. He is also the Director of the Health Care Program at the National Bureau of Economic Research, where he is a Research Associate. He is an Associate Editor of both the Journal of Public Economics and the Journal of Health Economics. In 2009 he was elected to the Executive Committee of the American Economic Association. He is also a member of the Institute of Medicine, the American Academy of Arts and Sciences, and the National Academy of Social Insurance.
Dr. Gruber received his B.S. in Economics from MIT, and his Ph.D. in Economics from Harvard University. Dr. Gruber’s research focuses on the areas of public finance and health economics. He has published more than 140 research articles, has edited six research volumes, and is the author of Public Finance and Public Policy, a leading undergraduate text, and Health Care Reform, a graphic novel. In 2006 he received the American Society of Health Economists Inaugural Medal for the best health economist in the nation aged 40 and under. During the 1997-1998 academic year, Dr. Gruber was on leave as Deputy Assistant Secretary for Economic Policy at the Treasury Department. From 2003-2006 he was a key architect of Massachusetts’ ambitious health reform effort, and in 2006 became an inaugural member of the Health Connector Board, the main implementing body for that effort. In that year, he was named the 19th most powerful person in health care in the United States by Modern Healthcare Magazine.
2012-01-09 Jonathan Gruber on Mitt Romney and Health Care Reform
Jonathan Gruber Once Again Says Subsidies Are Tied to State-Based Exchanges
Jonathan Gruber discusses health care law’s next step
Healthcare Reform 101 Part 1.
Healthcare Reform 101 Part 2.
Healthcare Reform 101 Part 3.
Jonathan Gruber on Obamacare: Part 1 of 3
Jonathan Gruber on Obamacare: Part 2 of 3
Crafting ObamaCare
Obamacare Architect: No State Exchange = No Subsidies; Blatant Enough
#GruberGate: Tale of the Tapes
Rush Limbaugh – MIT Gruber Lied about Obamacare
Rush Limbaugh: Jonathan Gruber says you are Life’s Lottery Winners – Eugenics
Gwen and Jonathan Gruber Talk Health Care with Chris Matthews
Obama 2008: Bypassing Congress Unconstitutional; I’ll Reverse It
Jon Gruber: The Dismal Science
Meet Jonathan Gruber, the man who’s willing to say what everyone else is only thinking about Obamacare
By Jason Millman
Jonathan Gruber might not be a household name, but in the world of health care policy, he’s a pretty big deal. And now he’s also known as the guy who’s credited “the stupidity of the American voter” for the passage of the Affordable Care Act.
An old video surfaced this week of Gruber saying that a lack of transparency was one of the reasons Obamacare got through Congress in 2010. Gruber, a Massachusetts Institute of Technology health economist who’s credited as one of the intellectual godfathers of the Affordable Care Act, has apologized for speaking off the cuff, but critics of the law are eagerly highlighting his comments.
That’s because of what Gruber represents. He was one of the architects of the 2006 Massachusetts health care law, which became the basis for the ACA, and he helped craft the federal legislation that used a similar scheme of guaranteed coverage, financial assistance and insurance mandates. He was far from the only person who helped shape the ACA, but he has been one of its most vocal academic defenders in the nearly five years since it passed. (And he’s the only one to write a comic book about the law.)
It’s easy to see why Gruber’s comments get pored over by ACA opponents. There’s plenty of misunderstanding about what’s in the ACA and mistrust of the motivations for passing the law — just recall Nancy Pelosi’s infamous line about needing to pass the bill to find out what’s in it. So when someone like Gruber, who’s supposed to know the law inside and out, seemingly confirms critics’ worst suspicions, that makes for a powerful anecdote.
Gruber, who’s fiercely intelligent and passionate about the health reforms he helped create, also isn’t one to always sugarcoat things.
Earlier this year, a pretty important health policy study showed that the expansion of Medicaid coverage in Oregon was associated with a spike in emergency room visits. The research potentially undercut an argument by supporters of the law who said it would save money since giving more people health insurance meant patients would rely more on primary care providers, rather than expensive trips to the ER. And Gruber, commenting on the study, offered an uncomfortable truth.
“I would view [the study] as part of a broader set of evidence that covering people with health insurance doesn’t save money,” Gruber told the Washington Post at the time. “That was sometimes a misleading motivator for the Affordable Care Act. The law isn’t designed to save money. It’s designed to improve health, and that’s going to cost money.”
You may also remember Gruber from the last presidential campaign, when there was plenty of debate over just how similar Obamacare and Romneycare actually were to one another. It was Gruber who artfully cleared up the confusion. “They’re the same f—— bill,” he told Capital New York in what became a widely circulated interview three years ago. It’s probably what ACA supporters wanted to say all along, but only Gruber went ahead and did it.
His most potentially damaging comments surfaced just over the summer, when Gruber seemingly gave credence to the ACA challenge just taken up by the Supreme Court last week — a challenge that if successful couldtorpedo the law.
The case revolves around whether residents in states that refused to set up their own health insurance marketplaces should still be able to claim tax subsidies to help them afford their insurance. Opponents say no, Congress intentionally didn’t allow that under the law. Democrats say they never intended for people in these 36 states to not have access to the financial assistance.
Here was Gruber again, in January 2012, telling a health-care conference that states refusing to set up their own exchanges would deny their residents premium tax credits. The video wasn’t widely viewed until June of this year, but this is what he said at the time:
I think what’s important to remember politically about this, is if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits. But your citizens still pay the taxes that support this bill. So you’re essentially saying to your citizens, you’re going to pay all the taxes to help all the other states in the country. I hope that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these Exchanges, and that they’ll do it. But you know, once again, the politics can get ugly around this.
Here’s the video, with these comments near the 31:30 mark:
Critics of the law jumped on those comments as further validation of their challenge to the subsidies in the 36 states relying on the federal-run insurance marketplaces, or exchanges. Gruber later said that he misspoke, and that his own work always assumed all exchanges — whether run by the states or the federal government — would be eligible for subsidies.
Gruber’s latest comments have surfaced at an especially inopportune time for the Obama administration. The next enrollment period is approaching this weekend with lowered expectations, just as Republicans reclaimed the Senate and the Supreme Court agreed to hear a new Obamacare challengethat could seriously weaken the law.
The Democrats, realizing how harmful Gruber’s latest comments have become, are already out doing damage control. Former Vermont Gov. Howard Dean was on MSNBC’s “Morning Joe” today to put distance between Gruber and the health-care law, saying he’s not even sure that Gruber ever met with President Obama.
“He’s a consultant, not the architect [of Obamacare,” Dean said. “I’m not excusing the language — it’s terrible.”
Jonathan Holmes Gruber is a professor of economics at the Massachusetts Institute of Technology, where he has taught since 1992. He is also the director of the Health Care Program at the National Bureau of Economic Research, where he is a research associate. He is an associate editor of both the Journal of Public Economics and the Journal of Health Economics.
Gruber’s research has focused on public finance and health economics. He has published more than 140 research articles, and has edited six research volumes. He is a co-editor of the Journal of Public Economics, an associate editor of the Journal of Health Economics, and the author of Public Finance and Public Policy.[3] and Health Care Reform, a graphic novel delineating the Affordable Care Act.[citation needed]
Public service
During the 1997–1998 academic year, Gruber was on leave as Deputy Assistant Secretary for Economic Policy at the Treasury Department. From 2003–06 he was a key architect of Massachusetts health care reform, also known as “Romneycare”. In 2006 he became an inaugural member of the Health Connector Board, the main implementing body for that effort. In that year, he was named the 19th most powerful person in health care in the United States by Modern Healthcare magazine. During the 2008 election he was a consultant to the Clinton, Edwards and Obama presidential campaigns.
Patient Protection and Affordable Care Act
In 2009–10 Gruber served as a technical consultant to the Obama Administration and worked with both the administration and Congress to help craft the Patient Protection and Affordable Care Act, often referred to as the ACA or “Obamacare”.[4] The act was signed into law in March 2010, and Gruber has been described as an “architect”, “writer”, and “consultant” of the legislation. He was widely interviewed and quoted during the roll-out of the legislation. [5][6][7][8][9]
One heavily-scrutinized part of the ACA reads that subsidies should be given to healthcare recipients who are enrolled “through an Exchange established by the State”. Some have read this to mean that subsidies can be given only in states that have chosen to create their own healthcare exchanges, and do not use the federal exchange, while the Obama administration says that the wording applies to all states. This dispute is currently part of an ongoing series of lawsuits referred to collectively as King v. Burwell. In July 2014, two separate recordings of Gruber, both from January 2012, surfaced in which he seemed to contradict the administration’s position.[4] In one, Gruber states, in response to an audience question, that “if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits”,[14] while in the other he says, “if your governor doesn’t set up an exchange, you’re losing hundreds of millions of dollars of tax credits to be delivered to your citizens.”[15] When these recordings emerged, Gruber called these statements mistaken, describing them as “just a speak-o — you know, like a typo”.[14]
In a panel discussion about the ACA at the University of Pennsylvania in October 2013, Gruber stated that the bill was deliberately written “in a tortured way” to disguise the fact that it created a system in which “healthy people pay in and sick people get money”. He stated that this obfuscation was necessary, due to “the stupidity of the American voter or whatever”, in order to get the bill passed and that a “lack of transparency is a huge political advantage.”[16] His comments caused controversy after a video of them was placed on YouTubein November 2014.[17][18][19][20]
Published works
On February 15, 2006, the Center on Budget and Policy Priorities published an article by Gruber entitled “The Cost and Coverage Impact of the President’s Health Insurance Budget Proposals”[21]
In a December 4, 2008 New York Times op-ed, “Medicine for the Job Market”, he claimed that expanding health insurance, even in difficult financial times would stimulate the economy.[22]
On February 9, 2011, the Center for American Progress published an article by Gruber titled “Health Care Reform Without the Individual Mandate,” analyzing the health insurance coverage impacts of alternative policy options for encouraging purchase of health insurance under the Patient Protection and Affordable Care Act, including the mandate, a late penalty, and auto-enrollment.[23]
In 2006, Gruber received the American Society of Health Economists Inaugural Medal for the best health economist in the nation aged 40 and under.[25] He was elected a member of the Institute of Medicine in 2005.[26] In 2009 he was elected to the Executive Committee of the American Economic Association.
In 2011 he was named “One of the Top 25 Most Innovative and Practical Thinkers of Our Time” by Slate Magazine. In both 2006 and 2012 he was rated as one of the top 100 most powerful people in health care in the United States by Modern Healthcare Magazine.
TAKE IT TO THE LIMITS: Milton Friedman on Libertarianism
Giving Away Money Costs More Than You Think
Downsizing the Federal Government
Downsize the Department of Energy
Can We Eliminate the Department of Education? (Charles Murray)
$5 Billion Loan for Solar Energy — Department of Energy
Phil Kerpen on Neil Cavuto to discuss the DOE loan program
Our Ever Growing Dependence on Government
Obamanomics: A Legacy of Wasteful Spending
Why Does Big Business Love Big Government? (Domhoff, Rothbard, and Evers)
G. William Domhoff is a research professor in psychology and sociology at the University of California, Santa Cruz. He is the author of Who Rules America? (1967), Bohemian Grove and Other Retreats: A Study in Ruling-Class Cohesiveness (1974), and other books.
A prolific author and Austrian economist, Murray Rothbard promoted a form of free market anarchism he called “anarcho-capitalism.”
Bill Evers was a resident scholar at Stanford University’s Hoover Institution (and is currently a research fellow there) and also served as Assistant Secretary for the Office of Planning, Evaluation and Policy Development in the U.S. Department of Education from 2007-09.
In this lecture Domhoff, Rothbard, and Evers talk about the “interlocking overlappers” that get together to influence the government, in California and in the country generally. They each spend some time describing what it is that draws businesspeople to market-capturing and rent-seeking behaviors, and take questions from the audience.
Walter Block – Free-Market Environmentalism [Australian Mises Seminar 2012]
How Murray Rothbard Became a Libertarian
The tide is rising for America’s libertarians
By Edward Luce
The new spirit in a rising climate of anti-politics has become an attitude, rather than a movement
Robert Nozick, the late US libertarian, smoked pot while he was writing Anarchy, State and Utopia. He would applaud the growth of libertarianism among today’s young Americans. Whether it is their enthusiasm for legalised marijuana and gay marriage – both spreading across the US at remarkable speed – or their scepticism of government, US millennials no longer follow President Barack Obama’s cue. Most of America’s youth revile the Tea Party, particularly its south-dominated nativist core. But they are not big-government activists either. If there is a new spirit in America’s rising climate of anti-politics, it is libertarian.
On the face of it this ought to pose a bigger challenge to the Republican party – at least for its social conservative wing. Mr Obama may have disappointed America’s young, particularly the millions of graduates who have failed to find good jobs during his presidency. But he is no dinosaur. In contrast, Republicans such as Rick Santorum, the former presidential hopeful, who once likened gay sex to “man on dog”, elicit pure derision. Even moderate Republicans, such as Chris Christie, who until last week was the early frontrunner for the party’s 2016 nomination, are considered irrelevant. Whether Mr Christie was telling the truth last week, when he denied knowledge of his staff’s role in orchestrating a punitive local traffic jam, is beside the point. Mr Christie’s Sopranos brand of New Jersey politics is not tailored to the Apple generation.
The opposite is true of Rand Paul, the Kentucky senator, whose chances of taking the 2016 prize rose with Mr Christie’s dented fortunes last week. Unlike Ron Paul, the senator’s father, who still managed to garner a large slice of the youth vote in 2008, Rand Paul eschews the more outlandish fringes of libertarian thought. Rather than promising an isolationist US withdrawal from the world, he touts a more moderate “non-interventionism”. Instead of pledging to end fiat money, he promises to audit the US Federal Reserve – “mend the Fed”, rather than “end the Fed”. Both find echo among the Y generation. So too does his alarmism about the US national debt. Far from being big spenders, millennials are more concerned about US debt than other generations, according to polls. They are also strongly in favour of free trade. More than a third of the Republican party now identifies as libertarian, according to the Cato Institute. Just under a quarter of Americans do so too, says Gallup.
All of which looks ominous for Ted Cruz, the Texan Republican whose lengthy filibuster against Obamacare last year lit the fuse for the US government shutdown. Mr Cruz, also a 2016 aspirant, leads the pugilistic wing of the Republican party that is prepared to burn the house down in order to save the ranch. Although also a Tea Partier, Mr Paul is cultivating a sunnier Reaganesque optimism that draws on the deep roots of US libertarianism. His brand of politics also strikes a chord with those who fear the growth of the US surveillance state – the types who view Edward Snowden (another millennial) as a hero rather than a traitor. Last year the US House of Representatives came within 12 votes of passing a bill to defund the National Security Agency. Mr Paul led the bill in the Senate. Next time they could succeed.
November 2012: While Obama lost ground among white male voters, his 2012 victory was the product of perhaps the most diverse electoral coalition in American history. Voters talk about how they interpret the president’s re-election
What does it mean for the Democrats? In terms of social values, libertarians are almost identical to liberals. Smoking pot and same-sex marriage both meet with big approval. The same is not necessarily true of guns. In spite of recent school massacres, 40 US states now have “concealed weapons” laws – many passed in the past 12 months. Again, millennials are surprisingly sceptical of gun control, say the polls. But it is on economic policy where they really part company with liberals. The Great Depression helped forge a generation of solid Democrats. The same does not appear to be true of the Great Recession. Franklin Roosevelt helped dig people out of misery in the 1930s by providing direct public employment. Mr Obama, on the other hand, has stuck largely to economic orthodoxy. He may have missed a golden opportunity to mould a generation of social democrats.
He has also inadvertently fuelled scepticism about the role of government. Mr Obama came to power in 2008 on a surge of voluntarism. He did so in part by appealing to youthful idealism about public service. That now feels like a long time ago. Distrust in public institutions has continued to rise during his presidency – most strongly among the youngest generation. The share of voters who identify as independents, rather than Democrats or Republicans, recently hit an all-time high of 42 per cent, according to Gallup. This is bad news for established figures in either party – and, indeed, in any walk of life. Hillary Clinton should beware. So should Jeb Bush.
On the minus side, libertarians have no real answer to many of America’s biggest problems – not least the challenges posed to US middle-class incomes by globalisation and technology. Nor are they coherent as a force. Libertarianism is an attitude, rather than an organisation. It is also potentially fickle. Young Americans disdain foreign entanglements. That could change overnight with a big terrorist attack on the homeland. They feel let down by Democrats and hostile to mainstream Republicans. Yet they could flock to an exciting new figure in either party. Theirs is a restless generation that disdains authority. Establishment figures should take note. Tomorrow belongs to them.
DOE says its energy-scoring software — called the Home Energy Scoring Tool — is like a vehicle’s mile-per-gallon rating because it allows homeowners to compare the energy performance of their homes to other homes nationwide. It also provides homeowners with suggestions for improving their homes’ efficiency.
The software is part of the government’s effort to reduce the nation’s energy consumption; but it’s also billed as a way to keep home-retrofitting going, at a time when stimulus funds for weather-proofing have run out.
The Home Energy Scoring Tool “can be a powerful motivator in getting homeowners to make energy efficiency improvements,” DOE says. “It’s also a great way to help trained workers enter the private sector energy improvement market as funding for weatherization efforts decline.”
DOE says its Home Energy Score is useful if you are a homeowner looking to renovate or remodel your home, lower your utility bills, improve the comfort of your home, or reduce your energy usage. Moreover, “the score serves as an official way to document these improvements and thereby enhance your home’s appeal when you’re ready to sell.”
Right now, getting your home scored is voluntary.
To produce a Home Energy Score, a trained, “qualified assessor” comes to your home — for a fee — and collects approximately 40 pieces of data about the home’s “envelope” (e.g., walls, windows, heating and cooling systems) during an hour-long walk-through.
Based on the home’s characteristics, the DOE software estimates the home’s annual energy use, assuming “typical homeowner behavior.” The software then converts the estimated energy use into a score, based on a 10-point scale (10 being the most energy-efficient). The 1-10 scale accounts for differences in weather conditions by using the zip code to assign the house to one of more than 1,000 weather stations.
In addition to showing the home’s current energy efficiency — or inefficiency — the score also shows where a home would rank if all of the energy-saving improvements identified during the home walk-through were made. That may prompt some homeowners to buy new windows or doors, for example, boosting the market for home retro-fitters.
DOE recommends getting a Home Energy Score “as soon as the program becomes available in your area.” The program launched in 2012, and at this time, only single-family homes and townhouses can be scored.
The scoring is available only through DOE’s participating partners, which include state and local governments, utilities, and non-profits. DOE does not determine how much an assessor charges to score a house. “It will depend on what the local market supports.” But DOE says its partners “have indicated plans to charge between $25 and $125 for the Home Energy Score.”
And yes, the size of the home matters because larger homes use more energy.
The Home Energy Score and the associated report is generated through DOE/Lawrence Berkeley National Laboratory software. The 2014 version of DOE’s Home Energy Scoring Tool will be introduced at a webinar on Tuesday.
So far,
The Home Energy Score is similar to a vehicle’s mile-per-gallon rating, says the U.S. Energy Department. (Graphic is from DOE website)
DOE says more than 8,500 homes have been scored by the Energy Department’s growing network of more than 25 partners and 175 qualified assessors.
The business and economic reporting of CNSNews.com is funded in part with a gift made in memory of Dr. Keith C. Wold.
Cathy Zoi on the new Home Energy Score pilot program
Acting Under Secretary Cathy Zoi talks about the new Home Energy Score pilot program that was announced today by Vice President Biden and U.S. Department of Energy Secretary Steven Chu. The Home Energy Score will offer homeowners straightforward, reliable information about their homes’ energy efficiency. A report provides consumers with a home energy score between 1 and 10, and shows them how their home compares to others in their region. The report also includes customized, cost-effective recommendations that will help to reduce their energy costs and improve the comfort of their homes.
200,000 homes weatherized under the Recovery Act
Home Energy Score Pilot Program Launched By DOE
Home Energy Score Qualified Assessor module 1 intro
Paul Ryan Questions OMB Director – President’s Fiscal Year 2014 Budget Request
Sessions: Obama’s Persistent Budget Misrepresentations Make Compromise More Difficult
‘When Do We Hold People Accountable?’ Sessions Slams Dems For Falsely Claiming ‘Balance’ To Nation
WASHINGTON, March 22—Throughout the course of the budget debate, Democratic Senators have repeatedly suggested their budget contains a “balanced approach,” a rhetorical description that has no accounting value. (Sen. Sheldon Whitehouse (D-RI) went even further last night and repeatedly said his party’s plan called for “balancing the budget.”)
But as Sen. Sessions pointed out this morning, “They know they don’t have a balanced budget. They won’t tell the American people they don’t have one. They just use the word. But it’s not in their document. Where and when do we hold people accountable in this United States Senate for an accurate [description] of legislation? It’s wrong.”
To view for yourself the budget tables with the Democrats’ own numbers (in other words, before one even begins to strip out all the gimmicks and accounting tricks), please click here: http://1.usa.gov/YwdsbM. Note that cumulative deficits will amount to $5.198 trillion, and the nation’s gross debt will climb to $24.365 trillion by 2023.
Dem Senators On Budget Committee Unanimously Oppose Balancing The Federal Budget
Hatch on Senate Democrats’ Budget: ‘A Cynical Political Document’
Senator King Discusses 2014 Fiscal Year Budget Blueprint
Sessions: Dem Budget Would Trap Millions In Poverty By Shielding Failed Government Programs
Hatch: Entitlement Reform Not an Option, a Necessity
Background Articles and Videos
Making the Federal Budget
How do you spend four trillion dollars? Turns out, you don’t; it takes the President and the Congress to allocate, authorize, appropriate, resolve, outlay, sequester, impound, and just plain spend that much in 2011. Such a process is baffling at times. It’s so complex that you may marvel that Washington can get any action accomplished and paid for at all. So how does the federal budget happen?
Join the Mercatus Center’s Capitol Hill Campus and Senior Research Fellow Jason J. Fichtner for a walk through the process of making the federal budget. He explains the process from its beginnings in the halls of the White House, highlight the many roles Congress takes to authorize and enforce the budget, and navigate the twisting, puzzling conglomeration of bureaucratic steps, political goals, and accountancy rules that go into making our government function.
Changing the Budget Process to Promote Fiscal Responsibility
A Sustainable Approach to Entitlement Reform
Foundation for Growth: Restoring the Promise of American Opportunity
The Fiscal Year 2014 Senate Budget builds on the work done over the last two years to create jobs, invest in broad-based economic growth, and tackle our deficit and debt responsibly.
This budget takes the balanced and responsible approach to our fiscal challenges that every bipartisan group has endorsed and that the American people support. It includes responsible spending cuts made across the federal budget, as well as significant new savings achieved by eliminating loopholes and cutting wasteful spending in the tax code that benefits the wealthiest Americans and biggest corporations.
The Senate Budget is grounded in the understanding that our country’s long-term fiscal and economic goals will only be met with policies that support a strong and growing middle class. And it keeps the promises we have made to our seniors, our families, and our communities.
The American people are sick and tired of watching their government lurch from crisis to crisis. The Senate Budget offers a serious and credible path away from this gridlock and dysfunction and toward a long-term plan to create jobs, lay down a strong foundation for broad-based economic growth, replace sequestration, and tackle our deficit and debt responsibly and credibly.
This budget reflects the values of a diverse Senate serving a diverse nation, and it is guided by the principles and priorities that are strongly supported by the constituents we were elected to represent
Foundation for Growth: Restoring the Promise of American Opportunity
The Fiscal Year 2014 Senate Budget builds on the work done over the last two years to create jobs, invest in broad-based economic growth, and tackle our deficit and debt responsibly.
This budget takes the balanced and responsible approach to our fiscal challenges that every bipartisan group has endorsed and that the American people support. It includes responsible spending cuts made across the federal budget, as well as significant new savings achieved by eliminating loopholes and cutting wasteful spending in the tax code that benefits the wealthiest Americans and biggest corporations.
The Senate Budget is grounded in the understanding that our country’s long-term fiscal and economic goals will only be met with policies that support a strong and growing middle class. And it keeps the promises we have made to our seniors, our families, and our communities.
The American people are sick and tired of watching their government lurch from crisis to crisis. The Senate Budget offers a serious and credible path away from this gridlock and dysfunction and toward a long-term plan to create jobs, lay down a strong foundation for broad-based economic growth, replace sequestration, and tackle our deficit and debt responsibly and credibly.
This budget reflects the values of a diverse Senate serving a diverse nation, and it is guided by the principles and priorities that are strongly supported by the constituents we were elected to represent.
The highest priority of the Senate Budget is to create the conditions for job creation, economic growth, and prosperity built from the middle out, not the top down.
The Senate Budget takes the position that trickle-down economics has failed as an economic policy and that true national prosperity comes from the middle out, not the top down. We believe that deficit reduction at the expense of economic growth is doomed to failure, and policies that promote a strong middle class are essential to tackling our long-term deficit and debt challenges.
The policies President Barack Obama and Congress put in place in response to the Great Recession pulled our economy back from the brink and helped to add back jobs. But with an unemployment rate that remains stubbornly high, and a middle class that has seen their wages stagnate for far too long, we simply cannot afford any threats to our fragile recovery. Therefore, the Senate Budget:
• Fully replaces the harmful cuts from sequestration with smart, balanced, and responsible deficit reduction, which would save hundreds of thousands of jobs while protecting families, communities, and the fragile economic recovery.
• Invests in long-term economic growth and national competitiveness by tackling our serious deficits in infrastructure, education, job training, and innovation to create jobs now and lay down a strong foundation for broad-based growth.
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• Includes a $100 billion targeted jobs and infrastructure package that would start creating new jobs quickly, begin repairing the worst of our crumbling roads and bridges, and help train our workers to fill 21
st century jobs. This jobs investment package is fully paid for by eliminating loopholes and cutting wasteful spending in the tax code that benefits the wealthiest Americans and biggest corporations.
• Protects and continues tax cuts for the middle class and low-income working families.
The Senate Budget builds on the work we have done over the last two years to tackle our deficit and debt responsibly.
At the end of 2010, the bipartisan Simpson-Bowles Commission report laid out a responsible goal of reducing our deficit by $4 trillion over ten years. Since that time, Congress and the administration have implemented $2.4 trillion in deficit reduction, with $1.8 trillion coming from spending cuts and $600 billion coming from new revenue from the wealthiest Americans. The Senate Budget:
• Surpasses the bipartisan goal of $4 trillion in 10-year deficit reduction and puts our deficit and debt on a downward, sustainable, and responsible path.
• Builds on the $2.4 trillion in deficit reduction already done with an additional $1.85 trillion in new deficit reduction for a total of $4.25 trillion in deficit reduction since the Simpson-Bowles report.
• Includes an equal mix of responsible spending cuts and new revenue raised by closing loopholes and ending wasteful spending in the tax code.
• Achieves $975 billion in deficit reduction through responsible spending cuts made across the federal budget:
o
$493 billion saved on the domestic spending side, including $275 billion in health care savings made in a way that does not harm seniors or families.
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$240 billion saved by carefully and responsibly cutting defense spending to align with the drawdown of troops in our overseas operations.
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$242 billion saved in reduced interest payments.
• Achieves $975 billion in deficit reduction by closing loopholes and eliminating wasteful spending in the tax code that benefits the wealthiest Americans and biggest corporations.
• Includes reconciliation instructions, a fast-track process that makes sure that the new revenue from the wealthiest Americans and biggest corporations cannot be filibustered in the Senate.
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The Senate Budget keeps the promises we have made to our seniors, families, veterans, and communities.
The Senate Budget takes the position that the promises we made to our seniors, families, veterans, and communities ought to be fulfilled. This budget:
• Preserves and protects Medicare so that it is strong for seniors today and will be there for our children and grandchildren.
• Rejects calls to dismantle, privatize, or voucherize Medicare.
• Builds on the responsible changes made in the Affordable Care Act to continue reducing health care costs while protecting patients.
• Protects the expansion of health insurance to nearly 30 million Americans and ensures the federal-state partnership on Medicaid is preserved.
• Rejects efforts to simply shift health care costs to states or make cuts that harm seniors and the most vulnerable families.
• Maintains the key principle that deficit reduction should not be done on the backs of the most vulnerable families and communities.
• Continues to make the investments we need in national defense, homeland security, and law enforcement to keep our country and our communities strong and secure.
• Keeps the promise we have made to our veterans that their country will be there for them and provide the resources and support they need when they come home.
The House Republican approach would hurt middle class families and the economy and break the promises we have made to our seniors.
The Senate Budget offers a very different vision than the approach taken by House Republicans.
Their proposals would cut the legs out from under our fragile economic recovery and threaten millions of jobs. They would slash the investments in infrastructure, education, and innovation that we need to lay down a strong foundation for broad-based growth and that would position us to compete and win in the 21
st century global economy.
House Republicans would dismantle Medicare and cut off programs that support the middle class and most vulnerable families. And they would do all that while refusing to ask the wealthiest Americans and biggest corporations to contribute their fair share.
We believe that the American people strongly support the pro-growth, pro-middle class approach taken in the Senate Budget. And we look forward to engaging with families and seniors across the country as we work to pass the responsible, fair, and bipartisan budget deal the American people expect and deserve.
The following timetable is used to guide the federal budget process each year (see 2. U.S.C. 631)
Date
Action
1st Monday in February
President’s budget submission (includes OMB sequester preview report and adjustments to spending caps).
February 15
CBO budget and economic outlook report
Within 6 weeks of President’s budget
Committees submit views and estimates to the Budget Committees
April 1
Senate Budget Committee reports resolution
April 15
Congress completes budget resolution. If not, Chairman of House Budget Committee files 302(a) allocations; Ways and Means is free to proceed with pay-as-you-go measures
May 15
Appropriations bills may be considered in the House
June 10
House Appropriations reports last bill
June 15
Congress completes action on reconciliation reconciliation (if applicable)
June 30
House completes action on annual appropriation bills
Appropriations Act: A statute, under the jurisdiction of the House and Senate Appropriations Committees, that generally provides authority for Federal agencies to incur obligations and to make payments out of the Treasury for specified purposes. An appropriation act is the most common means of providing budget authority. Currently, there are 13 regular appropriations acts for each fiscal year. From time to time, Congress also enacts supplemental appropriations acts. (See Appropriations under Budget Authority; Continuing Resolution; Supplemental Appropriation.)
Authorizing Committee: A committee of the House or Senate with legislative jurisdiction over laws that set up or continue the operations of Federal programs and provide the legal basis for making appropriations for those programs. Authorizing committees also have direct control over spending for mandatory programs since the Government’s obligation to make payments for such program is contained in the authorizing legislation (See Entitlement.)
Authorizing Legislation: Legislation enacted by Congress that sets up or continues the operation of a Federal program or agency indefinitely or for a specific period of time. Authorizing legislation may limit the amount of budget authority which can be appropriated for a program or may authorize the appropriation of “such sums as are necessary.” (See Budget Authority; Entitlement.)
Budget Authority: The authority Congress gives to Government agencies, permitting them to enter into obligations which will result in immediate or future outlays.
Budget authority may be classified in several ways. It may be classified by the form it takes: appropriations, borrowing authority, or contract authority. Budget authority may also be classified by the determination of amount: definite authority or indefinite authority. Finally budget authority may be classified by the period of availability: 1-year authority, multi-year authority, or no-year authority (available until used).
Forms of Budget Authority
Appropriations.–An act of Congress that permits Federal agencies to incur obligations and to make payments out of the Treasury for specified purposes. An appropriations act is the most common means of providing budget authority.
Borrowing Authority.–Statutory authority that permits a Federal agency to incur obligations and to make payments for specified purposes out of money borrowed from the Treasury, the Federal Financing Bank, or the public. The Budget Act in most cases requires that new authority to borrow must be approved in advance in an appropriation act.
Contract Authority.–Statutory authority that permits a Federal agency to enter into contracts in advance of appropriations. Under the Budget Act, most new authority to contract must be approved in advance in an appropriation act. Offsetting collections and receipts.–Income from the public which is displayed in the budget as negative budget authority. (See Offsetting Collections and Offsetting Receipts.
Budget Baseline: Projected Federal spending, revenue and deficit levels based on the assumption that current policies will continue unchanged for the upcoming fiscal year.
In determining the budget baseline under Gramm-Rudman-Hollings, the Directors of OMB and CBO estimate revenue levels and spending levels for entitlement programs based on continuation of current laws. For estimating discretionary spending amounts (both defense and non- defense), the Directors assume an adjustment for inflation (GNP deflator) added to the previous year’s discretionary spending levels. The baseline also includes sufficient appropriations to cover a Federal pay comparability raise (without absorption).
Budget Deficit: The amount by which the Government’s total outlays exceed its total revenues for a given fiscal year. (See Outlays; Revenues.)
Budget Resolution: A concurrent resolution passed by both Houses of Congress setting forth, reaffirming, or revising the congressional budget for the U.S. Government for a fiscal year. A budget resolution is a concurrent resolution of Congress. Concurrent resolutions do not require a presidential signature because they are not laws. Budget resolutions do not need to be laws because they are a legislative device for the Congress to regulate itself as it works on spending and revenue bills.
(Unified) Budget Surplus: The amount by which the Government’s revenues exceed its outlays for a given fiscal year. The “on-budget surplus” excludes spending and revenues of the Social Security Trust Fund, and the Postal Service. (See Outlays; Revenues.)
Capital Budget: A budget that segregates capital spending from all other spending, what is usually considered the “operating budget.” In a capital budget, spending and receipts in the capital budget are excluded from the operating budget and are not included in the operating budget’s deficit or surplus calculations. A capital budget would include spending only for capital assets. Capital assets are usually defined to be limited to land, structures, equipment, and intellectual property that are owned and used by the Federal government and have a useful life of more than 2 years. However, some proponents of capital budgeting have suggested that capital should be defined to include Federal “investment” spending that yields long-term benefits. President Clinton established a Commission to Study Capital Budgeting by issuing Executive Order 13037 on March 3, 1997. The Commission is required to issue its report by December 17, 1998.
Continuing Resolution: Appropriations legislation enacted by Congress to provide temporary budget authority for Federal agencies to keep them in operation when their regular appropriation bill has not been enacted by the start of the fiscal year. A continuing resolution is a joint resolution, which has the same legal status as a bill.
A continuing resolution frequently specifies a maximum rate at which obligations may be incurred, based on the rate of the prior year, the President’s budget request, or an appropriation bill passed by either or both chambers of Congress. However, there have been instances when Congress has used a continuing resolution as an omnibus measure to enact a number of appropriation bills.
A continuing resolution is a form of appropriation act and should not be confused with the budget resolution.
Credit Authority: Authority to incur direct loan obligations or to incur primary loan guarantee commitments. Under the Budget Act, new credit authority must be approved in advance in an appropriation act.
Crosswalk: Also known as “committee allocation” or “section 302 allocation.” The means by which budget resolution spending totals are translated into binding guidelines with respect to budget authority and outlays for committee action on spending bills. The Budget Committees allocate the budget resolution totals among the committees by jurisdiction, Crosswalk allocations of budget authority and outlays to the committee appear in the joint explanatory statement accompanying a conference report on the budget resolution.
Current Services Budget: A section of the President’s budget, required by the Budget Act, that sets forth the level of spending or taxes that would occur if existing programs and policies were continued unchanged through the fiscal year and beyond, with all programs adjusted for inflation so that existing levels of activity are maintained. (See Baseline.)
Deferral of Budget Authority: An action by the executive branch that delays the obligation of budget authority beyond the point it would normally occur. Pursuant to the Congressional Budget and Impoundment Control Act of 1974, the President must provide advanced notice to the Congress of any proposed deferrals. A deferral may not extend beyond the end of the fiscal year in which the President’s message proposing the deferral is made. Congress may overturn a deferral by passing a law disapproving the deferral.
Deficit: The amount by which the government’s total budget outlays exceeds its total receipts for a fiscal year.
Direct Spending: A term defined in the Budget Enforcement Act of 1990 to include entitlement authority, the food stamp program, and budget authority provided in law other than appropriations acts. From the perspective of the appropriations process, all direct spending is classified as mandatory as opposed to discretionary spending. New direct spending is subject to pay-as-you-go requirements. Direct spending is synonymous with mandatory spending. (See Mandatory Spending and Entitlement.)
Discretionary Spending: A category of spending (budget authority and outlays) subject to the annual appropriations process. (See Appropriations Acts.)
Entitlement: Programs that are governed by legislation in a way that legally obligates the Federal government to make specific payments to qualified recipients. Payments to persons under the Social Security, Medicare, and veterans’ pensions programs are considered to be entitlements. (See Direct Spending and Mandatory Spending.)
Emergency Spending: As provided in the Budget Enforcement Act, a provision of legislation designated as an emergency by both the President and the Congress. As a result, this additional spending is not subject to the discretionary caps or the pay go requirements and thus will not cause a sequester. In addition, emergency legislation is effectively exempt from Budget Act points of order.
There is no specific criteria in the law for emergency spending. However, the following criteria were contained in a June 1991 report prepared by the Office of Management and Budget–as required by Pub. L. No. 102-55 for the determination of whether to designate spending as an emergency spending:
Necessary expenditure.–an essential or vital expenditure, not one that is merely useful or beneficial;
Sudden.–quickly coming into being, not building up over time;
Urgent.–pressing and compelling need requiring immediate action;
Unforseen.–not predictable or seen beforehand as a coming need (an emergency that is part of an aggregate level of anticipated emergencies, particularly when normally estimated in advance, would not be “unforseen”); and
Federal Debt: Consists of all Treasury and agency debt issues outstanding. Current law places a limit or ceiling on the amount of debt. Debt subject to limit has two components: debt held by the government and debt held by the public.
Debt held by the government.–Represents the holdings of debt by federal trust funds and other special government funds. For example, when a trust fund is in surplus as is presently the case with Social Security, the law requires that this surplus be invested in government securities.
Debt held by the public.–Represents the holdings of debt by individuals, institutions, other buyers outside the federal government, and the Federal Reserve System. The change in debt held by the public in any given year closely tracks the unified budget deficit for that year.
Fiscal Policy: Federal government policies with respect to taxes, spending, and debt management intended to promote the nations’ macroeconomic goals, particularly with respect to employment, gross national product, price level stability, and equilibrium in balance of payments. The budget process is a major vehicle for determining and implementing Federal fiscal policy. The other major component of Federal macroeconomic policy is monetary policy. (See Monetary Policy.)
Fiscal Year: A fiscal year is a 12-month accounting period. The fiscal for the Federal Government begins October 1 and ends September 30. The fiscal year is designated by the calendar year in which it ends; for example fiscal year 1997 is the year beginning October 1, 1996, and ending September 30, 1997.
Functional Classification: A system of classifying budget resources by major purpose so that budget authority, outlays, and credit activities can be related in terms of the national needs being addressed (for example, national defense, health) regardless of the agency administrating the program. There are currently 20 functions. A function may be divided into two or more subfunctions depending upon the complexity of the national need addressed by that function. (See Budget Authority; Outlays.)
return to topIImpoundment: A generic term referring to any action or inaction by an officer or employee of the U.S. Government that precludes the obligation or expenditure of budget authority in the manner intended by Congress. (See Deferral of Budget Authority; Rescission of Budget Authority.) return to topJJoint Committee on Taxation (JCT): Section 8001 of the Internal Revenue Code authorized the creation of the Joint Committee on Taxation. By statute, it is composed of five members from the Committee on Finance (three majority, two minority) chosen by such Committee and five members from the Committee on Ways and Means (three majority, two minority) chosen by such Committee. In practice, the Chairmanship and Vice Chairmanship of the Joint Committee on Taxation has rotated between the Chairman of the Committee on Finance and the Chairman of the Committee on Ways and Means with each new Congress. Among other things, the JCT’s duties are to investigate the operation and effects of the federal tax system. return to topM
Mandatory Spending: Refers to spending for programs the level of which is governed by formulas or criteria set forth in authorizing legislation rather than by appropriations. Examples of mandatory spending include: Social Security, Medicare, veterans’ pensions, rehabilitation services, Members’ pay, judges pay and the payment of interest of the public debt. Many of these programs are considered entitlement. (See Direct Spending.)
Mark-Up: Meetings where congressional committees work on language of bills or resolutions. At Budget Committee mark-ups, the House and Senate Budget Committees work on the language and numbers contained in budget resolutions and legislation affecting the congressional budget process.
Monetary Policy: Management of the money supply, under the direction of the Board of Governors of the Federal Reserve system, with the aim of achieving price stability and full employment. Government actions in guiding monetary policy, include currency revaluation, credit contradiction or expansion, rediscount policy, regulation of bank reserves and the purchase and sale of Government securities. (See Fiscal Policy.)
return to topNNet Deficit Reduction: Savings below the defined budget baseline achieved for the upcoming fiscal year because of laws enacted or final regulations promulgated since January 1. CBO and OMB independently estimate these savings in their initial and final sequester reports. return to topO
Offsetting Collections: Income from the public that results from the government engaging in “business-like” activities with the public, such as the sale of products or the rendering of a service. Examples include proceeds funds derived from the sale of postage stamps. Offsetting collections are credited against the level of budget authority or outlays associated with a specific program or account. (See Offsetting receipts.)
Offsetting Receipts: Income from the public that results from the government engaging in “business-like” activities with the public such as the sale of products or the rendering of services. Examples include proceeds from the sale of timber from Federal lands or entrance fees paid at national parks. Rather than being credited against the spending of a particular program or account, (as in the case with offsetting collections) offsetting receipts are deducted from total budget authority and outlays rather than added to Federal revenues even though they are deposited in the Treasury as miscellaneous receipts. Generally offsetting receipts are associated with mandatory spending. (See Offsetting collections.)
Off-budget Federal Entity: Any Federal fund or trust fund whose transactions are required by law to be excluded from the totals of President’s budget submission and Congress’ budget resolution, despite the fact that these are part of the government’s total transactions. Current law requires that the Social Security trust funds (the Federal Old Age, Survivors, and Disability trust fund) and the Postal Service be off-budget. However, these entities are reflected in the budget in that they are included in calculating the deficit in order to derive the total government deficit that must be financed by borrowing from the public or by other means. All other federal funds and trust funds are on budget. (See Unified Budget.)
Outlays: Outlays are disbursements by the Federal Treasury in the form of checks or cash. Outlays flow in part from budget authority granted in prior years and in part from budget authority provided for the year in which the disbursements occur.
Outlay Rates: The ratio of outlays (actual government disbursements) in a fiscal year relative to new budgetary resources in that fiscal year. In estimating the budget baseline and baseline deficit for their sequestration reports, CBO and OMB use outlay rates for projecting levels of spending resulting from available budget authority.
Pay-as-you-go: Arises in two separate contexts: a point of order in the Senate and a sequester order from OMB.
Pay-as-you-go in the Senate.–Since fiscal year 1994, the budget resolution has included a pay-as-you-go rule in the Senate. The rule provides a 3/5ths vote point of order in the Senate against consideration of legislation that would cause a net increase in the deficit over a ten year period. It applies to all legislation except appropriations legislation. To determine a violation, CBO measures the budget impact of a direct spending or revenue bill combined with the budget impact of all direct spending and revenue legislation enacted since the latest budget resolution’s adoption to see if the legislation would result in a net deficit increase for any one of three time periods (the first year, the sum of years 1 through 5, and the sum of years 6 through 10.) The pay-go rule sunsets at the end of fiscal year 2002.
Pay-as-you-go and sequestration under the BEA.–The Budget Enforcement Act requires OMB to also enforce a “pay-as-you-go” requirement which has a similar effect as the Senate’s point of order: Congress is required to “pay for” any changes to programs which result in an increase in direct spending, or in this case risk a sequester. If OMB estimates that the sum of all direct spending and revenue legislation enacted since 1990 will result in a net increase in the deficit for the fiscal year, then the President is required to issue a sequester order reducing all non-exempt direct spending accounts by a uniform percentage in order to eliminate the net deficit increase. Most direct spending is either exempt from a sequester order or operates under special rules that minimize the reduction that can be made in direct spending. Social Security is exempt from a pay-as-you-go sequester and Medicare cannot be reduced by more than 4 percent.
President’s Budget: The document sent to Congress by the President in January or February of each year, requesting new budget authority for Federal programs and estimating Federal revenues and outlays for the upcoming fiscal year.
Revenues: Collections from the public arising from the Government’s sovereign power to tax. Revenues include individual and corporate income taxes, social insurance taxes (such as social security payroll taxes), excise taxes, estate and gift taxes, customs duties and the like.
Reconciliation Process: A process by which Congress includes in a budget resolution “reconciliation instructions” to specific committees, directing them to report legislation which changes existing laws, usually for the purpose of decreasing spending or increasing revenues by a specified amount by a certain date. The legislation may also contain an increase in the debt limit. The reported legislation is then considered as a single “reconciliation bill under expedited procedures.” Reserve Fund: A provision in a budget resolution that grants the Chairman of the Budget Committee the authority to make changes in budget aggregates and committee allocations once some condition or conditions have been met. Since a budget resolution establishes a binding ceiling on aggregate budget authority and outlay levels and a binding floor on revenues, budget resolutions frequently include reserve funds for deficit-neutral legislation that would otherwise violate the budget resolution and be subject to a point of order under the Budget Act. For example, the FY 1997 budget resolution included a tax reduction reserve fund that allowed the Chairman to reduce the revenue floor and the relevant spending allocations to accommodate legislation that reduced taxes if that legislation also contained offsetting spending reductions.
Rescission of Budget Authority: Cancellation of budget authority before the time when the authority would otherwise cease to be available for obligation. The rescission process begins when the President proposes a rescission to the Congress for fiscal or policy reasons. Unlike the deferral of budget authority which occurs unless Congress acts to disapprove the deferral, rescission off budget authority occurs only if Congress enacts the rescission. (See Deferral of Budget Authority; Impoundment.)
Scoring or Scorekeeping: The process for estimating budget authority, outlay, revenue and deficit levels which result from congressional budgetary actions. Scorekeeping data prepared by the Congressional Budget Office include status reports on the effect of congressional actions and comparisons of these actions to targets and ceilings set by Congress in budget resolutions. These reports are published in the Congressional Record on a regular basis. OMB is responsible for scoring legislation to determine if a sequester is necessary.
Sequester: Pursuant to Gramm-Rudman-Hollings, a presidential spending reduction order that occurs by reducing spending by uniform percentages.
Sequestrable Resource: Pursuant to Gramm-Rudman-Hollings federal funding authority (budgetary resources) subject to reductions under a presidential sequester order for achieving required outlay reductions (in non-exempt programs).
Supplemental Appropriation: An act appropriating funds in addition to those in the 13 regular annual appropriations acts. Supplemental appropriations provide additional budget authority beyond the original estimates for programs or activities (including new programs authorized after the date of the original appropriation act) in cases where the need for funds is too urgent to be postponed until enactment of the next regular appropriation bill. (See Appropriations Act.)
return to topTTax Expenditures: Revenue losses attributable to a special exclusion, exemption, or deduction from gross income or to a special credit, preferential rate of tax, or deferral of tax liability. return to topU
Unfunded Mandates: A Federal Intergovernmental Mandate is any provision in legislation, statute, or regulation that would impose an enforceable duty upon State, local or tribal government, except as conditions of assistance or duties arising from participation in a voluntary federal program. Exceptions to this rule are: enforcing constitutional rights; statutory prohibitions against discrimination; emergency assistance requested by states; accounting/auditing for federal assistance; national security; Presidential designated emergencies; and Social Security. Provisions that increase stringency of conditions of assistance or decrease federal funding for large state entitlement programs (greater than $500 million) if states lack authority to decrease their responsibilities are considered mandates as well.
A Federal Private Sector Mandate is any provision in legislation, statute, or regulation that would impose an enforceable duty upon the private sector. The exceptions are a condition of Federal assistance or a duty arising from participation in a voluntary Federal program.
Unified Budget: A comprehensive display of the Federal budget. This display includes all revenues and all spending for all regular Federal programs and trust funds. The 1967 President’s Commission on Budget Concepts recommended the unified budget and it has been the basis for budgeting since 1968. The unified budget replaced a system of the budgets that existed before 1968 (an administrative budget, a consolidated cash budget, and a national income accounts budget).
The Budget Control Act Serves as the Budget for 2012 and 2013
The Budget Control Act states: “For the purpose of enforcing the Congressional Budget Act of 1974 through April 15, 2012 … the allocations, aggregates, and levels set in subsection (b)(1) shall apply in the Senate in the same manner as for a concurrent resolution on the budget for fiscal year 2012.” In many ways, the Budget Control Act is even more extensive than a traditional budget resolution. Number one, it has the force of law, unlike a budget resolution that never goes to the President. A budget resolution is purely a Congressional document; the Budget Control Act is a law. Number two, it sets discretionary caps for 10 years, instead of the one year normally set in a budget resolution. Number three, it provides enforcement mechanisms, including two years of “deeming resolutions,” which allow budget points of order to be enforced. And fourth, it creates a reconciliation-like “Super Committee” process to address both entitlements and tax reform. And it backs that process up with a $1.2 trillion sequester.
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DAVID STOCKMAN: We’ve Been Lied To, Robbed, And Misled
hen, when the Fed’s fire hoses started spraying an elephant soup of liquidity injections in every direction and its balance sheet grew by $1.3 trillion in just thirteen weeks compared to $850 billion during its first ninety-four years, I became convinced that the Fed was flying by the seat of its pants, making it up as it went along. It was evident that its aim was to stop the hissy fit on Wall Street and that the thread of a Great Depression 2.0 was just a cover story for a panicked spree of money printing that exceeded any other episode in recorded human history.
David Stockman, former director of the OMB under President Reagan, former US Representative, and veteran financier is an insider’s insider. Few people understand the ways in which both Washington DC and Wall Street work and intersect better than he does.
In his upcoming book, The Great Deformation: The Corruption of Capitalism in America [37], Stockman lays out how we have devolved from a free market economy into a managed one that operates for the benefit of a privileged few. And when trouble arises, these few are bailed out at the expense of the public good.
By manipulating the price of money through sustained and historically low interest rates, Greenspan and Bernanke created an era of asset mis-pricing that inevitably would need to correct. And when market forces attempted to do so in 2008, Paulson et al hoodwinked the world into believing the repercussions would be so calamitous for all that the institutions responsible for the bad actions that instigated the problem needed to be rescued — in full — at all costs.
Of course, history shows that our markets and economy would have been better off had the system been allowed to correct. Most of the “too big to fail” institutions would have survived or been broken into smaller, more resilient, entities. For those that would have failed, smaller, more responsible banks would have stepped up to replace them – as happens as part of the natural course of a free market system:
Essentially there was a cleansing run on the wholesale funding market in the canyons of Wall Street going on. It would have worked its will, just like JP Morgan allowed it to happen in 1907 when we did not have the Fed getting in the way. Because they stopped it in its tracks after the AIG bailout and then all the alphabet soup of different lines that the Fed threw out, and then the enactment of TARP, the last two investment banks standing were rescued, Goldman and Morgan [Stanley], and they should not have been. As a result of being rescued and having the cleansing liquidation of rotten balance sheets stopped, within a few weeks and certainly months they were back to the same old games, such that Goldman Sachs got $10 billion dollars for the fiscal year that started three months later after that check went out, which was October 2008. For the fiscal 2009 year, Goldman Sachs generated what I call a $29 billion surplus – $13 billion of net income after tax, and on top of that $16 billion of salaries and bonuses, 95% of it which was bonuses.
Therefore, the idea that they were on death’s door does not stack up. Even if they had been, it would not make any difference to the health of the financial system. These firms are supposed to come and go, and if people make really bad bets, if they have a trillion dollar balance sheet with six, seven, eight hundred billion dollars worth of hot-money short-term funding, then they ought to take their just reward, because it would create lessons, it would create discipline. So all the new firms that would have been formed out of the remnants of Goldman Sachs where everybody lost their stock values – which for most of these partners is tens of millions, hundreds of millions – when they formed a new firm, I doubt whether they would have gone back to the old game. What happened was the Fed stopped everything in its tracks, kept Goldman Sachs intact, the reckless Goldman Sachs and the reckless Morgan Stanley, everyone quickly recovered their stock value and the game continues. This is one of the evils that comes from this kind of deep intervention in the capital and money markets.
Stockman’s anger at the unnecessary and unfair capital transfer from taxpayer to TBTF bank is matched only by his concern that, even with those bailouts, the banking system is still unacceptably vulnerable to a repeat of the same crime:
The banks quickly worked out their solvency issues because the Fed basically took it out of the hides of Main Street savers and depositors throughout America. When the Fed panicked, it basically destroyed the free-market interest rate – you cannot have capitalism, you cannot have healthy financial markets without an interest rate, which is the price of money, the price of capital that can freely measure and reflect risk and true economic prospects.
Well, once you basically unplug the pricing mechanism of a capital market and make it entirely an administered rate by the Fed, you are going to cause all kinds of deformations as I call them, or mal-investments as some of the Austrians used to call them, that basically pollutes and corrupts the system. Look at the deposit rate right now, it is 50 basis points, maybe 40, for six months. As a result of that, probably $400-500 billion a year is being transferred as a fiscal maneuver by the Fed from savers to the banks. They are collecting the spread, they’ve then booked the profits, they’ve rebuilt their book net worth, and they paid back the TARP basically out of what was thieved from the savers of America.
Now they go down and pound the table and whine and pout like JP Morgan and the rest of them, you have to let us do stock buy backs, you have to let us pay out dividends so we can ramp our stock and collect our stock option winnings. It is outrageous that the authorities, after the so-called “near death experience” of 2008 and this massive fiscal safety net and monetary safety net was put out there, is allowing them to pay dividends and to go into the market and buy back their stock. They should be under house arrest in a sense that every dime they are making from this artificial yield group being delivered by the Fed out of the hides of savers should be put on their balance sheet to build up retained earnings, to build up a cushion. I do not care whether it is fifteen or twenty or twenty-five percent common equity and retained earnings-to-assets or not, that is what we should be doing if we are going to protect the system from another raid by these people the next time we get a meltdown, which can happen at any time.
You can see why I talk about corruption, why crony capitalism is so bad. I mean, the Basel capital standards, they are a joke. We are just allowing the banks to go back into the same old game they were playing before. Everybody said the banks in late 2007 were the greatest thing since sliced bread. The market cap of the ten largest banks in America, including from Bear Stearns all the way to Citibank and JP Morgan and Goldman and so forth, was $1.25 trillion. That was up thirty times from where the predecessors of those institutions had been. Only in 1987, when Greenspan took over and began the era of bubble finance – slowly at first then rapidly, eventually, to have the market cap grow thirty times – and then on the eve of the great meltdown see the $1.25 trillion to market cap disappear, vanish, vaporize in panic in September 2008. Only a few months later, $1 trillion of that market cap disappeared in to the abyss and panic, and Bear Stearns is going down, and all the rest.
This tells you the system is dramatically unstable. In a healthy financial system and a free capital market, if I can put it that way, you are not going to have stuff going from nowhere to @1.2 trillion and then back to a trillion practically at the drop of a hat. That is instability; that is a case of a medicated market that is essentially very dangerous and is one of the many adverse consequences and deformations that result from the central-bank dominated, corrupt monetary system that has slowly built up ever since Nixon closed the gold window, but really as I say in my book, going back to 1933 in April when Roosevelt took all the private gold. So we are in a big dead-end trap, and they are digging deeper every time you get a new maneuver.
The U.S. economy is in a bubble inflated by “phony money” from the Federal Reserve and will burst within a few years, warned David Stockman, who was budget director for President Ronald Reagan.
In an essay published in the New York Times, Stockman wrote that the Fed’s quantitative easing policies in the aftermath of the credit crisis have flooded stock markets with cash even while the “Main Street economy” remains weak. The combination, he wrote, is “unsustainable.”
“When it bursts, there will be no new round of bailouts like the ones the banks got in 2008,” wrote Stockman, a former senior managing director at Blackstone Group LP and a former Republican congressman from Michigan.
“Instead, America will descend into an era of zero-sum austerity and virulent political conflict, extinguishing even today’s feeble remnants of economic growth.”
Stockman, 66, is the author of “The Great Deformation: The Corruption of Capitalism in America,” which will be published April 2.
The Fed, led by Ben S. Bernanke, is purchasing $85 billion in assets every month. The Fed is leaving its key interest rate near zero while it tries to reduce unemployment below 6.5 percent and hold inflation below 2.5 percent.
The Standard & Poor’s 500 Index rose to an all-time high last week, closing at 1,569.19 on March 28. That surpassed the previous record of 1,565.15 set in October 2007. U.S. stock markets were closed March 29 for the Good Friday holiday.
Gold Standard
Among the other culprits Stockman blamed for what he termed a “state-wreck” are President Franklin Delano Roosevelt for weakening the gold standard in 1933, President Richard Nixon for removing the convertibility of dollars to gold and “lapsed hero” Alan Greenspan, the former Fed chairman, for keeping interest rates too low for too long.
Investors will sell, Stockman wrote, at any hint that the Fed is starting to remove assets from its balance sheet.
“Notwithstanding Bernanke’s assurances about eventually, gradually making a smooth exit, the Fed is domiciled in a monetary prison of its own making,” he wrote, warning of unsustainable fiscal policies as well. “These policies have brought America to an end-stage metastasis. The way out would be so radical it can’t happen.”
Paul Krugman, the Princeton University economist and New York Times columnist, responded on his blog yesterday, saying that he was “disappointed” in Stockman’s “gee-whiz, context- and model-free numbers embedded in a rant — and not even an interesting rant.”
Krugman called Stockman’s piece “cranky old man stuff,” and summarized it this way:
“We’ve been doomed, yes doomed, ever since FDR took us off the gold standard and introduced unemployment insurance. What about those 80 years of non-doom? Just a series of lucky accidents. Now we’re really doomed. I mean it!”
“…Of the twenty new or higher taxes in Obamacare, below are the five worst that will be foisted upon Americans for the first time on January 1, 2013:
The Obamacare Medical Device Tax – a $20 billion tax increase: Medical device manufacturers employ 409,000 people in 12,000 plants across the country. Obamacare imposes a new 2.3 percent excise tax on gross sales – even if the company does not earn a profit in a given year. In addition to killing small business jobs and impacting research and development budgets, this will increase the cost of your health care – making everything from pacemakers to prosthetics more expensive.
The Obamacare “Special Needs Kids Tax” – a $13 billion tax increase: The 30-35 million Americans who use a Flexible Spending Account (FSA) at work to pay for their family’s basic medical needs will face a new government cap of $2,500 (currently the accounts are unlimited under federal law, though employers are allowed to set a cap).
There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are several million families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. This Obamacare tax provision will limit the options available to these families.
The Obamacare Surtax on Investment Income – a $123 billion tax increase: This is a new, 3.8 percentage point surtax on investment income earned in households making at least $250,000 ($200,000 single). This would result in the following top tax rates on investment income:
Capital Gains
Dividends
Other*
2012
15%
15%
35%
2013+ (current law)
23.8%
43.4%
43.4%
The table above also incorporates the scheduled hike in the capital gains rate from 15 to 20 percent, and the scheduled hike in dividends rate from 15 to 39.6 percent.
The Obamacare “Haircut” for Medical Itemized Deductions – a $15.2 billion tax increase: Currently, those Americans facing high medical expenses are allowed a deduction to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI). This tax increase imposes a threshold of 10 percent of AGI. By limiting this deduction, Obamacare widens the net of taxable income for the sickest Americans. This tax provision will most harm near retirees and those with modest incomes but high medical bills.
The Obamacare Medicare Payroll Tax Hike — an $86.8 billion tax increase: The Medicare payroll tax is currently 2.9 percent on all wages and self-employment profits. Under this tax hike, wages and profits exceeding $200,000 ($250,000 in the case of married couples) will face a 3.8 percent rate instead. This is a direct marginal income tax hike on small business owners, who are liable for self-employment tax in most cases. The table below compares current law vs. the Obamacare Medicare Payroll Tax Hike:
First $200,000 ($250,000 Married) Employer/Employee
Quarterly data: Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 1.3 percent in the second quarter of 2012 (that is, from the first quarter to the second quarter), according to the “third” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 2.0 percent.
GDP Show US Economy Slowed In Second Quarter, Unemployment Drops, Durable Goods Orders Plunge
United States Fiscal Cliff – Wiki Article
National Income and Product Accounts
Gross Domestic Product: Second Quarter 2012 (third estimate);
Corporate Profits: Second Quarter 2012 (revised estimate)
Real gross domestic product -- the output of goods and services produced by labor and property
located in the United States -- increased at an annual rate of 1.3 percent in the second quarter of 2012
(that is, from the first quarter to the second quarter), according to the "third" estimate released by the
Bureau of Economic Analysis. In the first quarter, real GDP increased 2.0 percent.
The GDP estimate released today is based on more complete source data than were available for
the "second" estimate issued last month. In the second estimate, the increase in real GDP was 1.7
percent (see "Revisions" on page 3).
The increase in real GDP in the second quarter primarily reflected positive contributions from
personal consumption expenditures (PCE), exports, nonresidential fixed investment, and residential
fixed investment that were partly offset by negative contributions from private inventory investment and
state and local government spending. Imports, which are a subtraction in the calculation of GDP,
increased.
The deceleration in real GDP in the second quarter primarily reflected decelerations in PCE, in
nonresidential fixed investment, and in residential fixed investment that were partly offset by smaller
decreases in federal government spending and in state and local government spending and an
acceleration in exports.
Motor vehicle output added 0.20 percentage point to the second-quarter change in real GDP after
adding 0.72 percentage point to the first-quarter change. Final sales of computers subtracted 0.10
percentage point from the second-quarter change in real GDP after adding 0.02 percentage point to the
first-quarter change.
__________
FOOTNOTE. Quarterly estimates are expressed at seasonally adjusted annual rates, unless otherwise
specified. Quarter-to-quarter dollar changes are differences between these published estimates. Percent
changes are calculated from unrounded data and are annualized. "Real" estimates are in chained (2005)
dollars. Price indexes are chain-type measures.
This news release is available on BEA’s Web site along with the Technical Note and Highlights related to this release.
For information on revisions, see "Revisions to GDP, GDI, and Their Major Components."
__________
The price index for gross domestic purchases, which measures prices paid by U.S. residents,
increased 0.7 percent in the second quarter, 0.1 percentage point less than the second estimate; this index
increased 2.5 percent in the first quarter. Excluding food and energy prices, the price index for gross
domestic purchases increased 1.4 percent in the second quarter, compared with an increase of 2.4
percent in the first.
Real personal consumption expenditures increased 1.5 percent in the second quarter, compared
with an increase of 2.4 percent in the first. Durable goods decreased 0.2 percent, in contrast to an
increase of 11.5 percent. Nondurable goods increased 0.6 percent, compared with an increase of 1.6
percent. Services increased 2.1 percent, compared with an increase of 1.3 percent.
Real nonresidential fixed investment increased 3.6 percent in the second quarter, compared with
an increase of 7.5 percent in the first. Nonresidential structures increased 0.6 percent, compared with an
increase of 12.9 percent. Equipment and software increased 4.8 percent, compared with an increase of
5.4 percent. Real residential fixed investment increased 8.5 percent, compared with an increase of 20.5
percent.
Real exports of goods and services increased 5.3 percent in the second quarter, compared with an
increase of 4.4 percent in the first. Real imports of goods and services increased 2.8 percent, compared
with an increase of 3.1 percent.
Real federal government consumption expenditures and gross investment decreased 0.2 percent
in the second quarter, compared with a decrease of 4.2 percent in the first. National defense decreased
0.2 percent, compared with a decrease of 7.1 percent. Nondefense decreased 0.4 percent, in contrast to
an increase of 1.8 percent. Real state and local government consumption expenditures and gross
investment decreased 1.0 percent, compared with a decrease of 2.2 percent.
The change in real private inventories subtracted 0.46 percentage point from the second-quarter
change in real GDP, after subtracting 0.39 percentage point from the first-quarter change. Private
businesses increased inventories $41.4 billion in the second quarter, following increases of $56.9 billion
in the first quarter and $70.5 billion in the fourth.
Real final sales of domestic product -- GDP less change in private inventories -- increased 1.7
percent in the second quarter, compared with an increase of 2.4 percent in the first.
Gross domestic purchases
Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever
produced -- increased 1.0 percent in the second quarter, compared with an increase of 1.8 percent in the
first.
Gross national product
Real gross national product -- the goods and services produced by the labor and property
supplied by U.S. residents -- increased 2.1 percent in the second quarter, compared with an increase of
0.6 percent in the first. GNP includes, and GDP excludes, net receipts of income from the rest of the
world, which increased $27.4 billion in the second quarter after decreasing $44.1 billion in the first; in
the second quarter, receipts increased $3.5 billion, and payments decreased $24.0 billion.
Current-dollar GDP
Current-dollar GDP -- the market value of the nation's output of goods and services -- increased
2.8 percent, or $107.3 billion, in the second quarter to a level of $15,585.6 billion. In the first quarter,
current-dollar GDP increased 4.2 percent, or $157.3 billion.
Gross domestic income
Real gross domestic income (GDI), which measures the output of the economy as the costs
incurred and the incomes earned in the production of GDP, increased 0.2 percent in the second quarter,
compared with an increase of 3.8 percent in the first. For a given quarter, the estimates of GDP and GDI
may differ for a variety of reasons, including the incorporation of largely independent source data.
However, over longer time spans, the estimates of GDP and GDI tend to follow similar patterns of
change.
Revisions
The "third" estimate of the second-quarter percent change in real GDP is 0.4 percentage point, or
$16.0 billion, less than the "second" estimate issued last month, primarily reflecting downward revisions
to private inventory investment, to personal consumption expenditures, and to exports.
Advance Estimate Second Estimate Third Estimate
(Percent change from preceding quarter)
Real GDP............................... 1.5 1.7 1.3
Current-dollar GDP..................... 3.1 3.3 2.8
Gross domestic purchases price index... 0.7 0.8 0.7
Corporate Profits
Profits from current production (corporate profits with inventory valuation and capital
consumption adjustments) increased $21.8 billion in the second quarter, in contrast to a decrease of
$53.0 billion in the first quarter. Current-production cash flow (net cash flow with inventory valuation
adjustment) -- the internal funds available to corporations for investment -- increased $6.0 billion in the
second quarter, in contrast to a decrease of $169.8 billion in the first.
Taxes on corporate income decreased $10.3 billion in the second quarter, in contrast to an
increase of $83.2 billion in the first. Profits after tax with inventory valuation and capital consumption
adjustments increased $31.9 billion in the second quarter, in contrast to a decrease of $136.2 billion in
the first. Dividends increased $20.4 billion, compared with an increase of $9.2 billion; current-
production undistributed profits increased $11.6 billion, in contrast to a decrease of $145.5 billion.
Domestic profits of financial corporations decreased $39.7 billion in the second quarter, compared
with a decrease of $12.3 billion in the first. Domestic profits of nonfinancial corporations increased
$27.8 billion in the second quarter, compared with an increase of $7.3 billion in the first. In the second
quarter, real gross value added of nonfinancial corporations increased, and profits per unit of real value
added increased. The increase in unit profits reflected an increase in unit prices and a decrease in unit
nonlabor costs that were partly offset by an increase in unit labor costs.
The rest-of-the-world component of profits increased $33.6 billion in the second quarter, in
contrast to a decrease of $48.0 billion in the first. This measure is calculated as (1) receipts by U.S.
residents of earnings from their foreign affiliates plus dividends received by U.S. residents from
unaffiliated foreign corporations minus (2) payments by U.S. affiliates of earnings to their foreign
parents plus dividends paid by U.S. corporations to unaffiliated foreign residents. The second-quarter
increase was accounted for by an increase in receipts and a decrease in payments.
Profits before tax with inventory valuation adjustment is the best available measure of industry
profits because estimates of the capital consumption adjustment by industry do not exist. This measure
reflects depreciation-accounting practices used for federal income tax returns. According to this
measure, domestic profits of financial corporations decreased. The decrease in financial corporations
was primarily accounted for by a decrease in "other" financial industries. Domestic profits of
nonfinancial corporations increased, primarily reflecting increases in wholesale trade, in manufacturing,
and in information industries. Within manufacturing, the largest increases were in computer and
electronic products and in "other" durable goods.
Profits before tax decreased $16.3 billion in the second quarter, in contrast to an increase of
$188.1 billion in the first. The before-tax measure of profits does not reflect, as does profits from
current production, the capital consumption and inventory valuation adjustments. These adjustments
convert depreciation of fixed assets and inventory withdrawals reported on a tax-return, historical-cost
basis to the current-cost measures used in the national income and product accounts. The capital
consumption adjustment decreased $1.7 billion in the second quarter (from -$200.7 billion to -$202.4
billion), compared with a decrease of $230.3 billion in the first. The large decrease in the first-quarter
capital consumption adjustment mainly reflected the expiration of bonus depreciation claimed under the
Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. The inventory
valuation adjustment increased $39.7 billion (from -$23.7 billion to $16.0 billion), in contrast to a
decrease of $10.8 billion.
* * *
BEA’s national, international, regional, and industry estimates; the Survey of Current Business;
and BEA news releases are available without charge on BEA’s Web site at www.bea.gov. By visiting
the site, you can also subscribe to receive free e-mail summaries of BEA releases and announcements.
* * *
Next release – October 26, 2012, at 8:30 A.M. EDT for:
Gross Domestic Product: Third Quarter 2012 (Advance Estimate)
http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm
Q2 GDP SLASHED TO 1.3%
“…The third reading on Q2 GDP just came out and the report was ugly.
The headline growth number was revised down to 1.3 percent on an annualized basis.
Economists expected the number to be unchanged at 1.7 percent.
“As we recently noted, you’ll need to watch the rear-view mirror to see the recession come into focus,” wrote ECRI’s Lakshman Achuthan in an email to Business Insider.
“The “third” estimate of the second-quarter percent change in real GDP is 0.4 percentage point, or $16.0 billion, less than the “second” estimate issued last month, primarily reflecting downward revisions to private inventory investment, to personal consumption expenditures, and to exports,” wrote the Bureau of Economic Analysis.
The personal consumption component was revised down to 1.5 percent. Economists were expecting it to be unchanged at 1.7 percent. …”
Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 1.3 percent in the second quarter of 2012 (that is, from the first quarter to the second quarter), according to the “third” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 2.0 percent.
The GDP estimate released today is based on more complete source data than were available for the “second” estimate issued last month. In the second estimate, the increase in real GDP was 1.7 percent (see “Revisions” on page 3).
The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, nonresidential fixed investment, and residential fixed investment that were partly offset by negative contributions from private inventory investment and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.
The deceleration in real GDP in the second quarter primarily reflected decelerations in PCE, in nonresidential fixed investment, and in residential fixed investment that were partly offset by smaller decreases in federal government spending and in state and local government spending and an acceleration in exports.
Motor vehicle output added 0.20 percentage point to the second-quarter change in real GDP after adding 0.72 percentage point to the first-quarter change. Final sales of computers subtracted 0.10 percentage point from the second-quarter change in real GDP after adding 0.02 percentage point to the first-quarter change.
“…U.S. Real gross domestic product increased at an annual rate of 1.3 percent in the second quarter of 2012 (that is, from the first quarter to the second quarter), according to the “third” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 2.0 percent.
The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, nonresidential fixed investment, and residential fixed investment that were partly offset by negative contributions from private inventory investment and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.
The deceleration in real GDP in the second quarter primarily reflected decelerations in PCE, in nonresidential fixed investment, and in residential fixed investment that were partly offset by smaller decreases in federal government spending and in state and local government spending and an acceleration in exports.
Motor vehicle output added 0.20 percentage point to the second-quarter change in real GDP after adding 0.72 percentage point to the first-quarter change. Final sales of computers subtracted 0.10 percentage point from the second-quarter change in real GDP after adding 0.02 percentage point to the first-quarter change.
Real personal consumption expenditures increased 1.5 percent in the second quarter, compared with an increase of 2.4 percent in the first. Durable goods decreased 0.2 percent, in contrast to an increase of 11.5 percent. Nondurable goods increased 0.6 percent, compared with an increase of 1.6 percent. Services increased 2.1 percent, compared with an increase of 1.3 percent.
Real nonresidential fixed investment increased 3.6 percent in the second quarter, compared with an increase of 7.5 percent in the first. Nonresidential structures increased 0.6 percent, compared with an increase of 12.9 percent. Equipment and software increased 4.8 percent, compared with an increase of 5.4 percent. Real residential fixed investment increased 8.5 percent, compared with an increase of 20.5 percent.
Real exports of goods and services increased 5.3 percent in the second quarter, compared with an increase of 4.4 percent in the first. Real imports of goods and services increased 2.8 percent, compared with an increase of 3.1 percent.
Real federal government consumption expenditures and gross investment decreased 0.2 percent in the second quarter, compared with a decrease of 4.2 percent in the first. National defense decreased 0.2 percent, compared with a decrease of 7.1 percent. Nondefense decreased 0.4 percent, in contrast to an increase of 1.8 percent. Real state and local government consumption expenditures and gross investment decreased 1.0 percent, compared with a decrease of 2.2 percent.
The change in real private inventories subtracted 0.46 percentage point from the second-quarter change in real GDP, after subtracting 0.39 percentage point from the first-quarter change. Private businesses increased inventories $41.4 billion in the second quarter, following increases of $56.9 billion in the first quarter and $70.5 billion in the fourth. …”
“…Spending has gone up from $2.98 trillion in 2008—the year before Obama came into office—to a proposed $3.80 trillion in 2013. That is a 28-percent increase in five years, which represents a compound annual growth rate of 5.0 percent. Because the economy has stagnated during this period, spending has increased as a share of GDP. …”
Although the federal deficit is the amount each year by which federal outlays in the federal budget exceed federal receipts, the gross federal debt increases each year by substantially more than the amount of the deficit each year. That is because a substantial amount of federal borrowing is not counted in the budget.
Taxes and Trust – The Achilles Heels of Obamacare and Obama, Part I
By Pat Caddell
“…This November, if President Obama goes before the voters on the defensive–that is, on a rickety platform of defending Obamacare as a tax increase–it is he who has a huge problem. After all, his healthcare program was sold as a boon to the middle class, with a few regulatory sticks included therein. But if Obamacare can be exposed for what it is–a huge tax increase, the reality of which Obamacare proponents did their best to obscure–then the probability of his survival shrinks dramatically. To be sure, such an exposing of Obamacare as the ObamaTax will not be easy; the White House and the Democrats, as well as their handmaidens in the Main Stream Media, will do their best to armor up against any attack on the tax issue.
So Romney must wield that cudgel, and wield it hard. And so must Republicans, because if the campaign against Obamacare–the ObamaTax–is to be truly effective, it must be a top-to-bottom message. Indeed, as we shall see, the anti-ObamaTax message could be even stronger for down-ballot Republicans than for Romney himself.
The challenge is to keep the focus on the tax–the ObamaTax. Obamacare is many things, but the biggest single thing is the thing that they said it wasn’t–the ObamaTax.
The American people have shown that they can tolerate incompetent policy. But what they will not tolerate is being lied to. As a Jesuit might say, incompetence is a venial sin, but deception is a mortal sin. And so if troubling questions about Barack Obama’s incompetence turn into serious concerns about his character, the President will lose.”
Examiner Editorial: Obamacare is loaded with big tax increases
“…If implemented in 2014, the penalty on individuals who don’t purchase health insurance will boost government revenue by $27 billion through 2021, according to an analysis done last year by the CBO. The requirement that certain employers provide acceptable insurance or pay a penalty would raise an additional $82 billion.
Additional destructive tax increases include a $259 billion Medicare payroll tax hike and $148 billion in taxes on medical device makers, drug companies and insurers. Such taxes will not only be inevitably passed on to consumers of all income levels, but will stifle innovation by vacuuming up money that could have otherwise been spent on research and development. The law also includes a 3.8 percent surtax on investment income for households earning more than $250,000, as well as a number of smaller tax increases, such as the 10 percent tax on indoor tanning.
In all, the CBO has identified $813 billion in taxes over the next decade (2012 through 2021). And even this number understates the true cost of the law to taxpayers, because many of the revenue-raising measures don’t go into effect for several years. In the most obvious example, Obamacare is set to impose a tax on benefit-rich insurance policies. At first glance, the CBO report shows this so-called “Cadillac tax” will raise $111 billion over 10 years. But a closer look shows that it isn’t scheduled to kick in until 2018, so that $111 billion number is only for the first four years of its implementation.
Instead of narrowly focusing on the issue of whether or not the mandate should count as a tax, opponents of Obamacare should use this opportunity to make a broader point about the many expensive and punishing taxes that the law piles on businesses and the American people.
“…Before Romney’s time, Massachusetts had enacted a number of laws that made its health-care system needlessly expensive. All policies offered in the state were required to cover expensive treatments like substance-abuse counseling and infertility. In 1996, the state passed a law requiring “guaranteed issue” and “community rating” — meaning people could wait until they got sick to purchase health insurance. Naturally, rates skyrocketed. In addition, a 1986 federal law required hospital emergency rooms to treat all patients, regardless of ability to pay.
Romney’s idea was to permit Massachusetts insurers to sell catastrophic plans. As Avik Roy explained in Forbes, “Shorn of the costly mandates and restrictions originating in earlier state laws, these plans, called ‘Commonwealth Care Basic,’ could cost much less. Romney also proposed merging the non-group and small-group markets, so as to give individuals access to the more cost-effective plans available to small businesses.” Romney’s plan would also have involved a degree of cost sharing, so that those receiving subsidies would have an incentive to minimize their consumption.
Romney agreed to the mandate believing that Massachusetts citizens would get the opportunity to purchase inexpensive, catastrophic plans. But the legislature, together with Romney’s successor as governor, Deval Patrick, changed the law to require insurers to offer three tiers of coverage — all of them far beyond catastrophic care. Perhaps Romney ought to have foreseen what future legislatures and governors would do — but that’s a far cry from the accusation that Romneycare was indistinguishable from Obamacare.
Romney’s proposed reforms included fraud-prevention measures for Medicaid, requiring the income of both parents to be considered in children’s Medicaid eligibility, medical-malpractice tort reform, and giving individuals the same treatment as small businesses in the purchase of health plans. He envisioned a system of increased competition and choice.
The bill that passed the legislature contained a number of features Romney couldn’t countenance. He opposed the mandate, preferring to permit individuals to post a $10,000 bond in lieu of insurance. The legislature overrode him. He vetoed the employer mandate, coverage for illegal aliens, the creation of a new bureaucracy to be called the Public Health Council, a provision limiting improvements to Medicaid, and another provision expanding Medicaid coverage to include dental care. His vetoes were overridden.
The health-reform law Romney introduced — as opposed to the one that was implemented by his successor — stressed competition, reduced regulation, and expanded choice for the consumer.
It was a mistake for Romney to sign the bill. As Avik Roy put it, “The individual mandate was a loaded gun that Romney handed to his opponents, who used it to force individuals to buy comprehensive insurance they didn’t need.” But Romney’s bona fides as a free-market advocate and critic of Obamacare are not undermined by Romneycare. He can rightly claim that he foresaw, and attempted to prevent, the consequences of heavy-handed government control of the health-care market.”
Fair share? – Each American’s share of debt up $16,000 under Obama
US Treasury: Will borrow $444 bln Jan.-Mar. CCTV News
Ron Paul Ad – Plan
Ron Paul: Preserve Social Security Benefits, Cut Foreign Spending, End Wasteful Agencies
Ron Paul: Save Social Security by Cutting Spending
Ron Paul on taxes
Ron Paul on Extending the Tax Cut
WSJ Economist: Ron Paul’s 0% Income Tax = Massive Insourcing of Jobs into America
Debt Crisis Explained: Similarities, Differences and Lessons Learned from the US
What exactly is this US debt crisis? Why does a country borrow? When a country spends more than it earns through revenues, it has to borrow money from the global market to meet the expenditure. The country also needs to pay back the debt in installments over a period of time. This is called as debt obligations. So once a country borrows, the expenditure of the country shoots up. Hence the next time the country has to borrow more to meet not just the expenditure but also the debt obligations. From this you can understand that the countries’ debt amount goes on increasing with time as they borrow more and more. United States is no different and is also under a huge debt of $14.3 trillion at present. In fact, lending money to US is considered as a safe and promising investment. It is very common for a country to spend more than its revenues. So it is also normal for a country to borrow. In 2011 federal budget, the US government estimated the expenditure at $3.82 trillion and revenues at something more than $2 trillion. That implies a deficit of around $1.5 trillion. Under normal situation, US govt. would have borrowed and compensated this deficit. But they couldn’t because of the debt ceiling that is set by the US Congress. ●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●
What is debt ceiling? Debt ceiling is a cap set by the US Congress on the amount of debt the government can borrow. The limit was first set in 1917 at $11.5 billion. Whenever the govt. reaches the ceiling, it can’t borrow more. Every time the cap is reached the Congress approves a higher debt ceiling and directs the treasury to borrow more. To raise the cap, a legislation has to be passed in both the houses of the Congress: the Senate and the House of Representatives. The cap was last raised to $14.3 trillion which the current govt. reached in May this year. Since then the US is not being able to borrow more debt. ●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●
The Crisis of Credit Visualized – HD
CBO: Taxes Will ‘Shoot Up by More Than 30 Percent’ Over Next 2 Years
“…The amount of money the federal government takes out of the U.S. economy in taxes will increase by more than 30 percent between 2012 and 2014, according to the Budget and Economic Outlook published today by the CBO.
At the same time, according to CBO, the economy will remain sluggish, partly because of higher taxes.
“In particular, between 2012 and 2014, revenues in CBO’s baseline shoot up by more than 30 percent,” said CBO, “mostly because of the recent or scheduled expirations of tax provisions, such as those that lower income tax rates and limit the reach of the alternative minimum tax (AMT), and the imposition of new taxes, fees, and penalties that are scheduled to go into effect.” …”
“…According to the CBO report, federal tax revenues equaled $2.302 trillion in fiscal 2011, and will increase to $2,523 trillion in fiscal 2012, $2,988 trillion in fiscal in 2013, and $3,313 trillion in 2014.
As a percentage of GDP, according to CBO, federal tax revenues were 15.4 percent in fiscal 2011, and will be 16.3 percent in 2012, 18.8 percent in 2013, and 20.0 percent in fiscal 2014. …”
Each January, CBO prepares “baseline” budget projections spanning the next 10 years. Those projections are not a forecast of future events; rather, they are intended to provide a benchmark against which potential policy changes can be measured. Therefore, as specified in law, those projections generally incorporate the assumption that current laws are implemented.
But substantial changes to tax and spending policies are slated to take effect within the next year under current law. So CBO has also prepared projections under an “alternative fiscal scenario,” in which some current or recent policies are assumed to continue in effect, even though, by law, they are scheduled to change. The decisions made by lawmakers as they confront those policy choices will have a significant impact on budget outcomes in the coming years.
CBO’s Current-Law Baseline
CBO projects a $1.1 trillion federal budget deficit for fiscal year 2012 if current laws remain unchanged. Measured as a share of the nation’s output (gross domestic product, or GDP), that shortfall of 7.0 percent is nearly 2 percentage points below the deficit recorded in 2011, but still higher than any deficit between 1947 and 2008. Over the next few years, projected deficits in CBO’s baseline decline markedly, dropping to under $200 billion and averaging 1.5 percent of GDP over the 2013–2022 period.
Revenues
Much of the projected decline in the deficit occurs because, under current law, revenues are projected to shoot up by almost $800 billion, or more than 30 percent, between 2012 and 2014—from 16.3 percent of GDP in 2012 to 20.0 percent in 2014. That increase is mostly the result of of the recent or scheduled expirations of tax provisions, such as those initially enacted in 2001, 2003, and 2009 that lower income tax rates and those that limit the number of people subject to the alternative minimum tax (AMT).
Under current law, CBO projects that revenues will continue to rise relative to GDP after 2014 largely because increases in taxpayers’ inflation-adjusted income will push more income into higher tax brackets and subject more of it to the AMT.
Spending
Outlays in CBO’s baseline projections decline modestly relative to GDP over the next several years before turning up again later in the decade. The modest declines are the result of an expanding economy and statutory caps on discretionary appropriations. The aging of the population and rising costs for health care drive increases in spending in later years.
Projected spending in CBO’s baseline averages 21.9 percent of GDP over the 2013–2022 period. That figure is less than the 23.2 percent CBO estimates for 2012, but it remains elevated by historical standards. As a share of GDP, discretionary spending is projected to decline to its lowest level in the past 50 years by 2022, but that decline will be partially offset by increases in spending for mandatory programs, which are projected to climb from 13.3 percent of GDP in 2013 to 14.3 percent in 2022. Driven by higher interest rates and additional accumulation of debt, net interest costs will grow significantly—from 1.4 percent of GDP this year to 2.5 percent in 2022.
CBO’s Alternative Fiscal Scenario
CBO’s baseline projections are heavily influenced by changes in tax and spending policies that are embodied in current law—changes that in some cases represent a significant departure from recent policies.
CBO’s alternative fiscal scenario shows the budgetary consequences of maintaining certain tax and spending policies that have recently been in effect. That scenario incorporates the following assumptions:
Expiring tax provisions (other than the payroll tax reduction) are extended [under current law, those expirations will boost individual income taxes in a variety of ways by amounts totaling $3.8 trillion from 2013 through 2022];
The AMT is indexed for inflation after 2011 [under current law, its parameters are fixed, and the number of taxpayers affected by the AMT will jump from 4 million in calendar year 2011 to 30 million in 2012];
Medicare’s payment rates for physicians’ services are held constant at their current level [under current law, those rates are scheduled to drop by 27 percent this March and more in later years]; and
The automatic spending reductions required by the Budget Control Act do not take effect [under current law, they will impose reductions totaling about $109 billion a year starting in January 2013].
Under that alternative fiscal scenario, far larger deficits and much greater debt would result than are shown in CBO’s baseline. Deficits would average 5.4 percent of GDP over the 2013–2022 period, rather than the 1.5 percent reflected in CBO’s baseline projections. Debt held by the public would climb to 94 percent of GDP in 2022, the highest figure since just after World War II.
The Economic Outlook
In part because of the dampening effect of the higher tax rates and curbs on spending scheduled to occur this year and next, CBO expects that the economy will continue to recover slowly, with real GDP growing by 2.0 percent this year and 1.1 percent next year (as measured by the change from the fourth quarter of the previous calendar year). CBO expects economic activity to quicken after 2013 but to remain below the economy’s potential until 2018.
In CBO’s forecast, the unemployment rate remains above 8 percent both this year and next, a consequence of continued weakness in demand for goods and services. As economic growth picks up after 2013, the unemployment rate will gradually decline to around 7 percent by the end of 2015, before dropping to near 5½ percent by the end of 2017.
While the economy continues to recover during the next few years, inflation and interest rates will remain low. In CBO’s forecast, the price index for personal consumption expenditures increases by just 1.2 percent in 2012 and 1.3 percent in 2013, and rates on 10-year Treasury notes average 2.3 percent in 2012 and 2.5 percent in 2013. As the economy’s output approaches its potential later in the decade, inflation and interest rates will rise to more normal levels.
Many developments could produce economic outcomes that differ from CBO’s forecast. For example:
The forces that have restrained the economy’s recovery could fade more rapidly than anticipated.
A significant worsening of the banking and fiscal problems in Europe could spill over to U.S. financial markets and greatly weaken the economy here.
Changes in fiscal policy that diverge from those in CBO’s baseline could affect economic growth.
CBO’s alternative fiscal scenario represents one possible set of changes in fiscal policy. Under that scenario, real GDP would be noticeably higher in the next few years than it is in CBO’s baseline economic forecast: CBO estimates that, with such changes in policy, real GDP in the fourth quarter of 2013 would be between 0.5 percent and 3.7 percent greater than in the baseline forecast, and that the unemployment rate would be between 0.3 and 1.8 percentage points lower. But, over time, the resulting larger deficits would reduce private investment in productive capital and result in real GDP that would fall increasingly below the level in CBO’s baseline projections.
The Complex Path of Ideological Change | Robert Higgs
“Lecture presented by Robert Higgs at the Lugwig von Mises Institute’s annual Austrian Scholars Conference held at the Mises Institute in Auburn, Alabama; March 16-18, 2006.”
“…Originally aired 4/4/2009. Robert Higgs, Ph.D., Senior Fellow at the Independent Institute, discusses his work as an author and political economist in a featured interview with In Depth on C-SPAN2’s Book TV. …”
Robert Higgs on C-SPAN2’s Book TV, Part 2 of 3
Robert Higgs on C-SPAN2’s Book TV, Part 3 of 3
Robert Higgs on the Rise and Fall of Leviathan
“…Robert Higgs is an economic historian whose writings focus on the causes and means of government growth. He is the author of Crisis and Leviathan: Critical Episodes in the Growth of American Government (1989). Higgs speaks here at a Future of Freedom Foundation conference in 1995 on the ratchet effect- the idea that governments tend to grab power during emergencies but do not cede it completely after each crisis abates- and gives his own analysis of what it might take to slow the growth of government in the 21st century. …”
Obama sets the record straight: It’s not class warfare …It’s MATH
President Obama – It’s Not Class Warfare to Ask Millionaire to Pay Same Tax Rate as Secretary
Obama the Socialist wants to spread YOUR money around
Obama – Taxes, Capital Gains
President Barack Obama, September 19, 2011
“…So I am ready, I am eager, to work with Democrats and Republicans to reform the tax code to make it simpler, make it fairer, and make America more competitive. But any reform plan will have to raise revenue to help close our deficit. That has to be part of the formula. Andany reform should follow another simple principle: Middle-class families shouldn’t pay higher taxes than millionaires and billionaires. That’s pretty straightforward. It’s hard to argue against that. Warren Buffett’s secretary shouldn’t pay a higher tax rate than Warren Buffett. There is no justification for it.
It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million. Anybody who says we can’t change the tax code to correct that, anyone who has signed some pledge to protect every single tax loophole so long as they live, they should be called out. They should have to defend that unfairness — explain why somebody who’s making $50 million a year in the financial markets should be paying 15 percent on their taxes, when a teacher making $50,000 a year is paying more than that — paying a higher rate. They ought to have to answer for it. And if they’re pledged to keep that kind of unfairness in place, they should remember, the last time I checked the only pledge that really matters is the pledge we take to uphold the Constitution. …”
2011 Tax Rates & 2011 Tax Brackets
Here are the federal income tax rates for 2011 from the IRS:
2011 Tax Rates & 2011 Tax Brackets
Here are the federal income tax rates for 2011 from the IRS:
Tax Rate
Single
Married Filing Joint
Married Filing Separate
Head of Household
10%
Up to $8,500
Up to $17,000
Up to $8,500
Up to $12,150
15%
$8,501 – $34,500
$17,001 – $69,000
$8,501 – $34,500
$12,151 – $46,250
25%
$34,501 – $83,600
$69,001 – $139,350
$34,501 – $69,675
$46,251 – $119,400
28%
$83,601 – $174,400
$139,351 – $212,300
$69,676 – $106,150
$119,401 – $193,350
33%
$174,401 – $379,150
$212,301 – $379,150
$106,151 – $189,575
$193,351 – $379,150
35%
Over $379,150
Over $379,150
Over $189,575
Over $379,150
In addition to the tax brackets above, you may owe tax under the alternative minimum tax. You can review the 2011 AMT exemption to see if it will apply to you.
Proposed 2012 Tax Rates & Tax Brackets
Tax Rate
Single
Married Filing Joint
Head of Household
10%
Up to $8,600
Up to $17,200
Up to $12,250
15%
$8,601 – $34,900
$17,201 – $69,800
$12,251 – $46,750
25%
$34,901 – $84,500
$69,801 – $140,850
$46,751 – $120,700
28%
$84,501 – $195,950
$140,851 – $237,700
$120,701 – $216,800
36%
$195,951 – $383,350
$237,701 – $383,350
$216,801 – $383,350
39.6%
Over $383,350
Over $383,350
Over $383,350
Married Filing Separate was not included in the release. I’ll update the 2012 federal tax tables for all filing statuses as soon as the information is available.
2012 Tax Rates vs 2011 Tax Rates
Want to compare the proposed 2012 tax brackets to the current year to see the changes?
The biggest changes in the proposal are expanding the 28% bracket and replacing the 33% and 35% brackets with 36% and 39.6% brackets.
“…This year, households making more than $1 million will pay an average of 29.1
percent of their income in federal taxes, including income taxes, payroll taxes
and other taxes, according to the Tax Policy Center, a Washington think
tank.
Households making between $50,000 and $75,000 will pay an average of 15
percent of their income in federal taxes.
Lower-income households will pay less. For example, households making between
$40,000 and $50,000 will pay an average of 12.5 percent of their income in
federal taxes. Households making between $20,000 and $30,000 will pay 5.7
percent.
The latest IRS figures are a few years older — and limited to federal income
taxes — but show much the same thing. In 2009, taxpayers who made $1 million or
more paid on average 24.4 percent of their income in federal income taxes,
according to the IRS.
Those making $100,000 to $125,000 paid on average 9.9 percent in federal
income taxes. Those making $50,000 to $60,000 paid an average of 6.3
percent.
Obama’s claim hinges on the fact that, for high-income families and
individuals, investment income is often taxed at a lower rate than wages. The
top tax rate for dividends and capital gains is 15 percent. The top marginal tax
rate for wages is 35 percent, though that is reserved for taxable income above
$379,150.
With tax rates that high, why do so many people pay at lower rates? Because
the tax code is riddled with more than $1 trillion in deductions, exemptions and
credits, and they benefit people at every income level, according to data from
the nonpartisan Joint Committee on Taxation, Congress’ official scorekeeper on
revenue issues.
The Tax Policy Center estimates that 46 percent of households, mostly low-
and medium-income households, will pay no federal income taxes this year. Most,
however, will pay other taxes, including Social Security payroll taxes. …”
“A Conservative is a fellow who is standing athwart history yelling ‘Stop!'”
~William F. Buckley, Jr.
Understanding The Debt Crisis In The U.S.
Ron Paul: Rein in Government Spending to Reduce the Debt
The CPI chart on the home page reflects our estimate of inflation for today as if it were calculated the same way it was in 1990. The CPI on the Alternate Data Series tab here reflects the CPI as if it were calculated using the methodologies in place in 1980. In general terms, methodological shifts in government reporting have depressed reported inflation, moving the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living.
Ron Paul to Congress: If Debt Is the Problem, Why Do You Want More of It?
Ron Paul: I’ll Vote Against Raising the Debt Limit
Ron Paul Ad – Conviction
Ron Paul ‘Annoyed’ at President Obama
Ron Paul Talks on The Federal Reserves Manipulation of US Dollar & The Tyranny of the TSA
Peter Schiff Responds to Timothy Geithner on Debt Ceiling He’s just making this stuff up!
A Promise That Cannot Be Kept | THE PLAIN TRUTH by Judge Napolitano
An open letter from Judge Andrew Napolitano to Speaker John Boehner
Underwhelming Spending Cuts from Congress and Obama
Dan Mitchell Exposing DC’s Fake Spending-Cut Scam with Judge Napolitano
“Cut, Cap and Balance,” the Debt Ceiling and Federal Spending
Dan Mitchell Talking about Downgrades and Debt Limit with Kudlow on CNBC
“Every Man Cannot Have His Way In All Things” President Obama Address
GOP Response To President Obama’s Debt Ceiling Address – 07/25/11
“A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned – this is the sum of good government.”
~Thomas Jefferson
The American people want government spending to be cut, the budget balanced and no increase the national debt ceiling starting in Fiscal Year 2012.
The only real cuts in the Federal government spending are cuts to the budget baseline for Fiscal Year 2012 not cuts in the rate of growth of the baseline.
Please downsize the government by closing Departments, Agencies and programs and not voting for an increase the National Debt ceiling.
The time has come to furlough without pay non-essential government employees starting on August 2, 2011.
If you must betray the Tea Party and conservative movements and the American people at least insist that for every dollar increase in the national debt ceiling at least 10 cents be cut from the House of Representatives Fiscal Year 2012 Budget Resolution:
If you vote for a $1,000 billion increase in the National Debt ceiling then require the House of Representatives Fiscal Year 2012 Budget Resolution be cut by $100 billion to $3,429 billion with a $885 billion dollar deficit.
If you vote for a $2,000 billion increase in the National Debt ceiling then require the House of Representatives Fiscal Year 2012 Budget Resolution be cut by $200 billion to $3,329 billion with a $785 billion dollar deficit.
If you vote for a $3,000 billion increase in the National Debt ceiling then require the House of Representatives Fiscal Year 2012 Budget Resolution be cut by $300 billion to $3,229 billion with a $685 billion dollar deficit.
If you vote for a $4,000 billion increase in the National Debt ceiling then require the Fiscal Year Budget be cut by $400 billion to $3,129 with a $585 billion dollar deficit.
If you vote for a $10,000 billion increase in the National Debt ceiling then require the Fiscal Year Budget be cut by $1,000 billion to $2, 529 with a $ 4 billion dollar surplus.
Otherwise you will be considered a traitor to the Tea Party movement and be voted out of office in 2012.
Either you are a Constitutionalist Republican or an Establishment Republican, you are either with the tea party or you are against the Tea party.
If you go back to the Fiscal Year 2005 government spending or outlay level, you can balance the budget this year.
I agree with President Obama that we need comprehensive tax reform and Speaker Boehner that we need something dramatic or a breakthrough.
Pass the FairTax to increase economic growth, jobs, savings, investment, productivity and even tax revenues by expanding the tax base.
The FairTax would replace the current Federal income, payroll, gift and estate taxation system which everyone agrees is too complex, costly and unfair.
The FairTax: It’s Time
Lugar Cosponsors the FairTax
Ron Paul on Taxes
Start listening to Ron Paul if you want to get re-elected.
No more commissions or backroom deals.
Cut spending now!
The choice is yours.
“It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world.”
~Thomas Jefferson
Background Articles and Video
Sen. Toomey Gives a Speech on the Debt Limit at AEI
Smoke and Mirrors on Spending Cuts
Ron Paul on the U.S. Government’s Debt Crisis
The Debt Limit: Made Simple
Ron Paul 2012 Amazing!!!
Rasmussen Reports
Most Voters Are Unhappy With Both Sides in the Debt Ceiling Debate
“…Most voters don’t care much for the way either political party is performing in the federal debt ceiling debate.
The latest Rasmussen Reports national telephone survey finds that 58% of Likely U.S. Voters at least somewhat disapprove of the way President Obama and congressional Democrats are handling the debate over the debt ceiling, with 38% who Strongly Disapprove. But 53% also disapprove of how congressional Republicans are handling the debate, including 32% who Strongly Disapprove.
Just 36% approve of how Obama and Democrats are doing, with 10% who Strongly Approve. Forty percent (40%) approve of the GOP’s performance, including 13% who Strongly Approve. (To see survey question wording, click here.)
While the two sides continue to wrangle over how to avoid defaulting on the government’s massive debt load, most voters nationwide are worried the final deal will raise taxes too much and cut spending too little.
Whatever spending cuts are in the final deal, 49% of all voters don’t think the government will actually cut the spending agreed upon. A commentary by Scott Rasmussen, published in Politico, put it this way: “Based on the history of the past few decades, voters have learned that politicians promising unspecified spending cuts should be treated with all the credibility of a six-year old boy caught with his hand in the cookie jar promising to be good for the rest of his life.” …”
“…As the Beltway politicians try to figure out how they will raise the debt ceiling and for how long, most voters oppose including tax hikes in the deal.
Just 34% think a tax hike should be included in any legislation to raise the debt ceiling. A new Rasmussen Reports national telephone survey finds that 55% disagree and say it should not. …”
“…There is a huge partisan divide on the question. Fifty-eight percent (58%) of Democrats want a tax hike in the deal while 82% of Republicans do not. Among those not affiliated with either major political party, 35% favor a tax hike and 51% are opposed.
Americans who earn more than $75,000 a year are evenly divided as to whether a tax hike should be included in the debt ceiling deal. Those who earn less are opposed to including tax hikes.
Voters remain very concerned about the debt ceiling issue. Sixty-nine percent (69%) believe that it would be bad for the economy if a failure to raise the debt ceiling led to government defaults. Only 6% believe it would be good for theeconomy. Fourteen percent (14%) believe it would have no impact and 11% are notsure. These figures are little changed from a few weeks ago. …”
House passes Ryan’s ’12 budget; conservatives want more cuts
By Erik Wasson and Pete Kasperowicz – 04/15/11
“…The House on Friday approved a fiscal year 2012 budget resolution from Budget Committee Chairman Paul Ryan (R-Wis.) that seeks to drastically limit government spending next year and in years to follow.
But the vote on the measure — which imposes $5.8 trillion in spending cuts over the next decade — came after a clear sign that at least half of the Republican Caucus supports even tougher spending cuts.
The final tally was 235-193, with four Republicans opposing it. They were Reps. Ron Paul (Texas), Denny Rehberg (Mont.), Walter Jones (N.C.) and David McKinley (W.Va.).
Rehberg, the appropriator in charge of health spending, is running for Montana’s Senate seat.
Majority Whip Kevin McCarthy (R-Calif.) said listening sessions with Republican members made it the strongest vote of the year.
“This is the process we should follow on all votes,” he said.
“…The Republican-controlled House defied a presidential veto threat Tuesday night in approving a bill to amend the Constitution to require a balanced federal budget. But Speaker John A. Boehner acknowledged that a backup plan is needed, and a Senate GOP leader said he expects such an alternative to win his chamber’s approval.
The House voted 234 to 190 in favor of the “Cut, Cap and Balance Act,” which the White House has said will be vetoed in the unlikely event it passes the Senate and reaches President Obama’s desk. Faced with those prospects, Boehner told reporters that it would also be responsible to consider a backup plan for raising the federal debt ceiling and thus averting a potentially disastrous default on U.S. obligations.
Neither the Republican Party nor Democratic Party Fiscal Year 2012 budget proposals are the road to peace and prosperity but a Tea Party budget with balanced budgets most definitely is:
Which Budgets Are Balanced And Living Within The Means of The American People?
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The carryout bag ordinance outlines the City’s “desire to protect the natural environment, the economy and the health of its residents,” and the “negative impact on the environment caused by improper disposal of single-use carryout bags.” The Dallas City Council approved the ordinance on March 26, 2014.
The ordinance takes effect on January 1, 2015.
Some are still unclear how the ordinance may impact them.
Pronk Palisades 
American People’s Verdict On Democratic Socialist Debate: Lying Lunatic Left — Hillary Clinton — Bernie Sanders — Martin O’Malley — Lincoln Chaffee — Guilty As Charged — Indict or Nominate or Pardon Hillary Clinton — Biden Biding Time Until Benghazi Testimony of Clinton — Worse Economic Recovery Since Great Depression and 7 Years of Economic Stagnation Under Obama — No Change — No Hope — Videos
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Story 1: American People’s Verdict On Democratic Socialist Debate: Lying Lunatic Left — Hillary Clinton — Bernie Sanders — Martin O’Malley — Lincoln Chaffee — Guilty As Charged — Indict or Nominate or Pardon Hillary Clinton — Biden Biding Time Until Benghazi Testimony of Clinton — Worse Economic Recovery Since Great Depression and 7 Years of Economic Stagnation Under Obama — No Change — No Hope — Videos
LAS VEGAS, NV – OCTOBER 13: (L-R) Democratic presidential candidates Jim Webb, U.S. Sen. Bernie Sanders (I-VT), Hillary Clinton, Martin O’Malley and Lincoln Chafee take the stage for a presidential debate sponsored by CNN and Facebook at Wynn Las Vegas on October 13, 2015 in Las Vegas, Nevada. The five candidates are participating in the party’s first presidential debate. (Photo by Joe Raedle/Getty Images)
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Emails Show Clinton Worked With George Soros To Run Shadow Gov’t
The real scandal surrounding Democratic presidential hopeful Hillary Clinton’s private email system may be that she was running, in concert with a private consulting firm tied closely to George Soros, an outsourced and parallel State Department answerable only to her and not President Obama, the Congress, or the American people.
INFOWARS Nightly News: CNN Democratic Debate Coverage Tuesday October 13 2015
Who Won The First Democratic Debate In Terms Of Body Language?
Carol Kinsey Goman
The major story of the first televised presidential debate in 1960 became the photogenic appeal of John F. Kennedy versus the sickly look of his opponent, Richard Nixon, who refused to wear makeup although his recent illness had left him with a pallid complexion. In addition, Kennedy looked directly at the camera when answering questions (rather that at the journalists who asked them), which made viewers see him as someone who was talking right to them and giving straight answers. To make matters worse, the cameras caught Nixon wiping perspiration from his forehead while Kennedy was pressing him on the issues.
When the debate ended, a large majority of television viewers recognized Kennedy as the winner. Radio listeners, who heard the debate but hadn’t seen it, gave the victory to Nixon.
Never again would politicians under estimate the importance of physical appearance and body language – especially when appearing on television. Today’s political figures are fully aware of, and heavily coached on, the impact of nonverbal communication.
And when it comes to nonverbal cues, everything matters: Gender, age, skin color, hair style, attractiveness, height, clothing, facial expressions, hand gestures, posture — audiences judge it all. Superficial? Maybe. But this potent (and often unconscious) process is also hardwired in the human brain.
There are two sets of nonverbal signals that are especially important for candidates to project: warmth and authority. Warmth cues project likeability and candor and authority cues denote power and status. The most appealing politicians (at least from a body language standpoint) are those whose behaviors encompass both sets of signals.
Which brings me to the first Democratic debate of the 2016 election cycle — and how I would grade the body language of the debaters.
Hillary Clinton, former secretary of state
Grade: A-
How she did it: Clinton is often described, by both supporters and critics, as strong, tough, and aggressive. So it was no surprise to see those qualities exhibited in her body language through expansive gestures, erect posture, and well-prepared responses.
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But Clinton’s body language won the debate by doing more than displaying authority. She successfully “warmed up” her image, with smiles, head nods in agreement/support of other’s comments, and (at one point) even laughter.
Visually, being the only woman on stage was also to her advantage. The contrast between Clinton and the rest of the (white, male) candidates was visually striking – especially for someone who wants to show how she would be different from previous presidents.
Bernie Sanders, senator of Vermont
Grade: B+
How he did it: Unlike Clinton, who (for better or worse) is a known national figure, Sanders needed to give the audience a clear picture of who he is and what he stands for – and he was very effective doing so last night. Sanders was animated and used gestures (like finger pointing and palms rotated down) to effectively emphasize his resolve – although at times, his movements were a bit jerky, instead of smooth. And for those who were wondering if a 74-year old could keep his energy high for two hours, the answer was a resounding “yes.”
Sanders nonverbal negatives include his leaning too often on the lectern (as if he needed physical support) and in his lack of warm cues. He is much more expressive when showing anger, disgust, and impatience – but rarely does he display joy or express optimism.
Martin O’Malley, former governor Maryland
Grade: C
How he did it: While he never had the “break through” moment his campaign was hoping for, nonverbally O’Malley had a significant nonverbal advantage: He looked fit and athletic – and he was the tallest person in the line up. Don’t discount the effect of these seemingly trivial facts. We are biased toward attractive, healthy people, and we unconsciously attribute leadership characteristics to tall people. (The effects of this are seen not only in politics, but in business. For example, in the U.S. population, 14.5% men are 6’ tall and over, but with CEOs of Fortune 500 companies, that statistic climbs to 58%.) But his softer, slower communication style often lacked the energy and passion needed to support his rhetoric. And his deadpan, almost angry expression when other candidates were speaking was tweeted about as the “death stare” – not a good look for someone who is usually seen as upbeat and happy.
Jim Webb, former senator of Virginia
Grade C-
How he did it: Webb is known as being “gruff” and “stiff,” and both of those qualities were displayed nonverbally: Outside of a slight lean backward and a shoulder shrug now and then, he rarely moved his body – adding to his stoic image.
Lincoln Chaffee, former governor of Rhode Island
Grade: D
How he did it: Chafee’s body language was filled with nervous facial gestures (lip licking was especially prevalent) and conflicting nonverbal messages, the most noticeable being a smile with tightened or compressed lips that made the otherwise warm signal look forced and inauthentic.
The only missing contender in last night’s debate was Vice President Joe Biden, who hasn’t declared his intention to run. Too bad. He is passionate and expressive. He would have been interesting to watch.
https://www.youtube.com/watch?v=DvjU0xLWrv4
EVIDENCE SHOWS CLINTON RAN A PARALLEL, OUTSOURCED STATE DEPT.
Clinton received help from George Soros to run shadow gov’t
The real scandal surrounding Democratic presidential hopeful Hillary Clinton’s private email system may be that she was running, in concert with a private consulting firm tied closely to George Soros, an outsourced and parallel State Department answerable only to her and not President Obama, the Congress, or the American people.
The media has tried to separate two dubious operations of Mrs. Clinton while she was at the State Department. The first is the private email server located in her Chappaqua, New York residence. The second is the fact that her government-paid State Department personal assistant, Huma Abedin, wife of disgraced New York “sexting” congressman Anthony Weiner, was simultaneously on the payroll of Teneo, a corporate intelligence firm that also hired former President Bill Clinton and former British Prime Minister Tony Blair as advisers. Abedin has been linked to the Muslim Brotherhood, which has recently buried the hatchet with longtime rival Saudi Arabia and common cause against the Assad government in Syria, the Houthi rebels in Yemen, and Iran.
It is clear that Mrs. Clinton used her private email system to seek advice on major foreign policy issues, from her friend and paid Clinton Foundation adviser Sidney Blumenthal providing private intelligence on Libya’s post-Qaddafi government and possible business ventures to Clinton friend Lanny Davis seeking favors from Mrs. Clinton. It should be noted that Davis was a paid lobbyist for the military junta of Honduras that overthrew democratically-elected President Manuel Zelaya in 2009. It also should be noted that Mrs. Clinton voiced her personal dislike for the late Libyan leader Muammar Qaddafi, when, after he was assassinated by U.S.-armed jihadist rebels, boasted, “We came, we saw, he died!”
It was highly unusual for Abedin to receive a U.S. government paycheck while also receiving a consultant’s salary from Teneo. Teneo was founded in 2011 by Doug Band, a former counselor to Bill Clinton. Teneo, which is as much a private intelligence firm as it is an investment company and “governance” consultancy, has its headquarters in New York and branches in Washington DC, Brussels, São Paulo, London, Dublin, Dubai, Hong Kong, Beijing, and Melbourne. With the exception of its investment arm, Teneo closely resembles the former CIA-connected firm where Barack Obama worked after he graduated from Columbia, Business International Corporation (BIC). Teneo’s marketing claims match those made by BIC during its heyday: Teneo works “exclusively with the CEOs and senior leaders of many of the world’s largest and most complex companies and organizations.”
Teneo has staked a position in the international news media with its recent purchase of the London-based firm Blue Rubicon, formed in part by the former home news editor for Channel 4 News in the United Kingdom. Teneo also recently acquired London’s Stockwell Group, which provides consultancy services to the National Bank of Greece and Pireaus Bank. It appears that Mrs. Clinton’s friends are cashing in on the global banking austerity being levied against Greece.
The head of Teneo Intelligence is Jim Shinn, a former assistant secretary for Asia for the Defense Department. What is troubling is that Teneo has been offering statements to the media designed to heighten tensions between NATO and Turkey on one side and Russia on the other over Russia’s military attacks on the Islamic State in Syria. Shinn’s intelligence chief in Teneo’s London office, Wolfgango Piccoli, who has worked for the Soros-linked Eurasia Group consultancy, told CNN that Russia’s “reinforcement of the Assad regime and the consolidation of separate areas of control is more likely to prolong the conflict by forcing a stalemate.” The Teneo statement came in a CNN report that suggests members of the Bashar al Assad government in Syria and Russian President Vladimir Putin and his government could be charged by international or “national” tribunals for war crimes in a manner similar to those convened on members of the Yugoslavian and Serbian governments.
The entire International Criminal Court (ICC) in The Hague and in Africa has fallen under the control of George Soros and his operatives. Soros has made no secret of his support for overthrowing Assad and Putin and he has resorted to a “weapon of mass migration” of Syrian, Iraqi, and other refugees into Europe in order to destabilize the entire continent and endanger its Christian culture and social democratic traditions. Mrs. Clinton and Soros extensively used Mrs. Clinton’s private email system to exchange, among other things, information on the political situation in Albania, a country where Soros’s operatives are plentiful and powerful. Soros is a major donor to the Clinton Foundation and Mrs. Clinton’s presidential campaign.
Soros also pressed Mrs. Clinton for State Department support for his American University of Central Asia, which, as seen with Soros’s Central European University in Budapest and its graduate ranks of pro-U.S. leaders throughout central and eastern Europe, is designed to manufacture a new generation of pro-U.S. leaders in the Central Asian states of the former Soviet Union.
The “wiping” of Mrs. Clinton’s email systems’ hard drives appear to be part of a classic case of an intelligence operation destroying data after being exposed.
The Clinton outsourcing of U.S. foreign policy not only involves Teneo but also the Clinton Foundation, for which Mrs. Clinton solicited donations from foreign sources while she served as Secretary of State. Moreover, in a classic example of racketeering, Bill Clinton was paid by Teneo as an adviser while his Clinton Foundation hired Teneo as as a consultant. The Clinton Foundation is directed by Bill and Hillary Clinton, along with their daughter Chelsea Clinton Mezvinsky. Mrs. Clinton’s private email use also extended to Clinton Foundation chief financial officer Andrew Kessel and longtime Bill Clinton friend Bruce Lindsey.
One of the emails sent via Mrs. Clinton’s private system was from her State Department counsel Cheryl Mills to Amitabh Desai, the head of foreign policy for the Clinton Foundation. Mills wanted Desai to arrange a meeting between Rwandan dictator Paul Kagame with the Democratic Republic of Congo strongman Joseph Kabila during Kagame’s visit to Kinshasa in 2012. This effort was conducted outside the State Department with the sole exception that Assistant Secretary of State for African Affairs Johnnie Carson, a close friend of Mrs. Clinton, was involved in the email exchange with Mills and Desai.
Other private email use involved Hollywood magnate Haim Saban, Loews heir Andrew Tisch, and Lynn de Rothschild, all of whom were peddling Israel’s interests to Hillary and Bill Clinton in return for sizable donations to the Clinton Foundation and Mrs. Clinton’s presidential campaign.
Under the Clinton Giustra Enterprise Partnership, the Clinton Foundation received generous financial support totaling some $31 million from Frank Giustra, a Canadian uranium mining magnate. Giustra relied on the Clintons to use their influence to open up lucrative uranium exploitation opportunities in places like Kazakhstan and Africa.
Senator Chuck Grassley (R-IA) has been stonewalled in his attempt to obtain more information about Teneo’s relationship with Mrs. Clinton, the Clinton Foundation, and Bill Clinton.
Wayne Madsen is an investigative journalist who consistently exposes cover-ups from deep within the government. Want to be the first to learn the latest scandal? Go to WayneMadsenReport.com subscribe today!
http://www.infowars.com/evidence-suggests-clinton-ran-a-parallel-outsourced-state-dept/
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