MYTH BUSTED: No Increase to Business Taxes, even for Joe the Plumber

Why are pro-business Republicans among the critics suggesting Obama's proposal includes a tax hit on people who run the small businesses that those same Republicans always insist drive job growth in the USA? Are they worried about the Joe-the-Plumber scale businesses? If so, it's already been documented that neither Joe nor his boss earned enough to be hit by the new taxes, and so they'd likely see a tax reduction. Don't forget, for these purposes "small business" includes up to 500 employees.

It's a curious thing - but to actually gross the $250,000 that represents the threshold for the tax increase is not common for small business owners. I know - I was one. I created jobs, I had more staff than my predecessor had in the same business, and I paid for health coverage for my full time staff (my part-timers had coverage through other sources) and even though the business moved a lot of cash through my bank, I didn't come close to grossing 6 figures. Many small business owners actually earn less than their best paid employees do, and that's even more true today that it was 10 years ago.

According to the Associated Press, an independent analysis estimated that just over 75% of all U.S. households would qualify for Obama's proposed tax credit for workers.

Did you know that there are over 3 times as many businesses in the USA without any employees as there are with employees? That's right, many professionals in partnerships, sole proprietorships, some S-Corps, and many who "organize" themselves as a for tax reasons as a business earn little or no taxable income from their business. So sure, some of those folks who are very successful and are technically small businesses on paper will end up paying more taxes - if their accountants can't figure out how to structure the cash flow to keep their paycheck under $21,000/month.

But the GOP has been campaigning for years - and often winning - based on accusing the Democrats of being the party of tax and spend. So even though that old familiar attack didn't work during the general election in 2008 their messaging gurus apparently don't have another theme ready. And that means we're going to hear about the mythical "drag on the economic engine of small business job creation" until the GOP finds somebody that makes for better coverage than former Massachusetts Governor Romney, or current Governors such as Palin, Pawlenty, and Jindal.

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The irony of hope: Obama's not relying on it

To confront the most profound challenges to our financial system the people of the United States have invested their hope in a former lawyer turned community activist, Barack Obama. In his address to the U.S. Congress, watched by much of the nation Tuesday night, Obama offered an insight into what's been happening inside his administration during the first month he's been in office, but it's clear the work began well prior to inauguration day on a wide range of initiatives.

You may argue that the cost of the Iraq war leaves us too far in debt to attain his ambitious goal of halving the national budget deficit in four years, or that the need for money to help homeowners and those losing their jobs is too urgent and will hamper his ability to attain those goals - and that's far from the only challenge the White House faces domestically, let alone on the stage of world affairs.

Still, we must reverse the unacceptable trends in the housing markets and the massive bleeding of the jobs from the workforce in the United States. We cannot simply wait and hope it gets better. Our long range future depends on a realistic assessment of the scope and scale of the problems and addressing not merely the budget deficit, but the deficit that average citizens feel when considering the leadership of our financial institutions and lawmakers that brought us to this critical point.

As the President rolls out the budget today, questions about fiscal policy in particular loom from all sides about more than the numbers. We must move to a system with clearer rules and better oversight to prevent another looting of our savings and investments in ways that benefit only a very few already wealthy individuals while leaving privatized retirement accounts and home values in tatters with echoes of the crisis around the globe.

Fortunately, Obama, Vice President Joe Biden, and their team are neither rookies nor have they been basking in the post-inaugural glow. They've had their sleeves rolled up for months. This administration has brought new vigor and insight to a variety of issues, clearly including the domestic economic crisis. Barack Obama gave an inspirational speech, despite unseemly catcalls from some of the opposition as he described an interlocking, holistic approach that combines controlling costs, retaining/creating job opportunities, and enhancing revenue by targeting three major sectors (energy, education, and health care.)

The man who had hope as a central theme of his campaign is not relying on hope. Obama's laid out a clear foundation for recovery that moves quickly into rebuilding our economy and infrastructure in a way that accounts for our place on the planet, both physically and metaphorically. He's not overlooking the threat from disaffected individuals in Afghanistan and elsewhere around the globe, but Obama his team have brought new energy and creativity to ordering our priorities, in a refreshingly open way.

Obama's asking a lot of people. Even mustering the energy to remain hopeful can be hard when challenges are so ubiquitous. Like the best doctor faced with a critical patient, though, Obama's asking more of himself, though, and his staff - they're not content to hope, they're leading by example. The executive branch of the U.S. is working aggressively on all fronts, using transfusions where appropriate to keep critical systems functioning, while focusing on the goal of stabilizing the U.S. and world economy that are intertwined with our other domestic challenges so that we can heal, and back to the American dream. That's a path I can believe in.

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Mitt "PAC man" Romney sends checks to GOP Reps who voted "NO" on stimulus

Wish I was so rich I could afford to play games with America's economy.

Former Governor Mitt Romney’s Free and Strong America PAC today sent $1,000 checks to a group of House Republicans for their votes against the $800 billion stimulus bill. Romney's obviously not worrying about making his mortgage or utility payments, let alone balancing state budgets, any more than the GOP millionaires in D.C., who he so desperately wants to be pals with.

Must be nice to be able to throw around the kind of money that shows you're a PAC leader. Of course, we all know he basically financed his own campaign out of what amounts to petty cash even though that amount would stagger any normal family in the U.S.

I'm not suggesting that this merits the sort of scrutiny that it would if there was evidence it was pre-arranged paying for votes, but consider this: Can you imagine how he'd be reacting to the current fiscal and economic situation if we'd elected smiling Mitt to be our President? Rhetoric about tax cuts for the rich providing a stimulus, maybe. While millions lose their jobs and face foreclosure, worrying about paying for meals and losing their health coverage, Romney's paying for deliberate obstructionism, not offering ways to make the bill or the situation better.

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Obama's visit to Mesa brings hope to fearful AZ home owners

President Obama has people paying attention and engaged -- and Dawn Teo's covering both sides of the story for Huffington Post:

Dueling groups of anti- and countering pro-Obama protesters were setup in several "free speech zones" near the high school, smaller groups were scattered across sidewalks and street corners for several blocks, where former Governor Janet Napolitano's departure to take over as the new United States Secretary of Homeland Security gave Republicans full control of Arizona's state government.

Ms. Teo wrote:
"According to Housing and Urban Development Secretary Shaun Donovan, who spoke to the press before the event, about 6 percent of Arizona mortgages either are in foreclosure or are more than 90 days behind today. Across the country, nearly 10 percent of mortgages are behind, and in December, close to half of home sales across the country were "distressed" sales. Donovan says he expects about 6 million more foreclosures over the next 3 years."

The Obama administration is supporting legislation that, if passed, would allow judges to write down the principle and/or interest of mortgages when mortgage holders file for bankruptcy, and will be releasing new mortgage guidelines, which go into effect in 2 weeks that will standardize the mortgage loan process, including the appraisal process.

"Eyes brimmed with tears, attendees described the bleak outlook of being uprooted from their homes, a common fate in the Valley of the Sun. Besides the obvious transition from pre-election rallies to stately policy talks, today's topic -- the foreclosure crisis -- was sobering for the Mesa crowd."

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The GOP opposes bi-partisan solutions.

The GOP was quick to vote for hundreds of billions of dollars to bail out rich Wall Street CEOs and bankers when then-President George Bush asked them to, but now that the money isn't going just to the rich anymore they are evidently closing up ranks. “Sen. Specter voted for the so-called stimulus bill, mortgaging the future of Pennsylvania’s children and grandchildren” said former daily talk-radio host and journalist Scott Wheeler, now the Executive Director of the National Republican Trust PAC in rhetoric emphasizing his desire to see the five-term Senator from Pennsylvania ousted.

Wheeler, formerly in the pay of Rev. Sun Myung Moon's News World Communications, went on to say, “It will just line the pockets of liberal political hacks to whom the Democratic Party is beholden. Sen. Specter and other Republicans who voted for this travesty will be held accountable.”

The plan includes a new public-private partnership that would seek to unclog the credit markets by buying up toxic securities. Senator Specter (R-PA), who voted against the release of the second $350 billion, on Friday said there were "aspects of this bill which give me heartburn." As a seasoned veteran of both the Korean War and many challenges in the Senate, Specter concluded:

...that’s the position you’re in if you’re a United States Senator. People are unhappy because they didn’t get the full amount from the Committee report, although absent this bill they get zero additional. People are unhappy about spending too much money, but it is imperative, as I see it, that we do something very, very substantial.

There are reasons to argue that this is a bad bill. I’m not saying it’s a bad bill; I’m saying there are reasons to argue that it’s a bad bill. But I do not believe that there is any doubt that the economy would be enormously worse off without it. That’s the kind of a choice we have to make.

Personally I would prefer not to be on the edge of the pin as so frequently is the case in this body. But I do believe that we have to act, and I believe that under all of the circumstances, this is the best we can do and we ought to do it.

For this, Specter is now unpopular with some at National Republican Trust PAC despite strongly supporting the death penalty and opposing most gun control (voting against background checks at gun shows, the ban on assault weapons, and handgun trigger locks.) He's written numerous articles advocating the the death penalty as a crime deterrent.

Sometimes labeled a moderate, Senator Specter provoked Democrats and women's groups by his combative questioning of Anita Hill during the Clarence Thomas hearings, and asserting "flat-out perjury" in her testimony. Yet Wheeler has targeted his sights on Specter for being too cozy with the changes the voters mandated in electing Obama. Foreclosures and layoffs aren't on Wheeler's radar, evidently, now that Bush is not in the Oval Office.

Here's part of what Senator Arlen Specter, a son of immigrants, told the national media on Tuesday, Feb 10, 2008:

The current recession may go into full-scale depression like 1929. When we worked this through, we went as far as we could. We structured it very, very carefully and there were a lot of people who were objecting to it. Fortunately, the Chamber of Commerce, a very strong Republican conservative organization, agrees that this is necessary because of a perilous economic situation and because it does a lot to rebuild America and because a substantial part of it involves tax cuts.

Specter has acted in what he sees as the best interests of his constituents and the citizens of the United States of America. I salute his bravery in reaching across the aisle to craft a bi-partisan bill intended to stave off the worst effects of the economic crisis the previous administration has created.

Never underestimate the power of a woman.

The U.S. economy continues to reverberate from the policies (or perhaps lack of policies) that the Bush-Cheney administration championed since taking office 8 years ago, and by most accounts we've now lost over 3.5 million jobs during the recession that they bestowed upon the tax-payers and future tax-payers. 600,000 Americans have been laid off in January alone. The mortgage foreclosures continue unabated, the unemployment rate is soaring, yet now that Bush is out of office certain members of the U.S. Senate and House of Representatives continue to support the trickle-down theories that brought us to this economic precipice. But it's not their fault.

The bloc that blocked

I don't mean the state of the economy - that's the fault of everybody who ever championed, or simply ignored, deregulation of the banking and financial industries. No, it's not their fault that they're engaged in partisan posturing at a time when the country has delivered a broad mandate for new approaches, because House Speaker Nancy Pelosi tricked them. The Speaker got the minority to circle their wagons, to vote as a block against the first version of the new Stimulus bill even though they had been supportive of Bush's hurried spending bills to bail out banks as the previous administration was winding down, and now the Republican Senators are largely following suit.

Pelosi ran a bill through quickly for a vote, and now they're posturing desperately while the tax payers and voters watch more closely than the politicos are accustomed to - they're being downright obstructionist, and that leaves the Democrats in a stronger position.

Some strategists might suggest that at such a juncture the wise thing would be to give the newly elected President what he asks for, hoping that by the time the mid-term election rolls around they'd have something to point their fingers at if it fails while saying, "we did what he asked." But the voters are seeing the Republicans suggest we try "cutting taxes" again. Cutting taxes sounds pretty good to the people we've bailed out on Wall Street, I suppose, but when you're worried about losing your job and keeping food on the table your concern is not for the Capital Gains tax which is already considerably lower than the Income Tax, your concern is over staunching the flow of jobs before unemployment spirals to the levels of the Great Depression. President Obama's right to insist on timely action, the same sort of need the prior administration finally woke up to in the waning lame-duck days of their power.

Theatrics are alive and well in the U.S. Senate

What are the Republicans opposed to? Not so much, it turns out: something under 1% of the spending, yet rather than come with proposals for the voters to contemplate their doing what worked in the past, made-for-Fox drama and histrionics, name calling. While the President is visibly reaching out to find common ground, some of the most influential Republicans in the capitol are playing for sound-bites of their outrage and opposition, "...you have to start from scratch" - they failed to realize that Nancy Pelosi invited them back into their old, discredited "we-they" postures for the national audience, and failed to understand the urgency and pain of their constituents as the layoffs and foreclosures continue.

The reality is the situation is urgent; we can't allow the economy of the nation to falter and stall, we can't afford it. The decisions have to be made and plans launched by people who can't remotely follow the calculus that economists such as Paul Krugman or Mark Anson employ. Americans want to get back to work - and we want our elected leaders to do their work swiftly so we can stop laying off teachers and assembly line workers and losing their productive participation in our economy.

Maybe if we enforced layoffs, or even pay cuts, in Congress in proportion to the rest of the country, or the budget, they'd get off their rhetoric and get the bill passed.

Economic Recovery Compromise Makes Rich, Richer: The Alternative Minimum Tax

The President's Economic Recovery Act plan, called the Economic Stimulus and much needed, is headed toward passage but only because of a compromise that essentially makes the rich, richer. It's also a good reason why I believe we need to have a program that gives at least $3,500 to each American under $100,000, rather than just tax credits.

Reportedly, $100 billion was shaved off the plan, but according to the blogger LithiumCola at The DailyKos, the big reason why the plan was cut, and why the Senate plan was about $80 billion more expensive than the House plan, was the installation of a provision adjustment in what's called The Alternative Minimum Tax, such that the AMT increases incomes for those making more money, whereas it has little if any impact on those making less, specifically:

Haley points to a study at the Tax Policy Institute which shows that slashing the AMT increases the incomes of Americans in the top quintile by 1.3%, Americans in the next-highest quintile by .7%, the middle quintile by .1%, and does nothing at all for Americans in the bottom 40% of incomes.

To put that another way, Americans in the middle 20% of incomes will get on average a whopping $52 because of Senator Grassley's demand, those in the second-highest 1/5th will get $502, while Americans in the top 1/5th of incomes will get an average $2,593 -- and that last one includes those in the top 5%, who will get an average of $4,511. This is what the WSJ calls "shielding millions of middle-income Americans from the so-called alternative minimum tax."

It's for this reason I continue to push for a targeted stimulus of $3,500 for every American under $100,000 in income, or an planned allocation capped at 100 million people. The total cost would be $350 billion, and worth every penny.




According to the Federal Reserve Board 2004 survey of consumer finances, the average balance for those carrying credit card balances was $2,200, but many American families do not carry a credit card balance, so the fear that this $3,500 would be used only to retire credit card debt is unfounded. Indeed, there's more evidence to support the observation that the money would be used -- especially by those in the lower income categories -- just to keep a roof over their heads.

US Sherriff's don't want people evicted as record home foreclosure rates are expected. This proposal, combined with relaxed mortgage rates and anticipated refinancing plans, could help to keep Americans in their homes for at least an additional two years. That buys enough time for the other job-producing aspects of the Economic Stimulus plan to take effect.

In closing, given the trillions of dollars sent directly to corporations, $350 billion to the Americans who need it the most is not too much to ask for.


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Bloomberg Introduces Obama's Economic Speech

So, the dark horse in the 2008 campaign seems to have hitched his fortune's to Obama's momentum - what will it spell in the long run? Is the NYC Mayor now ahead in the VeePstakes? Granted that other luminaries endorsed and commented on the Obama positions, it was Michael Bloomberg there on the podium at Cooper Union. The Senator's entire presentation is available via his web site. This surely comes at a time when voters are worried about the growing storm of foreclosures on main street while troubled about the administrations evident focus on helping out those on Wall St.

Meanwhile, the Clinton campaign has accused the Obama folks of keeping the Theft of Valor story of her not exactly dodging sniper fire in Tuzla in the news to distract people from the "Wright scandal." Now I know Bill didn't inhale, but what of Hillary's staff? After all, the more people learn about Jeremiah Wright the better it has worked for Obama! The latest polls, taken before the rebukes from military vets would have had much if any negative impact on Clinton's numbers show Obama bouncing back nicely from a slight dip, and the interpretation is that Wright won't be a negative factor while the Tuzla story, which has been lively on the web for 24-48 hours, is still gaining traction in the traditional media and hasn't yet been reflected in polling data.

Is the Clinton campaign hoping that they can resuscitate the Wright story to eclipse the sequence of increasingly tall tales the Senator spun about the risk of sniper fire, or simply mis-speaking yet again? Are the Clinton's Bosnian Chickens coming home to roost?