OK, folks, only a few furlongs left in this race, and South Brunswick Patch is pushing to the finish line. Our launch is planned for about 5 p.m. or so. I invite everyone to check us out, get involved and make Patch yours.
Can anyone tell me what is wrong with the lede paragraph in this allegedly unbiased news story in The New York Times?
I’ll give you a hint: The Times reporters apparently have made up their minds on the value of the Simpson-Bowles commission’s suggestions, positioning “fiscal health” as a long-term good, while casting critics of both tax hikes and/or spending cuts as fearful of their short-term political health.
Here is the lede:
The chairmen of President Obama’s debt-reduction commission have been unable to win support from any of the panel’s elected officials for their proposed spending cuts and tax increases, underscoring the reluctance of both parties to risk short-term political backlash in pursuit of the nation’s long-term fiscal health.
The problem, however, is not the politics so much as the lack of consensus on addressing long-term budget deficits — especially when the remedies being offered as skewed against the middle class and poor and favor those with the cash.
Mainstream Washington might be fixated on the deficit (at a time of high unemployment, a fact that boggles the mind), but there are economists willing to challenge the capital consensus. Dean Baker, at the Center for Economic and Policy Research, a populist liberal economist, questions the basic assumptions on which the battle to beat the deficit is built:
The fundamental premise of the commission is that the country suffers from serious deficit problems that Congress is unable to address through its normal processes. This view does not correspond with the facts as can be easily shown.
There has been no explosion of spending whatsoever. This is entirely an invention of those with their own agenda. The Congressional Budget Office shows that non-interest spending was 19.8 percent of GDP in 1980. Its analysis of President Obama’s 2011 budget projects that non-interest spending will be 21.1 percent of spending in 2020. This means that in 40 years, spending other than interest will have increased by just 1.3 percentage points of GDP.
Rather than being a cause for concern, the rise in the deficit in the downturn has been essential for sustaining demand in the economy. Annual demand in the private sector has fallen by more than $1.2 trillion as a result of the collapse of the bubbles in residential and non-residential real estate. This led to a plunge in construction and also consumption that was driven by housing bubble wealth. Remarkably, the co-chairs of the commission never seemed to have considered a tax on the financial sector as a source of revenue (a policy that is even recommended by the IMF), in spite of the fact that it was largely responsible for the current crisis.
The projections of longer-term budget problems are almost entirely due to a projected explosion in health care costs. The United States already pays more than twice as much per person for its health care as other wealthy countries with the same or longer life expectancies. This ratio is projected to rise to three and four to one in the decades ahead.
However, rather than honestly discuss the problems of the U.S. health care system, Simpson and Bowles have used the projections of exploding health care costs as an argument for gutting Medicare and Medicaid, leaving tens of millions at risk of not being able to afford health care.
And then there is Robert Reich, a former Clinton labor secretary, who included the anticipated release of the deficit commission report tomorrow in a post called “National Fiscal Hypocrisy Week“:
Finally, on Wednesday, the President’s deficit commission will issue a report on how to reduce the nation’s long-term deficit. The initial draft was regressive — cutting $3 of spending for every $1 of tax increase, and decimating the Earned Income Tax Credit, among other things.
The best outcome would be a unanimous report that focused on taming rising health-care costs (see first item above), rejected Republican calls to extend the Bush tax cuts for the wealthy (see second item above), and supported extending unemployment benefits for the long-term jobless and a new WPA (third item). Ideally, the report would also call for new investments in infrastructure and education that would grow the economy and thereby shrink the deficit as a share of GDP.
Likelihood, zero.
And that pretty much sums up the likelihood of this plan making a difference in the deficit.
The state has managed to mess up another federal education grant.
While I disagree that the grants — a Race to the Top grant and a charter school grant — have much merit, I think the failure to fill follow simple rules and follow through on grant applications does not bode well for the state.
It is easy to blame Gov. Chris Christie for this — and he deserves significant blame — but his predecessor and the entire bureaucracy at the Department of Education shouldn’t get off scott-free.
New Jersey’s top earners are not exactly hurting.
While many are paying a lot in property taxes, the reality is that their income tax load is not nearly as great as that paid by their neighbors.
New Jersey Policy Perspective, the liberal research and advocacy group, issued a report today that “is countering the claims that the state has abnormally high levy rates” for high-earners.
While the more than 10 percent tax rate for top earners seems high, the graduated system creates a lower actual tax burden, the report found.
The report used Gov. Chris Christie’s most recent tax returns — which he made public in October — to demonstrate that high-earners pay far less than one might expect given the 10.25 percent top rate.
The report, released today, demonstrates how Christie and his wife Mary Pat paid a total 6.2 percent tax rate on their combined income because of the state’s graduated tax rate. While the top brackets levy a more than 10 percent tax, only the portion of income that falls into that margin is taxed at that rate.
“In New Jersey, opponents of progressive taxation like Governor Christie argue that rates are too high,” the report states. “But a full understanding of the state’s tax structure shows that New Jersey is actually quite competitive.”
This raises a simple question: Why not use the income tax to help offset the state’s reliance on property and sales taxes, which hit middle-income folks hardest? Gov. Christie, when he vetoes a surcharge on incomes over $1 million earlier this year, said it would make the state less competitive.
But, as NJPP points out, the Christies pay less in income taxes than they would in New York or Philadelphia.
In 2009, the Christies reported $540,792 in taxable income and paid $33,619 in taxes.
“To most, that sounds like a lot of money but to them that’s 6.2 percent of their New Jersey taxable income, considerably less than one would expect them to pay given their 10.25 percent tax bracket,” the report stated.That is because only the $40,792 over $500,00 was taxed at a 10.25 percent rate. The rest of their income was taxed at a lower rate.
When comparing the overall rate, with surround states, NJPP found the Christies are paying less than some of their neighbors.
“The 6.2 percent effective income tax the Christie’s paid to New Jersey is less than they would have paid to New York State if Mrs. Christie’s job were there; less than they would have paid if she had worked in Philadelphia; and about what they would have paid if they had lived in Georgia,” the report found.
A bigger bite might not make Christie happy — or others in his tax bracket — but it seems unlikely that it would force high earners out of the state, making Christie’s lone argument against higher income taxes collapse of its own weight.
