Another Gaza post mortem. This one by my dear friend. (See 1 below.)
---
American unemployment could rise. (See 2 below.)
---
If Israel wants peace then it must prepare for atomic war. (See 3 below.)
---
The story of 'Aunt Susan's Rice' continues and it gets worse and worse. (See 4 below.)
--
OBAMA WAS SO BUSY BASHING GW TO WIN POLITICAL ACCOLADES HE WAS INCAPABLE OF UNDERSTANDING THE POSITIVE CONSEQUENCES OF GW'S TAX CUTS AS RELATES TO THE MIDDLE CLASS. (SEE 5 BELOW.)
---
Interesting charts on who owns out debt. (See 6 below.)
---
Does it pay to be poor? (See 7 below.)
Taxing them? (See 7a below.)
---
Does it pay to be poor? (See 7 below.)
Taxing them? (See 7a below.)
---
Dick
--------------------------------------------------------------------------------------------------------------
1) Another Round in Gaza: A Summary Assessment
By Elliot Chodoff
The smoke has cleared, the dust has settled, and the latest in an endless list of cease fires has taken effect. The latest round of fighting with Hamas looked a lot like the last round, but there were significant differences in context, tactics, strategy, and outcome. As usual, the pundits and populists have declared the Israeli operation a failure with Israel shying away from a ground assault, leaving Hamas in place to declare victory and re-arm for another round. The facts are very different from these assessments.
This escalation, initiated by Hamas with a cross-border anti-tank missile attack on an IDF vehicle that wounded four soldiers, coincided with dramatic events around the region: Iran’s progress in its nuclear weapons program, the Syrian civil war, and the strengthening of the Muslim Brotherhood in Egypt, to name a few.
The key to understanding Israel’s strategy in this operation is Iran, and the key to understanding its tactics is Egypt.
Let’s start with strategy. The Israeli government under Netanyahu is thoroughly (and correctly) focused on the threat of Iranian nuclear weapons development. With that in mind, 2013 may be the critical year of decision, including the option of a military strike against Iran’s facilities. In that context, the threat of missile attacks against the Israeli population, either as a pre-emptive or retaliatory act, must be considered seriously. Hizbullah has amassed an arsenal of tens of thousands of rockets, capable of reaching targets as far south as Dimona. Additionally, Hamas is reported to have acquired rocket capabilities that rivaled those of Hizbullah at the outset of the Second Lebanon War of 2006. These, combined with Iran’s ballistic missile capabilities, threatened to overwhelm Israel’s anti-missile and rocket defenses, as well as putting intolerable strain on Home Front Command’s civil defense abilities. Removing Hamas’ rocket threat, if only for one or two years, significantly alters the equation. To be clear, it was not only the quantity and quality of Hamas rockets that needed to be reduced, but, more importantly, the elimination of a third front from which attacks could originate.
Tactically, this operation comes on the heels of the failing Assad regime in Syria coupled with the rise of the Muslim Brotherhood in Egypt. These two phenomena have prompted a shift in Hamas’ allegiance from Shiite Iran to its more natural patron, Sunni Egypt. Proximity counts here, as well, as Egypt is much better placed to support Hamas in Gaza than is Iran. Furthermore, the Brotherhood-led regime is a natural ally for Hamas, which describes itself as the Palestinian branch of the Brotherhood.
Following Operation Cast Lead in Gaza in January 2009, Israel assumed that a certain level of deterrence had been established vis a vis Hamas. Rocket and other attacks were reduced, and, significantly, Hamas refused to take credit for attacks out of Gaza, even those launched by its members. Israel correctly viewed these facts as signs of Hamas vulnerability, and refrained from major initiatives, including the targeting of Hamas leaders, restricting its military operations to pre-emption and retaliation.
With the establishment of a Muslim Brotherhood-led regime in Egypt, Hamas changed its approach. Attacks increased in frequency and intensity, more groups were given the “green light” to strike from Gaza, and Hamas returned to credit-taking for attacks. Shortly after this occurred, the Israeli leadership decided to reinstate the policy of targeting Hamas leaders in Gaza
The missile attack against an IDF patrol began the escalation that led to “Operation Defensive Pillar.” A number of requirements had to be achieved simultaneously to initiate the operation: a high profile Hamas leader had to be targetable, IDF intelligence had to have located the majority of Hamas’ long range missiles and the IAF had to be able to eliminate them. When these three criteria were met, the operation was launched.
The reserve call-up was an elaborate bluff, but one that was prepared to act if the bluff was called. One important lesson learned after the 2006 war with Hizbullah was that ground forces need to be ready if and when they are needed, not a week or two later. Further, even if planned as a bluff, in war as in sports a good fake has to both look real and be set to become real if the opponent doesn’t react as planned. In addition, the threat of ground attack had an important impact on Hamas, Hizbullah, the region, and the West. Blustery propaganda aside, the terrorist organizations are well aware that an IDF ground incursion would cost them dearly. So the reserve forces, ready to go, helped Hamas accept a cease fire and keep it, made Hizbullah a little more conservative in its approach to the conflict than it might have been otherwise (recalling that the 2006 war began with the Gilad Shalit capture and the subsequent IDF operation in Gaza), and leant urgency to the efforts by local and distant governments to achieve a cease fire.
The operation ended when the IAF had destroyed essentially all its pre-set targets. Munitions, tunnels, Hamas infrastructure, and terrorist groups’ leaders were all targeted and hit. Rocket fire was declining, although not stopped, and the two key questions, often overlooked in real-time decision making, were asked: what more can reasonably be gained by continuing or further escalating the operation? What are the risks and potential costs?
Given the original strategic objectives, a ground operation, or even a continuation of the air campaign, would have risked more than they would have achieved. Israel’s leaders were careful to frame objectives in attainable terms: weaken Hamas, restore deterrence, and reduce rocket fire. Keeping the Iranian issue in mind, and not wanting to divert world opinion from that issue, a ground invasion of Gaza would have been counterproductive. Eliminating Hamas requires conquest of the area, occupation, and a painstaking search for low level leaders and operatives in addition to the higher echelons. IDF casualties could be heavy, and inadvertent noncombatant casualties could skyrocket as well. While all of this would be going on, Iran would be free to continue to work on its weapons in the shadow of world and Israeli preoccupation with the Gaza situation.
So, what was achieved? Hamas was seriously set back in terms of its arsenal, infrastructure, and leadership. The joy with which the organization received the cease fire was not a reflection of victory, but of relief. It will take a while before Hamas is ready to return to the battlefield. Egypt (and Turkey) openly supported Hamas, but with little more than lip service. The Arab and Muslim worlds demonstrated, once again, that they are not overly willing to risk life, limb, or treasure to fight for Hamas. Hizbullah also read the situation as not terribly conducive to troublemaking from Lebanon. They will most likely participate in an Iranian-instigated operation, but they are not looking forward to it.
Perhaps most important, Israel demonstrated its superiority in intelligence, planning, and execution as hundreds of targets were hit and noncombatant casualties were kept to a minimum. This serves not only the ethical aspects of IDF operations (important as they are) but also testifies to the precision accuracy of IDF air and ground fire capabilities. The willingness to call up ground forces, if not to use them, adds additional weight to any military threats that Israel will have to make in the future. Civil defense preparedness and operations, combined with the Iron Dome anti-rocket system, helped minimize civilian casualties and maintain high morale. There were certainly foul-ups and there remains room for improvement, but given that no military operation is ever executed perfectly, Pillar of Defense gets high grades in all the subjects that count.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2)
| ||||||||||||||||||
| The unemployment rate in Spain just hit 26%, barely topping Greece. Not to be outdone, Greece's largest labor union predicts it will rise to 29% next year. In Spain, the unemployment rate for those under age 25 is 56%. In Greece, it's 57%. What happens when you have hundreds of thousands of unemployed youths? They protest… sometimes violently. Could the U.S. end up like Greece and Spain? Unfortunately, the answer is yes.How does a country end up with high unemployment? It's Economics 101… When you run up big debts that you can't afford, the borrowing costs in your country go up. Studies show that higher debt loads are a drag on economic growth. Higher borrowing costs and lower economic growth lead to higher unemployment. You can see it happening around the world:
Spain's debt-to-GDP (gross domestic product) ratio should end 2012 at 85%. By comparison, the official federal debt-to-GDP ratio in the U.S. is currently 72%. The thing is, it is not the current level of debt that is the concern in the U.S. – it's the trajectory.  The Congressional Budget Office (CBO) predicts the U.S. federal government debt will reach 100% of GDP by 2025 and 200% of GDP by 2037. (You can see its assumptions here.) So where did Greece and Spain go wrong? And can we avoid making those mistakes here? Simply, the Greek and the Spanish governments made unsustainable promises to their people. And they rang up huge debts to pay for those promises. The weight of these debts forced economic growth to fall, which led to higher unemployment. Unfortunately, in the U.S., we are doing exactly the same thing… Our government has promised to pay for "entitlements" – programs like Social Security and Medicare/Medicaid. But they are unsustainable in their current form. In order for these benefits to exist at all for future generations, the programs need to be reformed. To show you what I mean, consider this chart:  It shows that spending on just these entitlements (plus the interest on the national debt) will eat up ALL the government's revenue by 2025. Once again, it is the trajectory that is the problem. The spending on entitlements (and the interest on our national debt to pay for these entitlements) will continue to soar. (These estimates also come from the CBO.) Politicians are deathly afraid to reform entitlements. They know if they vote in favor of entitlement reform – even if it is to ensure they continue for future generations – they will lose their re-election bid. But entitlement reform has to happen – or the U.S. will end up like Greece and Spain, with low growth and high unemployment. Politicians are talking around the issue these days. They're talking about increasing revenues through taxes… and cutting spending on different programs. But all that talk is a waste of breath. Let your Congressmen know you don't want to end up like Greece… that you don't want a broke government and riots in the streets because the government can't fulfill its promises. Let your Congressmen know that you are behind them… that they have your vote if they do the hard-but-right thing with entitlements. We can't avoid the issue any longer. The easiest way to contact your Congressmen is to type your zip code into this website. It takes you to the contact forms for all your Congressmen. Do it… Let's not end up like Spain and Greece… Regards, Steve -------------------------------------------------------------------------------------------------------- 3)If you want peace, prepare for atomic war Louis Rene Beres - The Jerusalem Post, October 12th, 2012
UN condemns Israel’s “violation” of Nuclear Non-Proliferation Treaty. Funny, because Israel isn’t a signatory on the 1968 pact.
On December 3, just four days after voting in strong support of a Palestinian state, the UN General Assembly condemned Israel for allegedly violating the Nuclear Non-Proliferation Treaty. Of course, this enthusiastic condemnation made no formal legal sense, because Israel, for very good reasons, has chosen to remain outside the 1968 pact. For Israel, agreeing to join the NPT as a non-nuclear member state, its only available treaty membership option, would be tantamount to national suicide.
Why would joining be so lethal to Israel? Plainly, making the Middle East in particular a nuclear weapon free zone could endanger Israel, and correspondingly strengthen Israel's enemies, including non-Arab Iran. By removing Israel's indispensable deterrent to suffering annihilatory military defeat, Israel's non-nuclear enemies would no longer be confronted by the near-certain prospect of unacceptably damaging retaliations.
In such a denuclearized region, these relentless enemies, soon to be joined by “Palestine,” could – at least in various collaborative combinations – achieve an unprecedented strategic advantage. This significantly one-sided advantage could be further enhanced by still-growing Arab and Iranian stockpiles of chemical or biological arms.
A core truth now needs to be more thoroughly understood.
By themselves, US President Barack Obama's well-publicized views notwithstanding, nuclear weapons are not always evil.
Indeed, by themselves, nuclear weapons are not the problem. In some situations, circumstances where war and genocide are not mutually exclusive, these weapons can even prove a blessing to peace and survival.
In the turbulent Middle East, a no-longer-nuclear Israel could be quickly overwhelmed by substantially larger enemy forces. As every military thinker who has read Karl von Clausewitz On War will readily recall, there can come a time, in virtually any military conflict, when “mass counts.”
Israel, it follows, must never allow such a time. Instead, it must remain recognizably willing and able to use its nuclear weapons. The objective would not be to encourage any form of nuclear exchange, but rather to diminish the overall probability of existential aggressions and catastrophic war.
Si vis pacem, para bellum atomicum. “If you want peace, prepare for atomic war.” At first glance, this would seem an odd strategic maxim for Israel, perhaps even needlessly belligerent. But, in the end, there can be no better military advice for the increasingly imperiled Jewish State.
Soon, this maxim, still only whispered (in deference to longstanding Israeli policy of “deliberate nuclear ambiguity”), must become part of a more open Israeli strategic doctrine. This is not because a nuclear war is necessarily becoming more likely. It is because Israel’s nuclear deterrent will remain sorely critical for the prevention of large-scale conventional conflict, and because the credibility of this deterrent will require incrementally greater disclosures.
The myriad security threats facing Israel are not mutually cancelling. With Iran’s steady and unhindered nuclearization, an eventual nuclear war, or even a “bolt-from-the-blue” nuclear attack, cannot be ruled out. Considered together with the plausible understanding that an Iranian nuclear enemy could be driven by incomparably ecstatic expectations of jihad, Israel's military planners will need to augment credible deterrence postures with (1) apt forms of diplomacy; (2) ballistic missile defense; and/or (3) still operationally possible forms of preemption.
Under authoritative international law, such a preemption, if directed against an “urgent” threat that is also “imminent in point of time,” would represent “anticipatory self-defense.”
This last option might include cyber-attacks, assassinations, or regime-change interventions. It need not be limited to the more conspicuously traditional sorts of defensive military strike.
Following the UN General Assembly's recent upgrading of “Palestine” to the diplomatically elevated status of a “nonmember observer state,” Israel must examine the strongly related and inter-penetrating security consequences of a Palestinian state. Today, especially if newly-reelected Obama should continue with the Road Map To Peace in the Middle East, a truly independent state of Palestine could be carved out of Israel. Here, Palestine would quickly become an additional and largely ideal platform for launching anti-Israel war and terror.
Without any evident subterfuge or masquerade, Obama still seeks “a world free of nuclear weapons.” For Israel, acceptable compliance with this improbable and imprudent vision would require certain antecedent forms of nuclear disarmament. Then, once a new enemy state of Iran and its grateful allies believed that Israel had been bent sufficiently to US-supported “nonproliferation” demands, adversarial military strategies could progress, rapidly, from terror to war, and from attrition to annihilation.
Israel's unilateral nuclear disarmament is very hard to imagine. But it is not entirely inconceivable. Ironically, certain of the country's leading academic strategists continue to advance this manifestly self-destructive idea. I have debated these strategists myself, even on the sober pages of the Harvard journal, International Security.
It is usually difficult to imagine nuclear weapons as anything other than evil. Yet, there are circumstances wherein a particular state's possession of such weapons may be all that protects it from major war or genocide. Moreover, because such weapons may most efficiently deter international aggressions, at least in those cases where the prospective aggressor remains fully rational, their possession could also protect neighboring states, both friends and foes, from war-related harms.
Should Israel ever be deprived of its nuclear forces because of any naively idealistic hopes for peace, it could become starkly vulnerable to overwhelming enemy attacks. Although such a life or death vulnerability might be prevented, in principle, by simultaneously instituting parallel forms of chemical/biological weapons disarmament among Israel's enemies, such steps would never actually succeed. Verification of disarmament compliance is inevitably very difficult. Any such verification would become even more problematic in those complicated cases in which several enemy states would be involved.
In the volatile Middle East, the core threat to peace is not Israel's nuclear weapons. These weapons are actually peace-preserving. The real core threat, especially with newly-intersecting dangers emanating from Iran and “Palestine,” remains a steadfast jihadist commitment to “excise the Jewish cancer.” To wit, we need only consider the most recent exterminatory exhortations from Hamas leader, Khaled Mashaal.
“From the river to the sea,” says Mashaal, unambiguously delineating the borders of “Palestine.” Significantly, it is a definition also fully accepted by the “moderate” Palestine Authority (PA) president, Mahmoud Abbas.
The US-backed Road Map , like the prior and once functional Oslo agreements, is merely a convenient enemy expedient. Nothing more. If ever taken seriously in Jerusalem, it could become an irreversible cartographic detour to oblivion.
With its undeclared nuclear weapons, Israel could still more-or-less efficiently deter enemy unconventional aggressions, and also most large conventional ones. With these weapons, Israel could still launch non-nuclear preemptive strikes against enemy state hard targets that would threaten Israel's annihilation. Without these weapons, any such expressions of anticipatory self-defense would likely represent the onset of a much wider war. This is because there could no longer be any sufficiently persuasive threat of an Israeli counter retaliation. Some truths are annoyingly counter-intuitive. In essence, Israel's nuclear weapons represent an effective impediment to the regional use of nuclear weapons, and to the corollary start of any regional nuclear war. Over time, however, the credibility of Israel's nuclear deterrent will also require certain carefully considered departures from the nation's traditional posture of “deliberate nuclear ambiguity.” That point, planning with the correct intent of enhancing national nuclear deterrence, will be the right time to take Israel's bomb out of the country's “basement.”
Si vis pacem, para bellum atomicum. “If you want peace, prepare for atomic war.”
The writer (Ph.D., Princeton, 1971) is the author of many major books and articles dealing with nuclear strategy and nuclear war, including Security or Armageddon: Israel's Nuclear Strategy; Mimicking Sisyphus: America's Countervailing Nuclear Strategy; and Apocalypse: Nuclear Catastrophe in World Politics. In Israel, he was Chair of Project Daniel (2003). Professor Beres was born in Zürich, Switzerland, on August 31, 1945.
-----------------------------------------------------------------------------------------------------------------------------------
4)The Other Susan Rice File
How to embrace psychotic murderers and alienate a continent.
The trouble with a newspaper column lies in the word limit. Last week, I wrote about some of Susan Rice's diplomatic misadventures in Africa during her years in the Clinton administration: Rwanda, Ethiopia, the Democratic Republic of Congo. But there wasn't enough space to get to them all.
And Sierra Leone deserves a column of its own.
On June 8, 1999, before the Senate Foreign Relations Committee, Ms. Rice, then the assistant secretary of state for African affairs, delivered testimony on a range of issues, and little Sierra Leone was high on the list. An elected civilian government led by a former British barrister named Ahmad Kabbah had been under siege for years by a rebel group known as the Revolutionary United Front, led by a Libyan-trained guerrilla named Foday Sankoh. Events were coming to a head.
Even by the standards of Africa in the 1990s, the RUF set a high bar for brutality. Its soldiers were mostly children, abducted from their parents, fed on a diet of cocaine and speed. Its funding came from blood diamonds. It was internationally famous for chopping off the limbs of its victims. Its military campaigns bore such names as "Operation No Living Thing."
In January 1999, six months before Ms. Rice's Senate testimony, the RUF laid siege to the capital city of Freetown. "The RUF burned down houses with their occupants still inside, hacked off limbs, gouged out eyes with knives, raped children, and gunned down scores of people in the street," wrote Ryan Lizza in the New Republic. "In three weeks, the RUF killed some 6,000 people, mostly civilians."
What to do with a group like this? The Clinton administration had an idea. Initiate a peace process.
It didn't seem to matter that Sankoh was demonstrably evil and probably psychotic. It didn't seem to matter, either, that he had violated previous agreements to end the war. "If you treat Sankoh like a statesman, he'll be one," was the operative theory at the State Department, according to one congressional staffer cited by Mr. Lizza. Instead of treating Sankoh as part of the problem, if not the problem itself, State would treat him as part of the solution. An RUF representative was invited to Washington for talks. Jesse Jackson was appointed to the position of President Clinton's special envoy.
It would be tempting to blame Rev. Jackson for the debacle that would soon follow. But as Ms. Rice was keen to insist in her Senate testimony that June, it was the Africa hands at the State Department who were doing most of the heavy lifting.
"It's been through active U.S. diplomacy behind the scenes," she explained. "It hasn't gotten a great deal of press coverage, that we and others saw the rebels and the government of Sierra Leone come to the negotiating table just a couple of weeks ago, in the context of a negotiated cease-fire, in which the United States played an important role."
A month later, Ms. Rice got her wish with the signing of the Lomé Peace Accord. It was an extraordinary document. In the name of reconciliation, RUF fighters were given amnesty. Sankoh was made Sierra Leone's vice president. To sweeten the deal, he was also put in charge of the commission overseeing the country's diamond trade. All this was foisted on President Kabbah.
In September 1999, Ms. Rice praised the "hands-on efforts" of Rev. Jackson, U.S. Ambassador Joe Melrose "and many others" for helping bring about the Lomé agreement.
For months thereafter, Ms. Rice cheered the accords at every opportunity. Rev. Jackson, she said, had "played a particularly valuable role," as had Howard Jeter, her deputy at State. In a Feb. 16, 2000, Q&A session with African journalists, she defended Sankoh's participation in the government, noting that "there are many instances where peace agreements around the world have contemplated rebel movements converting themselves into political parties."
What was more, the U.S. was even prepared to lend Sankoh a helping hand, provided he behaved himself. "Among the institutions of government that we are prepared to assist," she said, "is of coursethe Commission on Resources which Mr. Sankoh heads."
Of course.
Three months later, the RUF took 500 U.N. peacekeepers as hostages and was again threatening Freetown. Lomé had become a dead letter. The State Department sought to send Rev. Jackson again to the region, but he was so detested that his trip had to be canceled. The U.N.'s Kofi Annan begged for Britain's help. Tony Blair obliged him.
"Over a number of weeks," Mr. Blair recalls in his memoirs, British troops "did indeed sort out the RUF. . . . The RUF leader Foday Sankoh was arrested, and during the following months there was a buildup of the international presence, a collapse of the rebels and over time a program of comprehensive disarmament. . . . The country's democracy was saved."
Today Mr. Blair is a national hero in Sierra Leone. As for Ms. Rice and the administration she represented, history will deliver its own verdict.
-----------------------------------------------------------------------------------------------------------------
5)Obama's Middle-Class Tax Flip
After a decade of bashing by Democrats, the Bush tax cuts get strange new respect.
Barack Obama admits that he got the Bush tax cuts all wrong.
That's not how he would put it, of course—and it's plainly not what's being reported. Even so, President Obama's recent statements about the expiration of these tax cuts on Dec. 31 have put paid to the most widely accepted political slander of the past decade: that the Bush tax cuts rewarded the wealthy at the expense of the middle class.
That proposition simply cannot be reconciled with President Obama's latest position, which is that America's middle class will find itself hammered if Congress doesn't extend President Bush's middle-class tax cuts.
Here's how President Obama put it during a recent White House event with a group of middle-class Americans: Unless Congress acts, he said, "starting Jan. 1, every family in America will see their taxes automatically go up."
He went on: "A typical middle-class family of four would see its income taxes go up by $2,200. That's $2,200 out of people's pockets. That means less money for buying groceries, less money for filling prescriptions, less money for buying diapers. It means a tougher choice between paying the rent and paying tuition. And middle-class families just can't afford that now."
To emphasize that these cuts are a big deal, he asked people to "tell members of Congress what a $2,000 tax hike would mean to you." He is now taking his message on the road, telling a group of Michigan auto workers on Monday that the end of the Bush cut would be "a hit you cannot afford to take."
In any honest universe, this would be news. President Obama says the middle class benefits mightily from the Bush tax cuts and cannot afford to see them expire. Which provokes a question: Where has our press corps been these past 10 years?
For most of that time, Democrats have been hollering that the only people to benefit from the Bush tax cuts were Bill Gates, Wall Street bankers, and the guy with the top hat and monocle who appears on our Monopoly sets. Now the same press that accepted, approved and amplified the "Bush tax cuts for the wealthy" trope leaves unchallenged a president who today tells us, oh, by the way, those Bush tax cuts are vital for America's middle class—and claims that the opposition to middle-class tax cuts proposed and put into law mainly by Republicans comes from . . . Republicans.
Perhaps the American people will accept this new Obama story line. If so, it will be because after years of assailing the GOP as the party of the plutocracy, this is the first time the American people have heard Mr. Obama or any Democrat in the party leadership concede that the Bush tax cuts benefited anyone save the über-wealthy. For the original complaint that Mr. Bush's tax cuts favored the rich over the middle class has morphed into the orthodoxy we know today: Tax cuts for the rich came at the expense of the middle class.
Certainly this has been Nancy Pelosi's accusation. At various times the California Democrat has spoken of "Bush tax cuts for the super-rich," of Republicans "taking food out of the mouths of children to give tax cuts to America's wealthiest," of how Republicans were using "tax dollars paid by middle-class Americans" to pay for tax breaks for "millionaires."
Sen. Harry Reid of Nevada, Ms. Pelosi's counterpart in the Senate leadership, voiced a similar complaint. Republicans, he said, "drew up their program to benefit the very, very, very few and eliminate the majority from any"—yes, any—"benefit of these tax cuts." In November 2008, he described the Bush economy as "built on a foundation for eight years that basically just value[s] tax cuts for the very wealthiest."
Candidate Obama banged that same drum in his bid for the White House. Early in 2008, he declared that "we owe it to" the middle class "to end the Bush-McCain tax cuts for the wealthiest 2% and put a tax cut into the pockets of the families who need it." Though Mr. Obama has always said he wants to keep the Bush tax cuts for the middle class, he has always been careful not to suggest that these amounted to anything more than peanuts.
Today we are told a different story. Today Mrs. Pelosi tells us the "clock is ticking" on the fate of the Bush tax cuts for the middle class. Today Sen. Reid tells us "it's really important that this holiday season the middle class is not going to be burdened with the thought that they may get a $2,200 a year tax increase." And today President Obama tells us that the Bush tax cuts put some serious money in the pockets of our middle class—a benefit they will lose if Congress lets the Bush tax cuts expire.
Don't expect the admission that the Bush cuts are vital to the middle class to provoke any challenges at the president's next press conference. Like the assertion that Republicans hate women, the GOP preference for tax cuts for the rich at the expense of the middle class has become accepted scientific fact. Even when President Obama himself shows just how wrong that is.
-----------------------------------------------------------------------------------------------------------------------
6)
Who Owns Our National Debt?
Former Senator Alan Simpson has arguably done more to address our fiscal problems than anyone else in the last three years. He was co-chairman of the president's deficit-reduction committee, commonly known as the Simpson-Bowles budget plan. He's a good man on a good mission.
But he doesn't always get it right. Here's Simpson last week on The Daily Show with Jon Stewarttalking about the fiscal cliff:
Time out. I like you, Alan, but let's get the facts right.
China doesn't own a quarter of our debt. It doesn't even own 10%. When the latest data comes out, it probably won't even be the largest foreign creditor. (That title will go to Japan.) China has actually been a net seller of Treasuries for almost two years.
Let's start at the top. Who owns our $16 trillion national debt? Here's the tally as of June 2012 (the most recent month for which data is available):
And here's the breakdown of the 10 largest foreign holders as of September:
Yes, China is the largest foreign holder -- though its share is nowhere near one-quarter of the total. But Japan owns an almost identical amount of Treasuries, and its share is growing like a weed. Why all the fuss about China when no one seems bothered by Japan? And China, as mentioned, has been a net seller of Treasuries since 2011. In May 2011, China held $1.31 trillion in Treasuries -- $200 billion more than it owns today. This shouldn't be surprising, as the country is trying to let its currency slowly appreciate against the dollar. Many have asked in panicked tones what will happen to interest rates when China stops buying our debt. The answer: It already has. And not only has the world gone on, but interest rates are at all-time lows.
Some will counter that the only reason interest rates are low is that the Federal Reserve is buying all the new debt -- right? Sort of, but there are misconceptions here, too. The Fed has purchased a lot of Treasuries over the last few years, but that was after it slashed its holdings in late 2008 to make room on its balance sheet for emergency programs to stabilize the financial system. Since 2002, the Fed's holdings of Treasuries have increased by $1 trillion, or 10.8% of the new debt issued during that time. The blog Macro Market Musings has shown that the Fed's ownership share of Treasuries has actually declined in the last decade. (Where the Fed has grown its ownership share considerably is the market for mortgage-backed securities.)
So who has purchased the $9.3 trillion in new debt issued over the last decade? Pulling from several different sources, here's what I came up with:
None of this should be taken as an attempt to belittle those nervous about the debt. It's a serious issue no one should take lightly. The fact that we rely on foreign investors to finance 44% of our annual deficit is, to put it lightly, not ideal. The kindness of strangers doesn't last forever.
But what's more dangerous than a massive mountain of national debt? Exaggerations and misconceptions about that debt.
---------------------------------------------------------------------------------------------------------------------------------
7)Could Your Family Live on $61,320 Per Year Tax Free?
There’s a new report out by the Senate Budget Committee that calculates that “the amount of money spent on welfare programs equals, when converted to cash payments, about ‘$168 per day for every household in poverty.’”
Here’s the math: $168 per day x 365 days = $61, 320.
If someone gave you $61,320 per year with no federal, state, or Social Security taxes taken out, could your family live on that amount? Most likely nearly every family in America could if they chose a modest lifestyle. Most families could, especially if they didn’t have to pay taxes on any of it.
Not only would you get $61, 320 per year tax free, but you wouldn’t have to work for it. You could stay at home and engage in a hobby of your choice. If you lived simply, you could do some traveling and even save money for retirement.
We keep hearing about how the rich aren’t paying their “fair share” of taxes to “protect benefits that American families rely on,” as Democrat Rep. Keith Ellison tells us. This per diem poverty payout statistic is positive proof that the charge is baseless. Most money that’s collected for taxes is absorbed by the State.
Understand that not all the money that’s designated for payout to poverty-stricken families gets to them. The money has to go through our nation’s vast bureaucracy that is bloated and expensive. Government workers are paid very well. The bureaucratic agencies are designed to be the conduit for payments. These perpetual government workers almost always vote for Democrats. Their jobs are assured as long as there are payments to be made to poor people who also almost always vote for Santa Claus.
The numbers on this issue are startling:
“According to the Republican side of the Senate Budget Committee, welfare spending per day per household in poverty is $168, which is higher than the $137 median income per day. When broken down per hour, welfare spending per hour per household in poverty is $30.60, which is higher than the $25.03 median income per hour.”
We would be better off just writing a check for $4343.50 each month and sending it directly to each poor family in America and save 15 percent in the process. Remember, this is tax-free money.
The government’s definition of poverty is based on total income received. The poverty level for 2012 was set at $23,050 (total yearly income) for a family of four. A direct payment of $4343.50 each month is almost twice what the poverty rate is for a family of four.
The so-called “War on Poverty” has turned out to be a war on the taxpayer and the poor. And like any war, there are profiteers. Who are they? The elected officials that vote for these programs. They and the bureaucrats that oversee the poverty industry know that as long as there is poverty in America, they have a job.
7a)Taxing the Poor
With all the talk about taxing the rich, we hear very little talk about taxing the poor. Yet the marginal tax rate on someone living in poverty can sometimes be higher than the marginal tax rate on millionaires.
While it is true that nearly half the households in the country pay no income tax at all, the apparently simple word "tax" has many complications that can be a challenge for even professional economists to untangle.
If you define a tax as only those things that the government chooses to call a tax, you get a radically different picture from what you get when you say, "If it looks like a tax, acts like a tax and takes away your resources like a tax, then it's a tax."
One of the biggest, and one of the oldest, taxes in this latter sense is inflation. Governments have stolen their people's resources this way, not just for centuries, but for thousands of years.
Hyperinflation can take virtually your entire life's savings, without the government having to bother raising the official tax rate at all. The Weimar Republic in Germany in the 1920s had thousands of printing presses turning out vast amounts of money, which the government could then spend to pay for whatever it wanted to pay for.
Of course, prices skyrocketed with vastly more money in circulation. Many people's life savings would not buy a loaf of bread. For all practical purposes, they had been robbed, big time.
A rising demagogue coined the phrase "starving billionaires," because even a billion Deutschmarks was not enough to feed your family. That demagogue was Adolf Hitler, and the public's loss of faith in their irresponsible government may well have contributed toward his Nazi movement's growth.
Most inflation does not reach that level, but the government can quietly steal a lot of your wealth with much lower rates of inflation. For example a $100 bill at the end of the 20th century would buy less than a $20 bill would buy in 1960.
If you put $1,000 in your piggy bank in 1960 and took it out to spend in 2000, you would discover that your money had, over time, lost 80 percent of its value.
Despite all the political rhetoric today about how nobody's taxes will be raised, except for "the rich," inflation transfers a percentage of everybody's wealth to a government that expands the money supply. Moreover, inflation takes the same percentage from the poorest person in the country as it does from the richest.
That's not all. Income taxes only transfer money from your current income to the government, but it does not touch whatever money you may have saved over the years. With inflation, the government takes the same cut out of both.
It is bad enough when the poorest have to turn over the same share of their assets to the government as the richest do, but it is grotesque when the government puts a bigger bite on the poorest. This can happen because the rich can more easily convert their assets from money into things like real estate, gold or other assets whose value rises with inflation. But a welfare mother is unlikely to be able to buy real estate or gold. She can put a few dollars aside in a jar somewhere. But wherever she may hide it, inflation can steal value from it without having to lay a hand on it.
No wonder the Federal Reserve uses fancy words like "quantitative easing," instead of saying in plain English that they are essentially just printing more money.
The biggest and most deadly "tax" rate on the poor comes from a loss of various welfare state benefits-- food stamps, housing subsidies and the like-- if their income goes up.
Someone who is trying to climb out of poverty by working their way up can easily reach a point where a $10,000 increase in pay can cost them $15,000 in lost benefits that they no longer qualify for. That amounts to a marginal tax rate of 150 percent-- far more than millionaires pay. Some government policies help some people at the expense of other people. But some policies can hurt welfare recipients, the taxpayers and others, all at the same time, even though in different ways.
Why? Because we are too easily impressed by lofty political rhetoric and too little interested in the reality behind the words.
------------------------------------------------------------------------------------------------------------------------------------------------------------
|
No comments:
Post a Comment