Nutter's Washington

Payroll Tax Extension: Two Trains on the Track

The House of Representatives has rejected Senate legislation passed last week to extend a payroll tax cut for two months. On a vote of 229 to 193, the House set aside the Senate bill and requested a conference with the Senate, establishing a confrontation with the Democrat-controlled Senate.

Majority Leader Harry Reid (D-NV) has stated he does not intend to have a conference and that his Members have left for the year. Oh, My! If there is not further action, payroll taxes will revert to the 2010 levels. 

Here is the interesting part. Democrats have pushed for the full-year payroll tax cut for months say Congress should accept the temporary measure now and return in January to solve an impasse over how to extend the cut for the full year. Interesting, as it appears that Senator Reid does not really want to accomplish his goal of getting a year extension. Who would have thought? Why try to get something done when you can blame the other side for doing what you say you want but do not really want.  Sounds convoluted to me.

There is more, good stuff here. House Minority Leader Nancy Pelosi (D-CA) charged that “the extreme tea party element of the Republicans in the House” was blocking an extension of the payroll tax cut….” “They alone are standing in the way of a tax cut for the middle class,” she bellowed on the House floor.

This is interesting as it shows that the mind set of the liberals is to blame the tea party for everything. Paper does not come in the morning, blame the tea party. Traffic snarl on the Key Bridge, blame the tea party. National debt, hits S 15 billion, blame the tea party. Oh no, not that one.

It seems to me  Ms. Pelosi also does not understand this is not a tax cut. If enacted, no one gets any more money in their pocket. It is a mere continuation of the law as it stands now. If not extended, it would be a tax increase from current law but it is not a tax cut from where we are now.  At least, she could get the nomenclature right.

It will be quite intriguing to see how this all plays out. Will Bull Head Harry prevail? Will the Republicans blink? It seems like two trains are heading for each other on the same track and the wreckage will damage both engines, derail the economy and further damage the public's confidence in its' leaders.  Of course, the President is leading from the campaign trail. 

 

Not over yet in Congress: Reid thumbs House again.

 Just when it looked like it was over, it turns out it may not be. Just when you thought there was a hint of communication in the United States Congress, it proves wrong. Just when it looks like the country was safe because the Legislators went home, it proves to be false.

Last week the Senate voted a measly 2-month extension of the two per cent reduction of employee payroll taxes enacted last year. The vote was overwhelming and bi-partisan. The Majority Leader Harry Reid clapped his hands and told his members to go home. Problem though--seems like he forgot to get a firm understanding and agreement with the House of Representatives.

Harry Reid: Bi-Partisan Icon Declares Dead on Arrival

“The bill passed by House Republicans tonight is a pointless partisan exercise. The bill is dead on arrival in the Senate. It was dead before it got to the Senate.”

Senate Majority Leader Harry Reid

There is the distinguished United States Senate Leader waiving the branch of cooperation and bi-partisan spirit again. He holds out the hand of compromise and community. He energizes people to roll up their sleeves to work the problems to arrive at a solution.

The occasion that allows the Leader to shine?

Seems like the House of Representative passed a bill last night –which in their opinion- addresses a number of pressing issues facing Congress and the country. The 234-to-193 vote along party lines sets the stage for further negotiations between the House and the Senate, likely to continue into the next week.

Securities Transfer Excise Tax: STET, FTT and Robin Hood taxes are back!

The collective Euro Zone is in a state of calamity. Their problems are no doubt causing capital markets around to world to roil from time to time, largely depending on the pronouncements of German Chancellor Angela Merkel. One of the solutions proposed by European leaders to solve the problems of the European financial markets is to institute a new tax-this one on financial transactions.

The proposal is interesting for two reasons. The first is it is not a new proposal. A security transfer excise tax (“STET” or now referred to as financial transfer tax or “FTT”) is not a new idea. The second reason is the proposal demonstrates the mind-set of most policy makers- when in doubt—impose a tax. However, given the political and financial climate in this country, I do not dismiss the concept so easily.

Save the Post Office: What you can do!

 The United States Post Office is facing financial disaster. It is losing money fast but is trying hard to remain viable. I love the Post Office. I know they have been culpable in granting bad union contracts,  have slack and sloppy work rules, have indifferent, surly and unhelpful employees, but there is something about getting a real letter that is very exciting. It is a bargain. It is personal. It is part of the old social fabric. The USPS should be preserved and we all can help.  

 I am one of the few people who still actually write letters. I have a regular schedule to send my family letters, sometime even written by hand. I rarely, and I mean rarely, ever get a response but I still do it. My mother wrote letters to me almost every week of her life. It is special to know that someone actually takes the time and makes the effort. I want them to know I care for them. 

Now I get e-mail birthday cards, some forwarded newspaper articles, stupid video and bad jokes. I accept the modern age but what an insult sometime.

USPS has been the victim of not only the Internet but also the private carriers such as Federal Express and UPS. In addition, the fax machine has cut into mail delivery, although its use is waning. Electronic bill paying means we do not mail checks anymore, although I still do. Compressing business documents from 100 pages into a PDF and sending it over the wire so it arrives before I have taken another breath is—well, breath taking.

 So what can we do to help save this government institution that has been around since the founding of the Republic? It is simple. Everyone gets those awful credit card solicitations in the mail. I get sometimes 3 or 4 a day. They contain a prepaid envelope to mail back with the application. I do not need another credit card but I do mail the envelope back to the company with nothing inside. The Company has to pay for the return mail and the post office gets the business. It cost the sender nothing. So mail away and help the beleaguered USPS. And, drop a letter in the box to your family!

 

When is "Paid For" Not Really "Paid For": Ten Year vs. One Year

Congress is considering extending the employee payroll tax reduction enacted last year.  Good idea. They may even expand it. Not a good idea. The expanded one-year payroll tax cut and a separate tax credit Democrats have proposed for small businesses would cost $265 billion in the coming year. That is 265 billion dollars that the government must borrow from someone. 

President Obama and his liberal minions in Congress want to "pay for" this reduction in revenue by placing a surtax on taxpayers with incomes over a million dollars. Not the worse idea. Not great tax policy, probably not even great economic policy. Probably good politics to demagogue. However, even if it is a great idea, it is deceptive, dishonest, laughable and says to the public--" we think you are stupid".

The Democrats have no intention to ever address the deficit. Not ever. This example reinforces that point. The surtax would raise $267.5 billion over 10 years. So, that is how you "pay for" things. Ten years. Let's see, one year $265 billion I can borrow on the phony premise I will raise it in ten years and the voters will believe it? WOW! 

Bush tax cuts gone in 2012, health care surtaxes kick in soon, surtaxes on income, elimination and caps on deductions. Where does it all end? No problem with me to adjust the tax rates and system as part of a comprehensive overhaul but to use this kind of trickery is a prime example of why Washington is perceived a broken. 

I would have more respect if the politicians, just said, we are going to borrow this money now, the country needs to do this, the deficit will go up but this is what we are going to do. It is insulting to portray it otherwise. 

Republicans are no better. They had their own "pay for" suggestions that were were almost as equally phony. 

I find this situation outrageous as well sad and pathetic.

Tax Extenders: Will be Delayed but should be Banished

About this time every year, the business community as well as other tax sycophants start to wring their collective hands about the "tax extenders". This is a group of usually special provisions inserted in the Federal Tax Code to supply certain incentives, subsidies or special favors to a variety of groups. This year there are about 60 or so of them and they are big money.

The most likely reason a provision is temporary in the first place is its budgetary impact. The revenue impact of a one-year tax credit, for example, is obviously much less than the 10-year impact. It is an illusion, of course. Ten year budget numbers can cause all kinds of procedural and political problems. With the fiscal problems of the government, it is easy to understand their usefulness.