July 15, 2011

A PRIMER ON DEBT, REVENUE, AND TAXES: A CALL TO ACTION! CALL CONGRESS! NOW!

Washington, D.C.: The story dominating every news outlet on the planet, relates to efforts in our nation's capital, to introduce a bill that will increase the amount of money that the federal government can borrow, in order to meet the financial obligations of our government.

Article XIV, Section 4, in our Constitution states:

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

Why is raising the debt ceiling an issue, if the Constitution holds that the validity of the public debt shall not be questioned? All expenditur­es paid from the treasury must be in accordance with written law, and when they are, we are obligated to pay without question. When expenditures exceed revenue, the treasury has to sell government bonds, which becomes our federal IOU, to our creditors. Raising the debt limit is crucial, because it will allow the treasury to continue selling bonds.

In 1988 President George Herbert Walker Bush ran for President and famously said "read my lips" there will be no new taxes. A bi-partisan Congressional panel was formed to reform Social Security, and ensure that it was funded through the new millenium. Republicans and Democrats agreed that new taxes were necessary, to ensure that Social Security would be able to meet their obligations. The legislation was drafted and both houses of Congress passed the bill.

In 1992 President Bush was defeated by Bill Clinton, helped in large part by third party candidate Ross Perot, who entered the race because the President violated his pledge not to raise taxes. The political cognoscenti took note that the electorate rejected a popular incumbent, and the partisan nature of politics was changed forever.

During the presidency of George W. Bush the debt ceiling was raised 7 times without notice.

On May 5th 2011, Vice President Biden started meeting with Congressional leaders in order to formulate a plan to increase the debt ceiling, and look at possible cuts in spending, and opportunities to increase revenue. They met 11 times, and on June 23rd, the House majority leader Eric Cantor famously stormed out of a meeting and declared that there was an impasse, because Democrats were insisting on looking at raising taxes, and Republicans would not participate in any exercise that considered tax increases.

The contentious issue revolves around increasing revenue. The Obama administration proposes eliminating corporate tax loopholes, that allows corporations to avoid paying taxes. They also want to end government subsidies to oil companies, and other industries, where corporate profits obviate any need for subsidies.

In 2001 after the terrorist attacks on the World Trade Center, the Bush administration proposed temporary tax cuts, to spur growth and spending, in an effort to kick start the economy.  Congress has extended the Bush era tax cuts for ten years. The Obama administration has proposed eliminating the extension for wealthy Americans earning over $1.0M million dollars a year.

Republicans contend that eliminating tax loopholes, eliminating corporate subsidies, and allowing Bush era temporary tax cuts to expire as originally intended, are tax increases. Because they view these revenue enhancements as tax increases, they refuse to consider them.

If Congress fails to raise the debt ceiling, our government would default. What would a default mean? It would mean that all loans would become due, and our Federal government would be bankrupt. Taxes would rise, interest rates would rise, credit markets would tumble, and bond markets would be in turmoil. The repercussions could be so great, that it would affect every country in the world economically. It would be the greatest unforced error in the history of economic policy.

Are eliminating tax loopholes a tax increase? NO. Eliminating inequities in our tax code does not increase or decrease taxes. It corrects inequities in our system.

If we eliminate oil company subsidies, or farm subsidies, ethanol subsidies, etc. isn't that a tax increase? NO. Republicans love to say let the free market operate without government regulation or interference. Corporate profits have never been higher, and companies are sitting on piles of cash. The profits have not translated into creating jobs, in fact it has had the opposite effect.

If we let Bush era tax cuts expire on the wealthiest Americans, is that increasing taxes? NO. These tax cuts were temporary, and were enacted in response to the attacks on the World Trade Center. The tax rate is the same. If you allow cuts to expire, you aren't raising taxes, the tax rate remains what it was in 2001.

Why are the Republicans obstructing progress? Mitch Mc Connell, the Senate minority leader, stated that he would not contribute to any compromise that would help President Obama's re-election. That's it in a nutshell.

Republican members of the House and Senate are trying to inflame public sentiment, and define debt ceiling negotiations around raising taxes. They are lying to the press, they are lying to themselves, and they are lying to the American people. Common sense is being held hostage because of GOP stupidity.

Every American should write, email and phone their representatives in Congress.

Call Eric Cantor. Call Mitch McConnell. Call your Senator and Congressman. Tell them what you think!

                  (202) 225-3121

We, the people, must take government back, and make our feelings known. It's easy, dial the number, tell the operator who you would like to speak with, and tell the person that you support the President's effort to increase revenues, and reduce spending.

Feel free to copy and paste this posting, please share it with anyone interested in their government. Send a link, share it on facebook, or twitter. People need to know what this debate is all about. Our future depends on it.

I have a file below that you can copy and attach to emails. Click on the link, right click on the file and click "save as", and save to you computer. You can publish it wherever you see fit. You can attach it to an email, and send it to anyone.

Word Document: A Primer on Debt, Taxes & Revenue

We are in this together. Take back your government now!

Written and posted by Haightmale on the blog "Tie-dyed Jive in the (415)"

http://haightmale.blogspot.com/

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