Tuesday, July 26, 2011

Why Balance the Budget .... Just Raise the Dept Ceiling, Again.

I might be imagining this, but Obama appears to be sticking to his guns with the August 2nd showdown with the Republicans. That's on the issue on whether to balance the budget by increasing taxes or balancing the budget by cutting federal programs. Previously, Obama has caved on every major legislation. In fact, a Democrat congressman actually asked Obama whether he's planning to cave in the last minute. To which Obama replied (paraphrasing), "I'm the President. My words carry a lot of influence." Whatever that means. "Change," perhaps.

The Republicans have made a slippery lexicon out of "tax increases." Ending the Bush tax breaks is equivalent to increasing tax rates by their vernacular. Ditto with doing away with existing tax breaks for big industry. While there are a lot of federal programs that should be axed to trim the fat out of the budget, on the other side of the ledger, big industry enjoys lavish tax breaks that otherwise would provide needed revenues (list below from Senator Bernie Sanders, I-Vermont). Not withstanding, will Obama cave at the midnight hour?

What everyone in Washington DC is worried about if a deal can't be negotiated and the nation defaults, is not about all the bad things that will befall the nation's credit rating, etc., but whether the Democrats will be blamed if they happen to be a Democrat, or whether the Republicans will blamed if they're a Republican on the other side of the aisle. I realize Obama wants another 4 years, and if the Democrats are blamed for a default he might not get re-elected via backlash as well as a lot of fellow Democrat congressmen in the same boat who are up for re-election. However the same scenario holds true for Republican congressmen too. We'll see.

Exxon Mobil. $19 billion profits in 2009. $156 million rebate from the IRS, according to its SEC filings.

Bank of America. $4.4 billion profits in 2010. $1.9 billion tax refund. ($1 trillion in bailout money.)

General Electric. $26 billion profits in the United States. $4.1 billion refund.

Chevron. $10 billion profits in 2009. $19 million refund.

Goldman Sachs. $2.3 billion profits in 2008. 1.1 percent of its income in taxes. (Almost $800 billion in bailout money.)

Citigroup. $4 billion profits in 2010. $0 (zero) federal income taxes. ($2.5 trillion in bailout money.)

ConocoPhillips. $16 billion profits from 2007 through 2009. $451 million in tax breaks during those years.

Carnival Cruise Lines. $11 billion profits in the past five years. 1.1 percent federal income tax rate during those years.


Kay said...

I'm sorry but I am blaming Republicans and Tea Partiers for the NO tax increase for the RICH mantra. How do they get away with it? Why aren't their constituents getting after them? I don't understand. I have a feeling the balancing of the budget is going to fall on the backs of seniors. Sigh...

RONW said...

Kay- it seems like there's a law against growing old. Medicaid, medicare (never knew the difference between the two), etc. will be slashed. That said, I don't believe for a moment, if they can't work out a deal by the Aug. 2nd deadline, Congress won't raise the dept ceiling and go through the motions of balancing the budget until they max out that credit line too. I'm thnking, a lot of incumbents from both political party won't be returning to Washington DC after the next elections.