However, as a new analysis from Citizens for Tax Justice pointed out, the Buffett rule as laid out in the speech could raise up to $50 billion per year to pay down the deficit, while affecting just 0.08 percent of taxpayers:
Citizens for Tax Justice has calculated that President Obama’s “Buffett Rule” would, if in effect this year, raise $50 billion in a single year and affect only the richest 0.08 percent of taxpayers — that’s just eight percent of the richest one percent of taxpayers. [...]
To calculate the $50 billion figure, we assumed that there would be a minimum tax that applies to adjusted gross income (AGI) minus charitable deductions. (We’ll call this modified AGI.)
We assumed that a taxpayer with modified AGI greater than $1 million would face a minimum tax of 30 percent of modified AGI. The taxpayer would pay whichever is greater, their personal income tax under the existing rules or this minimum tax.
Obviously, $50 billion by itself won’t balance the budget, but it certainly doesn’t hurt. At the same time, the Buffett rule will aid in correcting some of the problems in the tax code — like one quarter of millionaires paying lower rates than millions of middle class families and some millionaires paying no income tax at all — that have helped drive income inequality up to a level not seen in the U.S. since the 1920s.
Our guest blogger is Adam Hersh, an economist at the Center for American Progress Action Fund.
Four years since the start of the Great Recession, the U.S. economy is picking up speed. The Bureau of Economic Analysis reported this morning that gross domestic product (GDP) grew by 2.8 percent in the last quarter of 2011. This marks the 10th consecutive quarter of economic expansion and the best growth performance for the US economy since the height of the Recovery Act in early 2010.
But beneath the headline growth figure, today’s report reveals that the nature of the Great Recession and current recovery departs markedly from historical experience. The difference: a debt hangover after years of bubble-driven investment that has left the economy much more fragile than it seems on the surface. This recovery is unlike previous ones experienced by your parents and grandparents, and it will require sustained policy action to ensure that a fragile recovery develops into strong and broadly shared economic growth.
Comparing the economy’s recent trajectory of consumption and investment with the experience on average of all other previous business cycles in the post-World War II economy shows the unusual depths to which the 2000s economy sank us and why recovery remains sluggish.
It’s true that consumer spending by households, the single-largest component of the U.S. economy, increased 2 percent in the past quarter. It’s now up 1.5 percent over pre-recession levels. But compared to previous recessions, the recovery of household consumption looks markedly weak. At this point in past business cycles, consumption on average had increased nearly 14 percent.
And the slow growth of consumption actually understates the financial stress faced by households: Despite growing in aggregate, personal consumption is actually 1.4 percent lower on a per capita basis than four years ago. Without critical social safety net programs, it would be even lower.
Our guest blogger is Isabel Owen, an education policy analyst at the Center for American Progress Action Fund.
The Virginia state senate belives a student's time is better spent riding this rollercoaster than being in a classroom.
Yesterday, the Virginia Senate Education and Health Committee put the interests of the tourism industry ahead of the needs of students by voting to kill three bills that would allow school boards to set their own calendar. The bills would have overturned the so called Kings Dominion Law, named for the amusement park in Doswell, Virginia. The law currently prohibits schools from starting before Labor Day, in an effort to boost late season tourism revenue:
The action by the Senate Education and Health Committee followed testimony from a string of tourism representatives, who said that moving the first day of school before the holiday weekend would hurt the industry at a time when it could ill afford to lose revenue.
Putting the tourism industry ahead of the needs of schools is an obvious blow to students. Proponents of rolling back the law cite research showing that students who have more time in school do better on exams and are more likely to go to college. A long summer vacation is particularly detrimental to low-income children who don’t have access to engaging programming during the summer. Indeed, more than 1,000 schools nationwide have broken free from the traditional confines of the school schedule and lengthened the school year to incorporate more time for academics, enrichment and teacher planning.
Speaking at an event at the Center for American Progress last year, Secretary of Education Arne Duncan made clear that it is time for students to spend more time — not less — in school. “We know that far too many of our nation’s young people get to a certain point by June, thanks to their teachers hard work and commitment, and they come back in September further behind than when they left, and we just have to do something about it,” he said.
The issue is also one of governance. As Delegate Joe Morrissey (D) noted, the persons making the call about when schools should start should not be amusement park owners. “Who is going to make the decisions,” Morrissey asked. “I suggest that it not be Tweety bird or Bugs Bunny or Scooby Doo or Sponge Bob that makes those decisions. They ought not to be making education decisions in the Commonwealth of Virginia.”
American homes have lost $7 trillion in value over the last five years and four million homeowners are either behind on their payments or in foreclosure, but thus far, the Republican Party’s leading presidential candidates have offered little in the way of solutions for the housing crisis that is holding back the economic recovery. Few states have been hit harder than Florida, where prices have dropped 45 percent since 2006, half of recently-sold homes are in default, and 23 percent of of homes are delinquent or in foreclosure.
That made last night’s debate, which was held in Jacksonville, the appropriate place to ask the remaining Republican candidates how they would address the crisis. Voters, in fact, were waiting to hear the candidates’ answers.
Unfortunately, the debate’s moderator, CNN anchor Wolf Blitzer, bungled his opportunity, turning to a submitted question that couldn’t have possibly led to substantive answers from the candidates. And then, after Newt Gingrich and Mitt Romney gave answers littered with falsehoods and turned the discussion toward each others’ investment portfolios, Blitzer failed to press them for actual plans to deal with housing:
BLITZER: We have a very important subject: housing. Not only here in Florida, foreclosures really, really bad, but all over the country. A lot of people are wondering if the federal government contributed to the housing collapse in recent years. We got a question that came into us. Let me put it up there and I’ll read it to you: How would you phase out Fannie Mae and Freddie Mac? Does the private mortgage industry need additional regulation?
Blitzer’s original question focused on what the candidates would do with Fannie Mae and Freddie Mac, the government-sponsored mortgage firms that have been targets of Republican ire since the crisis began. But it was private industry, not Fannie and Freddie, that sparked the crisis. More than 84 percent of the subprime loans in 2006 were issued by private lenders, including 83 percent of the loans that went to low- and moderate-income borrowers.
Blitzer could have asked Republicans to address the misconception that Fannie and Freddie sparked the housing crisis. He could have pressed Romney on what seemed like a change of position on housing in Florida. He could have asked where the candidates stood on the plan President Obama put forward in his State of the Union address to refinance mortgages, or asked what the candidates would do about the rampant fraud and abuse that private lenders perpetuated during both the housing boom and its subsequent bust. And yes, he could have pressed Romney to find out how much he knew about his investments into funds that profited off of Florida foreclosures.
But he didn’t. The result, as Reuters noted today, were soft outlines of policies that “could prolong the pain for years,” aren’t supported by market data, and showed little understanding of how the crisis happened in the first place. The Republican candidates continue to dodge questions about what, specifically, they plan to do about the housing crisis. Unfortunately for voters, questions like Blitzer’s only make it easier for those dodges to continue.
Yesterday, ThinkProgress’ Tanya Somanader noted that Apple Inc. is breaking its profit record and sitting on nearly $100 billion in cash, while its Chinese laborers toil in unsafe and even deadly conditions. Here on the other side of the Atlantic, another huge company has decided to lock out its Canadian workers in an attempt to force them to accept pay cuts, even as it pulls in its own record profits:
Caterpillar reported a 36 per cent increase in after-tax profit for both the fourth quarter of 2011 and the full year 2011. Revenues for the year increased four per cent to $2.65 billion.
Despite the record profits, the company is pressuring its employees at the London [Ontario] locomotive plant to accept a pay cut from $32 per hour to $16.50. Caterpillar locked out the workers on Jan. 1 after union members rejected the pay cut.
While certainly not in the same league with Apple’s abuses, Caterpillar is just the latest company attempting to force workers to accept wage cuts at the same time its hauling in huge profits and paying its CEO millions. AT&T, Navistar, John Deere, and Wellpoint have all pulled the same trick in the last few years, laying off hundreds of workers. Caterpillar’s CEO, Doug Oberhelman, made $10.5 million in 2010.
“This is all about greed,” says Bob Scott, union chairman at the plant. “How are workers supposed to go back to earning wages last paid nearly 25 years ago, while the company is richer than ever?” CEOs today make about 343 times the amount earned by the typical worker.
Former McCain Chief Economist Tells ThinkProgress Economy Is ‘Picking Up,’ Expects Continued Growth In 2012 |
MIAMI, Florida — Conservative economist Doug Holtz-Eakin, who served as John McCain’s chief economist during his 2008 presidential campaign, told ThinkProgress this morning that “things are picking up” and he expects the economy to grow at a significant clip this year and next. Holtz-Eakin projected that by the end of 2012, GDP growth above 3 percent and as high as 3.5 percent “will be trend,” and by 2013, “we’re faster.” He also said President Obama deserves credit for the 2009 stimulus package, though Holtz-Eakin said he disagreed with the bill.
Welcome to ThinkProgress Economy’s morning link roundup. This is what we’re reading. Have you seen any interesting news? Let us know in the comments section. You can also follow ThinkProgress Economy on Twitter.
Banks’ sloppy record keeping lets old mortgages rise from the dead to haunt homeowners. [Reuters]
Greece and its private creditors claim they’ve made progress toward a deal to avoid a Greek default. [Reuters]
The Obama administration is preparing to unveil a proposal tying federal higher education aid to a college’s affordability. [New York Times]
Ford yesterday announced its largest annual profit since 1998, making 2011 the second most profitable year in the company’s 109-year history. [CNN Money]