[jeffkrol]

This is quite funny actually.. BTW before anyone throws in the "Obama deficit" may I remind you of a trillion dollar war that was also "unfunded".. anyways back to the fun.

Actually, the tax cut was, by design, hard to notice. Faced with evidence that people were more likely to save than spend the tax rebate checks they received during the Bush administration, the Obama administration decided to take a different tack: it arranged for less tax money to be withheld from people’s paychecks.

They reasoned that people would be more likely to spend a small, recurring extra bit of money that they might not even notice, and that the quicker the money was spent, the faster it would cycle through the economy....................... But the hard-to-notice part has succeeded wildly. In a recent interview, President Obama said that structuring the tax cuts so that a little more money showed up regularly in people’s paychecks “was the right thing to do economically, but politically it meant that nobody knew that they were getting a tax cut.”

“And in fact what ended up happening was six months into it, or nine months into it,” the president said, “people had thought we had raised their taxes instead of cutting their taxes.”

http://www.nytimes.com/2010/10/19/us/politics/19taxes.html
As a counter point (again I remind you of a trillion dollar war w/ gives us NOTHING in return, and of course the extensions of the Bush stimulus...btw how's that book going... opps must be late. LET me guess, the book had a previous engagement and will now not show up till after the midterm elections Amazon.com: Decision Points (9780307590619): George W. Bush: Books: Reviews, Prices & more )
EDITORIAL: The Democrats' tax burden - Washington Times
OT since I did mention "books"
Funny parody of Rove's:

After enrolling at the University of Utah in 1969, I was devastated to find I had dodged the Vietnam draft – a war I wholeheartedly supported – and threw myself into campaigning for the Republican party. OK, I made youthful mistakes. I should never have allowed myself to get caught stealing Democrat stationery and printing fake campaign fliers, but at least Republican bosses recognised my potential...............We managed to win a second term although the Democrats again accused me of dirty tricks. As if. For the record, I never did anything illegal that anyone could prove. So all I'm going to say about the Valerie Plame affair, the millions of deleted emails, and the sacking of various US attorneys who weren't supporting the president, is I've no idea why anyone would imagine I was implicated..........There was no point in the president going to New Orleans after Hurricane Katrina as the victims were all hicks and there were no votes in it, but the press tried to make a big thing out of it. It was time to move on and cash in. Oops, I see I've forgotten to mention my second divorce and that the House Judiciary Committee did conclude I had played a significant role in the attorney firings! But these things happen when you're racing to get your side of the story out ahead of Dick Cheney and George Dubya. See you by the remainder pile.

Digested read, digested: Bluster and Inconsequence: My Life as Dubya's Ally Campbell.

Courage and Consequence: My Life as a Conservative in the Fight by Karl Rove | Digested read | Books | The Guardian
And a cartoon..........

---

Last edited by jeffkrol; 10-19-2010 at 07:31 PM.

[blueblazer22x]

gotta love politics...

[captmacq]

"the right thing to do economically, but politically it meant that nobody knew that they were getting a tax cut"

This is misleading.. Yep they took less out of your check but they did not change the tax rate.. You still owed the same amount. Net effect you got a smaller refund or you owed.

So yep i noticed.

[seacapt]

"the right thing to do economically, but politically it meant that nobody knew that they were getting a tax cut"

This is misleading.. Yep they took less out of your check but they did not change the tax rate.. You still owed the same amount. Net effect you got a smaller refund or you owed.

So yep i noticed.

Misleading yes and manipulative too! Also not an original idea, it's been done before,but lets let Jeff think that Barry came up with the best idea since sliced bread and really wants to help us regular folks. OK?

[mikemike]

“was the right thing to do economically, but politically it meant that nobody knew that they were getting a tax cut.”

Kind of like W urging people to go out and shop after 9/11.

[jeffkrol]

Misleading yes and manipulative too!

Why? Your wrong on that except if your income is higher then the cut off

Updated for Tax Year: 2009 The key tax cut in the massive stimulus plan signed into law by President Obama is a tax credit that's worth $400 for a single taxpayer, or $800 for a married couple who files a joint return. Retirees will get a $250 credit as well.

The Making Work Pay Credit reduces your 2009 taxes by 6.2 percent of your earnings, up to a maximum reduction of $400 for singles or $800 for couples. If you're eligible for this credit, chances are you've already been receiving it, in the form of reduced withholdings on your paychecks.

TurboTax® - New Making Work Pay Credit Increases Your Take-Home Pay
They added a credit and shaved take home margins to balance... maybe not elegent but the BOTTOM line was many netted less tax laibility.. So how is that a lie and deceptive????..
Guess you just exceed the income level......

We say “almost” everyone because the credit is phased out at higher income levels. You don’t get the credit if your 2009 Adjusted Gross Income (that’s basically taxable income before subtracting exemptions for yourself and your dependents, and before subtracting your standard or itemized deductions) is more than $95,000 on a single return, or more than $190,000 on a joint return.

The size of the credit is gradually reduced as income rises between $75,000 and $95,000 on single returns, and between $170,000 and $190,000 on joint returns.

---------- Post added 10-20-10 at 12:46 AM ----------

"the right thing to do economically, but politically it meant that nobody knew that they were getting a tax cut"

This is misleading.. Yep they took less out of your check but they did not change the tax rate.. You still owed the same amount. Net effect you got a smaller refund or you owed.

So yep i noticed.

Best to do your homework first... see above. To save you time

The Making Work Pay Credit reduces your 2009 taxes by 6.2 percent of your earnings.....

ON the truth-o-meter

http://www.politifact.com/truth-o-meter/statements/2010/jan/28/barack-obama/...us-made-it-so/

During the campaign, the independent Tax Policy Center researched how Obama's tax proposals would affect workers. It concluded 94.3 percent of workers would receive a tax cut under Obama's plan based on the tax credit to offset payroll taxes. According to the analysis, the people who wouldn't get a tax cut are those who make more than $250,000 for couples or $200,000 for a single person. Obama said he intended to raise taxes on those high earners, a promise he reiterated during the State of the Union, and that revenue would offset the stimulus tax cut.

Because the stimulus act did give that broad-based tax cut to workers, we rate Obama's statement True.

More tax cut confusion..........
http://www.newsweek.com/blogs/the-gaggle/2010/09/15/why-is-obama-s-tax-cut-f...democrats.html

Tax cut for 95 percent? The stimulus made it so...................So, the broad understanding of Obama's tax cuts for everyone but the rich is inaccurate. They are actually tax cuts for everyone, including the rich. The rich will simply get smaller tax cuts in percentage (but not dollar) terms. And that's just income taxes. Obama would also extend the child tax credit and a generous exemption for estate taxes, the latter of which disproportionately benefits wealthy families. When comparing Obama’s proposal to the Republican position, "the question isn’t whether to give high-income taxpayers a cut, but how much," says Tax Policy Center researcher Benjamin Harris. "Interestingly, the administration seems to be pushing this misconception; I’m not sure why."

SOOOO you 2 eitehr just missed it or your in the 5% left out..... HA.....

[Nesster]

I believe there's also some political blinders in effect: if the right wing has been taught for the last 30+ years that democrats are only and inevitably tax and spend socialists, then that's the only possible interpretation of current reality.

The Tea Party insists this is all Obama: the stimulus/bail-out (always combined, though they are different) is throwing money we do not have away. Never mind the Recovery Act was $288Bill in tax cuts, $275bill in stimulus spending, and $233bill in emergency food stamps etc. That tax cut by definition could NOT have been real because it was the democrats who enacted this.

There's grudging admission that Bush loved to spend without funding, that Obama's stimulus costs more than the Bush wars, and so on. And that the bailouts were socialist take overs of the private economy, plus a complete waste of money. Whereas in reality Obama's plan is on track to recover much of the money - and the Bush 'loans' are not likely to be ever recovered.

I think one of the reasons for republican hatred of Clinton was that he actually made things work financially and for business, which of course is less likely than hell freezing over, per dogma.

[mikemike]

Faced with evidence that people were more likely to save than spend the tax rebate checks they received during the Bush administration, the Obama administration decided to take a different tack: it arranged for less tax money to be withheld from people’s paychecks.
They reasoned that people would be more likely to spend a small, recurring extra bit of money that they might not even notice, and that the quicker the money was spent, the faster it would cycle through the economy

Even though this tax cut was distributed to the bottom 95% the ultimate goal was for the money to get spent by on "stuff" and spur consumption by people who have a monthly payment mentality. The benefits of this ultimately accrued to those who made a profit off of the stuff that the tax cut recipients purchased.

Giving it to people who are struggling financially as a windfall would help them get on more stable financial footing by having them pay down their debts or save it for a rainy day instead it was designed to be a capitalist free for all allowing businesses to suck it out of the unsuspecting publics pocket every month. I am quite surprised that you are celebrating something like this given your views, Jeff.

[Nesster]

Even though this tax cut was distributed to the bottom 95% the ultimate goal was for the money to get spent by on "stuff" and spur consumption by people who have a monthly payment mentality. The benefits of this ultimately accrued to those who made a profit off of the stuff that the tax cut recipients purchased.

Giving it to people who are struggling financially as a windfall would help them get on more stable financial footing by having them pay down their debts or save it for a rainy day instead it was designed to be a capitalist free for all allowing businesses to suck it out of the unsuspecting publics pocket every month. I am quite surprised that you are celebrating something like this given your views, Jeff.

the ties that bind one side blind you to what the other side is really about. Efficient government that actually works - thus efficien stimulus that actually does what it is supposed to do, rather than score political points.

Why Can't Republicans Figure Out How To Reduce Government? | The New Republic

Why Can't Republicans Figure Out How to Reduce Government?
Jonathan Chait October 19, 2010 | 4:49 pm
I am constantly amazed at the way conservatives -- the ones who genuinely want to reduce the size of government -- so consistently reject the one proven method of achieving their goal. Here's National Review's John Hood:

The case for a “starve the beast” strategy — large tax cuts to force large spending cuts — doesn’t look so hot empirically, at least at the federal level. Score one for Williamson. But there’s also not much of an empirical case for conservatives being able to talk liberals into fiscal restraint by signaling a willingness to debate how best to raise taxes rather than whether to do so. Flinty resolve is the best weapon. Score one for Norquist.

Flinty resolve! Like George W. Bush, whose anti-tax resolve was without parallel, and who consistently denounced excessive spending!

In fact, there is a great deal of evidence that making bipartisan deals that include tax increases can restrain spending. Here is a chart of federal receipts and outlays since 1980:



See that bump in 1990? That was when George H.W. Bush made a deal with Congressional Democrats to hike taxes and restrain spending. Conservatives fiercely denounced it and swore they would never permit such a betrayal again, a pledge they have kept. Look at the slope of outlays that followed after that. Down, down down.

In 1993, Bill Clinton passed another deficit reduction measure containing a mix of tax hikes and spending cuts. Republicans denounced it as incipient socialism at worst, and a job-killing piece of class warfare with phony spending cuts at best. Spending continued to drop as a share of the economy.

I think this counts as evidence that making deals to increase taxes and reduce spending can work. Indeed, since nearly all actual government programs are popular, securing bipartisan agreement is the only way Republicans have ever successfully reduced spending. And yet, in the Republican mind, it is anathema. In the conservative media, the 1990 budget deal was memorialized as a domestic Yalta, a sellout that must never be repeated. And they conservatives have never bothered to revisit their hysterical denunciations of Clinton's 1993 deficit reduction. (Sometimes they credit his results, but only in the context of defining them as conservative.)

The thing is, I don't support their goal of reducing government, so I shouldn't care. But I do care about long-run fiscal solvency, so it would be nice if you could find some anti-government Republican, somewhere, who was capable of recognizing the intersection of his own ideological self-interest and the interest of fiscal responsibility. Instead they will continue on in their belief that flinty resolve will win the day.

Update: Bruce Bartlett wrote recently about how the 1990 budget deal reduced the deficit.

[mikemike]

the ties that bind one side blind you to what the other side is really about. Efficient government that actually works - thus efficien stimulus that actually does what it is supposed to do, rather than score political points.

This was an efficient economic stimulus, what I was saying is that it doesn't reduce economic inequality, wealth inequality, or stabilize people's finances. Instead it preys on those living paycheck-to-paycheck. It let them eat out at Applebees a couple of extra times last year because they had a few extra dollars burning a hole in their pocket. A year later, the tax cut recipients aren't doing any better but the shareholders of Applebee's have seen the value of their stock double.

Economic stimulus, yes.

Helpful to struggling families, barely.

[Nesster]

Helps me make ends meet month to month after receiving the negative increase in pay brought on by TARP.

I suppose it would have been better not to give us this cut - this way those evil restaurants and their evil shareholders wouldn't pray on me. Oh, and let's not forget the phone company, super market, and other such vultures on the nearly-defunct American wage earner.

[jeffkrol]

This was an efficient economic stimulus, what I was saying is that it doesn't reduce economic inequality, wealth inequality, or stabilize people's finances. Instead it preys on those living paycheck-to-paycheck. It let them eat out at Applebees a couple of extra times last year because they had a few extra dollars burning a hole in their pocket. A year later, the tax cut recipients aren't doing any better but the shareholders of Applebee's have seen the value of their stock double.

Economic stimulus, yes.

Helpful to struggling families, barely.

Arguably a tax cut to the upper 2% is not going to even give that help.. albeit as temporary as it is.. You may be amazed at how little can help so many so much...
It may be peanuts to some but it could mean a tank of gas here, a mortgage payment there, ect...
This country has become quite callous.
Besides he wants to continue them....... those pesky meaningless hundreds....

[mikemike]

It may be peanuts to some but it could mean a tank of gas here, a mortgage payment there, ect...

The tax cut is designed to put $33.33/month in individuals or $66.67/month in married couples pockets.

It is more a tank of gas (that goes into BP and OPEC's pockets) every month instead of an April windfall which could easily be a mortgage payment.

The psychology that it is preying on is that "I can afford this monthly payment" attitude, which is the rope by which people hang themselves in debt. If someone is not careful this tax cut could allow them to carry an extra $1100 (for an individual) in credit card debt with a 3% minimum monthly payment.

This was good for the economy but it would have been better for people if it came as a windfall because they would have made a better financial decision with it. This just laundered a big payday for the rich through the rest of the American people.

[jeffkrol]

The tax cut is designed to put $33.33/month in individuals or $66.67/month in married couples pockets.

It is more a tank of gas (that goes into BP and OPEC's pockets) every month instead of an April windfall which could easily be a mortgage payment.

The psychology that it is preying on is that "I can afford this monthly payment" attitude, which is the rope by which people hang themselves in debt. If someone is not careful this tax cut could allow them to carry an extra $1100 (for an individual) in credit card debt with a 3% minimum monthly payment.

This was good for the economy but it would have been better for people if it came as a windfall because they would have made a better financial decision with it. This just laundered a big payday for the rich through the rest of the American people.

No psychologically this is self defeating... many would feel that this "lump sum" reward is just that a reward for all the cutting and scrounging they have done all year... and spend it on themselves.. THIS is simple, proven psychology.
The rich do it, the poor do it. it is HUMAN nature... especially since it is small...
IF it were large, say enough to pay off a mortgage, car ect.. or even to replace an old furnace/ roof you might have a chance... as it is no your fighting basic instinct of work/reward...
Want real "stimulus"? Pay off all mortgages on owner occupied houses whose loan to value ratio is under 50%..... rewarding the fiscally conservative, (of course some will re-mortgage) and watch the economy fly...
As to laundering big paydays to the rich, seems that's what we have been doing for the last 8 -10 years... and really longer to be honest.
Isn't that the "business" that is so great for all the "little people". See the irony in the position?
Now the "little people" get some back and people call them lazy and fiscally irresponsible... how prejudicial is that.
I have a friend who emigrated from South Africa and even he admits the US is no longer the "land of opportunity"... seems he would have been fiscally better off in Botswana... that my friend, is a sad statement, though to be honest, is situationally dependent, but worth pondering that a hard working family now finds a complete vacuum of opportunity... I believe it is not uncommon.
Hard facts................

Abstract:
Only one-fifth of respondents to a rider on the University of Michigan Survey Research Center's Monthly Survey said that the 2008 tax rebates would lead them to mostly increase spending. Almost half said the rebate would mostly lead them to pay off debt, while about a third saying it would lead them mostly to save more. The survey responses imply that the aggregate propensity to spend from the rebate was about one-third, and that there would not be substantially more spending as a lagged effect of the rebates. Because of the low spending propensity, the rebates in 2008 provided low "bang for the buck" as economic stimulus. Putting cash into the hands of the consumers who use it to save or pay off debt boosts their well-being, but it does not necessarily make them spend. Low-income individuals were particularly likely to use the rebate to pay off debt.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1349586

[mikemike]

many would feel that this "lump sum" reward is just that a reward for all the cutting and scrounging they have done all year... and spend it on themselves.. THIS is simple, proven psychology.

See your own OP for simple proven psychology.

Faced with evidence that people were more likely to save than spend the tax rebate checks they received during the Bush administration, the Obama administration decided to take a different tack

That paper you reference was refering to the 2008 tax rebates, not the Obama "making work pay" credit that we are discussing. Like I said the windfall is better for low income people who need the help because it puts them on better financial footing. It is easier to exercise will power and make 1 good decision with a lot of money once a year than it is to do it every month with a small amount.

Low-income individuals were particularly likely to use the rebate to pay off debt.

This kind of tax cut is great for someone like me (who doesn't really need it but will gladly accept it) because I am already a big saver, I already have my withholding cut to the bone so that I always have to send the IRS a check with my taxes. In fact, estimating my 2010 tax bill is on my to do list for this weekend to make sure I am not penalized for under withholding.

But for some people that tax rebate is there only form of savings because they spend money as fast as they can get their hands on it. It is so popular as a savings vehicle that they have a box on the W-4 to withhold an additional amount just to juice up that refund check.

If the government was willing to have lower compliance rates with federal income taxes and stimulate the economy in the short term, they could exempt everyone from withholding and hope that they save enough to pay their tax bills. This would be a great stimulus approach that wouldn't require any new spending or tax cuts, although there realistically would be a lot of people with unpaid tax bills because they didn't prepare for it.