Obama Flip-Flops on on Taxing Health Care Benefits - Another Tax Increase

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Obama Is Willing to Consider Move to Gain Health Reform

By Ceci Connolly
from The Washington Post
June 3, 2009

President Obama, in a pivot from some of his harshest campaign rhetoric, told Democratic senators yesterday that he is willing to consider taxing employer-sponsored health benefits to help pay for a broad expansion of coverage.

Senate Finance Committee Chairman Max Baucus (D-Mont.) said Obama expressed a willingness to consider changing the existing tax exclusion. The decision would probably anger liberal supporters such as labor unions, but such a tax change would raise enormous sums of money as Congress and the White House are struggling to find the estimated $1.2 trillion needed to pay for health-care reform over the next decade.

"Yeah, it's something that he might consider," Baucus told reporters after the meeting between Obama and Democratic lawmakers. "That was discussed. It's on the table." Obama had summoned about two dozen senators to the White House to keep up the pressure to enact a comprehensive health-care overhaul this year.

White House officials moved quickly to clarify that taxing the health insurance provided by businesses is not Obama's first choice, but aides refused to rule out the possibility.

"The president made it clear during the campaign that he has serious concerns about taxing health-care benefits, and he has introduced his own revenue proposal, which he reiterated in today's meeting," spokesman Reid Cherlin said.

Obama instead urged senators to reconsider his proposal, which would raise federal revenue by reducing itemized deductions such as charitable contributions and mortgage payments for the wealthiest Americans, according to one adviser in the meeting. Obama included that idea in his budget, reporting that it would raise $317 billion over 10 years, a sizable "down payment" on the cost of health-care reform. But Congress immediately labeled the proposal a non-starter.

Private-sector businesses spend about $518 billion a year on their workers' health insurance, benefits that are not taxed. If workers had to pay taxes on their health coverage, it would raise $246 billion in revenue each year, according to the congressional Joint Committee on Taxation.

Tax treatment of employer-sponsored health care cuts across party lines: Prominent Republicans such as Sen. Judd Gregg (N.H.) support imposing a tax on certain health plans, while Democrats such as Sen. Sherrod Brown (Ohio) say that a tax would unfairly hurt middle-class workers with good benefits.

Health analysts from across the political spectrum have pressed for changing the tax treatment, arguing in part that the exclusion provides the greatest tax relief to high-salaried workers with generous insurance plans.

Last month, Baucus said he did not support eliminating the exclusion but was eyeing a benefit cap. Experts have outlined two likely approaches: taxing health benefits for workers above a certain income level; or taxing benefits over a certain value, perhaps $14,000 a year.

Administration officials meeting with lobbyists in recent days have projected that a benefit cap might generate $35 billion a year, though Finance Committee staffers said the number could be much higher.

Nevertheless, the issue represents treacherous politics for Obama, given his attacks on Sen. John McCain (R-Ariz.), who advocated a similar approach during the campaign.

"For the first time in American history, he wants to tax your health benefits," Obama said in September. "Apparently, Senator McCain doesn't think it's enough that your health premiums have doubled. He thinks you should have to pay taxes on them, too."

Strongly desiring to declare a health-care victory this year, Obama is now taking a more nuanced approach, aides said. "His style of leadership is to say, let's not get bogged down; let's keep moving forward," said one senior adviser who was in yesterday's meeting. "He's not ruling anybody's ideas out."

Staff writer Michael D. Shear and staff researcher Madonna Lebling contributed to this report
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What's Keeping Obama's Approval Ratings Up?

from Real Clear Politics
June 3, 2009
By Dick Morris

The Rasmussen poll conducted over the weekend of May 30-31 asked a key question designed to give us perspective on Obama's current popularity. The question was whether the current problems "are due to the recession that began under the Bush administration or to the policies Obama has put in place since taking office." In other words, who's to blame, Bush or Obama?

By 62-27, voters say Bush is still the culprit.

As long as this opinion remains prevalent, Obama will continue to enjoy high popularity. But when it changes, as it inevitably must, we will see him begin a long, long fall.

And this is the key measurement to watch.

The real recession - dating from the stock market collapse - began four months before Bush left office. And it is now four months since Obama was inaugurated. From this vantage, it still looks to voters like Bush's recession.

But it will become increasingly obvious that the large deficit Obama has incurred while pursuing his cure for the recession is, on its own, causing more problems than it solves. As high interest rates and, most likely, inflation, begin to set in - with no relief in unemployment - it will be obvious that Obamanomics isn't working and is, in fact, aggravating the economic trouble.

Obama, recognizing the danger, has recently begun to speak out - without even cracking a guilty smile - against the huge budget deficit he created. He is trying to blame the deficit, too, on Bush. But voters will not overlook the huge spending sprees of January and February, when Obama quadrupled the 2009 deficit. They will come to see that spending as a huge mistake and will shift their blame to the new president who proposed it.

Obama now faces a choice of poisons.

He can leave taxes as they are and take the poison of high interest rates, rapid inflation and a new recession, all caused by the massive borrowing he has forced on the Treasury. If the Treasury cannot sell enough bonds at a reasonable interest rate, it will, of course "monetize the deficit" - economics-speak for printing money so that there will be enough to buy the Treasury debt at moderate interest rates. But the process of so vastly expanding the money supply (or even just leaving the current expansion in place without trying to soak up the extra money) will cause its own runaway inflation.

Or Obama can break his pledge and raise taxes on everybody. His soak-the-rich approach will not be enough to cover the deficit. Especially when one factors in his healthcare proposals, big tax increases on the middle class become an increasing likelihood. And when we consider his cap-and-trade legislation, huge increases in utility rates also loom.

Either poison will make it clear that the economy is suffering from the medicine Obama administered, rather than the original disease that started under Bush.

And, of course, while we cannot predict precisely the start date of the Obama-generated misery, it's pretty clear that it will be a long-lasting pain. Neither inflation nor the pain of higher taxes is going to go away soon. And either approach will probably kindle a new recession.

Some economists think we will have an L-shaped recession from which we do not emerge for years and years. Others think it will be a W-shaped recession (not Bush's W) in which we emerge briefly and then go back down again. But a U-shaped recession, in which we go down and then come bouncing back, probably cannot happen with Obama's deficits now firmly in place. Then it will become clear that the cure was worse than the disease.

Morris, a former political adviser to Sen. Trent Lott (R-Miss.) and President Bill Clinton, is the author of "Outrage." To get all of Dick Morris’s and Eileen McGann’s columns for free by email, go to www.dickmorris.com.
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INSANITY - Current government debt per household is $546,688

from Hot Air.com
June 1, 2009
by Allahpundit

Ace despairs at the figures but I feel about this the way lefties felt when gas was more than four bucks a gallon and heading north: The higher the numbers go, the better. They figured only a full-blown meltdown would force a paradigm shift from fossil fuels to green energy; similarly, people like Robert Samuelson realize that only bankrupting Medicare and Social Security will make Congress face the fact that the two programs — which account for 81 percent of the debt load, per USA Today’s chart — will collapse under the weight of baby boomers. Everyone knows it, including and especially our chief creditor, so let’s get on with it.

China is the biggest foreign owner of U.S. Treasury bonds. U.S. data shows that it held $768 billion in Treasuries as of March, but some analysts believe China’s total U.S. dollar-denominated investments could be twice as high.

“Chinese assets are very safe,” Geithner said in response to a question after a speech at Peking University, where he studied Chinese as a student in the 1980s.

His answer drew loud laughter from his student audience, reflecting scepticism in China about the wisdom of a developing country accumulating a vast stockpile of foreign reserves instead of spending the money to raise living standards at home.

The $546K figure is based on current debt only, mind you. It doesn’t include universal health care or the fact that the FDIC’s going bust and will need to bailed out. According to some back-of-the-envelope math at the Atlantic, even with a hypothetical interest rate of 0 percent, each household now owes $22,274 per year … for the next 30 years. Average U.S. household income as of 2007: $50,233. Won’t be long now until the reckoning. Exit question: Blame Bush? Or blame Reagan?
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Chinese Audience Laughs At Geithner - He said their dollar assets were safe! ROFLMAO

from Reuters
By Glenn Somerville
June 1, 2009

BEIJING, June 1 (Reuters) - U.S. Treasury Secretary Timothy Geithner on Monday reassured the Chinese government that its huge holdings of dollar assets are safe and reaffirmed his faith in a strong U.S. currency.

A major goal of Geithner's maiden visit to China as Treasury chief is to allay concerns that Washington's bulging budget deficit and ultra-loose monetary policy will fan inflation, undermining both the dollar and U.S. bonds.

China is the biggest foreign owner of U.S. Treasury bonds. U.S. data shows that it held $768 billion in Treasuries as of March, but some analysts believe China's total U.S. dollar-denominated investments could be twice as high.

"Chinese assets are very safe," Geithner said in response to a question after a speech at Peking University, where he studied Chinese as a student in the 1980s.

His answer drew loud laughter from his student audience, reflecting scepticism in China about the wisdom of a developing country accumulating a vast stockpile of foreign reserves instead of spending the money to raise living standards at home.

But later in the day, Chinese Vice Premier Wang Qishan said it was important for the two nations to show the world they are working together through their joint economic dialogue.

"We must through our dialogue send a clear signal that China and the U.S. are engaged in practical cooperation to address the crisis," Wang told Geithner, according to the Chinese Foreign Ministry's website (www.mfa.gov.cn).

"This is important for boosting confidence and encouraging global financial stability and economic revival," said Wang.

In his speech, Geithner renewed pledges that the Obama administration would cut its huge fiscal deficits and promised "very disciplined" future spending, possibly including reintroduction of pay-as-you-go budget rules instead of nonstop borrowing.

"We have the deepest and most liquid markets for risk-free assets in the world. We're committed to bring our fiscal deficits down over time to a sustainable level

"We believe in a strong dollar ... and we're going to make sure that we repair and reform the financial system so that we sustain confidence," he said.

Geithner, who is due to meet President Hu Jintao and Premier Wen Jiabao during two days of talks, described the recession as still "powerful and dangerous" in much of the world.

Recent signs of improvement were not enough to change an International Monetary Fund prediction that world output would shrink this year for the first time in 60 years. And credit was likely to be tight for some time, Geithner said.

But he added: "The global recession seems to be losing force."

Moreover, the U.S. financial system was healing and it now seemed assured that the world would avoid financial collapse and deflation.

CHINA ROLE

Geithner offered U.S. backing for a higher-profile role for China in running global institutions including the IMF -- a controversial proposition since it raises the sensitive issue of reducing Europe's voting share in the global lender.

"The United States will fully support having China play a role in the principal cooperative arrangements that help shape the international system, a role that is commensurate with China's importance in the global economy," he said.

Geithner said he was hopeful that General Motors Corp and Chrysler would be able to stand on their own feet once they emerge from bankruptcy.

GM will file for bankruptcy on Monday, U.S. officials said, forcing the 100-year-old automaker once seen as a symbol of American economic might into a new and uncertain era of government ownership.

"We want a quick, clean exit as soon as conditions permit," Geithner said. "We're very optimistic these firms will emerge (from restructuring) without further government assistance."
(Reporting by Glenn Somerville; Editing by Alan Wheatley/Toby Chopra)
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Warning! A Very Disturbing Graphic!

Trillion Dollar Obama Stimulus Plan: Visual of What One Trillion Dollars Looks Like


from Death By 1000 Paper Cuts
Posted by RidesAPaleHorseMarch 26th, 2009

What does one TRILLION dollars look like?

All this talk about “stimulus packages” and “bailouts”…

A billion dollars…

A hundred billion dollars…

Eight hundred billion dollars…

One TRILLION dollars…

What does that look like? I mean, these various numbers are tossed around like so many doggie treats, so I thought I’d take Google Sketchup out for a test drive and try to get a sense of what exactly a trillion dollars looks like.

We’ll start with a $100 dollar bill. Currently the largest U.S. denomination in general circulation. Most everyone has seen them, slightly fewer have owned them. Guaranteed to make friends wherever they go.

A packet of one hundred $100 bills less than 1/2″ thick contains $10,000. Fits in your pocket easily and is more than enough for a week or two of shamefully decadent fun.
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Dollar Plummets in Value - Dollar Index dropped 4.1 percent this week to 83.84, the biggest decrease since September 1985

By Ye Xie
March 21, 2009
from Bloomberg.com

March 21 (Bloomberg) -- The dollar dropped the most against the currencies of six major U.S. trading partners since the Plaza Accord almost a quarter-century ago as the Federal Reserve’s plan to purchase Treasuries spurred speculation that it’s debasing the greenback.

“What it introduces is the problem of the currency to the extent that the Fed is buying what isn’t desired by foreign holders,” said Bill Gross, co-chief investment officer of Pacific Investment Management Co., in an interview on Bloomberg Television on March 19. “The Fed can keep interest rates where they want to keep them, at least for a 6- to 12- to 18-month period of time, but it will have consequences down the road.”

The U.S. currency weakened beyond $1.37 per euro this week for the first time since January as the central bank’s decision to increase its balance sheet by $1.15 trillion lowered yields, making American assets less attractive. The Norwegian krone and the New Zealand dollar rallied as the Fed’s move spurred advances in commodities.

The dollar depreciated 4.8 percent to $1.3582 per euro yesterday, from $1.2928 on March 13. The U.S. currency touched $1.3738 on March 19, the weakest level since Jan. 9. The dollar also fell 2.1 percent to 95.94 yen from 97.95. The euro increased for a fifth week versus the yen, gaining 2.9 percent to 130.29 after touching 130.49 yesterday, the highest level since Dec. 18.

The ICE’s trade-weighted Dollar Index dropped 4.1 percent this week to 83.84, the biggest decrease since the week in September 1985 when the U.S., U.K., France, Japan and West Germany agreed at New York’s Plaza Hotel to coordinate the devaluation of the dollar against the yen and deutsche mark.
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