57% Federal spending to create jobs

[one...two...tree 2,762]

For much of 2009, polls pointed to a discouraging perception among Americans. Given a choice between economic growth and deficit reduction, large majorities -- over and over again -- said policymakers should focus on the latter. There was no real rationale for the majority of the public to be so wrong about this, but different pollsters in different times of the year found the same misguided result. There were meaningful consequences for the public's wildly flawed priorities. As lawmakers on the Hill saw the polls, for example, the political appetite for investing in economic stimulus disappeared. Nervous Democrats started echoing Republicans about spending cuts, and key legislation wouldn't even get a fair hearing unless the bills were fully paid for. Under the economic circumstances, this was bizarre. But under the political circumstances, lawmakers felt like they had no other choice.

It's worth noting, then, that there's at least some evidence that attitudes have shifted in a more constructive direction. This question in the newly-released Newsweek poll bears special attention:

"Which one of the following do you think should have the higher priority for policy-makers in Washington right now:

37% Reducing the federal budget deficit

57% Federal spending to create jobs

6% Don't know

This strikes me as very encouraging. For many Americans, the "deficit" has become an amorphous concept that they've been conditioned to viscerally reject, and the polling last year suggested this knee-jerk reaction was so strong, deficit reduction was actually perceived as more important than the economy itself.

But the Newsweek poll -- yes, I know, it's only one poll -- wasn't close. Asked which should be a higher priority, the deficit or spending money on job creation, the latter won by 20 points.

Dems on the Hill are afraid to make economic investments because they expect a public backlash. They're nervous enough about the midterms and aren't in the mood to hear another round of "government spending is bad." But here's data showing that spending on job creation is actually quite popular. Republicans would respond by saying the deficit matters more, but that's not where the public is right now.

So why not borrow the money and invest in job creation? Like, immediately?

As for the rest of the poll, President Obama's approval rating is at 47%, the parties are tied on the generic ballot at 45%, and more than twice as many Americans blame Bush than Obama for the country's economic problems.

As for the fight over Bush-era tax rates, a 52% majority believes "Congress should allow the Bush tax cuts for persons in the top two percent income category to expire," while 38% support the Republican line.

I can understand Democratic panic about pushing an agenda that doesn't poll well. But when the majority is already with them, the apprehension is tougher to appreciate.

link

[DEDixon 39]

Dems on the Hill are afraid to make economic investments because they expect a public backlash.

"investment" LOL!

[lostinblue 1,989]

What Would Happen if the Bush Tax Cuts Expire Much of the focus has been on the wealthy

What would it actually mean for you if they let the Bush tax cuts expire at the end of this year, and we went back to the old Bill Clinton tax rates adjusted for inflation?

Much of the focus has been on the wealthy, but what will the expiration of the tax cuts mean for everyone else? Brett Arends runs the numbers.

This is a thought experiment, not a prediction or a recommendation.

The tax cuts, passed in 2001 and 2003, are front and center now and will be a hot issue going into the elections this fall. Unless something is done by the end of the year, they'll expire. With the economic recovery looking shaky, expiration is particularly controversial.

Most of the attention has understandably focused on highest earners, who are likely to be most affected by whatever happens. But as the debate has gathered pace I have been wondering what it might mean for everyone else. After all, according to the IRS just 4% of Americans earn more than $200,000 a year.

How high were taxes back in the 1990s? How would those rates seem now? The American Institute of CPAs supplied me with the numbers. I updated the tax brackets to account for inflation.

Sure, everyone's taxes are different, and the U.S. tax code is so horrendously Byzantine that the moment you say anything you run into a thicket of caveats. But let's run some numbers. And let's take a very broad brush approach to this. Let's assume you're a typical filer, you take the standard deduction, and let's just look at the biggest tax issues.

Right now people pay income taxes on a sliding scale from 10% up to 35%. The old 2000 rates started at 15% and went up to 39.6%.

For most people, these higher rates are moot. They only apply to the highest of flyers. Fewer than 1% currently pay the 35% rate and fewer than 4% even pay 33%, says the IRS. As for the old 39.6% rate: Adjusted for inflation, you'd only pay that now on any income over $363,000 a year.

Most ordinary people these days are paying a marginal rate of 15% or 25%. If we let the tax cuts expire, that might rise for many to 28%. Based on data supplied by the AICPA these ordinary folks would take a tax bump of anywhere between a few hundred and a few thousand dollars.

For a typical single filer with adjusted gross income of around $40,000 it might be about $400 a year.

For someone on $80,000, about $1,600.

How about married couples filing jointly? They'd get hit with higher tax rates and a lower standard deduction. (It was raised in 2001).

A couple earning $80,000 a year in adjusted gross income might pay about $2,200 extra. A married couple on $160,000 a year: Maybe $5,500 extra.

If they have children it would be more, as the child tax credit would revert from $1,000 to $500. Ouch.

(It's worth noting that income tax rates can be deceptive. While middle earners may be paying a top marginal rate of 15% or 25%, their average tax rate is much lower. After counting deductions and exemptions, says the IRS, the typical middle-income family is actually paying less than 10% of gross income in federal income tax. Taking rates back to 2000 might raise that by a point or two.)

Some of the bigger headline changes would be to the tax on long-term capital gains and on dividends.

The top rate of tax on long-term capital gains–meaning any profits on shares or other assets held for more than a year–would rise from 15% to 20%. On qualified dividends, it would rise from a maximum of 15% to your marginal income tax rate. (Under the current system, notes Melissa Labant, in the AICPA's tax division, those in the lowest tax brackets right now pay no tax on these sources of income at all.)

However, for most people this is largely academic. According to the Congressional Budget Office, even for earners in the second quintile from the top, with an average pretax income of $94,00 a year in 2007, interest, dividends and capital gains amounted to just 3.7% of their income.

Raising taxes on the middle class seems unlikely in the near future. President Obama says he wants to renew the tax cuts for all those making less than $200,000 to $250,000 a year. Republicans, and some Democrats, want to renew them across the board.

We will have to wait and see. But as usual, the smartest things you can do to protect your own finances include making sure you make full use of your available shelters, including IRAs or Roth IRAs and the 401(k), or equivalent, at work.

One thing that seems pretty certain is that sooner or later tax rates will have to rise. Deficits, after all, are merely deferred taxes.

Write to Brett Arends at Brett.Arends@wsj.com

http://online.wsj.com/article/NA_WSJ_PUB:SB10001424052748703977004575393483572603148.html

[Pooky 3,795]

57% Federal spending to create jobs

But that's like mob rule, and you hate mob rule, right?

[Ban Hammer 13,360]

well steven, welcome to america - where taxpayers do have a say so in how their money is spent.

[Texanadian 10]

I'd like to see a simple vote on ALL of the tax cuts expiring or being renewed. Not picking and choosing. Because people will always choose for themselves and pick on somebody else.

[TBoneTX 45,365]

57% Federal spending to create jobs

This = 1% for each of the 57 states, si man. Edited August 29, 2010 by TBoneTX

[Scott & Lai 12]

Deficits, after all, are merely deferred taxes.

Or deferred spending cuts...

[Gary and Alla 3,694]

Big surprise. 57% of people polled are idiots. 74% of 12th graders asked to name a country beginning with the letter "U" named "Yugoslavia" So what? Now "Yugoslavia" begins with "U" because that many idiots CAN'T be wrong?

The real concern, El Buscador, is the very real chance of another big slide in the economy thanks to Obama-nomics. Digging around for biased articles to post on VJ that paint a rosy picture of the economy or support some wacko Obama policy won't change it. Ignoring facts is what causes this problem.

FWIW, the huge slump in housing sales was caused by the end of the tax "incentive". In other words, when taxes are CUT, the economy is stimulated greatly. When taxes are applied the economy sputters and fails. Imagine what would happen, if instead of giving a tax break to first time home buyers, we just eliminated income tax altogether!

[lostinblue 1,989]

What happens to that construction job or education job when the government funding goes away? The job goes away also. Not a single job that may have been created or saved by this package is a PERMANENT non-government spending dependent job.I am so sorry I forgot about the 15,000 IRS agents from the health program.

[Gary and Alla 3,694]

What happens to that construction job or education job when the government funding goes away? The job goes away also. Not a single job that may have been created or saved by this package is a PERMANENT non-government spending dependent job.I am so sorry I forgot about the 15,000 IRS agents from the health program.

How's about this...we educate our children with our local money and tell the federal government to keep their nose out of it! My children are 80% educated by my local taxes 13% by state taxes and 7% federal taxes. I would rather pay the 7% directly to my local school district in property tax and keep all the income tax that is confiscated from my pay. The government "theory" only works if government is necessary...it isn't.

Roads need to be built because we need roads. Not because the government is creating jobs. Those road workers do not work for the government, they work for private contractors that are hired to build/repair the roads. We do not need to confiscate money from people's earnings, send to Washington and then send part of it back to build roads. Keep the money here in the first place.

The "government funding" comes from ME AND YOU. What happens when the government has less money? WE have more!

Edited August 29, 2010 by Gary and Alla

[Heracles 417]

How's about this...we educate our children with our local money and tell the federal government to keep their nose out of it! My children are 80% educated by my local taxes 13% by state taxes and 7% federal taxes. I would rather pay the 7% directly to my local school district in property tax and keep all the income tax that is confiscated from my pay. The government "theory" only works if government is necessary...it isn't.

Roads need to be built because we need roads. Not because the government is creating jobs. Those road workers do not work for the government, they work for private contractors that are hired to build/repair the roads. We do not need to confiscate money from people's earnings, send to Washington and then send part of it back to build roads. Keep the money here in the first place.

The "government funding" comes from ME AND YOU. What happens when the government has less money? WE have more!

You already do educate your kids with your local money, attempting to act as if the federal government is somehow to blame is lame.

Trying to divert attention from the truth and twisting reality is a tactic a fellow libertarian used the other day regarding the egg saga and FDA. It truly is amazing that you guys can get any event and turn it into a failure of taxes and the government, when in reality it's the total opposite. It's not rocket science to realize that there is a reason a lot of the ####### that goes on here does not happen in any other first world country. Yet rule #2 of a libertarian is not to care about the rest of the world, like we live in the 1700s or something and should ignore their success or failure.

[Hilarious Clinton 452]

50% that don't pay taxes + 7% hardcore liberals with zero math skills = 57%

But hey... we need another stimulus since the last several worked so awesome. (font: dripping sarcasm)

[Usui Takumi 1,562]

Its pretty straight forward. Americans are a fickle lot. When it appears like there is a recovery they only see the deficit. When there is recession they only see stimulus.

[DEDixon 39]

When it appears like there is a recovery they only see the deficit. When there is recession they only see stimulus.

how about when the economy is good, what do they see then? nothing!

what i wish is that in good times, americans would demand a balanced budget so when bad times hit, we have the means to stimulate.

our pols on both side however think that because times are good, it is a okay to spend. trouble is both parties in good times are spending to buy votes. the vote purchasing never stops, but i think because of the nature of dem spending, this is a lot more true for them than it is for repubs. geez, while in a recession, big O promotes big health care (vote purchasing and he'll want to collect during the next election).

there really is no excuse to spend beyond our mean when we are not in a recession. if we don't stop over spending in good times, the train will eventually run into a wall.