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On the Web
- Grand Central: U.K. and U.S. Lawmakers Pressing for More Central Bank Accountability
March 04 from WSJ Real Time Economics
- Grand Central: U.K. and U.S. Lawmakers Pressing for More Central Bank Accountability
Tag Archives: taxes
Over this past weekend the federal budget drama ended with an hour to spare ahead of a threatened shutdown. Congress passed a continuing resolution to keep funding operations after a deal was cut to reduce the remaining 2011 budget by $38 billion, while taking several social issues off the table demanded by conservatives.
The story was covered like a natural disaster with hourly updates and frequent progress reports. Realistically, it was only the prelude to a larger fight looming over the 2012 budget and the necessity of raising the federal debt ceiling in the weeks ahead. Now comes the frightening part. Read More
Remember the imagery of an ostrich with its head buried in the sand? That is sort of how I view the average American taxpayer. They may be opinionated, but choose to remain purposely blinded to what is really happening around them. It is much easier to just not see anything in the periphery and keep to ourselves, or maybe just vent about what we think we don’t like and won’t try to understand.
The Concord Coalition (www.ConcordCoalition.org) was formed in 1992 to create a bi-partisan dialogue on fiscal responsibility by then U.S. Senators Warren Rudman (R-NH) and Paul Tsongas (D-MA). Obviously it has not made enough progress in the years since to raise awareness of the need to reform the U.S. budget or its drunken propensity to continue an endless cycle of spending growth and income reduction. Read More
I have never owned a single share of Berkshire Hathaway stock. My interest and observations of Warren Buffett have always been passive, but my admiration is nonetheless strong. As a captain of American industry, he strikes me as a solid individual who has conducted his life and business with values we can only revere. Old-fashioned? Absolutely. Out-of date? Never.
Wouldn’t it be interesting to know what Warren Buffett is thinking now as our democratic process has delivered this republic to a point of perpetual government deadlock? At the core of every issue: money. Read More
In honor of the 250th anniversary Albert Gallatin’s birth, a Swiss native who became the fourth and longest serving U.S. Treasury Secretary, Atlanta’s Swiss Consul General Claudio Leoncavallo recently organized a forum to offer international perspectives on two timely topics on which Gallatin was quite outspoken: public debt and fiscal policy.
Emigrating to the U.S. at age 19, Gallatin was elected to the U.S. Senate only 13 years later. Venomous politics shortened his tenure, yet he later spent six years in the U.S. House of Representatives where he served as majority leader and founded the Ways and Means Committee.
Thursday’s panel discussion at The Commerce Club was titled Balancing Act: A Dialogue on Public Debt and Fiscal Policy and gathered well qualified panelists for an insightful discussion – Fritz ZurbrÃ¼gg, Director General of the Swiss Federal Finance Administration; Dennis Lockhart, President and CEO of the Federal Reserve Bank of Atlanta; Annabelle Malins, Her Majesty’s Consul General of Great Britain, Atlanta; and Glenn Campbell, the Consul General of Canada, New York and Head of their Economic Finance Program. I was selected to moderate the discussion, which was a real treat to share a conversation with such an imminent gathering of economists, bankers and diplomats. Read More
The only good predictions are ones that we can point back to with some measure of accuracy. Putting those predictions in writing carries some risks, because it also provides proof to others in the event you were wrong. Economists are famous for having an opinion and contra-opinion about everything (“â€¦on the other hand”), which I believe is only a hedge to ensure they can always claim to be right.
Demonstrating fearless confidence in my own sense of what to expect, I humbly offer these predictions about our economy and the contributing financial factors that will largely shape it in 2011. Watch this column late next year and we’ll compare notes to see how well I did.
Dow Jones Average – Having recently attained the highest value since August, 2007, and watching other international equity markets similarly climbing back up toward pre-crisis levels, I predict that the DJA will return to the high 13,000 – low-14,000 range in 2011. But don’t read more than economic confidence in the status quo into these metrics, because the Dow won’t be driven by extraordinary growth.
Many factors contribute to sending equities back into higher numbers: a) smaller investors have bailed out of the market as hundreds of companies have used surplus cash to repurchase shares and drive prices higher; this trend will continue. 2) Growth expectations are moderate, so companies will be rewarded by exceeding modest targets. 3) corporate profits will remain strong as no one ventures to break out into an aggressive growth strategy, and hesitate to bulk up employment further, and 4) most economists are starting to see daylight in an uptick in consumer spending during the holidays and lower unemployment claims.
Potential pitfalls may be financial stocks, given the unknown drama to play out over home foreclosures and growing litigation related to the CDO mess.
Bank Failures – Bank closings in 2010 were less than expected with only 154 shut down while expectations were higher. No one is saying why, but I believe that the FDIC is still a little overwhelmed at the volume of work involved with so many failures and so many banks operating under formal agreements.
That may change in 2011 as the regulators seek to clear the decks and take the worst of their 800+ problem banks down. Their incentives would be to help the residential market begin to recover faster and consolidate more operations into banks that are healthy enough to continue lending. Both of these factors would contribute to the general economic recovery. I predict 225 banks will be closed in 2011.
Home Foreclosures – No one is predicting unemployment will improve nationally to less than 9% in 2011, and that statistic will block progress on reducing home foreclosures. I believe the foreclosure volume will remain at the same volume, as will bankruptcies and short sales.
Gross Domestic Product – Lots of leading indicators smell like GDP will finally start migrating north, as consumers couldn’t hold back from a decent holiday sales spree, and new job are slowly growing. I will go out on a limb and price a 3% growth rate for 2011 – optimism is a good thing. You can help – take someone out to dinner one more time each month to do your fair share.
Tax Legislation – Hard to say what will happen in the 112th Congress, infused (confused?) with lots of rookie patriots who will try making their point in all the wrong ways. Look for much grandstanding on the deficit commission report, as the president seems to be signaling that he will present a plan to re-write much of the tax code to pave the way for broader tax base and lower tax rates.
Expect everyone to support these efforts enthusiasticallyâ€¦ except seniors (who oppose tinkering with social security benefits of their grandchildren), home builders (who want to save the home mortgage deduction), and dozens of industries that have been enjoying decades of tax breaks we didn’t even know about. In other words, it will be a mess.
But I predict something less than a heroic repair will emerge, but it will be more than just kicking the can down the road.
Happy New Year!
Who does not like the idea of lower taxes? No matter how progressive one is, all the liberals I know will agree with their conservative friends that lower taxes are better than higher taxes, right? Particularly when you are talking about those that you have to write a check to pay. No responsible person would unnecessarily pay higher taxes if given the choice to not do so.
But what is Congress preparing to do? Extend a “tax break” for two years, and using more borrowed money to pay for the expenses that they are unwilling to reduce in the meantime. Does that make sense? Of course it does not. Read More
Two things I believe (at least I hope) all my friends can agree with me about me is that 1) I am a fair person, and 2) I will readily admit when I’m wrong. Yesterday’s (November 14th) New York Times ran an interesting article about the projected long term (20 year) U.S. government budget deficit, and the choices for balancing it. I admit I was wrong.
The article provides an incredibly simple challenge to its readers:
You know how to fix the long term federal budget deficit? Here are the real numbers involved – do it.
So, I will admit that all the answers I have been touting presumptively for years were dispelled in about 15 seconds. I missed balancing the budget by hundreds of billions with my list of solutions.
I encourage every reader to check it out online, and throw your best course of action on the table. There is an interactive version of their worksheet that lets you test your big ideas and see how far they go toward resolving the problem.
One of the advantages and curses of ageing beyond 50 years, is although you haven’t nearly seen everything, you have seen a helluva lot. Having grown up in a home blessed with a daily newspaper subscription and a devotion to a family television hour dedicated to legendary news anchors Chet Huntley and David Brinkley, I began to track world events regularly at a very early age. Meaning – I have heard a lot of “new ideas” repeated over and over across the years. Call me skeptical.
This past week’s election restored a Republican majority in the U.S. House, and brought the U.S. Senate closer to being equally divided. To suggest those gains will change anything in the short term is fantasy. What it really means is that whatever modicum of work was being done in Congress will slow even more. Read More