"Up-to-$800" My Precious!

I have to be honest, I don’t really understand this:

The president’s Labor Day speech in Detroit featured an assertion that contained a number of warning signs that it might be an errant fact: “biggest middle-class tax cut in history.” [. . .] We decided to put the president’s claim to the test.

We took an informal survey in our office and asked people what they thought the president’s statement meant. Everyone agreed he was claiming the biggest tax cut in terms of dollars.

Imagine our surprise when the White House responded that he wasn’t talking about dollars at all.

“The point the president was making that is there is not a tax cut that has been enjoyed by such a broad section of the population,” an administration official said, pointing to a report that said that 95 percent of working families received some kind of tax cut under the Making Work Pay provision in his stimulus bill.

Huh?

Yeah…but then there is this:

In other words, this isn’t about the size of the tax cut, but about the fact that every working family, except those making more than $190,000, received as much as $800 in tax cuts.

Oh. “Up to $800.” Would it be okay for me to here borrow the words of our First Lady, when discussing the $600 “stimulus” of 2008?

“You’re getting $600. What can you do with that? Not to be ungrateful or anything. But maybe it pays down a bill, but it doesn’t pay down every bill every month..

Barack’s approach is that the short-term quick fix kinda stuff sounds good. And it may even feel good that first month when you get that check. And then you go out and you buy a pair of earrings.”

I’m not even sure the $800 tax cut — if spread over twice-monthly paychecks, or included in tax-filings — was noticed or noticeable. Not to be ungrateful, or anything.

Read the rest of the WaPo fact-check. It’s interesting — seems John F. Kennedy was the tax-cut king — but perhaps the most interesting thing about it, is that it exists, at all.

And Jennifer Rubin has more

UPDATE:
While searching
for the FLOTUS quote, I found this trip down memory lane:

February 11, 2009; Accord reached on final stimulus bill: $789 billion for 3.5 million jobs House and Senate negotiators settled Wednesday on a $789 billion package of tax cuts and new federal spending meant to save the US economy from a deep recession, or worse.

And here comes another 300 Billion,; this time, we’re told, it’s going to work!

I really wish they’d stop saving us, already.

Related:
The $13-a-week stimulus

About Elizabeth Scalia
  • Greta

    If the country does not soon reject this spending by a government that is broke, we will soon be a third world state.

    What the President needs to say on Thursday is that we are broke, that the only path to stablizing the economy is to fire up jobs and cutting Washington spending while giving tax cuts to those who truly can fire up the economy, small businesses is the right thing to do. On top of that, he should say we need to reduce regulations on business by at least 50%. What he will say is government needs to spend its way out of poverty by borrowing more from China. This guy is a one note song and dance man who should never have been elected in the first place.

  • http://jscafenette.com/ Manny

    LOL!!! To be honest, I did not feel any tax cut in my paycheck. These guys are desperate. I guess if you gave a one dollar tax cut to every single person in the country you could claim the largest tax cut in history.

    These guys are used car salesmen. The $300 billion is conveniently just the right amount that might be a yes by the general public. But the details are what’s important. What is it they are spending it on? Spending for the sake of spending is not stimulative as we have seen with the $789 billion. If the $300 billion is not aimed at cutting business costs, it’s a waste of money. Businesses hire people. Giving a taxpayer $13 perweek extra is useless.

  • Richard Johnson

    I agree. This was just as useless as the previous payroll tax cut, and the Bush “pizza a month” tax stimulus.

    But I dispute the notion that cutting taxes and removing regulation is the answer. We currently have taxes set at the lowest levels since the Hoover administration for those making over $100,000, and at the lowest level since the Eisenhower administration for “small businesses”, whatever that is (since by some measure GE qualifies for small business economic incentives in our state). Cutting taxes is not going to stimulate business hiring in an economy that is driven as much by consumer spending as ours.

    If cutting taxes actually increased employment we should have seen massive increases in employment under President G.W. Bush. We saw steady gains from 2001 through 2008, but was that driven by tax cuts or by increased spending (mostly increased levels of debt) by consumers?

    Business owners that I speak with are not wanting tax cuts. They want to sell products and services. Cutting taxes does not bring customers through the door, and until customers start buying again businesses will not have an incentive to hire.

  • http://jscafenette.com/ Manny

    @Richard
    We have the highest corporate taxes in the world. Our companies are not competitve working out of the US homeland.

  • Richard Johnson

    @Manny #4: The amount of taxes paid by corporations is nowhere near the highest in the world. The 35% rate that is in code is offset by deductions, exemptions, rebates, and so-called “economic development” so that the actual rate paid on average is closer to 18% according to the CBO.

    We are told that the American worker is the most productive worker in the world, and yet we are then told that companies cannot compete working here. One reason they cannot compete is they refuse to pay wages for those productive workers. We hear stories from corporations such as Apple that bemoan the notion that the reason they offshore their facilities is because wages here are too high.

    The short story is that today’s corporations are telling the American worker that they must settle for less while telling their investors they should expect more. This is the new American dream, and looks to be our lot regardless of who occupies the White House.

  • kenneth

    If they want to do a useful stimulus, do something like pay a quarter of the salaries or a total payroll tax relief for each real full-time new hire that a company does out of the long-term unemployed pool of people. Offer longer term tax relief of other sorts and maybe regulatory relief to those who maintain their payroll and avoid cuts for the next few years. Give a strong preference in government contracting to those who are creating jobs.

    Throwing a few hundred bucks my way at tax time solves nothing at all. Nor does money thrown willy-nilly at “infrastructure.” Very very few of the 20-some million long term unemployed are road and bridge builders, and more construction isn’t going to pull us out of anything.

  • Mary

    Probably do more good cutting down some of the thickets of regulations.

    And approving those free-trade agreements that the President hasn’t bothered to send to Congress.

  • http://jscafenette.com/ Manny

    @Richard in #5
    I had not heard the average is 18%, but if true there are probably lots of inequities. Some companies have deductions, some not. Frankly I don’t see why there is a corprate tax at all. Taxes to corporations are passed on to the consumer. As to the American worker being the most productive, well I’ve heard that and am completely skeptical. Not that I put down American workers, but it’s impossible to be paid an American middle class wage and be more competive with the wages given to workers in India and China.

  • Ellen

    I certainly didn’t feel any tax cut in my paycheck, while the price of food keeps going up and up. Eggs went up .20 cents this past week.

  • Richard Johnson

    Manny #8: “Not that I put down American workers, but it’s impossible to be paid an American middle class wage and be more competive with the wages given to workers in India and China.”

    Thus is the crux of the problem. The US worker is being told that to compete they must accept less and less in wages and benefits. Meanwhile the upper echelons of corporate leaders receive more and more as the profitability of their company increases.

    Looking at the hourly wage is only part of the picture, Manny. Consider this, from earlier this year. It speaks of profit per employee, and we are seeing historical records set in that statistic.

    http://www.dailymarkets.com/economy/2011/04/09/the-good-news-worker-productivity-and-profits-per-workers-are-at-record-highs-the-bad-news-that-probably-means-a-record-jobless-recovery/

    “What does that surge in worker productivity surge mean for the bottom lines of American companies? The bottom chart above shows that real corporate profits per private sector job reached an all-time record historical high of $11,552 in the fourth quarter of 2010 (measured in 2010 dollars). That’s 65% higher than the recession-low of about $7,000 per worker in fourth quarter of 2008 and 7.5% above the pre-recession high of $10,740 in 2006.

    That’s the good news about record-high worker productivity and the resulting record-high real corporate profits per private sector worker. The bad news is that these trends might translate into a record-length “jobless recovery,” as U.S. companies have been able to expand output and profits to record levels, but with millions and millions of fewer workers. Taken together, these two trends might explain why many companies have been reluctant to hire back more workers – why increase the labor force when output and profits are at record-levels?”

    Of course, you won’t hear this mentioned on much of the MSM because it blows a hole in the mantra about taxes and regulation holding back hiring.

  • Richard Johnson

    Related to my post above:

    http://smallbusiness.chron.com/average-workers-effective-productivity-rate-18220.html

    “The gross domestic product (GDP) is one of the most widely used economic statistics in the world. It is the monetary value of a country’s total economic output, with the figure adjusted to account for inflation. Average GDP per labor hour provides an estimate of worker productivity. By this measure, American businesses employ one of the most productive work forces in the world.”

  • Greta

    There are a huge number of issues involved in the current economic problems. They need to be handled by a very sophisticated approach with a focus on getting government out of the way of creating jobs and rewarding success rather than punishing it. We need to change the direction from the failed nanny state concepts started under FDR.

    We are in a change at least as big as that from agricultural society to industrial and we are in a time when we were the only player on the planet after WWII. We also need to rethink how we live our lives as the vast number of things in our lives have not given us happieness and joy even with multiple cars, multiple TV’s, multiple electronic gadgets, and disposable everything. We need to change from the credit card to a cash society. We need to understand how we are going to pay for something before we buy it. Rather than credit, maybe we need layaway where the product only leaves when it is paid for.

    We need to have regulations thrown out by the boatloads and pass laws limiting any new regulations that do not have the support of at least 3/4th of the states and a majority in Congress. We need to see entire cabinets and departments ended in the federal government and those tasks returned to the states. We need to make sure congress does not pass any unfunded mandates. We need to have a balanced budget amendment. Every government agency should go on the program used by GE and many other industries of rack and stack with the bottom 10 employees identified each quarter and fired rewarding those who are actually deliverying quality services. We need to stop making working for the government the best prospect for a college student who is seeking massive benefits, lifetime employment, high pay, and great pensions back into public service.

    We need to fix ObamaCare by repealing it. We then need to fix those things not working with fixes like tort reform tied to an agreement of the healthcare industry developing self regulating solutions to get back doctors out of the system. We need to slowly back government out of healthcare including medicare and medicaid because they create a mess. We need to come up with a universal plan of coverage that every person can buy into at a good rate rather than having it tied to the employer and insure it is not run by the government. By taking the total costs and dividing it up by the numbers of people, you come out with an affordable cost, especially when you are getting tests because of need and not because of threatened lawsuit If you take healthcare off the backs of employers, you will do more to create jobs than anything else. Since the democrats started talking about ObamaCare, a bad situation became critical for employers with increased costs.

  • Richard Johnson

    Greta #12: “We need to change from the credit card to a cash society. We need to understand how we are going to pay for something before we buy it. Rather than credit, maybe we need layaway where the product only leaves when it is paid for.”

    You mention a number of items in your post, but since this thread has to do with economic matters this stood out to me. I wholeheartedly agree with you that we need to decrease the amount of personal credit that individuals have. These accounts need to be paid off and closed, and purchases should be made with cash or on layaway. This is by far the most sound approach to family finances that I have heard, and it has a long track record of success.

    However, when the GDP of our nation depends on consumer spending (which depending on how you measure it accounts for 60% to 65% of the GDP currently), we need to be prepared for a *massive* drop in the GDP if these sound fiscal policies are followed. As consumers pay off debt and go on a “pay as you go” approach, consumer spending will decrease significantly. Retailers will feel the pinch first, but eventually it will spread to every sector of our economy. As consumer demand drops small businesses will face an increased level of economic stress, and many will close, which will put yet more unemployed individuals into the marketplace.

    For the past 40 years our economy has grown due to the ever increasing levels of consumer spending we have seen, most of which came through increased debt. Greta’s advice is exactly the medicine we need to return our nation to a stable economic state. However, are we ready to endure the pain on the way to that stability? By some measurements such a solution might well put us into a second Great Depression.

    Will we be able to hold society together if that happens?

  • Greta

    Richard, that is why I said it will take a very thoughtful complete approach to the problem which seems to be impossible to have with politicians.

    We have to begin to make changes ourselves in how we handle our own responsibilites. One thing that ticked be off with W. Bush after 9/11 was when asked what we could do the answer was to go shopping in general terms. I thought that they should have come up with a number of well thought out changes and urged people to really make some significant changes that would have helped us long term as a people and also aimed at hitting the enemy who attacked us where it would hurt most. In a way, although I in now way voted for Obama or support the vast majority of what he has done, I really thought he might come out with that comprehensive package of things we all could work on based on his past as a community organizer. One thing a good organizer does is get folks working on things together with a focus. Instead he seemed tied into the standard response line of democrats of class warfare and playing to the unions and base. I had hoped we would see a real leader immerge but so far have found no candidate that really gets juices flowing. After Carter, we had Reagan who within months had a positive feeling going with the people which showed in his massive 49 state reelection. We need this again after Obama and maybe even more.

    Watched the speech tonight and cannot understand how he can keep pounding the same tired notes that have not worked over and over.

  • Doc

    Greta, it’s the only tune his party knows.


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