Monday, June 27, 2011

"Obama, Democrats, Republicans AND Bernanke All in a Bind – What they will do and when" Bruce Krasting: Would this be a hidden tax hike by both Dems and Pubs?

"We have two distinct groups in D.C. that are stuck between a very big rock and a hard place.

The first is the Federal Reserve.

The second is the Democrats and Republicans and the battle being waged over the debt limit.

...The Fed is in a bind.

The economy is clearly slowing down again.

Unemployment will soon follow.

According to the Fed’s Dual Mandate they should be doing something about that.

...They can’t do more Large Scale Asset Purchases (“LSAP”).

What has become referred to as “QE”, has not worked.

It was also very unpopular (both in and out of the country).

...Now consider where the politicians are on the inflation story.

Republicans have drawn a line in the sand on the debt limit with their position
of “No New Taxes”.

If we cannot raise taxation and we are spending more than we make,
and we cannot borrow more,
where will the money come from to pay for Social Security, Medicare
and Medicaid?

The Democrats have said pretty much the opposite with, “No spending cuts”. go to August 2 without a resolution is just a dumb move.

...the next presidential election is riding on the outcome.

...The “side” that gets the blame will lose the election. And both sides understand this.

So where’s the compromise?

...The government has got to get out of its inflation indexed obligations.

If everything gets more expensive and fixed payments stay the same,
who takes the hit, and who benefits from others having less to spend?

You don’t have to raise tax brackets to raise revenues or cut expenses.

You can mess with inflation adjustments to achieve these ends.

Lying by omission

One lies by omission by omitting an important fact,
deliberately leaving another person with a misconception.

Lying by omission includes failures to correct pre-existing misconceptions.

…Propaganda is an example of lying by omission.


Both sides can appear to win if this is accomplished.

Consider the words last week of Brian Graff of ASPPA (Lobby for pensions and actuaries)
(The conference was sponsored by the IRS!!)

"Eliminating indexing is one of the proposals receiving serious consideration
as Congress enters “uncharted territory” with legislation to raise the debt ceiling.

If Congress were to stop indexing for a period of time, which would affect tax brackets,
individual retirement account contributions, and contribution limits under tax code Section 415,
“you could raise a lot of money, and those are the kinds of things they are talking about.”

On the expense side of the equation a great deal of fat can be cut
by eliminating/cutting COLA increases in a variety of programs.

The most important of which would be Social Security.

Depending on how the cuts in COLA are defined and how they are applied
a huge amount of money would be saved over an extended period.

If all social obligations had their COLA increases cut in half
it would (on paper) put the US on a much more solid long-term footing.

If some financial estimates and hypothetical illustrations
assume perpetual levels of varying data,
can governmental inflation valuation measures be manipulated
to increase taxes without most understanding what is occuring?

It is a very appealing “kick the can down the road” approach.

No cuts in programs (just smaller increases) and no new taxes
(but higher revenue as the inflation adjustments for AMT and other tax issues kick in).

Why not do the same with federal state and corporate pension funds?

...this is the way it could play out:

We DO go to the 11th hour on the debt limit. But a compromised is reached.

Central to the deal is a broad restructuring
of the way inflation impacts both revenue and expenses at the federal level.

Both sides claim victory."

Bruce Krasting

The Ministry of Peace concerns itself with war,
the Ministry of Truth with lies, the Ministry of Love with torture,
and the Ministry of Plenty with starvation.

These contradictions are not accidental, nor do they result from ordinary hypocrisy.

They are deliberate exercises in doublethink.

George Orwell

Do the few who control dissemination of most financial and political information,
enjoy relatively disproportionate levels of influence than the many who don’t?

“You shall not bear false witness against your neighbor.”

Exodus 20:13

All warfare is based on deception.

…when able to attack we must seem unable,
when using our forces we must seem inactive,
when we are near, we must make the enemy believe we are far…,
when far away, we must make him believe we are near.

Sun Tzu

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