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Posts Tagged ‘Congressional Budget Office’


The Republican Party is about to determine whether or not it will become the biggest death panel since Adolf Hitler and the Nazi Party tried to exterminate the Jews of Europe.

US House of Representatives leader Paul Ryan pulled out his new American Health Care Act last week, which he is hoping will be used to replace the Affordable Care Act. According to the Congressional Budget Office (CBO) yesterday, within a decade as many as 24 million US citizens will lose their health care coverage and premiums will go up for the rest of us if Ryan’s plan is passed, and especially for low income people and the elderly. Many grandmas and grandpas will have to chose between starving to death, or not paying their overpriced healthcare premiums, thanks to the Ryan plan.

Obamacare has only added slightly more than 19 million people to the rolls of the health insured. That means another 4 million US citizens beyond Obamacare may lose their coverage with Ryan’s carefully thought out health care bill. And it has been carefully thought out.

March 8, 2017

The primary purpose of this bill by all appearances is to provide tax cuts to the rich, the only people who have been the beneficiary of thirty-six years of economic expansions, and deliberately so. Currently, there is a 0.9 percent tax on income over $200,000 a year to help fund Obamacare. There is also a 3.5 percent tax on capital gains for the same purpose, such as the profits from the sale of stocks and bonds. This is why Wall Street hedge funds and big investment firms want Obamacare gone.

Many Republicans are prepared to make the Republican Party and all it stands for into a giant death panel in order to make its billionaire masters richer. Herr Ryan is one of these. Yet, other Republicans want to get reelected.

Florida Republican Rep. Ileana Ros-Lehtinen, for example, said Tuesday that she wouldn’t be able to support Ryan’s health care legislation after the CBO score revealed the high number of people who would lose insurance.

“I plan to vote NO on the current #AHCA bill. As written the plan leaves too many from my #SoFla district uninsured,” the Florida congresswoman wrote in two consecutive tweets. “As #AHCA stands, it will cut much needed help for #SoFla’s poor + elderly populations. Need a plan that will do more to protect them.”

This shows several things. The legislation is not likely going to pass. The Republicans are going to find it difficult to give their billionaire masters tax cuts by replacing Obamacare. So they will likely try a different tack.

The most likely scenario is simply keeping Obamacare largely intact, but shifting the tax burden from the rich to the middle and lower classes, and then marketing this plan as replacing Obamacare. One thing is certain; replacing Obamacare and taking health insurance from tens of millions of people in the process is not going to be politically palatable.

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On Thursday, November 20, 2014, President Obama announced that he was taking executive action that will allow up to five million undocumented immigrants to stay in the United States. The president promised these immigrants that they will not be deported, that they can seek work legally in the United States, on certain conditions, such as paying taxes.

Much of the news media of the 1 percent are claiming this is good for the economy, that everybody will prosper because of the president’s action.

For example, a study released by the Center for American Progress says, “Once they (undocumented immigrants) attain legal status, immigrants will be able to contribute to the increased consumption of goods and services that boosts business sales and raises the earnings of all Americans. They will pay taxes on their higher wages and increase the gross state product (GSP). Additionally, immigrants will be able to use their new legal status by integrating their skill set and education into creating jobs and raising productivity.”

Common sense, however, tells us that once undocumented immigrants receive legal status, they will consume approximately what they consume today. It is possible that with higher wages they will consume more. That will be offset, however, because the rest of us will be consuming less, according to an analysis of a similar congressional measure by the non-partisan Congressional Budget Office (CBO). According to the CBO, everybody’s wages and job opportunities will decline with the deal, except for the newly legalized immigrants. That means the impact of immigration reform will have little, or no, or perhaps even negative, net impact on the consumption of goods and services. It could even result in a decline of GNP. How could the consumption of goods and services go up if everybody’s wages and salaries are going down? They can’t and so the claim by the Center for American Progress is patently wrong.

According to the CBO, a senate bill similar to President Obama’s executive action which failed in committee last year would have depressed wages of all workers for the next twelve years, “raise the unemployment rate,” and “result in higher interest rates.” Notice the corporate news media hasn’t reported these things to you.

The president’s action will also push the unemployment rate higher than it would otherwise be through 2031. Currently, the real unemployment is somewhere between 10 and 13 percent, which is higher than the official rate of 7 percent. The executive action will force more and more people to compete for a smaller number of jobs, and this will drive wages down.

According to the Pew Hispanic Research Center, 80 percent of undocumented immigrants work under the table, that is without paying income taxes. Most of these people are expected to move into better paying jobs in the legal job market, creating greater labor competition, and driving wages down.

This same process also occurred after the amnesty granted undocumented immigrants in December 1986. Real wages immediately began to plummet for the next six years and didn’t recover to their 1986 level until 11 years later. Check out the graph below from the Bureau of Labor Statistics website. You’ll see a big dip in real wages for everybody beginning in December 1986.

EES00500049_882127_1416709266790 - Copy

The CBO also reported, “Capital investment would rise primarily because the return that investors would earn on a given amount of investment would be higher under the legislation than under current law.” The rationale for this is given with economic jargon, but basically it boils down to this; lower wages will increase profit margins, and so members of the 1 percent will purchase more corporate stocks, bonds and politicians.

In other words, the president’s executive action ensures the 1 percent benefit by pushing down wages, salaries and other compensation and redistributing the difference between the old rates and the new lower rates into the hands of the 1 percent. Nice scam, but it gets worse.

The president’s action comes at a time of real declining average wages for all American citizens, and so things are now going to become worse for us. On top of this, the 1 percent has been stealing 95 percent of all income growth for the last four years. Now it might grow as high as 96 percent. We are in an economy heading for disaster.

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The US senate passed a comprehensive immigration reform bill several days ago. The bill calls for amnesty for somewhere between eleven and twenty-five million undocumented immigrants in the US, which will be granted over a period of thirteen years. Some of the provisions of the bill include the payment of back taxes, increased border security (such as more fences) and an end to family ties as a determining factor for future immigrants.

The bill looks like it was written by Wall Street and the 1 percent, most likely because it was. Wall Street and the 1 percent derive all the benefits; undocumented immigrants and the rest of the 99 percent will pay the price. The propaganda machines of the proponents of immigration reform, some of which are non-Wall Street, are on the march.

A study released by the Center for American Progress says, “Once they (undocumented immigrants) attain legal status, immigrants will be able to contribute to the increased consumption of goods and services that boosts business sales and raises the earnings of all Americans. They will pay taxes on their higher wages and increase the gross state product (GSP). Additionally, immigrants will be able to use their new legal status by integrating their skill set and education into creating jobs and raising productivity.”

Common sense tells us that once undocumented immigrants receive legal status, they will consume approximately what they consume today. It is possible that with higher wages they will consumer more. That will be offset, however, because the rest of us will be consuming less, according to an analysis of the bill by the non-partisan Congressional Budget Office (CBO). According to the CBO, everybody’s wages and job opportunities will decline with the deal. That means the impact of immigration reform will have little, or no, or perhaps even negative, net impact on the consumption of goods and services. It could even result in a decline of GNP. How could the consumption of goods and services go up if everybody’s wages and salaries are going down? They can’t and so the claim by the Center for American Progress is patently wrong.

According to the CBO, the senate bill will depress wages of all workers for the next twelve years, “raise the unemployment rate,” and “result in higher interest rates.” Notice the corporate news media hasn’t reported these things to you.

Immigration reform will also push the unemployment rate higher than it would otherwise be through 2031. Currently, the real unemployment is somewhere between 13 and 15 percent, which is higher than the official rate of nearly 8 percent. In other words, the 99 percent is living during a low grade depression and the government intends to increase unemployment. Immigration reform will force more and more people to compete for a smaller number of jobs, and this will drive wages down.

This same process also occurred after the amnesty granted undocumented immigrants in December 1986. Wages immediately began to plummet for the next six years and didn’t recover to their 1986 level until 11 years later.

The CBO also reported, “Capital investment would rise primarily because the return that investors would earn on a given amount of investment would be higher under the legislation than under current law.” The rationale for this is given with economic jargon, but basically it boils down to this; lower wages will increase profit margins, and so members of the 1 percent will purchase more corporate stocks and bonds.

In other words, immigration reform has been written to ensure Wall Street and the 1 percent benefit by pushing down wages, salaries and other compensation and redistributing the difference between the old rates and the new lower rates into the hands of the 1 percent. Nice scam, but it gets worse.  That issue will be taken up in part two.

All the government really has to do is enforce the laws written in 1986, or it could pass out green cards to legalize the undocumented, place them in line for legal immigration status, and when their number comes up, grant them citizenship.  That, however, is too easy, and not all that profitable for Wall Street and the 1 percent.

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The rich are getting off easy when it comes to federal taxes. That includes people and corporations. There are plenty of reasons why. Just check it out below.

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The US added 165,000 jobs in April, according to the Bureau of Labor Statistics. This was followed by upwardly revised gains of 332,000 in February and 138,000 in March. The three-month average pace of job gains of 211,000 was slightly above the average pace of 173,000 jobs over the last twelve months. The unemployment rate slid down a little to 7.5 percent. Here’s what the news reports won’t necessarily tell you.

The unemployment rate has now dropped 0.6 percentage point since April, 2012, but much of this is because of declining rates of labor-market participation rather than increases in employment. Worse yet, dropping so little makes this the worse job creation economic expansion probably in the history of the US, including during the Great Depression.

There are two factors at hand that make this so. The corporate media doesn’t like to report either, but sometimes they report that US government austerity is sinking America’s economic ship.

“While the Federal Reserve warned that “‘fiscal policy is restraining economic growth,'” the Republican National Committee released an ad crowing that “‘the sequester is here to stay.'” In other words, by sabotaging the US economy, the Republicans hope to reclaim the presidency and maybe even the senate.

So the public sector, especially, has been a drag on the economy in recent months. While the private sector has added roughly 2.2 million jobs over the past year, employment in state, local, and federal governments has declined by 89,000, including significant losses to teachers and emergency responders. In this challenging economic climate, there is growing concern about how sequestration—the across-the-board budget cuts to discretionary spending that took effect on March 1—may negatively impact the recovery even more. Indeed, forecasters at the Congressional Budget Office project that the sequestration could reduce overall GDP growth in the United States by 0.6 percentage point and cost the economy 750,000 jobs by the end of 2013.

Now here’s the part the press doesn’t want you to know. The redistribution of income and wealth over the last thirty-three years from the 99 to the 1 percent has played a much greater role in why the US economy sucks big time for working people. One percent of the population now takes in over 30 percent of the total income produced in the US, compared to 8 percent back then. That leaves less and less money for the rest of us to demand goods and services. That’s why the economy is so weak. The rich are sucking us dryer and dryer. Worse yet, they buy things like stocks, bonds and derivatives, rather than goods and services. So they don’t help the economy at all. In fact, the purchases of the rich suck us dry, but that’s another story.

Austerity, in other words, isn’t the primary culprit in why the American economy is so historically weak, although it plays a role. It’s almost all about income redistribution.

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“Over the last three years, the long-term budget outlook (covering 75 years) if current law is followed has improved dramatically. In 2009, the Congressional Budget Office projected that debt held by the public would rise from around 60 percent of GDP to roughly 300 percent of GDP in 75 years. In contrast, in 2012 the CBO has projected that debt will consistently fall—and even be fully paid off by 2070.” Economic Policy Institute

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As I pointed out in The Rigged Game: Corporate America and a People Betrayed, there is not one speck of evidence that tax cuts for the rich have ever created one net job. I pointed out that Republican economic policies don’t work at doing anything, except to make the rich wealthier at the expense of the rest of us. Those tax cuts are used to redistribute income from the 99 to the 1 percent by buying politicians like Wall Street Senator Ron Wyden. Studies are showing all of this to be true. The Republicans don’t want you to know that the center of their economic policies (tax cuts for the 1 percent) is a fairy tale. Last September, Republicans went so far as to place pressure on the nonpartisan Congressional Budget Office to not release a study showing exactly that.

One other thing needs to be stated. As I pointed out in The Rigged Game, those tax cuts not only do not create jobs, they simply destroy jobs. That’s obvious and we really don’t need studies beyond The Rigged Game to show us that, but more studies will likely appear in the next few years, and they will demonstrate precisely this.

Click the links below for more on the story.

Republicans Force Withdrawal of Tax Report–New York Times

What the Republicans Don't Want You to Know–The Huffington Post

Related stories below

What Will the Rich Do With the Extra Money After They Get Mitt Romney's Proposed Tax Cuts–JohnHively.wordpress.com

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