April 16, 2012
It looks like President Barack Obama is making the tax proposal called the Buffett Rule (also known as the “Paying a Fair Share Act”) into a wedge issue. This weekend, the President was pushing the tax proposal, named after billionaire Warren Buffett, as a way to reduce the deficit. The pending legislation says anyone making more than $1 million a year should pay no less than 30% federal tax. Democrats are going to try to vote on the Buffett Rule this week, but it probably will not get very far in the Senate, and it is a non-starter in the Republican controlled House.
The reason why I say this is merely a “wedge issue” is because it will not do much to reduce the $15.6 trillion deficit. It will set up another totally false narrative that will not help the country. According to the Joint Committee on Taxation, which provides the official Congressional analysis of tax legislation, the Buffett Rule will only raise $4.7 billion a year over the next ten years. Mr. Buffett’s plan is nothing more than a proverbial drop in the bucket. Counting TARP, QE 1, QE 2 and the $16.1 trillion the Federal Reserve pumped out after the 2008 meltdown, we are well on our way to the $23.7 trillion Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program, predicted the crisis would cost back in 2009. But, even that number, as big as it is, does not tell a complete story, and Mr. Buffett knows it.
The banks are continually being bailed out in many backdoor ways, and to be fair, neither party will say a word about it. The recent $25 billion “Robo signing/foreclosure fruad” settelement was a form of a bank bailout. Foreign bank bailouts are also American bank bailouts in disguise. Take Fannie Mae and Freddie Mac, for instance. Taxpayers now own a 100% stake in these two failed mortgage giants. Last year, Fannie and Freddie either forgave or bought a total of nearly $200 billion in mortgage debt liability from Bank of America–alone. (I wrote about this before.) Let that sink in, and then consider Warren Buffet invested $5 billion, last year, into B of A at $7.14 a share.
This article was posted: Monday, April 16, 2012 at 2:39 am