The Debt Ceiling Crisis

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The Debt Ceiling Crisis

The Senate has agreed to put off debt ceiling. Yesterday, the Senate voted to approve a measure that suspends the U.S. debt ceiling which translates to our country being able to at least temporarily pay bills.

However, two amendments touted by Republican Sen. Rob Portman (Ohio) were voted down by Democrats who control the Senate. These were supposed to stop some of the chaos in these debates.

The bill, passed by the House previously last week, suspends the $16.4 trillion debt ceiling so that the U.S. can pay bills. Mid-April is the new deadline to make a budget; if not done by this time, lawmakers do not get a paycheck. The last vote was 64-34.

Portman desired to add two amendments to this bill: the first one would necessitate that Congress would cut spending first before being able to raise the debt ceiling, and the second one was hoping to avoid upcoming government shutdowns. Discretionary programs would still be paid for even if Congress didn’t pass bills to pay for them by the beginning of the fiscal year on October 1st.

There was also an enforcement clause: If Congress missed this fiscal year deadline by 120 days, there would be 1% deducted from money for those programs. An additional percentage point would be taken every 90 days.

In the Senate, the vote was 52-46 to table this clause. Three of the Democrats were in support of this.

Since 1997, Portman claims, Congress has not been able to come to an agreement on spending bills. There were government shutdowns in some years, such as 1996.

Also voted down was a proposal by Portman to require any presidential proposal to raise the debt limit be linked to a proposal to cut spending over the next ten years. With such a request would of course, come a request to raise taxes on at least some Americans.

Portman says his measures are one way to take care of the rising amount of unsustainable debt.

Portman also voted against suspending our debt ceiling in order to reduce spending, and therefore, taxes, and prevent the United States from overspending and casting the burden onto our children and grandchildren.

California Faces Battle Over Budget

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A budgetary showdown is looming in California over taxes 2010 as a constitutional deadline approaches. California which is the eighth largest economy in the world, faces running out of money if no budget is approved by the first of July. This would force California to issue IOUs as was done in 2009. The California constitution requires any tax increase to be approved by two thirds of the legislators. At the present time the Democrats need four more votes to pass the budget but the Republicans are vowing they will block its passage.

Top ranked Republican Jim Neilsen of the Assembly Budget Committee says there is nothing in the framework of the current budget that deserves his support.

Brown who is now 73, took over the position of governor of California in January of this year. He had pledged to repair fiscal problems in California that give it the worst credit rating of all the states according to Standar & Poor’s. At the beginning of the year California had a deficit of $26 billion. Recent government spending cuts and increased revenue have lowered the gap to $10 billion.

The plan for taxes 2010 that Brown is proposing includes keeping a one percent boost in retail sales tax to 8 and a quarter percent. There is also a proposal to raise the fee to register a car to 1.15 percent of the value of the vehicle. The plan extends the reduction of the annual child tax credit to $99 from the previous amount of $309.

Congress Urged By A Group Of Millionaires To Increase Their Taxes

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On June 6, a day before the 10th anniversary when Bush tax cuts in 2001 were enacted, a group of rich Americans recommended that taxes be raised on individuals who earn beyond $1 million.

A conference call to House Speaker Boehner (R-OH) was made by a group of patriotic millionaires suggesting that the Bush tax cuts should be terminated for those who earn more than $1 million. With this, tax rates would increase. These tax cuts were extended in 2010 and to expire within two years.

The group further argued that revenues generated from this tax cuts expiration could then … Read the rest

TaxAct

On June 6, a day before the 10th anniversary when Bush tax cuts in 2001 were enacted, a group of rich Americans recommended that taxes be raised on individuals who earn beyond $1 million.

A conference call to House Speaker Boehner (R-OH) was made by a group of patriotic millionaires suggesting that the Bush tax cuts should be terminated for those who earn more than $1 million. With this, tax rates would increase. These tax cuts were extended in 2010 and to expire within two years.

The group further argued that revenues generated from this tax cuts expiration could then be used for paying down government debt and for investing in modern infrastructures. Paul Egerman, eScription, Inc. founder, said that helping the country by cutting expenses as suggested by House Speaker Boehner and other Republicans is such a crazy idea. According to him, if the country is really broke, then how could it continue giving tax breaks to wealthy Americans?

Addressing the country’s budget deficits has been the subject of debate in the congress. Most Democrats favor revenue increases, while Republicans contended that spending cuts alone are enough. The group, however, foresees that the fiscal problems of the government will not be alleviated by spending cuts, which is a limiting action.

“Sometimes, I think John Boehner and the Republicans have a hard time doing the arithmetic,” according to Egerman. He further added that to understand the idea that a deficit is composed of expenses and revenues does not require a major in mathematics. Eliminating Bush tax cuts to increase revenue is one plausible way of solving the problem, he concluded.