Obama v John Boehner
Last night we watched the two most powerful political leaders in the USA each make a speech imploring the public to side with their version of how the impasse over raising the Debt Ceiling should be resolved.
The Differences Between Them
Both seemed to agree on the amount of debt reduction needed, and that the debt ceiling could be raised so long as a strong effort to reduce debt accompanied it.
The President wanted to achieve this by both a reduction in spending and an increase in income taxes on only the top 2% of taxpayers.
Speaker John Boehner wanted to achieve this by zero increase in taxes, and solely reductions in spending.
On the sidelines, the Tea Party wanted no increase in the debt ceiling under any circumstances.
Really quite a spectacle.
A Unique USA Attitude
There may be a compromise, or perhaps not. It seems the debate is centering around last year’s issue of whether ObamaCare should be repealed, as the only way to totally reduce spending with no new taxes, is to drastically cut social spending.
Americans are a people who somehow feel that those that have achieved financial status should enjoy all the fruits of their labour while those less fortunate, are of less concern.
In issues of health, Americans feel that those that can afford care should get it, and nothing else seems to matter. It matters not that Americans have amoung the lowest life expectancy in the Western world, and amoung the highest child mortality rates in the Western world. It matters not that Americans spend far more than any other nation per capita on health care. It is regarded as a business, and a good profitable business.
The issue about the debt ceiling is being used as an ideological tool to rid the USA of “socialized” health care, as if the USA can’t afford it. I guess the wealthiest nation on earth feels that it is the only nation in the world that can’t afford health care. Ridiculous, yet reasonable in USA politics as it seems.
There seems to be a feeling that wealthy corporations are entitled to every tax break, even if it means that many of the largest corporations pay no tax. This creates an enormous burden on society, yet no one seems to care.
Rupert Murdoch’s enormous companies pay zero tax, although their profits in the USA are in the billions.
(Reuters) – Most U.S. and foreign corporations doing business in the United States avoid paying any federal income taxes, despite trillions of dollars worth of sales, a government study released on Tuesday said.
The Government Accountability Office said 72 percent of all foreign corporations and about 57 percent of U.S. companies doing business in the United States paid no federal income taxes for at least one year between 1998 and 2005.
Exxon Mobil made $19 billion in profits in 2009. Exxon not only paid no federal income taxes, it actually received a $156 million rebate from the IRS, according to its SEC filings.
Bank of America received a $1.9 billion tax refund from the IRS last year, although it made $4.4 billion in profits and received a bailout from the Federal Reserve and the Treasury Department of nearly $1 trillion.
Over the past five years, while General Electric made $26 billion in profits in the United States, it received a $4.1 billion refund from the IRS.
So What Will Happen?
The various sides will either come to some sort of temporary compromise before or after the deadline and each will claim victory.
Or there won’t be a compromise, and each will claim the high moral ground.
Or there will be a postponement of the issue and each will claim a moral victory.
Meanwhile, the world will continue, the markets will continue, and life will continue.
Only if there is some bump in the road with a rise in interest rates, or a 500 point fall in the DOW, or some other temporary effect will the parties publicly compromise, and then things will return to normal.
In the meantime, large corporations will continue to hide their cash beyond the IRS grasp, the effort to deny the less fortunate a decent life standard will continue, life will go on.
With one large exception – the ever increasing debt being created in the Western world that is fueled by borrowing and printing money will start reversing itself as everyone agrees that reality has to return to borrowing.