Obama Wants $1.5 Trillion In Tax Hikes, Mostly On Rich, Draws Election Battle Lines


Janet NovackJanet Novack, Forbes Staff I write from D.C. about tax and retirement policy and planning.

Official presidential portrait of Barack Obama...Image via Wikipedia

President Barack Obama will call today for an additional $3.2 trillion in deficit reduction over the next decade, including $1.5 trillion in tax hikes, mostly on the rich. His plan also includes $1.1 trillion in savings from winding down the wars in Iraq and Afghanistan and $580 billion in savings from “mandatory” programs, including $248 billion in Medicare cuts, but significantly, no increase in the age for Medicare eligibility and no Social Security trims.

Contrary to earlier press reports, however, the plan Obama is sending to Congress’ Joint Select Committee On Deficit Reduction—the so-called Super Committee– won’t include a special  new  millionaire’s tax. Instead, Administration officials said in a background briefing with reporters Sunday night, Obama will call for tax reform to be based on five principles and one of those will be the “Buffett rule”—in honor of Berkshire Hathaway CEO Warren Buffett who has complained for years that he pays taxes at a lower rate than his secretary.  An official put the rule this way: “People making more than $1 million should not pay a smaller share of their income in taxes than middle class people pay.”  The other four principles, he added, are that tax reform should lower rates; reduce the deficit (in other words raise taxes) by $1.5 trillion over 10 years; close “wasteful loopholes and tax breaks”; and “boost job creation and growth.”

Republicans, too, favor tax reform and lower rates, but have ruled out raising any new revenue. On Thursday House Speaker John Boehner (R-Ohio) declared tax increases “off the table”.  In an interview on NBC’s Meet The Press show Sunday, Senate Minority Leader Mitch McConnell (R-KY) dismissed any consideration of tax increases as “a bad thing to do in the middle of an economic downturn.”

The August political deal that raised the nation’s debt ceiling and averted a Treasury debt default created the Super Committee and charged it with coming up with a plan by Thanksgiving to trim at least $1.2 trillion from the deficit over 10 years. The Super Committee is  made up of six Democrats and six Republicans and if it deadlocks—or its final product is voted down by Congress or vetoed by Obama–automatic budget cuts would kick in. Republicans insist the $1.2 trillion should come solely from cuts to spending, including to entitlement programs like Medicare and Medicaid.

Significantly, the Administration official said Obama is making his embrace of Medicare cuts contingent on tax increases being included in the final deal.  “He’ll say he’ll veto any bill that takes one dime from the Medicare seniors rely on without asking the wealthy and the biggest corporations to pay their share,’’ the official said in a preview of Obama’s remarks. In another move that should similarly please his restive Democratic base, Obama is excluding from his proposal any change  to Social Security, including a reduction in inflation adjustments for Social Security recipients that was part of a bigger deal he tried to strike with Boehner in July. “It’s his vision,  not a legislative compromise,” an Administration official explained. “It’s inherently different form the grand bargain he was working on with the Speaker.”  A higher age for Medicare eligibility was also, reportedly, considered as part of the failed bargain with Boehner but won’t be in Obama’s proposal. (Currently, Americans become eligible at 65 even if they haven’t yet claimed their Social Security benefits.)

In the Sunday night preview, Administration officials cast Obama’s plan as a total of $4.4 trillion in net deficit reduction —including cuts that were made in discretionary spending as part of the August deal and prospective savings on interest costs. (While Republicans are sure to dismiss Obama’s counting of war savings, they have done the same thing in their deficit plans.)  Moreover, an Administration official noted, the $4.4 trillion is net of the cost of Obama $447 billion “jobs” proposal—a package of payroll tax cuts, infrastructure spending, and help for the unemployed designed to attack the nation’s stubbornly high 9.1% unemployment rate. Obama has proposed paying for that too with tax hikes Republicans have rejected, including a limit on mortgage, charitable and other deductions for the well off; elimination of the “carried interest” tax break enjoyed by the managers of hedge funds and other partnerships; and the repeal of various tax preferences enjoyed by oil and gas producers, including Exxon Mobil,  Chevron and BP.

Indeed, most of Obama’s tax proposals will apparently repeat those he has made before. For example, $800 billion would come from letting the Bush tax cuts for families earning more than $250,000 expire at the end of 2012, meaning the top rate on ordinary income such as salary would rise from 35% to 39.6%. Last month, in a New York Times op-ed, Buffett called for two higher tax rates—one on income over $1 million and the other on income over $10 million. Published reports over the weekend variously suggested Obama would endorse a new millionaire’s rate or release some sort of proposal for a minimum tax on millionaires—say to replace the current convoluted alternative minimum tax.  But Sunday night, the Administration official said the Buffett rule was simply a principle for tax reform.

Most people earning more than $1 million are already taxed at a higher effective rate than their secretaries. In 2008, for example, taxpayers with adjusted gross income between $1 million and $10 million paid an average of 24.5% of their adjusted gross in federal income tax, compared with an average of 12.6% for those earning $100,000 to $200,000, and 8.4%  for those earning $50,000 to $100,000. But the 400 highest income taxpayers do pay a lower effective rate  than mere millionaires—an average of just 18.1% in 2008. That’s because the top 400 get the bulk of their income from capital gains, which are taxed at a top rate of 15%, scheduled to rise to 20% when the Bush tax cuts expire at the end of 2012. If tax reform is to insure that billionaires pay a higher effective rate than the upper middle and middle class it would have to reduce or eliminate the break for capital gains—something that was done in Reagan’s 1986 tax reform but that doesn’t sit well with most Republicans today.

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Obama tax plan draws election battle lines

Stephen Collinson

An impassioned US President Barack Obama has set up an acerbic and personal clash with Republicans, demanding $US1.5 trillion ($A1.47 trillion) in new taxes on the rich in a plan aimed at slashing the deficit.

“This is not class warfare, it is math,” Obama declared, arguing that without tax increases on those who could afford it, the budget gap – which is casting a shadow over future generations of Americans – could never be closed.

“All I’m saying is that those who have done well, including me, should pay their fair share in taxes,” Obama said in a speech that effectively staked out the ground on which the 2012 presidential election will likely be fought.

But Republicans immediately came out against the move, making it more likely that a fierce partisan row over taxes and spending will rumble on and define the terrain of the 2012 presidential election.

“Pitting one group of Americans against another is not leadership,” said Republican House Speaker John Boehner.

A fiery, populist Obama laid out a plan few experts believe has any chance of passing Congress but which will make clear the battle lines between the White House and Republicans on the lumbering economy.

“We can’t just cut our way out of this hole,” Obama said in the White House Rose Garden, laying out his plans to cut $US3.0 trillion from the deficit with a mixture of spending cuts and tax hikes.

“It is only right we ask everyone to pay their fair share,” Obama said, in a direct challenge to House of Representatives speaker John Boehner, who has categorically ruled out any tax increases to trim the budget gap.

“We can’t afford these special lower rates for the wealthy. We can’t afford them when we are running these big deficits,” Obama said, fighting for the end of tax cuts for the rich passed by former president George W Bush.

“Middle class taxpayers shouldn’t pay higher taxes than millionaires and billionaires. That’s pretty straightforward. It’s hard to argue against that,” said Obama, who has seen his approval ratings hammered by the slowed economy.

In a sign of the antipathy between Obama and Republican leaders after months of political confrontations, the president took personal aim at Boehner’s refusal to contemplate any tax revenue raises.

“The speaker says we can’t have it ‘my way or the highway’ and then basically says ‘my way or the highway’.”

“That’s not smart. It’s not right.”

Obama’s plan amounted to suggestions to a congressional supercommittee charged with finding up to $US1.5 trillion in deficit cuts by November.

The president threatened to veto any bill produced by Congress that was based on cutting medical benefits for the elderly but did not include increased revenues drawn from higher taxes on the rich and corporations.

Obama’s plan effectively forced Republicans to defend continued favourable tax treatment for the wealthiest Americans and corporations while unemployment is at 9.1 per cent and economic frustration stalks the United States.

But Republicans, who say tax hikes would penalise small business and lower growth, reacted with contempt to his speech.

“Veto threats, a massive tax hike, phantom savings, and punting on entitlement reform is not a recipe for economic or job growth-or even meaningful deficit reduction,” said Mitch McConnell, the top Republican in the Senate.

Mitt Romney, a leading Republican contender to take on Obama in the 2012 election, also rejected his plans as the action of a president who he portrays as out of his depth on the economy.

“President Obama’s plan to raise taxes will have a crushing impact on economic growth,” Romney said.

“This is yet another indication that President Obama has no clue how to bring our economy back.”

Obama’s plan includes $US1.2 trillion in cuts in federal discretionary spending already agreed in August as part of a compromise which ended a standoff with Republicans over raising the federal debt ceiling.

It includes $US580 billion in spending cuts across all mandatory spending programs and $US1.1 trillion of savings realised from drawing down US troop numbers in Afghanistan and Iraq.

Tax reform would result in $US1.5 trillion in savings, and a further $US430 billion will be found in additional interest savings elsewhere.

Included in the spending cuts will be $US248 billion in savings from Medicare programs for the elderly and $US72 billion in cuts from the Medicaid service for the poor, officials said.

© 2011 AFP

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Towards a brave new Malaysia,keep lobbying and pushing for change!


 CERITALAH By KARIM RASLAN newsdesk@thestar.com.my

Prime Minister Datuk Seri Najib Tun Razak may have appropriated core Pakatan Rakyat issues with his Sept 15 civil liberties announcements, but more crucial is whether Malaysians are ready to face up to the challenges. Malaysians need to keep lobbying and pushing for change!
Malaysian Prime Minister, Najib Tun RazakImage via Wikipedia

PRIME Minister Datuk Seri Najib Tun Razak surprised Malaysia on Sept 15. In one fell swoop, he appears to have turned the civil liberties agenda into a Barisan Na­­sional initiative.

Announcing plans to abolish and/or amend the Internal Security Act (ISA), the Printing Presses and Publications Act (PPPA) as well as other laws, Najib has cleverly appropriated core Pakatan Rakyat issues.

In doing so, he has also demonstrated that Umno is capable of renewal. Indeed, the party of Merdeka – as I’ve always argued – is infinitely more diverse than many realise or wish to acknowledge.

After all, it ranges from figures such as Deputy Minister of Higher Education Datuk Saifuddin Abdullah at the moderate end of the spectrum to hardliners such as Deputy Education Minister Dr Puad Zarkashi.

Moreover, in times of crisis, the party has the ability to adapt, discarding outdated thinking quickly and effectively. In this respect, its internal discipline and sense of common purpose allows for sudden shifts in direction by its leaders.

Of course, the same leaders then have to be able to win elections with these new policy initiatives – and win big at that. Losing is not an option.

It’s also important to bear in mind that Umno members possess a strong sense of self-preservation. Party members are not lemmings leaping to their doom.

On the face of it, the PM’s bold move returns Umno to the moderate centre-ground. Alhamdullilah! This is a major relief. Nonetheless, there’s a lot of work left to be done and the PM’s credibility will be utterly destroyed if he fails to make good on the Sept 15 announcements.

For a start, Najib will have to work hard and fast to repeal and replace these laws. He must prove that he can walk the talk. He must also head off the sceptics within Umno’s right wing.

So, while the move is to be applauded, ordinary Malaysians need to keep lobbying and pushing for change. We cannot let up or Barisan will revert to inertia.

As a writer, however, I’m most concerned with what will happen to the media. A functioning democracy needs a free and independent press and the PPPA has been a long-term stumbling block to both.

First off, I, along with most Malaysians, want more details. I totally disagree with the need for newspaper licences. The very concept is wrong-headed.

Second, access to and ownership of the media are also critical. We need all sides of the political debate (Barisan and Pakatan) to be given fair and equal coverage.

Malaysians can only make in­­formed decisions about who to vote for if they’re properly informed.

It’s worth bearing in mind that blanket media coverage of BN leaders has been a major turn-off. Whoever thought we needed to watch the PM wishing the country Selamat Hari Raya again and again was wrong. With the media, less is more, especially when you have nothing to say.

The current order also makes BN politicians lazy and high-handed when dealing with journalists and editors. But a freeing up of the media will force BN cadres to change – let’s call it political Darwinism.

The Singapore Government is also experimenting with liberalisation. During its recent general election, Singapore’s ruling PAP allowed its press some latitude in their coverage of the opposition. While the opposition made substantial gains, the ruling party still won because ordinary Singaporeans saw the candidates for what they were and still felt safer with the PAP.

There’s no reason to assume why the same couldn’t happen here, all the more so if the Prime Minister maintains his humility and candour.

At this stage, I must add that I would personally like to see Najib go head-to-head with Datuk Seri Anwar Ibrahim in a live, no holds barred debate during the next polls.

Such a debate would give Malaysians the chance to see who has a better vision for the country. Besides, Umno leaders really need to overcome their pathological fear of Anwar’s supposed superhuman rhetorical skills.

The man is not invincible. Then Information Minister Datuk Seri Ahmad Shabery Cheek faced him back in 2008 and came out of the encounter very creditably.

Umno politicians also have to realise that constant communication and media coverage is the order of the day. Those who are not up to the exposure and pressure should be dropped – Barisan is better off without them. Certainly, if I had my way I’d dump over 80% of the present Cabinet. Most are ill-equipped for present-day challenges.

Also, reporters are stakeholders to be engaged, not hirelings to be ordered about. Treat them with respect and the returns will be considerable. Remember that the media, however tetchy and irritating, is the voice of the people.

At the same time, Malaysia’s mainstream media will now have to up its game. With Najib’s reforms, there’ll no longer be any excuse to not provide the critical news, investigative reporting and analysis that Malaysians crave.

We are tasked to serve the people and not our erstwhile political masters.

Najib has opened the door to a new world. We know most of his Barisan Nasional colleagues are ill-prepared. The tougher question is this: are we – the Malaysian people – ready for what’s to come?

Related posts:

 Changes in Malaysia’s horizon; Keep the momentum up!

Winds of change blowing in Malaysia; Dawn of a new era?

How To Use Social Media To Promote Your Small Business


Kym McNicholasKym McNicholas, Forbes Staff

Image representing Facebook as depicted in Cru...Image via CrunchBase

You have a small business and you haven’t bought into the social media craze? Guess what? Silence is no longer an option. People are online talking about your company as you read this, whether you like or not.  If you don’t engage in the conversation, you risk losing your customers. But maybe you don’t have a choice as many small airports do in the State of California and across the United States. Many are owned by cities who don’t give them a dime and yet take money whenever they please. Those city managers force their airport managers to jump through hoops and political red tape to be able to promote their facilities. These airport managers have their hands tied in dealing with counties which just recently decided to launch a website, let alone a social media marketing strategy. So, I was asked by Michael McCarron, Public Information Office for San Francisco International Airport, to speak to the managers of small airports through California about the benefits of having a social media presence, so that they can convince their ‘bosses’ to allow them to open Facebook, Twitter and Google+ accounts, as well as to create blogs.

Here’s part of my presentation. I hope it helps you with your online social media strategy. If You have more ideas, please share them in the comments section at the bottom of the post. The more ideas, the better.

1. ASSESS YOUR ASSETS: The first action you should take before engaging in online marketing or social media marketing and engagement is to look at what are you’re trying to promote. What are your assets? Who are your target customers? It may seem obvious. But, A Bay Area airport had small planes for rent. But business was slow because they were simply targeting pilots trying to rack-up hours. Turns out there was a larger audience they could target through social media, tourists looking for aerial Bay Area tours. Business took-off.

SIGN-UP FOR SOCIAL MEDIA: Facebook, Twitter, Google+, YouTube and LinkedIn. Facebook allows you to create a business page.  Make sure you read the rules for businesses first. You can even ‘create a page’ through your personal account, if your business allows you to do so. That makes it easy for small business owners to manage it. On LinkedIn, every employee becomes your best advocate.

FIND A SOCIAL MEDIA MANAGER: Managing multiple social networks is daunting. So, before you start posting content, requesting friends and adding followers, sign-up for a social media manager such as Ping.fm and HootSuite. It allows you to manage all of your accounts on one site and schedule your messages to deploy so you don’t have to sit over it all day. It also allows you to review the success of the tweets real-time with click-through statistics. And you can gather all the mentions of your brand, industry or search terms on Twitter through it as well. That’s for the free version. I suggest trying that first. As you get more involved in social media, I prefer SproutSocial.com. You have a choice on plans for nine-dollars to $49. There’s a 30-day free trial to make sure it works for you. What I like is that it allows you to take all of those you follow and the followers and create contacts out of them which you can manage in the system and track engagement. It also has one inbox for all of your messages from all the networks. Plus, it allows you to track check-ins at FourSquare and Gowalla.

POST UPDATES: It’s important to have content on your social media pages before you start adding friends and followers. When you try to find friends, they’re going to look at the page to see if they want to follow you. So you need to give them a reason to follow you first. Provide valuable information about the industry. Post pictures of your business or people enjoying your business. On YouTube, post videos of your business, customer experiences, and encourage customers to make their own. You can also ‘favorite’ other YouTube users’ videos and they will end up on your page. If you’re a small airport, posting cool aerobatic videos of the Patriots’ Jet Team is a possibility that would add value to those who ‘subscribe’ to your page. Also, share those videos on your other accounts such as Twitter, Facebook and even LinkedIn.

FIND FRIENDS AND FOLLOWERS: Twitter and Google+ are easiest. Search keywords to find followers. On Twitter,  If you’re a small airport, for example, search ‘pilot. You can also search ‘flying.’ Searching your town and surrounding areas as well to find key influencers, news outlets, bloggers and city officials. Also, search for large players in your market. For airports, try Boeing, Virgin America, United Airlines and Southwest Airlines. If they share your posts, you have the potential to reach thousands.  I suggest adding just a few people at a time.  On Google+, comment on one of their posts immediately. On Twitter, mention them in a post immediately. You can also comment on one of their posts or simply say that you look forward to following their great content.  If it’s a reporter or blogger, give them story ideas and leads that have nothing to do with your business. Get them to trust you. To find fans on Facebook, it’s best to start with real friends and family. You can also pay as little as $100 to have an ad for your Facebook page syndicate across the network for a designated period of time.

7. ENGAGE FRIENDS AND FOLLOWERS:

Cory Colligan who used to be head of marketing for California Bouquet friended me on Facebook. When she asked to be my friend, she typed a personal message, saying how impressed she was with my work and how she’s enjoyed watching my work evolve. I couldn’t remember where I knew her from. Was it a television station, radio station, or was it from school? I wasn’t sure. I was too embarrassed to ask. And she seemed harmless. So, I confirmed her friend request and wrote her a note back thanking her for her feedback and saying that I look forward to connecting. She proceeded over the next few months to follow my videos and stories. She engaged in great debates and conversation with me as well as my friends. I knew just days after I added her that I didn’t know her personally. But I was so impressed with her and the relationship we’d developed over the months, that when I was traveling to her town, Fresno, I suggested we have lunch. When I arrived she had a full basket of goodies from her shop, including the best dark chocolate covered strawberries I’ve ever tasted, waiting for me. Since then, I have been a regular customer and am quick to share her products on my page.

So, your first priority should be building that relationship with people, not pitching your service or product.

Give them story ideas and leads that have nothing to do with your business.

On Facebook:

Share their links on your wall and/or comment on them. Wish them a Happy Birthday. Birthdays are big on Facebook. Always acknowledge them. Maybe even offer them a discount coupon for a birthday treat via Facebook.

On Twitter:
Retweet their stories and comment on them! Reply to each and every message. Keep the conversation going. Get them to trust you. For example, one of my favorite Twitter followers is @heykim. She is an amazing example of how to do it right. She has thousands of followers. But she has even more friends. She friended thousands of people little by little and engaged with them, retweeting their tweets, commenting on their tweets, checking in on topics those folks had tweeted on days before. Now, she’s constantly in conversation with folks like Morgan Fairchild, Alyssa Milano and Kathy Ireland. Alyssa Milano even just shared a linked @heykim posted tonight about how Twitter has transformed over the last five years. Who would’ve thought? She’s not famous. The key is she knows how to engage. And she never misses a #FF (Follow Friday). On Friday’s many people share with their friends, their favorite people to follow, encouraging others to follow them as well.

Google+: It’s a cross between Facebook and Twitter. It’s great because you can create circles of certain people you want to target for different reasons. It makes it easier to post certain promotions to one group vs. another.LinkedIn: The best way to engage with potential customers is by joining industry groups and starting group discussions.

Very important: Do not ask for help/favors from people until you’re friends or at least warm acquaintances with them. And the #1 way to become friends is to offer tons of help/favors without expecting anything in return. In the words of Michael Ellsberg, Forbes Contributor and Author of “Self-Educated Millionaires: The Seven Skills You’ll Never Learn in College, “Networking is a *long term* activity – it CANNOT be done for short-term results. Follow these basic concepts, and you’ll be ahead of 99.99% of the knuckleheads out there who are botching their networking attempts online!” Also, a great book to read is by Brian Solis, Principal at Altimeter Group, “Engage: The Complete Guide for Brands and Businesses to Build, Cultivate, and Measure Success in the New Web.”

8. STAY CURRENT: Get alerts sent to your phone when folks engage with you via your social networking sites – at least in the beginning – that way you respond quickly.

Please share your tips and tricks that will help small businesses sign-up and use social media. This certainly just scratches the surface. Please share the most creative marketing campaigns via social media in the comment section below.

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