Money

From Atrios:

Lying like a rug on the tax cuts

David Rosenbaum of The Newspaper of Record (when they axe Lelyveld, that is) has a great headline:

Bush May Have Exaggerated, but Did He Lie?

My goodness gracious, are such things possible?!

What is more important is that the tax relief most people will receive is quite meager, hardly the impression the president sought to leave when he campaigned around the country for the plan.

Mr. Bush kept emphasizing the tax benefits for people with modest incomes, not the more extensive tax relief he wanted for the well heeled. He often had onstage with him a couple with two children and an income of $40,000 or $50,000 whose taxes would be cut by more than $1,000, mostly because of the increase in the child tax credit.

From CalPundit:

TAXES….Taxes, taxes, taxes, how much is enough?

This post isn’t about persuading anybody about anything. I just want to present a few numbers to put the whole tax/budget debate into perspective.

The chart on the right shows total federal tax receipts. As you can see, they have been relatively steady for the past 50 years, averaging about 18% of GDP (yellow line). There’s also a pretty obvious dynamic at work: whenever taxes start to rise to around 20% of GDP, they get reduced. This happened most recently in 2001, and during the 2000 election there was a bipartisan consensus that taxes ought to be lowered. (Bush and Gore differed on the size and nature of the cuts, but both agreed that taxes should come down.)

Ever wonder how much of a cut the musicians get when people download their songs for $1 a piece?

- 40 % goes to the website
- 30% goes to the label
- 8% goes to the publisher
- 10% goes to middlemen
- 12% goes to the artist
Source: Business 2.0

From ArgMax:

Bill Gates and the Estate Tax

I just got back from a press conference sponsored by United for a Fair Economy and Americans for a Fair Estate tax. Bill Gates (Sr.) made a very compelling case for keeping the estate tax arguing that one important reason that the super-wealthy have been able to make/keep vast sums of money is that they are fortunate enough to live in America. And, as good Americans, they owe some of their wealth to the country that made it possible for them to become so wealthy.

FYI - only 2 percent of estates owe any tax, and the first $1 million for individuals, or $2 million per married couple, is tax-free. So, if you leave $1,000,001 to your heir (after deductions for charity), your heir is responsible for only 18 cents in taxes.

CBO Expects Deficit to Shatter Record

By ALAN FRAM

WASHINGTON (AP) - The Congressional Budget Office now expects this year’s federal deficit to exceed $400 billion, shattering the previous record even as President Bush and lawmakers consider creating expensive new prescription drug benefits for Medicare recipients.

Only a month ago, the budget office - which is Congress’ top nonpartisan fiscal analyst - said for the first time that it believed this year’s shortfall would exceed $300 billion.

But that projection excluded this year’s price tag of the tax reductions enacted three weeks ago, which totaled $330 billion through 2013. It also failed to reflect an ongoing softness in the economy, which is generating lower federal revenues than the government had anticipated.

From It’s Still the Economy, Stupid:

The economic revisionism has begun…

So, yes, the US unemployment rate was released this morning, and no real surprises there - up .1% to 6.1%, the highest level in 9 years. Economists actually expect the rate to continue to climb over the next few months, even if the economy turns around, as only phenomenal economic conditions could accommodate the millions of high school and college graduates expected to enter the job force this summer.

From The 10b-5 Daily:

Second Largest Accounting Firm Settlement Ever - The Associated Press reported on Friday that KPMG has agreed to a $125 million settlement in a securities class action in the E.D. of Pa. The case is based on KPMG’s role in the events leading to Rite-Aid Corp.’s 1999 restatement of earnings. According to one of the plaintiffs’ attorneys, it is the second-largest settlement by an accounting firm in a securities class action (after the Cendant case, in which Ernst & Young agreed to pay $335 million). U.S. District Judge Dalzell’s ruling on the settlement is expected next week.

From CBS News:

Halliburton’s $400M Iraq Payday
(AP) The Army has given a Halliburton Co. subsidiary more than $425 million in troop support work related to the Iraqi war in the past 14 months, using an exclusive contract that Vice President Dick Cheney’s former company won in 2001.

The previously undisclosed work, awarded without competitive bids, is in addition to the $71.3 million that Halliburton’s subsidiary, Kellogg Brown & Root, has received from the Army Corps of Engineers in no-bid contracts to repair and operate oil wells in Iraq.

Rep. Henry Waxman, D-Calif., who disclosed the troop support work orders Thursday, said the structure of exclusive contract means that “the amount that Halliburton could receive in the future is virtually limitless.”

Direct from the White House’s Office of Management and Budget about the FY2004 Budget.

THE REAL FISCAL DANGER
As noted frequently in this document, the federal government appears likely to spend more than it takes in for at least the next few years. Although the resulting deficits are manageable by any reasonable standard, they are cause for legitimate concern and attention. But whatever judgment one reaches about the deficit of this year or even the next several years combined, these deficits are tiny compared to the far larger built-in deficits that will be generated by structural problems in our largest entitlement programs. Social Security and Medicare combine to provide financial support to 39 million seniors-14 percent of our population-and account for one-third of total federal spending. As our population ages and health care costs continue to escalate, the costs of these programs will grow enormously, in fact, so rapidly that they will threaten to overwhelm the rest of the budget.

Apparently, after merging with TimeWarner, AOL’s Steve Case is unhappy with the way the merger has turned out. He is now considering the idea of spinning off AOL into a standalone company. Is this another case of corporate greed gone bad? TimeWarner’s shares have gone from $56 at the time of the merger (May, 2001) to $14.71 today.