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MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

Geithner Headlines

Posted by WARREN MOSLER on January 22nd, 2010


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Not exactly a unified front for the team.

TREASURY SECRETARY GEITHNER HAS EXPRESSED RESERVATIONS ABOUT PROPOSED U.S.
BIG BANK LIMITS ANNOUNCED ON TUESDAY–FINANCIAL INDUSTRY SOURCES

GEITHNER HAS CONCERNS LIMITS DO NOT NECESSARILY GET AT PROBLEMS THAT FUELED
FINANCIAL CRISIS–SOURCES

GEITHNER HAS CONCERNS THAT POLITICS INFLUENCING REFORMS–SOURCES


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9 Responses to “Geithner Headlines”

  1. winterspeak Says:

    Well, Geithner *did* just lose Obama his healthcare dream.

    And it’s become patently clear that profitable banks do not create a healthy economy. I think Obama has figured out he was sold a bill of goods here. If Bernanke does not get reconfirmed later this month, it will signal a big shift in political strategy.

    Reply

  2. Winslow R. Says:

    Good to see a split emerging.

    Keep it up Timmy. Do us all a favor and implicate Larry while you’re at it.

    Reply

  3. beowulf Says:

    I’m dubious that an independent central bank is a good idea, leave it to Geithner to try to be the first independent Treasury Secretary. He really should get on the same page as the President.

    Warren, I’ve been thinking the last couple of days about how the federal government could impose a “real estate tax” (presumably to replace the income or FICA tax systems) since a property tax, as a “direct tax”, is very difficult to implement under our Constitution. I believe the solution is to adapt the old state inheritance tax “pickup tax” system. Until 2005, taxpayer estates were given a tax credit against federal estate taxes for whatever was paid as inheritance taxes (i.e. state estate taxes). Naturally every state imposed an inheritance tax, the money would just be going to Uncle Sam if they didn’t.

    You could tax property and untax income by giving a pickup tax credit again income taxes for whatever the taxpayer pays in state property taxes. States would inevitably raise their property tax rates to pick up whatever taxes would otherwise be going to the IRS. Which is just as well, as Gregg Easterbook pointed out in the 2003 article, the federal government sends out $400 billion a year (probably closer to $500 billion now) to subsidize state budgets. The states could use the new property tax revenue to pay their own freight.
    http://www.tnr.com/article/states-rites

    I’m still a fan of Edgar Feige’s APT transaction tax as the simplest way to drain private savings as needed, but when I bring a problem, I try to bring along a solution too. :o)

    Reply

    warren mosler Reply:

    why not piggyback the federal property tax on top of the existing local property taxes? probably be a flat 2-3%? any idea what the total local property tax role is in the US?

    Reply

  4. Winslow R. Says:

    The smooth sailing of the Bernanke confirmation has run up against some rocks, which may be the ‘withdrawal’ of QE. Perhaps if Bernanke changes his mind, the will senate change their mind.

    The stock market ‘crisis’ induced by Volker’s Reform could be the temporary crisis needed to pass legislation, but not how it’s currently being spun.

    I was expecting turbulence to start after the new year, though I am surprised at how poltically inept this temporary crisis appears to be playing out.

    It’s almost like Obama is saying to the populists, you want control here, now see what happens. Get rid of Timmmy and Larry’s guidance and watch the stock market plunge…..

    I’ve been hearing the administration wants to keep Timmy around so they can fire him after the election, but perhaps they’d rather have Volker around so they can fire him before the election.

    Reply

  5. zanon Says:

    Beauwolf: “Edgar Feige’s APT transaction tax”. Do you have a link?

    Winslow: I think Obama has decided that the S&P is not where it is at. S&P went up, employment did not. The stock market is not the economy. I think the popular view is that the stock market is not for them — and they are right! High earnings are coming from low wages.

    Reply

  6. beowulf Says:

    Zanon, here’s the presentation Feige submitted to Bush’s Tax Reform Panel.
    http://www.scribd.com/doc/25299549/Feige-APT-Presentation-to-Tax-Reform-Panel-2005

    Warren, If the tax is levied under federal law, then it will face legal challenge as an unapportioned direct tax (the 16th Amendment was ratified to allow income taxes but but property taxes would still have to be collected in such a way that each state paid the same per capita amount). Heck, if Obama get his healthcare bill through, he’s buying himself a direct tax challenge because of the insurance mandate. States are free to tax property or as in MA, impose an insurance mandate. If Uncle Sam wants to tax property and untax something else, they have to bribe (tax credit!) or bully (cut off highway funds!) states to do so.

    I just checked the Census Bureau (they track state and local revenue), here’s a link to a pdf for “NATIONAL TOTALS OF STATE AND LOCAL TAX REVENUE, BY TYPE OF TAX”. http://ftp2.census.gov/govs/qtax/table1.pdf

    For the 4 quarters ending with 3Q 09, state and local property taxes collected was around $430 billion (though some portion of that is for tangible personal property)

    Reply

  7. warren mosler Says:

    good points!

    Reply

  8. Dave Begotka Says:

    Speaking as victim of the health care joke we have, there are too many leaches in the system and doctors are not aloud to be doctors anymore. And the legislation like you speak of just muddies the water. The lawyers, insurance companies, drug companies, and large health care conglomerates for profit are not good stewards of humanity.

    http://www.youtube.com/watch?v=SDnWKQFprRg

    Think about this 1.5 minute vid I made, and then realize people are dieing and suffering as Washington acts like a bunch of greedy asses!

    DUDES?

    Reply

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