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starbucks4ever (98.78)

On the budget proposal: the glass is half-full, but will soon become empty

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November 11, 2010 – Comments (9)

In its current form, the budget proposal is not as horrible as one might expect, but it's still bad enough.

Shortcomings (in the order of importance): COLA recalculation, increase of retirement age, decrease of income tax, reduction of Medicare spending.

Advantages (also in the order of importance): Elimination of mortgage interest deduction, cuts in the Pentagon budget, taxing employer-provided health plans, higher cap for Social Security tax, gasoline tax.

No opinion on: ending child tax credit, cutting 10% of federal workforce.

The main shortcoming of the plan is that the good proposals will be thrown away by the Congress but all the bad proposals will pass.  

http://news.yahoo.com/s/ap/20101111/ap_on_bi_ge/us_cutting_deficits 

9 Comments – Post Your Own

#1) On November 11, 2010 at 7:03 PM, russiangambit (29.43) wrote:

> ending child tax credit

Child credit is a joke anyway. It doens't cover even 10% of raising a child. It might as well go for all I care.

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#2) On November 11, 2010 at 7:27 PM, ChrisGraley (30.23) wrote:

I haven't read much on the proposal yet, but it sounds like they are starting in the wrong places.

Yes, we might need all the cuts mentioned in the article,  but I think that there are easier cuts that we can make as well. Those cuts should be done first.

 

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#3) On November 11, 2010 at 7:57 PM, chk999 (99.98) wrote:

Elimination of mortgage interest deduction

That would be interesting, it would drop the price of housing by a huge percentage. Which since the gov is trying to re-inflate housing, makes it probably a non-starter. 

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#4) On November 11, 2010 at 8:05 PM, starbucks4ever (98.78) wrote:

Today's low rates have already eliminated it for most houses. 4.5% interest on a $200K principle is about the same as standard deduction. But the East Hampton crowd will be fighting tooth and nail. 

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#5) On November 11, 2010 at 8:06 PM, starbucks4ever (98.78) wrote:

on a $200K principal

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#6) On November 11, 2010 at 10:34 PM, zymok (< 20) wrote:

Mortgage interest deduction will not be ended.  Congress doesn't have the guts. They might lower the cap.

Higher retirement age and higher (or removal of) the FICA cap are certain.  They did it before, they'll do it again. 

Medicare cuts will not happen.  Too many doctors and hospitals (including a high profile Mayo clinc) are beginning to refuse to accept Medicare. Look for a hike in medicare tax instead.  They did it before...

Defense cuts are certain.  Taxing health benefits (but probably only above some threshold) will also happen.

My predictions, based on decades of watching the spineless machinations in DC.

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#7) On November 12, 2010 at 8:36 AM, russiangambit (29.43) wrote:

> Mortgage interest deduction will not be ended.  Congress doesn't have the guts. They might lower the cap.

I heard a pretty good argument on it the other day. Since interst rates are so low now, the value of this deduction is not what it used to be. So, it might  pass.

I would certinly welcome it since it does nothing but distorts the housing prices  and punishes those who dont' ahve easy access to credit or chose to rent instead of owning the house.

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#8) On November 12, 2010 at 10:45 AM, starbucks4ever (98.78) wrote:

The deduction still has some value if you also had high healthcare bills or other items to itemize. But the conclusion still stands that many homeowners are not only not gaining anything from this deduction, but are actually subsidizing their affluent colleagues.  

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#9) On November 12, 2010 at 3:38 PM, starbucks4ever (98.78) wrote:

Case in point: Krugman is already railing against the proposal. He thinks his $1.7 M apartment authorizes him to speak on behalf of the middle class.

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