Pronk Pops Show 13: December 9, 2010: President Obama and Republican Cut Tax and Spend Deal–Time For Serious Spending Cuts, Balance Budgets and The Flat Tax!

Posted on December 9, 2010. Filed under: Climate Change, Crime, Economics, Government, Government Spending, History, Politics, Radio, Videos, Wisdom | Tags: , , , |


 
 

 

Listen To Pronk Pops Podcast or Download Shows 1-9

 

Listen To Pronk  Pops Podcast or Download Shows 10-13

 

Pronk Pops Show 13: December 9, 2010

 

News Update: WikiLeaks and Julian Assange

 

Hackers Take Down Mastercard Website As Revenge For Julian Assange Arrest

 

Nobel Peace Prize for Assange? ‘Arrest a set up, info bomb on standby’

 

Julian Assange’s Lawyer Speaks Out

 

MasterCard, Visa Hacked in Support of WikiLeaks

 

Full Show – 12/07/10. Julian Assange in Prison, DREAM Act, Organ Wagons

 

Army of hackers targets the Swedish government, Sarah Palin and credit card giants in WikiLeaks ‘Operation: Payback’

Payback-cyber-war-targets-Swedish-Government.html#ixzz17dPITkm3

  • Visa, PayPal, Amazon also come under attack through the night
  • Hackers bring down Swedish government internet site
  • Sarah Palin’s personal credit card account and website targeted
  • 5,000 ‘hacktivists’ believed to be behind electronic onslaught

Computer hackers have sent two of the world’s biggest credit card companies into meltdown in revenge for cutting off payments to the WikiLeaks website.

The attack was launched by a shadowy international group called ‘Anonymous’ which said MasterCard and Visa had been targeted for freezing the account of the whistleblowing site.

The devastating blow to the credit card giants came on one of the busiest online shopping days of the year.

Hackers also targeted online payment system PayPal, Amazon and a Swiss bank over the WikiLeaks row.

The Swedish government’s website was also brought down this morning after a fresh wave of cyber

Read more: http://www.dailymail.co.uk/news/article-1336806/WikiLeaks-hackers-Operation-Payback-cyber-war-targets-Swedish-Government.html#ixzz17dP6xiFH

 



Segement 1: Ben Bernanke & The Fed

Fed Chairman Bernanke On The Economy

60 minutes Ben Bernenke Interview December 5 2010

Quantitative Easing Only Tool Left for Fed

Quantitative Easing Explained

Quantitative Easing — How Does it Work in the Real World?

Quantitative Easing, the Fed, Finance, and Inflation — QE

Quantitative Easing Bernanke — History & Objectives of QE

Quantitative Easing (QE) 2010 — 2011 Why is the Fed printing money?

Quantitative Easing Explained — Who Gets Fed’s Printed Money?

QE2: Quantitative Easing Investing & Stock Market Consequences

Kroszner Interview on Bernanke’s CBS Appearance – Video – Bloomberg.flv

Jim Rogers on QE2 – ‘It has never worked’

Federal Reserve Debt Monetization Explained.

“Looks Like Magic” – Ron Paul on the Fed’s Money Machine

Peter Schiff : Dollar not mighty any more

CNBC: Fed’s Big Gamble–What Could Go Wrong?

Peter Schiff Proves He Is A Baboon By Claiming QE2 A Government Conspiracy To Support Treasuries

Peter Schiff : It’s Scary How Clueless Bernanke Is!

The FED’s magic with money

FED Was Liquefying The World

Peter Schiff : Dollar not mighty any more

Fed Bank Documents Revealed

Background Articles and Videos

Introduction to Monetary Policy

The Chairman Part 1

The Chairman Part 2

FED using foreign banks to monetize debt behind closed doors

Reply to Quantitative Easing Explained

Black Friday, the Federal Reserve, & The Global House Of Cards

Money supply

“…Empirical measures

Money is used as a medium of exchange, in final settlement of a debt, and as a ready store of value. Its different functions are associated with different empirical measures of the money supply. There is no single “correct” measure of the money supply: instead, there are several measures, classified along a spectrum or continuum between narrow and broad monetary aggregates. Narrow measures include only the most liquid assets, the ones most easily used to spend (currency, checkable deposits). Broader measures add less liquid types of assets (certificates of deposit, etc.)This continuum corresponds to the way that different types of money are more or less controlled by monetary policy. Narrow measures include those more directly affected and controlled by monetary policy, whereas broader measures are less closely related to monetary-policy actions.[6] It is a matter of perennial debate as to whether narrower or broader versions of the money supply have a more predictable link to nominal GDP.The different types of money are typically classified as “M”s. The “M”s usually range from M0 (narrowest) to M3 (broadest) but which “M”s are actually used depends on the country’s central bank. The typical layout for each of the “M”s is as follows:

Type of money M0 MB M1 M2 M3 MZM
Notes and coins (currency) in circulation (outside Federal Reserve Banks, and the vaults of depository institutions) V[8] V V V V V
Notes and coins (currency) in bank vaults V[8] V        
Federal Reserve Bank credit (minimum reserves and excess reserves)   V        
traveler’s checks of non-bank issuers     V V V V
demand deposits     V V V V
other checkable deposits (OCDs), which consist primarily of negotiable order of withdrawal (NOW) accounts at depository institutions and credit union share draft accounts.     V[9] V V V
savings deposits       V V V
time deposits less than $100,000 and money-market deposit accounts for individuals       V V  
large time deposits, institutional money market funds, short-term repurchase and other larger liquid assets[10]         V  
all money market funds           V


 

 
 
 
 
 
 
 
 

 

  • M

 

  • 0: In some countries, such as the United Kingdom, M0 includes bank reserves, so M0 is referred to as the monetary base, or narrow money.

 

 

  

 
  • [11]

 

  • MB: is referred to as the monetary base or total currency.[8] This is the base from which other forms of money (like checking deposits, listed below) are created and is traditionally the most liquid measure of the money supply.[12]
  • M1: Bank reserves are not included in M1.
  • M2: represents money and “close substitutes” for money.[13] M2 is a broader classification of money than M1. Economists use M2 when looking to quantify the amount of money in circulation and trying to explain different economic monetary conditions. M2 is a key economic indicator used to forecast inflation.[14]
  • M3: Since 2006, M3 is no longer tracked by the US central bank.[15] However, there are still estimates produced by various private institutions. (M2 +large deposits and other large, long-term deposits)
  • MZM: Money with zero maturity. It measures the supply of financial assets redeemable at par on demand.

The ratio of a pair of these measures, most often M2/M0, is called an (actual, empirical) money multiplier.Fractional-reserve banking

Main article: Fractional-reserve banking

The different forms of money in government money supply statistics arise from the practice of fractional-reserve banking. Whenever a bank gives out a loan in a fractional-reserve banking system, a new sum of money is created. This new type of money is what makes up the non-M0 components in the M1-M3 statistics. In short, there are two types of money in a fractional-reserve banking system[16][17]:

  1. central bank money (physical currency, government money)
  2. commercial bank money (money created through loans) – sometimes referred to as private money, or checkbook money[18]

In the money supply statistics, central bank money is MB while the commercial bank money is divided up into the M1-M3 components. Generally, the types of commercial bank money that tend to be valued at lower amounts are classified in the narrow category of M1 while the types of commercial bank money that tend to exist in larger amounts are categorized in M2 and M3, with M3 having the largest.Reserves are deposits that banks have received but have not loaned out. In the USA, the Federal Reserve regulates the percentage that banks must keep in their reserves before they can make new loans. This percentage is called the minimum reserve requirement. This means that if a person makes a deposit for $1000.00 and the bank reserve mandated by the FED is 10% then the bank must increase its reserves by $100.00 and is able to loan the remaining $900.00. The maximum amount of money the banking system can legally generate with each dollar of reserves is called the (theoretical) money multiplier, and, following the formula for the sum of an infinite convergent geometric series, can be calculated as the reciprocal of the minimum reserve. For example, with a reserve of 20%, the money multiplier would be 5, as 20% divided into 100% makes 5.

Example

Note: The examples apply when read in sequential order.M0

 

  • Laura has ten US $100 bills, representing $1000 in the M0 supply for the United States. (MB = $1000, M0 = $1000, M1 = $1000, M2 = $1000)
  • Laura burns one of her $100 bills. The US M0, and her personal net worth, just decreased by $100. (MB = $900, M0 = $900, M1 = $900, M2 = $900)

M1

  • Laura takes the remaining nine bills and deposits them in her checking account at her bank. (MB = $900, M0 = 0, M1 = $900, M2 = $900)
  • The bank then calculates its reserve using the minimum reserve percentage given by the Fed and loans the extra money. If the minimum reserve is 10%, this means $90 will remain in the bank’s reserve. The remaining $810 can only be used by the bank as credit, by lending money, but until that happens it will be part of the banks excess reserves.
  • The M1 money supply increased by $810 when the loan is made. M1 the money has been created. ( MB = $900 M0 = 0, M1 = $1710, M2 = $1710)
  • Laura writes a check for $400, check number 7771. The total M1 money supply didn’t change, it includes the $400 check and the $500 left in her account. (MB = $900, M0 = 0, M1 = $1710, M2 = $1710)
  • Laura’s check number 7771 is accidentally destroyed in the laundry. M1 and her checking account do not change, because the check is never cashed. (MB = $900, M0 = 0, M1 = $1710, M2 = $1710)
  • Laura writes check number 7772 for $100 to her friend Alice, and Alice deposits it into her checking account. MB does not change, it still has $900 in it, Alice’s $100 and Laura’s $800. (MB = $900, M0 = 0, M1 = $1710, M2 = $1710)
  • The bank lends Mandy the $810 credit that it has created. Mandy deposits the money in a checking account at another bank. The other bank must keep $81 as a reserve and has $729 available for loans. This creates a promise-to-pay money from a previous promise-to-pay, thus the M1 money supply is now inflated by $729. (MB = $900, M0 = 0, M1 = $2439, M2 = $2439)
  • Mandy’s bank now lends the money to someone else who deposits it on a checking account on yet another bank, who again stores 10% as reserve and has 90% available for loans. This process repeats itself at the next bank and at the next bank and so on, until the money in the reserves backs up an M1 money supply of $9000, which is 10 times the M0 money. (MB = $900, M0 = 0, M1 = $9000, M2 = $9000)

M2

  • Laura writes check number 7774 for $1000 and brings it to the bank to start a Money Market account (these do not have a credit-creating charter), M1 goes down by $1000, but M2 stays the same. This is because M2 includes the Money Market account in addition to all money counted in M1.

Foreign Exchange

  • Laura writes check number 7776 for $200 and brings it downtown to a foreign exchange bank teller at Credit Suisse to convert it to British Pounds. On this particular day, the exchange rate is exactly USD $2.00 = GBP £1.00. The bank Credit Suisse takes her $200 check, and gives her two £50 notes (and charges her a dollar for the service fee). Meanwhile, at the Credit Suisse branch office in Hong Kong, a customer named Huang has £100 and wants $200, and the bank does that trade (charging him an extra £.50 for the service fee). US M0 still has the $900, although Huang now has $200 of it. The £50 notes Laura walks off with are part of Britain’s M0 money supply that came from Huang.
  • The next day, Credit Suisse finds they have an excess of GB Pounds and a shortage of US Dollars, determined by adding up all the branch offices’ supplies. They sell some of their GBP on the open FX market with Deutsche Bank, which has the opposite problem. The exchange rate stays the same.
  • The day after, both Credit Suisse and Deutsche Bank find they have too many GBP and not enough USD, along with other traders. Then, To move their inventories, they have to sell GBP at USD $1.999, that is, 1/10 cent less than $2 per pound, and the exchange rate shifts. None of these banks has the power to increase or decrease the British M0 or the American M0; they are independent systems.

The Federal Reserve previously published data on three monetary aggregates, but on 10 November 2005 announced that as of 23 March 2006, it would cease publication of M3.[15] Since the Spring of 2006, the Federal Reserve only publishes data on two of these aggregates. The first, M1, is made up of types of money commonly used for payment, basically currency (M0) and checking account balances. The second, M2, includes M1 plus balances that generally are similar to transaction accounts and that, for the most part, can be converted fairly readily to M1 with little or no loss of principal. The M2 measure is thought to be held primarily by households. As mentioned, the third aggregate, M3 is no longer published. Prior to this discontinuation, M3 had included M2 plus certain accounts that are held by entities other than individuals and are issued by banks and thrift institutions to augment M2-type balances in meeting credit demands; it had also included balances in money market mutual funds held by institutional investors. The aggregates have had different roles in monetary policy as their reliability as guides has changed. The following details their principal components[19]:

  • M0: The total of all physical currency, plus accounts at the central bank that can be exchanged for physical currency.
  • M1: The total of all physical currency part of bank reserves + the amount in demand accounts (“checking” or “current” accounts).
  • M2: M1 + most savings accounts, money market accounts, retail money market mutual funds,and small denomination time deposits (certificates of deposit of under $100,000).
  • M3: M2 + all other CDs (large time deposits, institutional money market mutual fund balances), deposits of eurodollars and repurchase agreements.

When the Federal Reserve announced in 2005 that they would cease publishing M3 statistics in March 2006, they explained that M3 did not convey any additional information about economic activity compared to M2, and thus, “has not played a role in the monetary policy process for many years.” Therefore, the costs to collect M3 data outweighed the benefits the data provided.[15] Some politicians have spoken out against the Federal Reserve’s decision to cease publishing M3 statistics and have urged the U.S. Congress to take steps requiring the Federal Reserve to do so. Libertarian congressman Ron Paul (R-TX) claimed that “M3 is the best description of how quickly the Fed is creating new money and credit. Common sense tells us that a government central bank creating new money out of thin air depreciates the value of each dollar in circulation.”[20] Some of the data used to calculate M3 are still collected and published on a regular basis.[15]

Current alternate sources of M3 data are available from the private sector.

 

 

  

  

 

[21] However, some would argue[citation needed] that since the Federal Reserve has even less control over the fluctuations of M3 than over those of M2, it is unclear why this number is relevant to monetary policy.As of 4 November 2009 the Federal Reserve reported that the U.S. dollar monetary base is $1,999,897,000,000. This is an increase of 142% in 2 years.[22] The monetary base is only one component of money supply, however. M2, the broadest measure of money supply, has increased from approximately $7.41 trillion to $8.36 trillion from November 2007 to October 2009, the latest month-data available. This is a 2-year increase in U.S. M2 of approximately 12.9%.[23] …”http://en.wikipedia.org/wiki/Money_supply

Related Posts On Pronk Palisades

 

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Food Prices Rising–Videos

The Crisis of Credit Visualized–Videos

The Collapse of The U.S. Dollar From Federal Government Deficit Spending And Monetization Of Debt–Videos

Bubble Bernanke–Videos

Quantitative Easing 2–The Shot Heard Around The World–The Coming Currency Wars!

Milton Friedman On The Federal Reserve’s Printing Money Or Quantitative Easing Monetary Policy To Increase Inflation and Reduce Unemployment–Absolutely Not!

The Day The Dollar Crashes–What’s Next? What’s Next? What’s Next?–Videos

Federal Reserve’s Nonconventional Monetary Policy of Quantitative Easing–Printing Money and The Coming Inflation–Videos

Paul Craig Roberts On The Federal Reserve’s Quantitative Easing (QE2) Monetary Policy And The Impotence of Elections–Videos

Why We Are In So Much Debt–Videos

Federal Reserve Monetizes U.S. Government Treasury Debt By Printing Money–Quantitative Easing (QE2)–Devalues U.S Currency–Banks Steal American People’s Purchasing Power!

The Obama Depression Deepens–Federal Reserve Executes–QE II Plan–”Operation Pawnshop”–$2,500 Billion In Quantitative Easing–Money Printing–Will It Be Enough?

The Ruling Establishment’s Robbery Of The American People–Deflation–Inflation–Hyperinflation–Bust–Bailout–Boom–Bubble–The Fall Of The American Republic–The Rise of One World Government and Currency–Videos

The American People Paid Off The Bets (Credit Default Swaps) Of Wall Street Investment Banks–Videos

The Massive Fraud In Mortgages Continues–Crooks and Corrupt Politicians In Charge–Videos

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The Trillion Dollar Bet–Videos

U.S. Labor Force Participation Rate Normally Between 66%-67.5% Hits New Twenty-Five Year Low of 64.5%!

October, 2010 U.S. Unemployment Rates–9.6% (U3) and 17.0% (U-6) With 14,843,000 and 26,163,00 Americans Respectively Seeking Work–Higher Than Great Depression!

Obama Depression: 20 Months Of Unemployment Over 8% For Official U-3 Rate and Over 15% For Total U-6 Rate–Over 26 Million Americans Looking For A Full Time Job and 41.8 Million On Food Stamps!–Followed By 36 More Months Of Over 8% Official Unemployment U-3 Rate and 15% Total Unemployment U-6 Rate!

The Ascent of Money–Videos

Niall Ferguson–”The Ascent of Money–Videos

G. Edward Griffin- On Individualism vs. Collectivism–Videos

Creature from Jekyll Island: The Federal Reserve System–Videos

Heritage Foundation 2010 Budget Charts–Federal Spending

Heritage Foundation 2010 Budget Charts–Federal Revenue

Heritage Foundation 2010 Budget Charts–Federal Debt and Deficits

Heritage Foundation 2010 Budget Charts–Federal Entitlements


Segment 3: Barack Obama & The Tax and Spend Democrats

Communist Manifesto, Karl Marx and Friedrich Engels

  1. Abolition of property in land and application of all rents of land to public purposes
  2. A heavy progressive or graduated income tax.
  3. Abolition of all right of inheritance.
  4. Confiscation of the property of all emigrants and rebels.
  5. Centralisation of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.
  6. Centralisation of the means of communication and transport in the hands of the State.
  7. Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste-lands, and the improvement of the soil generally in accordance with a common plan.
  8. Equal liability of all to labour. Establishment of industrial armies, especially for agriculture.
  9. Combination of agriculture with manufacturingindustries; gradual abolition of the distinction between town and country, by a more equitable distribution of the population over the country.
  10. Free education for all children in public schools. Abolition of children’s factory labour in its present form. Combination of education with industrial production.[12]


Jake Tapper on Obama’s Tax Cut Deal with Republicans

Bell Says Tax Cut Deal a `Turning Point’ for Obama

Obama Defends Deal With Republicans on Tax Cut



Jim Rogers on CNBC Kudlow Report 12_7_10

Explain it to me: Bush-era tax cuts


 

Anderson Cooper 360°: Obama agrees to extend Bush tax cuts

Tax Year 2002[3] Tax Year 2003[4]
Income level Tax rate Income level Tax rate
up to $6,000 10% up to $7,000 10%
$6,000 – $27,950 15% $7,000 – $28,400 15%
$27,950 – $67,700 27% $28,400 – $68,800 25%
$67,700 – $141,250 30% $68,800 – $143,500 28%
$141,250 – $307,050 35% $143,500 – $311,950 33%
over $307,050 38.6% over $311,950 35%

 

 

 

 

Series Id:           LNS12000000
Seasonally Adjusted
Series title:        (Seas) Employment Level
Labor force status:  Employed
Type of data:        Number in thousands
Age:                 16 years and over
Download:
Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
2000 136559(1) 136598 136701 137270 136630 136940 136531 136662 136893 137088 137322 137614  
2001 137778 137612 137783 137299 137092 136873 137071 136241 136846 136392 136238 136047  
2002 135701 136438 136177 136126 136539 136415 136413 136705 137302 137008 136521 136426  
2003 137417(1) 137482 137434 137633 137544 137790 137474 137549 137609 137984 138424 138411  
2004 138472(1) 138542 138453 138680 138852 139174 139556 139573 139487 139732 140231 140125  
2005 140245(1) 140385 140654 141254 141609 141714 142026 142434 142401 142548 142499 142752  
2006 143142(1) 143444 143765 143794 144108 144370 144229 144631 144797 145292 145477 145914  
2007 146032(1) 146043 146368 145686 145952 146079 145926 145685 146193 145885 146483 146173  
2008 146421(1) 146165 146173 146306 146023 145768 145515 145187 145021 144677 143907 143188  
2009 142221(1) 141687 140854 140902 140438 140038 139817 139433 138768 138242 138381 137792  
2010 138333(1) 138641 138905 139455 139420 139119 138960 139250 139391 139061 138888    
1 : Data affected by changes in population controls.
Series Id:           LNS14000000
Seasonally Adjusted
Series title:        (Seas) Unemployment Rate
Labor force status:  Unemployment rate
Type of data:        Percent or rate
Age:                 16 years and over
 Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
2000 4.0 4.1 4.0 3.8 4.0 4.0 4.0 4.1 3.9 3.9 3.9 3.9  
2001 4.2 4.2 4.3 4.4 4.3 4.5 4.6 4.9 5.0 5.3 5.5 5.7  
2002 5.7 5.7 5.7 5.9 5.8 5.8 5.8 5.7 5.7 5.7 5.9 6.0  
2003 5.8 5.9 5.9 6.0 6.1 6.3 6.2 6.1 6.1 6.0 5.8 5.7  
2004 5.7 5.6 5.8 5.6 5.6 5.6 5.5 5.4 5.4 5.5 5.4 5.4  
2005 5.3 5.4 5.2 5.2 5.1 5.0 5.0 4.9 5.0 5.0 5.0 4.9  
2006 4.7 4.8 4.7 4.7 4.6 4.6 4.7 4.7 4.5 4.4 4.5 4.4  
2007 4.6 4.5 4.4 4.5 4.4 4.6 4.6 4.6 4.7 4.7 4.7 5.0  
2008 5.0 4.8 5.1 5.0 5.4 5.5 5.8 6.1 6.2 6.6 6.9 7.4  
2009 7.7 8.2 8.6 8.9 9.4 9.5 9.4 9.7 9.8 10.1 10.0 10.0  
2010 9.7 9.7 9.7 9.9 9.7 9.5 9.5 9.6 9.6 9.6 9.8    
Series Id:           LNS13000000
Seasonally Adjusted
Series title:        (Seas) Unemployment Level
Labor force status:  Unemployed
Type of data:        Number in thousands
Age:                 16 years and over
 
Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
2000 5708 5858 5733 5481 5758 5651 5747 5853 5625 5534 5639 5634  
2001 6023 6089 6141 6271 6226 6484 6583 7042 7142 7694 8003 8258  
2002 8182 8215 8304 8599 8399 8393 8390 8304 8251 8307 8520 8640  
2003 8520 8618 8588 8842 8957 9266 9011 8896 8921 8732 8576 8317  
2004 8370 8167 8491 8170 8212 8286 8136 7990 7927 8061 7932 7934  
2005 7784 7980 7737 7672 7651 7524 7406 7345 7553 7453 7566 7279  
2006 7059 7185 7075 7122 6977 6998 7154 7097 6853 6728 6883 6784  
2007 7085 6898 6725 6845 6765 6966 7113 7096 7200 7273 7284 7696  
2008 7628 7435 7793 7631 8397 8560 8895 9509 9569 10172 10617 11400  
2009 11919 12714 13310 13816 14518 14721 14534 14993 15159 15612 15340 15267  
2010 14837 14871 15005 15260 14973 14623 14599 14860 14767 14843 15119    

FACTBOX-Obama’s deal with Republican on Bush tax cuts

*

Obama proposes 2-year extension of all tax rates

* Concedes to Republicans on individual, estate taxes

* Angry response from many fellow Democrats

Dec 8 (Reuters) – President Barack Obama proposed a Republican-backed tax deal this week to extend all Bush-era income tax cuts for two years, veering to the right after his party suffered big losses in last month’s congressional elections.

The plan still needs to gain at least some support from congressional Democrats, who control both houses of Congress for the rest of this year.

As

a result of the Nov. 2 elections, Republicans will take control of the House of Representatives next year and expand their power in the Senate, leading Obama to make a deal.

Without this legislation, all tax cuts initiated by former President George W. Bush expire on Dec. 31.

Most Democrats want to extend the lower tax rates for individual income up to $200,000 only, while Republicans pushed for extending tax cuts for everyone including the wealthiest.

The Democratic option passed the House last week but failed to pass the Senate on Saturday, leading to what Obama called a necessity to deal with Republicans to prevent most Americans from seeing higher tax bills come January.

Following are key components of the deal:

INDIVIDUAL INCOME, INVESTMENT TAXES

* Obama and his economic advisers came out strongly before the congressional elections on the need to extend only the so-called middle-class rates, arguing the country couldn’t afford the extra billions it costs to fund the extended breaks for the rich.

* After Republican gains on election day, though, Obama signaled he was open to compromise. First he offered a temporary extension of the top rates with a permanent extension of the lower rates. Republicans rejected that offer.

* Along with keeping all the current tax rates as is, the deal also keeps capital gains and dividends taxed at a top rate of 15 percent. Obama and Democrats had sought a 20 percent top rate.

ESTATE TAX

* Obama also gave in to Republican demands on the estate tax, by proposing a 35 percent tax with a $5

million

individual exemption level.

* That level was originally pitched by Republican Senator Jon Kyl. Obama and Democrats had wanted to renew the tax at 2009 levels of 45 percent rate with a $3.5 million exemption level. The estate tax expired this year.

UNEMPLOYMENT INSURANCE

* The deal proposes to extend long-term unemployment insurance for 13 months, without a requirement that it be paid for immediately with budget cuts elsewhere, as Republicans had been demanding.

* Two million people by the end of the year will lose their benefits if the benefits are not extended, according to the National Employment Law Project, which advocates for workers’ rights.

* Jobless benefits usually expire after six months, but since the recession took hold in 2007, Congress has voted to extend them for up to 99 weeks.

ALTERNATIVE MINIMUM TAX

The plan “patches” the alternative minimum tax by indexing it to inflation to prevent more than 20 million middle-class taxpayers from getting hit with the tax, which originally was intended to ensure the wealthy pay some income taxes.

EXPENSING FOR BUSINESS

* Lets businesses of all sizes to write off investments faster in 2011. This benefits capital-intensive companies the most.

PAYROLL TAX CUT

* Employers and workers each pay a 6.2 percent payroll tax, which funds Social Security. Under the proposal, workers get a two percent cut in their share for one year, so they will pay a 4.2 percent payroll tax in 2011.

* The Social Security Trust Fund would be paid back by a transfer of general funds.

* A payroll tax credit was recently recommended by several deficit-fighting panels as a way to spur growth.

FAMILY TAX CREDITS

* Continuation of the Earned Income Tax Credit for working families for two years.

* Extension of a $1,000 child tax credit for two years.

* Renewal of a college tax credit of up to $2,500 for two years. (Editing by Philip Barbara)

 

Jobs and Growth Tax Relief Reconciliation Act of 2003

The tax cuts enacted by this legislation were retroactive to January 1, 2003
and first applied to taxes filed for the 2003 tax year. These individual rate
reductions are scheduled to sunset on January 1, 2011 along with the Economic
Growth and Tax Relief Reconciliation Act of 2001 unless further legislation is
enacted to make its changes permanent.[2] This comparison
shows how the ordinary taxable income brackets for each filing status were
changed.

Single

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