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Democrats Should Propose Alternative Offsets

Democrats Should Propose Alternative Offsets

Authored by Bill King via RealClear Wire,

Last week, Republicans in the U.S. House of Representatives…



Democrats Should Propose Alternative Offsets

Authored by Bill King via RealClear Wire,

Last week, Republicans in the U.S. House of Representatives passed a $14.3 billion aid package to Israel, paired with a corresponding cut in the increased funding for the IRS included in the Inflation Control Act passed last year. The bill was almost unanimously opposed by Democrats, who lashed out at the new speaker and Republicans for holding aid to Israel hostage to providing tax cuts to the wealthy.

The bill, which will be dead on arrival at the U.S. Senate, was mostly partisan theatrics, with Republicans attempting to placate their base that is pro-Israel but hates more funding for the IRS. Democrats, however, played along with the theatrics when they could have begun a serious conversation about our national debt.

After all, it did just exceed $33 trillion and now equates to 123% of our gross domestic product. While that is down slightly from stratospheric levels at the height of the pandemic, these are levels we have not seen since WWII. So, I am completely okay with members of Congress insisting that any new spending be offset by cutting spending somewhere else.

However, I do not agree with the Republicans’ proposal to reduce IRS enforcement. I pay my taxes and I suspect that the vast majority of you do as well. When someone is not paying their taxes that means that you and I must pay more.

Many economists estimate that as much as 10% of our economy is conducted underground and is never taxed. Much of this is in the illicit drug and human trafficking trades. But there is also a large independent contractor community that largely does not pay the same income and payroll taxes that you and I do. At a GDP of about $28 trillion, if the 10% estimates are accurate, that is $2.8 trillion escaping taxation. The federal government collects about 20% for every dollar of GDP, so taxing the $2.8 trillion in the underground economy could yield as much as $500-600 billion annually. By the way, that would be enough to cut our current annual deficit in half.

But beyond those completely avoiding taxation in the shadows, there is plenty of other fudging that goes on in the preparation of tax returns. For many years, I practiced commercial litigation. In a number of cases, I had the opportunity to review tax returns of prominent and successful individuals as part of the discovery process. I saw all kinds of schemes to reduce their tax bills that would not stand up in an audit. I saw one case where a couple owned a vacation home in a family limited partnership and wrote off the expenses as if it was a business. I saw another where the owners of a private company wrote off all of the expenses of their corporate jet, yet the logs showed that it was routinely used for purely personal trips.

Those in the underground economy and those fudging their tax returns do so, and almost always get away with it, because the IRS is overwhelmed and only audits a tiny fraction, about .04% of returns filed. I am perfectly fine with Congress setting limits on the kinds of returns that can be audited – say only those over $500,000 and those failing to report their income altogether. But to just say we are going to starve the IRS of resources so they cannot enforce our tax laws is self-defeating and grossly unfair to those of us who do pay our taxes.

And it’s not as though there aren’t plenty of other places to cut or loopholes to plug – loopholes which ultimately have the same effect as spending. For example, the carried interest loophole, which allows private equity investors to treat an interest they receive for putting to together a deal as a capital gain instead of regular income, costs the federal government as much as $18 billion annually – enough to fund the aid to Israel by itself.

Of course, the cost of the aid to Israel, even if you throw in the aid to Ukraine and some money for the southern border (all of which enjoy widespread, bi-partisan support), are a rounding error on our national debt and deficits going forward. The Congressional Budget Office’s current baseline projections are that the federal government will run up another $15 trillion in debt this decade, mostly driven by the rising costs of Social Security, Medicare, and Medicaid. The entire package proposed by Biden for Israel, Ukraine, and the border is only about 7% of the deficit this year and .05% of the deficit projected for this decade.

Until we start talking about the fact that Social Security, Medicare, and Medicaid are not sustainable in their current forms, any discussion about the national debt and deficits is mostly partisan noise. But you must start somewhere. So, let’s hear it, Democrats. What is your alternative proposed offset to provide this aid to Israel and Ukraine and to strengthen our southern border?

Tyler Durden Wed, 11/08/2023 - 18:20

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Angry Shouting Aside, Here’s What Biden Is Running On

Angry Shouting Aside, Here’s What Biden Is Running On

Last night, Joe Biden gave an extremely dark, threatening, angry State of the Union…



Angry Shouting Aside, Here's What Biden Is Running On

Last night, Joe Biden gave an extremely dark, threatening, angry State of the Union address - in which he insisted that the American economy is doing better than ever, blamed inflation on 'corporate greed,' and warned that Donald Trump poses an existential threat to the republic.

But in between the angry rhetoric, he also laid out his 2024 election platform - for which additional details will be released on March 11, when the White House sends its proposed budget to Congress.

To that end, Goldman Sachs' Alec Phillips and Tim Krupa have summarized the key points:


While railing against billionaires (nothing new there), Biden repeated the claim that anyone making under $400,000 per year won't see an increase in their taxes.  He also proposed a 21% corporate minimum tax, up from 15% on book income outlined in the Inflation Reduction Act (IRA), as well as raising the corporate tax rate from 21% to 28% (which would promptly be passed along to consumers in the form of more inflation). Goldman notes that "Congress is unlikely to consider any of these proposals this year, they would only come into play in a second Biden term, if Democrats also won House and Senate majorities."

Biden also called on Congress to restore the pandemic-era child tax credit.


Instead of simply passing a slew of border security Executive Orders like the Trump ones he shredded on day one, Biden repeated the lie that Congress 'needs to act' before he can (translation: send money to Ukraine or the US border will continue to be a sieve).

As immigration comes into even greater focus heading into the election, we continue to expect the Administration to tighten policy (e.g., immigration has surged 20pp the last 7 months to first place with 28% in Gallup’s “most important problem” survey). As such, we estimate the foreign-born contribution to monthly labor force growth will moderate from 110k/month in 2023 to around 70-90k/month in 2024. -GS


Biden, with House Speaker Mike Johnson doing his best impression of a bobble-head, urged Congress to pass additional assistance for Ukraine based entirely on the premise that Russia 'won't stop' there (and would what, trigger article 5 and WW3 no matter what?), despite the fact that Putin explicitly told Tucker Carlson he has no further ambitions, and in fact seeks a settlement.

As Goldman estimates, "While there is still a clear chance that such a deal could come together, for now there is no clear path forward for Ukraine aid in Congress."


Biden, forgetting about all the aggressive tariffs, suggested that Trump had been soft on China, and that he will stand up "against China's unfair economic practices" and "for peace and stability across the Taiwan Strait."


Lastly, Biden proposed to expand drug price negotiations to 50 additional drugs each year (an increase from 20 outlined in the IRA), which Goldman said would likely require bipartisan support "even if Democrats controlled Congress and the White House," as such policies would likely be ineligible for the budget "reconciliation" process which has been used in previous years to pass the IRA and other major fiscal party when Congressional margins are just too thin.

So there you have it. With no actual accomplishments to speak of, Biden can only attack Trump, lie, and make empty promises.

Tyler Durden Fri, 03/08/2024 - 18:00

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United Airlines adds new flights to faraway destinations

The airline said that it has been working hard to "find hidden gem destinations."



Since countries started opening up after the pandemic in 2021 and 2022, airlines have been seeing demand soar not just for major global cities and popular routes but also for farther-away destinations.

Numerous reports, including a recent TripAdvisor survey of trending destinations, showed that there has been a rise in U.S. traveler interest in Asian countries such as Japan, South Korea and Vietnam as well as growing tourism traction in off-the-beaten-path European countries such as Slovenia, Estonia and Montenegro.

Related: 'No more flying for you': Travel agency sounds alarm over risk of 'carbon passports'

As a result, airlines have been looking at their networks to include more faraway destinations as well as smaller cities that are growing increasingly popular with tourists and may not be served by their competitors.

The Philippines has been popular among tourists in recent years.


United brings back more routes, says it is committed to 'finding hidden gems'

This week, United Airlines  (UAL)  announced that it will be launching a new route from Newark Liberty International Airport (EWR) to Morocco's Marrakesh. While it is only the country's fourth-largest city, Marrakesh is a particularly popular place for tourists to seek out the sights and experiences that many associate with the country — colorful souks, gardens with ornate architecture and mosques from the Moorish period.

More Travel:

"We have consistently been ahead of the curve in finding hidden gem destinations for our customers to explore and remain committed to providing the most unique slate of travel options for their adventures abroad," United's SVP of Global Network Planning Patrick Quayle, said in a press statement.

The new route will launch on Oct. 24 and take place three times a week on a Boeing 767-300ER  (BA)  plane that is equipped with 46 Polaris business class and 22 Premium Plus seats. The plane choice was a way to reach a luxury customer customer looking to start their holiday in Marrakesh in the plane.

Along with the new Morocco route, United is also launching a flight between Houston (IAH) and Colombia's Medellín on Oct. 27 as well as a route between Tokyo and Cebu in the Philippines on July 31 — the latter is known as a "fifth freedom" flight in which the airline flies to the larger hub from the mainland U.S. and then goes on to smaller Asian city popular with tourists after some travelers get off (and others get on) in Tokyo.

United's network expansion includes new 'fifth freedom' flight

In the fall of 2023, United became the first U.S. airline to fly to the Philippines with a new Manila-San Francisco flight. It has expanded its service to Asia from different U.S. cities earlier last year. Cebu has been on its radar amid growing tourist interest in the region known for marine parks, rainforests and Spanish-style architecture.

With the summer coming up, United also announced that it plans to run its current flights to Hong Kong, Seoul, and Portugal's Porto more frequently at different points of the week and reach four weekly flights between Los Angeles and Shanghai by August 29.

"This is your normal, exciting network planning team back in action," Quayle told travel website The Points Guy of the airline's plans for the new routes.

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Walmart launches clever answer to Target’s new membership program

The retail superstore is adding a new feature to its Walmart+ plan — and customers will be happy.



It's just been a few days since Target  (TGT)  launched its new Target Circle 360 paid membership plan. 

The plan offers free and fast shipping on many products to customers, initially for $49 a year and then $99 after the initial promotional signup period. It promises to be a success, since many Target customers are loyal to the brand and will go out of their way to shop at one instead of at its two larger peers, Walmart and Amazon.

Related: Walmart makes a major price cut that will delight customers

And stop us if this sounds familiar: Target will rely on its more than 2,000 stores to act as fulfillment hubs. 

This model is a proven winner; Walmart also uses its more than 4,600 stores as fulfillment and shipping locations to get orders to customers as soon as possible.

Sometimes, this means shipping goods from the nearest warehouse. But if a desired product is in-store and closer to a customer, it reduces miles on the road and delivery time. It's a kind of logistical magic that makes any efficiency lover's (or retail nerd's) heart go pitter patter. 

Walmart rolls out answer to Target's new membership tier

Walmart has certainly had more time than Target to develop and work out the kinks in Walmart+. It first launched the paid membership in 2020 during the height of the pandemic, when many shoppers sheltered at home but still required many staples they might ordinarily pick up at a Walmart, like cleaning supplies, personal-care products, pantry goods and, of course, toilet paper. 

It also undercut Amazon  (AMZN)  Prime, which costs customers $139 a year for free and fast shipping (plus several other benefits including access to its streaming service, Amazon Prime Video). 

Walmart+ costs $98 a year, which also gets you free and speedy delivery, plus access to a Paramount+ streaming subscription, fuel savings, and more. 

An employee at a Merida, Mexico, Walmart. (Photo by Jeffrey Greenberg/Universal Images Group via Getty Images)

Jeff Greenberg/Getty Images

If that's not enough to tempt you, however, Walmart+ just added a new benefit to its membership program, ostensibly to compete directly with something Target now has: ultrafast delivery. 

Target Circle 360 particularly attracts customers with free same-day delivery for select orders over $35 and as little as one-hour delivery on select items. Target executes this through its Shipt subsidiary.

We've seen this lightning-fast delivery speed only in snippets from Amazon, the king of delivery efficiency. Who better to take on Target, though, than Walmart, which is using a similar store-as-fulfillment-center model? 

"Walmart is stepping up to save our customers even more time with our latest delivery offering: Express On-Demand Early Morning Delivery," Walmart said in a statement, just a day after Target Circle 360 launched. "Starting at 6 a.m., earlier than ever before, customers can enjoy the convenience of On-Demand delivery."

Walmart  (WMT)  clearly sees consumers' desire for near-instant delivery, which obviously saves time and trips to the store. Rather than waiting a day for your order to show up, it might be on your doorstep when you wake up. 

Consumers also tend to spend more money when they shop online, and they remain stickier as paying annual members. So, to a growing number of retail giants, almost instant gratification like this seems like something worth striving for.

Related: Veteran fund manager picks favorite stocks for 2024

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