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Monday, August 1, 2011

Debt Ceiling "Deal"

Last night, there was an announced agreement on the debt ceiling increase.

The deal reached by Democratic and Republican leaders in Congress, Obama said, would first cut nearly $1 trillion in spending over the next 10 years while raising the debt ceiling by the same amount.
Notice the semantics. "We're cutting spending by $1 trillion."

However, that's the cuts *OVER 10 YEARS*. The cut in current spending is around $100B, on tenth.

Notice that $100B is a negligible amount, compared to the total Federal government's budget.

Really, the Federal government's budget needs to be slashed by 50%-75% or more. That "isn't politically feasible", because lobbyists will always object when you cut their pork.

Also, the cuts in years 2-10 mean *NOTHING*. A future Congress can always change their mind.

State budget logic is amusing. If you increase spending by less then expected, that's a budget cut.

As I predicted, the Republicans and Democrats reached a deal. What do you expect them to do? Shut down the Federal government permanently and go get a real job? Of course they reached a deal.

Unless Congress repeals or reforms the Federal Reserve, an exponentially-increasing national debt is needed to keep the monetary system scam running. The rules of the monetary system guarantee that Congress must periodically raise the national debt limit.


Anonymous said...

steamroller says:
You KNEW they were going to cut a deal. There was only one caveat: Go along to get along and don't rock the boat before the 2012 election. They hope we will think past corruption and malfeasance - - all the way to hope and change. The only negotiating is between the incompetent left and the incalcitrant right. What results is a new brand of even more nefarious theft by the scoundrels. Nobody who knew anything for sure believed there would be a default - althought it would have been a utilitarian default of benefit to us, the victims of the theft.

DC said...

I actually know some people who were worried about the outcome!

I've tried to explain things to them as best I can, but I swear they can not hear anything I say. It is like talking to a dog.

FSK. If you can, I need your advice. My Grand father died last year. He had donated his house to a collage in the 1990's. Last year, after he died, the collage took possession of the house and auctioned it off.
Now the state of New York wants to collect inheritance tax from us. The tax is something like 40% of the value of the house.
He donated his house to the school and they got the full value of the sale.
My mom is freaking out about this.
She assumed that his house was just a clean write off with no tax consequences.
Any ideas?

FSK said...

I'm not an expert on estate tax law. Unfortunately, you need a lawyer and an accountant. Contact the college. They may offer to pay the legal expenses or help you.

The way tax law works is "Whatever the tax collector says is by default assumed to be correct."

You probably are screwed. No good deed goes unpunished.

It's like the guy who caught Derek Jeter's baseball gave it back to Derek Jeter, and he still owes a huge tax bill. Cases like this make it seem how the tax system is obviously unfair. (BTW, if he kept the ball, he *SHOULD* owe zero tax. His cost basis in the ball is the cost of attending the game.)

DC said...

FSK: Thank you very much for your response and advice.

We have two accountants. Guess what they are good for?

My mom has told me that so far this year 19 tax returns have been filed for the estate. This is hard to believe, but she is not one to exaggerate.

One thing that I have learned from this fiasco is that having a living trust and designating an executor of your estate is very important. If you do not do this your estate goes to probate court and then your heirs are truly screwed.

At least my grandfather had the foresight to avoid that nightmare.

Thanks much,

If he did not sell the ball I think he would still owe taxes based on "found treasure". If you find treasure I think you are required to pay taxes. Not sure . . but probably.

FSK said...

I guess the accountants are useless. They're going to get nice fees and you still have to pay the tax also.

Since it's an estate tax situation, you probably legally can't go pro se. The estate has to have its own lawyer and accountant.

Advice: If you want to give money to your children, buy gold and silver coins, take physical delivery, and don't report the transaction!

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