This has nothing to do with the "Fair Tax".

It's hard to know what you're agreeing with there, but I assume it's about the payroll tax holiday.

Cain seems to be a fan of the "Fair Tax" (sic). Different animal.

There are lots of reasons to be skeptical of a payroll tax holiday, and all proposals aren't equal. I doubt that Cain would be a fan of Reich's proposal from August 2009 - http://robertreich.o...propose-a-peoples

[...]

Republicans understand the art of tax demagoguery: Put the other side on the defensive by forcing them to explain why a Âtax increaseÂ is warranted and they lose regardless.

So instead of playing defense, Democrats should go on the attack.

Accuse Republicans of being shills for the rich.

And donÂt stop there. Do tax jujitsu. In addition to ending the Bush tax cut for the rich, put forward another proposal for growing the economy that cuts taxes on lower-income Americans.

Democrats should propose eliminating payroll taxes on the first $20,000 of income, and making up the revenue loss by applying payroll taxes to incomes above $250,000.

This would give the economy an immediate boost by adding to the paychecks of just about every working American. 80 percent of Americans pay more in payroll taxes than they do in income taxes. And because lower-income people would get most of the benefit, itÂs likely to be spent.

It would also give employers an extra incentive to hire because theyÂd save on their share of the payroll tax. And most of the incentive would be directed toward hiring lower-income workers Â who have taken the biggest hit on jobs and pay during the recession.

It wouldnÂt add to the deficit. Lost revenues would be made up by applying payroll taxes to income exceeding $250,000. This is certainly fair. As it is now, the Social Security payroll tax doesnÂt apply to any income over $106,000. Having the tax kick in again at $250,000 would draw on the top 3 percent of earners, who (as noted) now rake in a larger portion of total income than they have in more than 80 years.

Call it the PeopleÂs Tax Cut, and let Republicans explain why theyÂre against it.

Yeah, the Treasury and the Fed aren't the same. They work together though. E.g. from October 2008 - http://www.econbrows...ance_sheet_o.html

But how did the Fed acquire all that stuff, with "only" a $160 B increase in reserve balances and a $30 B increase in currency outstanding? The answer is to be found in a new entry on the liability side described as "Treasury supplementary financing account." This was announced by the U.S. Treasury through the following somewhat obscure release:

The Federal Reserve has announced a series of lending and liquidity initiatives during the past several quarters intended to address heightened liquidity pressures in the financial market, including enhancing its liquidity facilities this week. To manage the balance sheet impact of these efforts, the Federal Reserve has taken a number of actions, including redeeming and selling securities from the System Open Market Account portfolio.

The Treasury Department announced today the initiation of a temporary Supplementary Financing Program at the request of the Federal Reserve. The program will consist of a series of Treasury bills, apart from Treasury's current borrowing program, which will provide cash for use in the Federal Reserve initiatives.

Announcements of and participation in auctions conducted under the Supplementary Financing Program will be governed by existing Treasury auction rules. Treasury will provide as much advance notification as possible regarding the timing, size, and maturity of any bills auctioned for Supplementary Financing Program purposes.

Here's what I take that to mean. I gather that the Treasury auctioned off some extra T-bills to the public, in addition to their usual weekly auction, and simply kept the receipts as deposits in an account with the Fed. If that were the end of the story and the Fed kept its total liabilities constant, it would result in a huge (completely infeasible technically) drain on reserve balances and currency in circulation, as banks sought to deliver reserves to the Treasury's account to honor their customers' purchases of the T-bills. So the Fed offset the supplemental Treasury auction with a matching purchase of private assets, such as the PDCF and AMLF, thereby temporarily delivering reserves to banks which the banks in turn could hand over to the Treasury supplementary account. The net result of such dual Treasury/Fed operations is that the newly created "reserves" would just sit there in the Treasury supplementary account doing nothing other than standing as an accounting entry. In other words, the device allowed for a huge expansion of the Fed's balance sheet without causing any change in currency in circulation or reserve deposits.

Getting closer to the original topic - If the US exchange rate were fixed, and the US decided it wanted to devalue the dollar by, say, 30%, it would be the Treasury's job - http://en.wikipedia....y_of_the_Treasury Since the exchange rate is not fixed, that means nudging the market (and in this case the headwinds are due to a hurricane of buying of dollars, so moving it the other way won't be trivial).

Cheers,
Scott.

Post #332,360 by Another Scott 9/8/10 10:02:29 AM Reply	This has nothing to do with the "Fair Tax". It's hard to know what you're agreeing with there, but I assume it's about the payroll tax holiday. Cain seems to be a fan of the "Fair Tax" (sic). Different animal. There are lots of reasons to be skeptical of a payroll tax holiday, and all proposals aren't equal. I doubt that Cain would be a fan of Reich's proposal from August 2009 - http://robertreich.o...propose-a-peoples [...] Republicans understand the art of tax demagoguery: Put the other side on the defensive by forcing them to explain why a Âtax increaseÂ is warranted and they lose regardless. So instead of playing defense, Democrats should go on the attack. Accuse Republicans of being shills for the rich. And donÂt stop there. Do tax jujitsu. In addition to ending the Bush tax cut for the rich, put forward another proposal for growing the economy that cuts taxes on lower-income Americans. Democrats should propose eliminating payroll taxes on the first $20,000 of income, and making up the revenue loss by applying payroll taxes to incomes above $250,000. This would give the economy an immediate boost by adding to the paychecks of just about every working American. 80 percent of Americans pay more in payroll taxes than they do in income taxes. And because lower-income people would get most of the benefit, itÂs likely to be spent. It would also give employers an extra incentive to hire because theyÂd save on their share of the payroll tax. And most of the incentive would be directed toward hiring lower-income workers Â who have taken the biggest hit on jobs and pay during the recession. It wouldnÂt add to the deficit. Lost revenues would be made up by applying payroll taxes to income exceeding $250,000. This is certainly fair. As it is now, the Social Security payroll tax doesnÂt apply to any income over $106,000. Having the tax kick in again at $250,000 would draw on the top 3 percent of earners, who (as noted) now rake in a larger portion of total income than they have in more than 80 years. Call it the PeopleÂs Tax Cut, and let Republicans explain why theyÂre against it. Yeah, the Treasury and the Fed aren't the same. They work together though. E.g. from October 2008 - http://www.econbrows...ance_sheet_o.html But how did the Fed acquire all that stuff, with "only" a $160 B increase in reserve balances and a $30 B increase in currency outstanding? The answer is to be found in a new entry on the liability side described as "Treasury supplementary financing account." This was announced by the U.S. Treasury through the following somewhat obscure release: The Federal Reserve has announced a series of lending and liquidity initiatives during the past several quarters intended to address heightened liquidity pressures in the financial market, including enhancing its liquidity facilities this week. To manage the balance sheet impact of these efforts, the Federal Reserve has taken a number of actions, including redeeming and selling securities from the System Open Market Account portfolio. The Treasury Department announced today the initiation of a temporary Supplementary Financing Program at the request of the Federal Reserve. The program will consist of a series of Treasury bills, apart from Treasury's current borrowing program, which will provide cash for use in the Federal Reserve initiatives. Announcements of and participation in auctions conducted under the Supplementary Financing Program will be governed by existing Treasury auction rules. Treasury will provide as much advance notification as possible regarding the timing, size, and maturity of any bills auctioned for Supplementary Financing Program purposes. Here's what I take that to mean. I gather that the Treasury auctioned off some extra T-bills to the public, in addition to their usual weekly auction, and simply kept the receipts as deposits in an account with the Fed. If that were the end of the story and the Fed kept its total liabilities constant, it would result in a huge (completely infeasible technically) drain on reserve balances and currency in circulation, as banks sought to deliver reserves to the Treasury's account to honor their customers' purchases of the T-bills. So the Fed offset the supplemental Treasury auction with a matching purchase of private assets, such as the PDCF and AMLF, thereby temporarily delivering reserves to banks which the banks in turn could hand over to the Treasury supplementary account. The net result of such dual Treasury/Fed operations is that the newly created "reserves" would just sit there in the Treasury supplementary account doing nothing other than standing as an accounting entry. In other words, the device allowed for a huge expansion of the Fed's balance sheet without causing any change in currency in circulation or reserve deposits. Getting closer to the original topic - If the US exchange rate were fixed, and the US decided it wanted to devalue the dollar by, say, 30%, it would be the Treasury's job - http://en.wikipedia....y_of_the_Treasury Since the exchange rate is not fixed, that means nudging the market (and in this case the headwinds are due to a hurricane of buying of dollars, so moving it the other way won't be trivial). Cheers, Scott.
Post #332,361 by boxley 9/8/10 10:38:49 AM Reply	from October 12, 2009 http://www.wnd.com/i...php?pageId=112634 Suspend the payroll tax for one year. This gives an immediate 7.65 percent increase in take-home pay to all workers. It also lowers the payroll costs for all employers by 7.65 percent for one year. A total of about $900 billion would be injected directly into the economy immediately, rather than through the inefficiency of the federal government. Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
Post #332,364 by Another Scott 9/8/10 10:53:09 AM Reply	Interesting. Thanks. (The rest of it is bogus, of course.;-)

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