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Responsible Fiscal Cliff Resolution


Responsible governance isn’t rocket science. Nor is effective economic policy. Fiscal cliff resolution is as simple as doing the right thing. Both parties spurn doing so.

December 31 is a nominal deadline. Effectively it’s meaningless. New year legislation can be retroactive to January 1. Absent any, here’s what’s at stake.

Bush tax cuts revert automatically to Clinton-era levels. The current top 35% will rise to 39.6%. Average middle income families will pay an extra $2,200 annually.

High income earners have clever lawyers and accountants able. They’re able to minimize their burden. Ordinary people are hit hardest.

The payroll tax will rise from 4.2% to 6.2%. Doing so means a 50% tax increase for over 90% of Americans.

Payroll taxes shouldn’t have been cut in the first place. Better economic stimulus methods exist. Cuts drain Social Security Trust Fund reserves. Doing so irreparably hurts the ability to pay future benefits.

Congress planned it that way. Both parties want Social Security privatized. Doing so assures destroying it altogether. It also violates Franklin Roosevelt’s pledge. He said:

 ”We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits.”

 ”With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren’t a matter of economics. They’re straight politics.”

Both parties play hardball. Class war defines their agenda. America’s social contract is on the chopping block for elimination. A decade from now it won’t exist in its current form. In two decades or less it will disappear altogether.

Doing so means using America’s resources for waging war on humanity, increasing corporate profitability, and benefitting super-rich elites already with too much. Vital popular needs will be sacrificed.

Nominally at midnight December 31, unemployment benefits for 2.1 million Americans expire. They represent those without jobs longterm. In 2013 Q I, another million Americans will lose their benefits. More will lose out throughout the year.

Budget sequestration kicks in. Initially, automatic $1.2 trillion in spending cuts are mandated. Nominally they’re across the board. Obama, most Democrats, and Republicans agree.

Defense spending will rise, not fall. America’s war machine will be generously funded. War profiteers demand it. Bipartisan complicity won’t disappoint.

Social America will be hardest hit. It’s longstanding policy. Over the next decade, agreement was reached on cutting about $4 trillion. Before it ends, expect much more.

Social Security, Medicare, Medicaid, and public pensions are prime targets. Other vital social programs are included. Erosion and planned privatization assure eliminating them.

So does eventually ending virtually all benefits disadvantaged households now get. Bedrock programs will be entirely destroyed. Doing so in their current form comes first. Eliminating them altogether follows.

The annual “doc fix” also expires. Medicare’s growth formula ties physician compensation to economic performance. Healthcare providers get shortchanged. Doc fixes minimize damage.

Unless renewed, physician compensation will drop 26.5%. Doing so assures more doctors dropping out of the program altogether. Many already did so.

The alternative minimum tax (AMT) expires. Annual congressional patches keep it in place. In 1969, it was introduced.

Initially it was conceived as a system to assure high-income earners, corporations, trusts, and estates pay at least minimal taxes. Currently around 20% of households are affected.

Thresholds aren’t automatically adjusted for inflation. For years, Congress enacted one-year patches. At times, modest inflation relief was included. AMT kicks in if tentative minimum taxes exceed regular ones.

Tentative ones are AMT amounts times alternative minimum taxable income less the AMT foreign tax credit. Regular ones equal income tax obligations minus foreign and possessions tax credits.

The AMT is a very complicated. It’s a parallel tax system. Ordinary people need accountants to determine if it affects them. What began in 1969 is totally dysfunctional. Many middle income earners are hard hit. Nominally it wasn’t supposed to be this way.

Patches rectify things annually. Failure to do so assures voter rage. It’s been avoided so far. Given bipartisan agreement to destroy America’s social contract, anything is possible ahead.

Social destructiveness is prioritized. Doing what’s right is spurned. Imagine the difference effective policies would make. Key ones include:

Putting money power back in public hands where it belongs. The Constitution’s Article I, Section 8 mandates it.

Public banking works. It’s an idea whose time has come. Privatized money power is destructive. Regaining public control more than ever is needed.

Colonial America prospered that way tax and inflation-free. It’s the same wherever it’s instituted. Imagine if Wall Street’s controlled Federal Reserve was nationalized.

Its franchise would be abolished. Giant banks could be broken up. Too-big-to-fail ones could end. Insolvent ones would be shut down. Responsibly run public ones would replace them.

Sustainable inflation-free prosperity could follow. Readily available credit makes it possible. All boats could be lifted equitably. It happened in America before and could again. Political will alone prevents it.

Imagine the difference under public banks. They’re not beholden to Wall Street or shareholders. They don’t have to earn profits. They don’t pay huge salaries and bonuses.

They’re mandated only to serve communities, businesses of all sizes, farmers, and private individuals responsibly. They’re very much up to the task. They succeed marvelously.

Federal, state and local debt could be substantially reduced or eliminated. So could personal and payroll taxes. America’s manufacturing base could be rebuilt.

Social programs could be funded inflation-free. Infrastructure rebuilding could be prioritized. It could be done on a scale never before imagined.

Environmental cleanup could happen. Alternative, sustainable, clean, safe, affordable energy sources could be developed.

Millions of good-paying jobs could be created. Employment would exist for everyone willing and able to work. People with money spend it. Doing so enhances economic growth.

Home ownership would be available to millions. Foreclosures would end. Mortgages would be sustainably cheap. Booms and busts would end. So would destructive currency devaluations and economic warfare.

Private pensions, savings and investments would be safe. Social Security, Medicare, Medicaid, public pensions, and other vital benefits would be secure in perpetuity. So would sustainable prosperity.

Fiscal cliff duplicitous hype wouldn’t exist. Imagine this kind of nation. It’s not pie-in-the-sky. Colonial America proved it works. So have other nations where it was tried. Why not again now. Political will alone prevents it. People power can change things.

Reinstitute anti-trust laws with teeth. Prohibit monopoly and oligopoly power.

Revoke corporate personhood. Business giants are private tyrannies. Their rights are the same as people. Limited liability status eliminates most responsibilities.

They’re a universe unto themselves. They can reside in many places simultaneously. They can’t be imprisoned for wrongdoing. They take full advantage.

They’re obligated only to shareholders. Their power has grown exponentially. They’re out-of-control. They’re rapacious predators. They make US policy. They write legislation Congress passes. Presidents dutifully enact it. It’s high time that changed.

Dismantle destructive duopoly power. Replace it with multi-party direct democracy. Get money out of politics.

Break up big media. Make broadcasting a public utility. Airwaves belong to everyone. Business giants exploit it. Generous subsidies support them.

Prohibit corporate handouts, loopholes, and special benefits. Make corporations pay their fare share. Tax all profits equitably.

Mandate progressive taxation. Treat all forms of income equally.

Tax speculation. Impose a Tobin tax on large financial transactions.

Reinstitute Glass-Steagall. Decouple commercial from investment banks and insurers. Abolish the Commodity Futures Modernization Act. It legitimized swap agreements and other hybrid instruments.

It prevents regulatory oversight of derivatives and leveraging. It turned Wall Street crooks loose on unsuspecting investors. Fraud more than ever was institutionalized. It’s Wall Street’s business model.

Giant banks make money by stealing it. Crooked politicians permit it. Predatory rapaciousness is institutionalized. America’s 1% profits at the expense of others. Depression conditions harm growing millions. Reckless policies make it possible.

Mandate level playing field fairness. End monied corruption. Hold corporate bosses accountable. End America’s student loan racket. Reenergize organized labor. Let workers bargain collectively with management fairly.

Save public education. Institute it at the college and graduate school levels. Establish universal healthcare. Everyone in. No one left out.

End America’s permanent war policy. Prioritize peace. Close all overseas bases. Cut defense spending sharply. Use America’s resources for productive economic growth.

Imagine priorities this beneficial. Imagine a country fit to live in. Imagine widespread activism committed to achieve it. It won’t happen any other way. It never has. It never will.

Ordinary people are responsible for their own futures. They hold their fate in their own hands. It’s their choice. Act responsibly or lose out entirely. America’s on a fast track toward the worst of all possible worlds.

Imagine mass activism unwilling to tolerate it. Beneficial social change could follow. Institutionalizing it could become policy. It that’s not worth working for, what is?

Stephen Lendman lives in Chicago and can be reached at 

 His new book is titled “Banker Occupation: Waging Financial War on Humanity.”

Visit his blog site at and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.


First Person: Money Moves we Put on Hold Until Landing a Full-Time Job

we done some-more income in my early 20s than many of my Generation-X peers. As an eccentric executive in a 1990s, though, we was during a financial waste when it came to financing a home and receiving advantages that come with a full-time job. In my 20s, we was also traffic with tyro loan debt and credit label debt that we acquired during college. Paying debt mostly took a large cube of my monthly paychecks that ranged from $3,000 to $5,000.

Although we mislaid some coherence and freedoms when we started a full-time pursuit in my late 20s, we was means to finally make my best income moves that we had behind until then.

Setting adult a 401(k)

My initial income pierce when we got my full-time pursuit was to set adult a 401(k). Although we never had entrance to an employer-sponsored retirement devise in a past, we had usually started contributing to a Roth IRA. The Roth IRA was a new investment choice on a stage in a late 1990s. With a 401(k), we could suffer receiving a association compare to a commission of my contributions. In a past 10 years, we watched my 401(k) grow from zero to about $75,000. we don’t consider we would have saved that most income on my possess but a palliate of a income automatically being deducted from my paycheck.

Buying a home

When we attempted to obtain a debt in my 20s, we was denied. Having too most credit label and student loan debt was one factor. But even after we paid off my debt, we was denied since my eccentric executive work was noticed as being too unstable. Even yet we done usually half as most income with my full-time job, a banks noticed my conditions as most some-more financially stable. we usually had to lease an unit and reason down a full-time pursuit for one year before my debt loan focus was approved. Buying a home was another good financial pierce that authorised me to build wealth.

Opening a health assets account

When we was an eccentric contractor, we paid out of slot for my medical expenses. In some cases, we had to use a credit label to compensate for astonishing trips to a obligatory caring clinic. After removing a full-time pursuit we motionless to pointer adult for a health assets account. My association contributed $500 a year to a account. we also had income deducted from my paycheck. Having a health assets comment has supposing me with a clarity of financial confidence that we never felt when we was on my own.

When we initial schooled what a starting income was for my full-time job, we was shocked. we was used to creation twice as much. Still, we shortly detected there are dark financial advantages to carrying a full-time pursuit that we had deliberate when we was younger. In further to receiving health benefits, my employer also paid for expenses. we perceived giveaway income in a form of matches to my 401(k). Also, we was finally means to know what it was like to accept a paid vacation and paid ill days. Perhaps a usually parable was that my full-time pursuit would yield a feeling of pursuit security. With a recession, any clarity of confidence was thrown out a window as layoffs became commonplace.

*Note: This was created by a Yahoo! contributor. Do we have a personal financial story that you’d like to share? Sign up with a Yahoo! Contributor Network to start edition your possess financial articles.

More from this contributor:

Working harder should be me rich

Home improvements that paid off when we sold

Reaching my Debt Set Point

A New Pay-as-You-Earn Student Loan Repayment Plan

A QA with Adam Minsky, a Boston attorney who specializes
in student loan law. Still paying off his own loans, he is
enrolled in an income-based repayment plan.


7 Smart Ways to Pay for College

How does the new repayment plan work?


: The best way to describe it is in relation to the current
income-based repayment plan. The IBR plan allows federal loan
borrowers who qualify based on their income in relation to their
loans to pay 15% of their discretionary income (the amount by which
adjusted gross income exceeds the poverty line, accounting for
family size). After 25 years, any remaining balance is forgiven.
The new Pay As You Earn plan cuts payments to 10% of income and
cuts the payment period from 25 to 20 years.

Are all federal loans eligible for the plan?

No, only Direct student loans, funded by the U.S. Department of
Education. Direct PLUS loans made to parents and consolidation
loans that repay parent PLUS loans aren’t eligible. The catch with
Pay As You Earn is that it doesn’t apply to every borrower. To
qualify, you can’t have had outstanding federal loans as of October
1, 2007, and you have to have received a new loan on or after
October 1, 2011. That effectively disqualifies most people in
repayment now.

What can they do?

IBR will remain available for people who qualify. So will
income-contingent repayment, which, like IBR, also has a 25-year
repayment period but requires payments of 20% of income. The good
news is that there are a lot of helpful programs. Consolidation can
make management of loans easier. Forgiveness options are available,
based not just on income but also on profession-such as public

What about students with private loans?

None of these programs exist for private loans. Their terms are
often worse, with higher rates, longer repayment and less-generous
forbearance. Private student loan problems in this country are

How many students will the new program help?

It’s hard to say. But anything that ensures that college grads
stay afloat is helpful. The consequences of defaulting on federal
loans are severe. The government can garnish wages, offset federal
benefits or seize tax refunds. And there’s no statute of
limitations; collectors can literally pursue you to the grave.

This article first appeared in

Kiplinger’s Personal Finance
magazine. For more help with your personal finances and
investments, please
subscribe to the magazine

. It might be the best investment you ever make.

An Alternative Route to Mortgage Approval

For many homebuyers, substantiating credit came naturally once they began working, practical for a credit card, automobile loan or paid behind tyro loans. But what about intensity homebuyers who don’t have a credit score possibly since they are credit label antithetic or have nonetheless to build adult a concrete credit story — can they still request for a mortgage?

The answer is “yes,” though “it’s awfully formidable to obtain a debt though a credit score,” says Tim Ross, boss and CEO of Ross Mortgage Corp. in Royal Oak, Mich. “Lenders use programmed underwriting systems that bottom a loan preference on certain criteria including a credit score. But there are some non-traditional sources that can be used for credit verification.”

Mortgage lenders typically need a credit measure of during slightest 620 or 640 to even cruise an applicant for a loan.

Whether we cite not to use credit cards, are new to this nation or are simply a younger borrower who hasn’t built adult adequate credit history, there are some choice sources debt lenders can use to settle your credit risk.

While many lenders need 3 or some-more sources of credit, Clint Madison, a comparison debt landowner with Envoy Mortgage in Walnut Creek, Calif., says, “I’ve worked with borrowers who have a slim credit record and been means to get them authorized for a loan. The initial thing we demeanour for would be 12 to 24 months of cancelled checks or corroboration from a landlord of on-time lease payments.”

Alternative sources of credit

Here are several other equipment that can be used for non-traditional credit verification, according to Ross:

  • Utility bills for gas, electricity or H2O as prolonged as they are paid alone from your monthly rent
  • Phone and wire bills
  • Car insurance, renter’s insurance, life word payments or medical word payments if they are not paid by payroll deduction
  • Child caring or propagandize fee payments

The some-more justification we can yield that indicates a story of on-time payments a larger your chances of qualifying.

“You need during slightest 12 months and infrequently as many as 24 months of payments to infer your creditworthiness,” says Ross. “A bigger down remuneration offsets your credit risk and so does your pursuit stability, your money pot and a high income in propinquity to your debts.”

Credit story matters

The reason for your miss of credit story will also impact your ability to validate for a loan.

“If you’re vital with your relatives and have nonetheless to settle any credit, it’s flattering most unfit to get a loan unless your relatives are peaceful to co-sign for you,” says Madison. “The relatives will need a credit measure during a smallest of 660 and you’ll need to have during slightest dual months or maybe as most as 6 months of principal, interest, taxes and word payments in money pot in a bank.”

Borrowers who are new to a U.S. might have a credit news from another country. Ross says those credit reports can be used to emanate a record of check payments for a loan application.

You might not know your loyal credit score

Even consumers who have a prolonged adequate credit story to furnish a measure still need choice sources of credit when requesting for a loan. The Consumer Financial Protection Bureau (CFPB) recently expelled a study that showed there are discrepancies between a credit measure given to a consumer and one reported to a lender.

“This investigate highlights a complexities consumers face in a credit scoring market,” pronounced CFPB Director Richard Cordray in a press release. “When consumers buy a credit score, they should be wakeful that a lender might be regulating a really opposite measure in creation a credit decision.”

The problem, says Madison, is that borrowers are set adult for fake expectations.

“They might possibly be awaiting to validate for a improved rate than they do, or they might remove out on opportunities for that they don’t trust they will qualify, when, in reality, they can,” says Madison. This is because carrying choice sources of credit — that can assistance infer your ability to repay a loan — is important.

Establishing credit

Ross says it takes only 6 months of credit label use to beget a credit score, though lenders would also need other sources of credit in further to your six-month-old score.

“Using choice credit doesn’t change someone’s credit score, so if your measure is low, all we can do is let time pass while we do a right thing over and over again,” says Madison.

It’s generally critical that impending buyers with skinny credit deliberate with a debt lender, says Ross. They can yield we with “a highway map to follow to urge your chances of subordinate for a mortgage.”

The strange essay can be found during
An choice track to debt approval

Tips for Low-Income Students to Pay for College

While a four-year degree has become a pricey investment for students of all socioeconomic backgrounds, data shows many low-income families can’t afford to make the college dream a reality.

According to Postsecondary Education Opportunity, 79% of students born into the top income quartile in the U.S. obtain bachelor’s degrees while only 11% of students from bottom-quartile families graduate from four-year universities. 

Although college can be expensive, a diploma means higher salaries and better career advancement, and it’s important that students from low-income backgrounds understand all financial options available to them, says Amy Kerwin, chief educational opportunities officer at Great Lakes Higher Education Guaranty Corporation. 

“Even with increasing tuition costs, college remains an incredibly worthwhile investment in building a better and more prosperous life,” she says. “In fact, census data shows that people who earn bachelor’s degrees earn nearly $1 million more over their lifetimes than high school graduates.”

Experts say the more students understand available financial aid options, the better prepared they can be for earning a degree and minimizing student loan debt. Here are four ways the experts say low-income students can make their college dream achievable.

Seek Out ‘Free Money’ Options

Students should seek out any scholarship or grant opportunities to receive gift aid that doesn’t need to be repaid, which will reduce students’ total out-of-pocket cost of college and the need to borrow student loans, resulting in a lighter debt load upon graduation, says Kerwin.

Students should look for scholarships online as well as within community/civic organizations, businesses and college financial aid offices.

“Scholarships not only provide students the financial support they need to go to college, it is also a representation of their character and potential,” says Nicolas Tynes, director of College Quest for the Harlem Educational Activities Fund. “Earning a prestigious scholarship is another way for recent grads to stand out and secure a job once they graduate.” 

Federal grants are based on a student’s financial need rather than merit and are often awarded on a first-come, first-serve basis so students should be prepared. To apply for federal and many state grants, students need to complete the Free Application for Federal Student Aid (FAFSA) as soon after Jan. 1 as possible, says Kerwin.  

Students should also look into grant partnerships between schools and organizations to maximize the amount of money they receive, says Orlando Espinosa, president of marketing and outreach of ScholarshipProz.

“Different organizations that specifically work with some of the colleges and universities have Pell Grants where they have matching grants that they will actually help the student with an education depending on if that student was in the program.”

Apply for Work-Study

As with many grants, the Federal Work-Study Program is based on financial need and provides opportunities for students to find and apply for work (usually on campus) and earn money to help cover their college expenses. 

“The amount students can earn through Work-Study will depend on the hours they work,” Kerwin says. “It’s important to keep in mind that Work-Study money won’t be available to pay tuition at the beginning of the semester but will instead help with ongoing expenses throughout the school year.”

Exhaust all Federal/Institutional Aid

When borrowing federal loans, it’s vital students understand the type of loan they are getting, says Kerwin.

“Federal student loans, including Perkins, Stafford and PLUS offer low interest rates and helpful options if borrowers go through a rough patch and need to suspend or reduce their payments.”

According to FinAid, some schools have “free tuition” programs for low income students: no loans (loans are eliminated from the aid package), loan caps, no parental contributions (eliminating the parental contribution while retaining the student contribution along with the standard self-help level), and Pell Grant matches. 

“In a lot of cases, it’s going to make a difference in college being affordable and within their window–more schools have programs like this than you realize,” says Jordan Goldman, CEO and founder of 

“When you get your financial aid package, almost every school has at least a one-time re-evaluation policy where you can go back to the school and say you didn’t give me enough aid due to my family’s circumstances and most schools will actually re-run all of your numbers and see what they can do to make that happen.”

Search for Local Aid

Espinosa recommends that students who still have gaps in their educational funding share their stories with their community in person and through online crowd-funding. 

“A lot of low-income students may have obstacles that they have to overcome because they don’t have the affluent funds that they need that other students may or may not have–I think that a lot of people genuinely want to help the underdog,” says Espinosa.

Students can reach out to local chambers, businesses and organizations to make their needs known on a more personal level.

“It gives them a platform to share their stories and let people know who they are and what they’re all about,” says Espinosa. “The only time that people actually give is because they know who the person is or there’s something that they relate to something in a story.”