There is a Way Out of the Swamp!

What would Republicans do for the economy? An interview with Rep. Paul Ryan.

Paul Ryan is the ranking Republican on the House Budget Committee, and one of the party's most influential voices on the economy. And with Republicans likely to pick up a lot of seats -- and maybe even the House -- in the upcoming election, he's soon to be one of the nation's most influential voices on economic policy. So I called him to ask what, exactly, he'd like to see done. This transcript is edited for length and clarity. For the Democratic perspective, see theinterview I did last week with Sen. Kent Conrad.

Ezra Klein: It’s clear now that there’ll be no more deficit-financed stimulus coming out of Congress. And Republicans, of course, could well take the House in the next election. So with unemployment still near 10 percent, what does the GOP want to do? If stimulus isn’t the solution, what is?

Paul Ryan: I know uncertainty is a new economic buzzword, but for good reason: If we can reduce it, we’ll unlock capital. I’d revisit some of the major issues over the last year. Health care, energy, taxes, financial regulation. I’m not saying these aren’t important issues. We need to reform the health-care system. But these are the wrong solutions. I would advance different solutions with an eye toward international competitiveness and encouraging saving and investing and encouraging certainty.

Then there’s our borrowing. If you look at the deficit, the problem is spending, not taxes. Revenues will come back up. At the end of the day, I’m not a Keynesian, but even Keynesians would agree that raising taxes in this economy is a bad idea. So if it’s helpful for me to concede to that section of Keynesian doctrine, fine. Let’s do that. I really do believe that locking in budget reforms and spending control will help us in the short run by taking pressure off interest rates and monetary policy. Spending control is pro-growth in this age of sovereign debt crises.

But even putting aside the question of whether these are good or bad policies, starting over would take a long time. Repeal would be difficult. Passing something new would be difficult. Congress, as you know better than me, is a slow beast. So doesn’t that leave a lot of uncertainty in the interim? And what about the short term? What can be done now?

I understand that. But an announced policy shift is a quick thing that would change expectations. If you had regulatory forbearance in the credit markets, that would be a quick thing. If the Obama guys said there’ll be no tax increases for two years, it would make a big difference fast. Look at the original [Christina] Romer-[Paul] Romer paper. She’d agree this is not the time to raise taxes. I think a mistake Keynesians are making is they think this is demand-side and consumption-led. I think we need to focus on investment and jobs. There’s lots of money sitting on the sidelines.

Romer herself, however, thinks this is a problem of aggregate demand. The National Federation of Independent Business’s surveys have shown the main concern of their member businesses is that they’re not going to have customers for their products. So do Republicans have any demand-side solutions, even if they’re just tax cuts? Is there talk of a payroll tax holiday, or anything similar?

There are some who do. Where I come from, I think certainty and long-term solutions are better. Temporary stuff doesn’t work. These short-term stimulative things like rebates don’t work. They’ll pump up some money in the quarter where they occur. You go right back where you were. These short-term stimuli, which Bush and Obama did, don’t change aggregate demand. And that’s why I think we need more of an investment-led recovery. At this point, given the borrowing costs, stimulus is counterproductive.

But we do also have short-term problems. So let’s say that in a stunning performance, Republicans capture the House, the Senate and the presidency in 2010. The election is such a staggering repudiation of Democratic policies that Barack Obama and Joe Biden both resign. What’s the first move?

The move is get spending under control, actually pass a budget, prevent tax increases from hitting the economy, and set the conditions for growth in all these sectors. And I really do believe FinReg was a mistake. I think it’ll end up restricting credit. That’s bad. We need credit.

Then let’s talk about taxes. Republicans want an extension of the Bush tax cuts. And many don’t want to pay for it. But they also say our borrowing is a major problem. I know you’ve got your spending roadmap, but if you need to, how do you decide between those priorities?

I wouldn’t say that every tax cut pays for itself. It depends on the tax. I would say that you cannot reduce the deficit with a sinking economy. The better way, in my mind, is to grow the economy as quickly as possible and control and slow spending. So keep taxes low, maximize growth and cut spending. I just don’t see government spending as a key to growth. The budget I wrote last year cut $4.8 trillion of spending out of the baseline, so I cut spending by more than the tax cuts cost. So I’ve put my money where my mouth is.

But you aside, it doesn’t look like that’ll be the choice. So what if you have to choose between more tax cuts and lowering the debt?

You said we had the White House and Congress! If we get that, I’m cutting spending and keeping taxes low.

I’ll predict now that even if you get that, we’re not going to see Ryan-esque spending cuts coming from the Republican Party.

You’ll see a big fight. That’s for sure.

Do you worry that even if you got your spending cuts, the American economy will suffer? A report released by the National League of Cities, the National Association of Counties and United States Conference of Mayors said they’ll have to lay off 500,000 people in the next few years if they don’t get some fiscal relief. That’s 500,000 people on the unemployment rolls.

I’ve always believed we need automatic stabilizers. We need a safety net. But I think it’s becoming equally important to show we’re not going to borrow endlessly. I also think it’s a bad idea to bail out states from making the necessary decisions they need to make to increase and fix their structural deficit problems. All you’re doing then is putting their liabilities on the federal books. And I assume those jobs are mostly public sector jobs. If you focus on those, that money comes from the private sector. The money isn’t free. It’s being taken out of the private economy and pumped through the private sector. The right path is to keep the money in the private sector and so they have money to invest. We should focus on growth in the private sector, not growth in the public sector.

But part of the problem right now is that even when you put that money in private coffers, they’re not spending it. They’ve got a lot of capital on hand now, but they’re sitting on it. What gives you confidence that your path will work, when pretty good profits and stock prices right now aren’t working?

We need to do things to free up credit. We need regulatory forbearance there. Right now, the policymakers and regulators are doing opposite things. So you’re right that there’s a lot of capital parked out there, and we need to coax it out into the markets. I think literally that if we raised the federal funds rate by a point, it would help push money into the economy, as right now, the safest play is to stay with the federal money and federal paper.

And a lot of this is psychological. The people who have capital are sitting on their hands: I just talked to a guy who builds nurseries and canceled three construction projects next year because he just doesn’t know what’s happening. People are just too nervous, they don’t know what the economy will be, what the regulations will be, what the taxes will be, and to the extent you can increase certainty, you can unlock some of that credit.

To wrap this up, let me try and say this back to you so I’m sure I have it right: Your economic approach would be to repeal and replace the big legislation we’ve passed in the last year, make a long-term commitment to keep taxes low and cut federal spending, get regulators to ease up on the credit market, and generally focus on pulling the government back, as you believe that’ll leave space for private businesses to step forward.

That’s right, but let me clarify one thing: You said repeal and replace. You can say I’m offering more uncertainty by redoing these laws. I’m saying it’s the quality of these laws that’s the problem. Better solutions could’ve been passed. On FinReg, I’d do the Luigi Zingales stuff. On health care, you know what I’d do.

But to just push you on this one more time, even under the best circumstances, that will take a long time. What Congress produces won’t be what’s in your white papers. So best-case scenario: Replacing them takes awhile, and there’s going to be natural uncertainty as banks, for instance, now have to wait to see what the new rules will be on them. And so what do you do in the interim to unlock this capital?

If Nancy Pelosi came to me and said I’ve been wrong, you’re right, what do you want to do immediately, we could put caps on spending, maybe make a good dent on future spending through the [fiscal] commission, and extend the tax cuts two years. That, in and of itself, would really help the economy.

Update: There's been some criticism of Ryan's suggestion that we should increase the federal funds rate to push capital out into the private sector, so I asked Ryan if he'd like to expand on the point. Here's his reply:

“Of course I do not think increasing the federal funds rate is what one does to spur immediate economic growth. But I do think we need to understand that the extremely accommodative monetary policy we have had for the past two years is not risk free. Observers like Kansas City Fed President Tom Hoening have made the case for a modest increase in the federal funds rate to send signals of monetary credibility, get back to normalcy and ward off speculative behavior (i.e., the next bubble). (More fromHoening [pdf]).

Also – I’m not convinced – but intrigued – with the debate over the carry trade that is going on right now. What I mean by that is banks can borrow at essentially no cost from the Fed, plow the money back into no-risk Treasury securities, and earn that modest spread. This dynamic, while obviously helping banks recapitalize, could be curbing capital deployment in the private sector.

I'm intrigued – but not convinced – by this argument. I appreciate the opportunity to fully explain my point.”

Time For Obama To Tell The Truth on Taxes!

"I can make a firm pledge, under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes." Barack Obama

The Tax Tsunami On The Horizon

Posted 07/21/2010 06:41 PM ET

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Fiscal Policy: Many voters are looking forward to 2011, hoping a new Congress will put the country back on the right track. But unless something's done soon, the new year will also come with a raft of tax hikes — including a return of the death tax — that will be real killers.

Through the end of this year, the federal estate tax rate is zero — thanks to the package of broad-based tax cuts that President Bush pushed through to get the economy going earlier in the decade.

But as of midnight Dec. 31, the death tax returns — at a rate of 55% on estates of $1 million or more. The effect this will have on hospital life-support systems is already a matter of conjecture.

Resurrection of the death tax, however, isn't the only tax problem that will be ushered in Jan. 1. Many other cuts from the Bush administration are set to disappear and a new set of taxes will materialize. And it's not just the rich who will pay.

The lowest bracket for the personal income tax, for instance, moves up 50% — to 15% from 10%. The next lowest bracket — 25% — will rise to 28%, and the old 28% bracket will be 31%. At the higher end, the 33% bracket is pushed to 36% and the 35% bracket becomes 39.6%.

But the damage doesn't stop there.

The marriage penalty also makes a comeback, and the capital gains tax will jump 33% — to 20% from 15%. The tax on dividends will go all the way from 15% to 39.6% — a 164% increase.

Both the cap-gains and dividend taxes will go up further in 2013 as the health care reform adds a 3.8% Medicare levy for individuals making more than $200,000 a year and joint filers making more than $250,000. Other tax hikes include: halving the child tax credit to $500 from $1,000 and fixing the standard deduction for couples at the same level as it is for single filers.

Letting the Bush cuts expire will cost taxpayers $115 billion next year alone, according to the Congressional Budget Office, and $2.6 trillion through 2020.

But even more tax headaches lie ahead. This "second wave" of hikes, as Americans for Tax Reform puts it, are designed to pay for ObamaCare and include:

The Medicine Cabinet Tax. Americans, says ATR, "will no longer be able to use health savings account, flexible spending account, or health reimbursement pretax dollars to purchase nonprescription, over-the-counter medicines (except insulin)."

The HSA Withdrawal Tax Hike. "This provision of ObamaCare," according to ATR, "increases the additional tax on nonmedical early withdrawals from an HSA from 10% to 20%, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10%."

Brand Name Drug Tax. Makers and importers of brand-name drugs will be liable for a tax of $2.5 billion in 2011. The tax goes to $3 billion a year from 2012 to 2016, then $3.5 billion in 2017 and $4.2 billion in 2018. Beginning in 2019 it falls to $2.8 billion and stays there. And who pays the new drug tax? Patients, in the form of higher prices.

Economic Substance Doctrine. ATR reports that "The IRS is now empowered to disallow perfectly legal tax deductions and maneuvers merely because it judges that the deduction or action lacks 'economic substance.'"

A third and final (for now) wave, says ATR, consists of the alternative minimum tax's widening net, tax hikes on employers and the loss of deductions for tuition:

• The Tax Policy Center, no right-wing group, says that the failure to index the AMT will subject 28.5 million families to the tax when they file next year, up from 4 million this year.

• "Small businesses can normally expense (rather than slowly deduct, or 'depreciate') equipment purchases up to $250,000," says ATR. "This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be 'depreciated.'"

• According to ATR, there are "literally scores of tax hikes on business that will take place," plus the loss of some tax credits. The research and experimentation tax credit will be the biggest loss, "but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs."

• The deduction for tuition and fees will no longer be available and there will be limits placed on education tax credits. Teachers won't be able to deduct their classroom expenses and employer-provided educational aid will be restricted. Thousands of families will no longer be allowed to deduct student loan interest.

Then there's the tax on Americans who decline to buy health care insurance (the tax the administration initially said wasn't a tax but now argues in court that it is) plus a 3.8% Medicare tax beginning in 2013 on profits made in real estate transactions by wealthier Americans.

Not all Americans may fully realize what's in store come Jan. 1. But they should have a pretty good idea by the mid-term elections, and members of Congress might take note of our latest IBD/TIPP Poll (summarized above).

Fifty-one percent of respondents favored making the Bush cuts permanent vs. 28% who didn't. Republicans were more than 4 to 1 and Independents more than 2 to 1 in favor. Only Democrats were opposed, but only by 40%-38%.

The cuts also proved popular among all income groups — despite the Democrats' oft-heard assertion that Bush merely provided "tax breaks for the wealthy." Fact is, Bush cut taxes for everyone who paid them, and the cuts helped the nation recover from a recession and the worst stock-market crash since 1929.

Maybe, just maybe, Americans remember that — and will not forget come Nov. 2.

Time For Obama To Tell The Truth On The Economy!

Obama's Economic Fish Stories

On unemployment, the president claims that the stimulus bill was several times more potent than his chief economic adviser estimates. Such statements hurt his credibility.

By MICHAEL J. BOSKIN

2010 July 21

A president's most valuable asset—with voters, Congress, allies and enemies—is credibility. So it is unfortunate when extreme exaggeration emanates from the White House.

All presidents wind up saying some things that make even their own economists cringe (often the brainchild of political advisers unconstrained by economic principles, facts or arithmetic). Usually, economic advisers manage to correct these problematic statements before delivery. Sometimes they get channeled into relatively harmless nonsense, such as President Gerald Ford's "Whip Inflation Now" buttons. Other times they produce damaging policies, such as President Richard Nixon's wage and price controls. The most illiterate statement was President Jimmy Carter's late-1970s plea to the Federal Reserve to lower interest rates to combat high inflation, the exact opposite of what it should do. Not surprisingly, the value of the dollar collapsed.

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Martin Kozlowski

President Obama says "every economist who's looked at it says that the Recovery Act has done its job"—i.e., the stimulus bill has turned the economy around. That's nonsense. Opinions differ widely and many leading economists believe that its impact has been small. Why? The expectation of future spending and future tax hikes to pay for the stimulus and Mr. Obama's vast expansion of government are offsetting the direct short-run expansionary effect. That is standard in all macroeconomic theories.

So, as I and others warned in 2008, the permanent government expansion and higher tax rate agenda is a classic example of what not to do during bad economic times. Worse yet, all the subsidies, bailouts, regulations and mandates are forcing noncommercial decisions on the economy, which now awaits literally thousands of new diktats as a result of things like ObamaCare and the financial reform bill. The uncertainty is impeding investment and hiring.

The president does not say that economists agree that the high future taxes to finance the stimulus will hurt the economy. (The University of Chicago's Harald Uhlig estimates $3.40 of lost output for every dollar of government spending.) Either the president is not being told of serious alternative viewpoints, or serious viewpoints are defined as only those that support his position. In either case, he is being ill-served by his staff.

Mr. Obama's economic statements are increasingly divorced not only from competing viewpoints but from those of his own economic advisers. It is surprising how many numerically challenged pronouncements come from this most scripted and political of White Houses. One slip is eventually forgiven, but when a pattern emerges, no one believes it is an accident.

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• Senate to Vote on Jobless-Aid Bill

For example, on the anniversary of the stimulus bill, Mr. Obama declared, "It is largely thanks to the Recovery Act that a second Depression is no longer a possibility." Yet his Council of Economic Advisers just estimated the stimulus bill's effect on GDP at its trough was 1%-2%.

The most common definition of a depression is a long period in which GDP or consumption declines at least 10%. The decline in GDP in the recent recession was 3.8%, in consumption 2%. No one disputes the recession was severe, but to reach a 10% GDP decline requires tripling the administration's estimate (three times their 2% effect) added to the actual 3.8% decline. On the alternative consumption standard, the math is even more absurd. The depression statement isn't credible. The stimulus bill has assumed certain mystic powers in administration discourse, but revoking the laws of arithmetic shouldn't be one of them.

The recession would have been worse if not for the Fed's monetary policy and quantitative easing. Also important were the unmentioned automatic stabilizers—taxes falling more than income, cushioning declines in after-tax incomes and consumption—which were far larger than the spending and tax rebates in the stimulus bill. Arguing that all these policies (including injecting capital into banks, which was necessary but done poorly) may have prevented a depression is perhaps still an exaggeration but at least is within hailing distance of plausibility. On that scale, the effect of the stimulus was puny.

On his recent "Recovery Tour," Mr. Obama boasted, "The stimulus bill prevented the unemployment rate from "getting up to . . . 15%." But the president's own chief economic adviser, Christina Romer, has estimated that the stimulus bill reduced peak unemployment by one percentage point—i.e., since the unemployment rate peaked at 10.1%, it prevented the unemployment rate from rising to just over 11%. So Mr. Obama claims that the stimulus bill was several times more potent than his chief economic adviser estimates.

Perhaps the most serious disconnect concerns the impending expiration of the 2001 and 2003 tax cuts, which will raise the top two income tax rates and the rates on dividends and capital gains. If these growth inhibiting tax increases occur—about $75 billion in tax increases next year, $1.4 trillion over 10 years—there will be serious economic damage.

In the most recent issue of the American Economic Review, Ms. Romer (and her husband David H. Romer) conclude that "tax increases are highly contractionary . . . tax cuts have very large and persistent positive output effects." Their estimates imply the tax increases would depress GDP by roughly half the growth rate in this so-far-anemic recovery.

If Mr. Obama is really serious about a second stimulus, by far the best thing he can do is have Congress quickly extend the expiring Bush tax cuts, combined with real spending cuts set to take effect as the economy improves.

The president badly needs to make more realistic pronouncements. No one expects him to say his policies have failed (although most have delivered far less than claimed at large cost). A little candor about the results of experimentation in uncharted waters would go a long way. But at the very least, his staff needs to avoid putting these exaggerations on the teleprompter. It undermines confidence and raises concerns about competence. It's doing nobody any good—not the economy and certainly not Mr. Obama.

Mr. Boskin is a professor of economics at Stanford University and a senior fellow at the Hoover Institution. He chaired the Council of Economic Advisers under President George H.W. Bush.

Obama Taxes are Here To Stay!

The Obama Tax Tsunami is Here

Posted By Conn Carroll On July 22, 2010 @ 9:23 am

The American people are already well aware of President Barack Obama’s historic expansion of government spending: his $862 billion economic stimulus that has completely failed ^[2] to keep unemployment below 8% as promised; his still-expanding health care law which the Congressional Budget Office now admits ^[3] will cost more than $1 trillion; and an Obama budget ^[4] that increases government spending by $12,000 per household. But all that spending is just the first half of President Obama’s game plan.

The second half of Obama’s attempted transformation began last night when the Senate rejected^[5] Sen. Jim DeMint’s (R-SC) effort to end the Death Tax. This year is actually the first year since 1916 that Americans do not have to pay any federal taxes when a family member dies. But thanks to the way Congress had to pass the legislation that phased out the Death Tax in 2001, it is set to go from zero percent to 55 percent at the stroke of midnight on December 31, 2010.The Death Tax is but one of many government taxes on capital and entrepreneurship, and its reinstatement will be yet another job killer from the Obama administration ^[6]. It rewards estate tax lawyers, insurance companies and big businesses at the expense of small family-owned enterprises ^[6]. According to a study ^[7] by the American Family Business Foundation, a full repeal of the death tax, like the one rejected by the Senate last night, would create 1.5 million jobs. Before the vote, Sen. DeMint described ^[5] the tax as an “unfair, immoral double tax on property and assets that folks have already paid taxes on throughout their lives.” He added: “The Obama death tax is just the latest example of this administration’s assault on small businesses.”

Sen. DeMint is dead on. Last night’s vote to raise the Death Tax is just the beginning of the Obama administration’s historic tax hike campaign. Unless Congress acts to oppose President Obama’s agenda, everyone’s taxes on personal income, capital gains and dividends will rise ^[8]. Married couples will see their taxes rise even higher, as will families with children. According to The Tax Foundation, a family of four with two earners making $85,000 a year would pay about $1,800 more in federal income taxes in 2011. Tax Foundation president Scott Hodge tells MSNBC ^[9]: “I’m hard pressed to think of another moment in the history of the tax code in which we have had so many provisions expire at the same time impacting so many Americans all at once.”

For two generations after post-war reconstruction, Europe and America have pursued different economic models, and accordingly, moved in different economic directions.^[10]The American model was low tax, low spending and small government. It favored growth, income and vibrancy. The European model is high tax, high spending and big government. It favored fairness, equality and stability. It also featured unemployment rates double those of the United States, often hovering around 10 percent ^[11]. Now that is no longer the case. Under Obama’s economic leadership, U.S. unemployment rates are surpassing Europe’s ^[12].

Last night’s vote was just the beginning of a larger choice the American people must make: do they want to continue down the Obama path of high taxes, high spending and high unemployment? Or do they still believe in American exceptionalism, in limited government and in a vibrant U.S. economy? Last night’s vote was a step in the wrong direction.

Quick Hits:

• While the Obama administration continues to kill thousands of jobs in the Gulf with its oil drilling ban, countries like Norway, Brazil and Canada are increasing ^[13]their deep-water oil drilling.
• While the oil spill has been an economic disaster for the Gulf, like everything else in the Obama administration, it has been a boon to Washington’s economy asenergy and environmental groups spent millions ^[14] to shape any energy legislation inspired by the crisis.
• According to The New York Times ^[15], the TARP inspector general has called the Obama administration’s mortgage modification program “one of the greatest failures” of the Treasury Department.
• Thanks to unemployed older Americans, illegal immigrants and an increase in the minimum wage, the teen unemployment rate in June was at 25.7 percent ^[16] – about three times the national rate of 9.5 percent.
• According to Gallup ^[17], only 11 percent of Americans say they have a great deal or quite a lot of confidence in Congress, placing them dead last out of the 16 institutions rated this year

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Article printed from The Foundry: Conservative Policy News.: http://blog.heritage.org

URL to article: http://blog.heritage.org/2010/07/22/morning-bell-the-obama-tax-tsunami-is-here/

Government to Tax GOLD

Gold Coin Sellers Angered by New Tax Law

Amendment Slipped Into Health Care Legislation Would Track, Tax Coin and Bullion Transactions

By RICH BLAKE

July 21, 2010—

Those already outraged by the president's health care legislation now have a new bone of contention -- a scarcely noticed tack-on provision to the law that puts gold coin buyers and sellers under closer government scrutiny.

The issue is rising to the fore just as gold coin dealers are attracting attention over sales tactics.

Section 9006 of the Patient Protection and Affordable Care Act will amend the Internal Revenue Code to expand the scope of Form 1099. Currently, 1099 forms are used to track and report the miscellaneous income associated with services rendered by independent contractors or self-employed individuals.

Coin Dealers Flipping

Starting Jan. 1, 2012, Form 1099s will become a means of reporting to the Internal Revenue Service the purchases of all goods and services by small businesses and self-employed people that exceed $600 during a calendar year. Precious metals such as coins and bullion fall into this category and coin dealers have been among those most rankled by the change.

This provision, intended to mine what the IRS deems a vast reservoir of uncollected income tax, was included in the health care legislation ostensibly as a way to pay for it. The tax code tweak is expected to raise $17 billion over the next 10 years, according to the Joint Committee on Taxation.

Taking an early and vociferous role in opposing the measure is the precious metal and coin industry, according to Diane Piret, industry affairs director for the Industry Council for Tangible Assets. The ICTA, based in Severna Park, Md., is a trade association representing an estimated 5,000 coin and bullion dealers in the United States.

"Coin dealers not only buy for their inventory from other dealers, but also with great frequency from the public," Piret said. "Most other types of businesses will have a limited number of suppliers from which they buy their goods and products for resale."

So every time a member of the public sells more than $600 worth of gold to a dealer, Piret said, the transaction will have to be reported to the government by the buyer.

Pat Heller, who owns Liberty Coin Service in Lansing, Mich., deals with around 1,000 customers every week. Many are individuals looking to protect wealth in an uncertain economy, he said, while others are dealers like him.

With spot market prices for gold at nearly $1,200 an ounce, Heller estimates that he'll be filling out between 10,000 and 20,000 tax forms per year after the new law takes effect.

"I'll have to hire two full-time people just to track all this stuff, which cuts into my profitability," he said.

An issue that combines gold coins, the Obama health care law and the IRS is bound to stir passions. Indeed, trading in gold coins and bars has surged since the financial crisis unfolded and Obama took office, metal dealers said.

The buying of actual gold, as opposed to futures or options tied to the price of gold, has been a particularly popular trend among Tea Party supporters and others who are fearful of Obama's economic policies, gold industry members such as Heller and Piret said. Conservative/libertarian commentators, such as Fox News Channel's Glenn Beck, routinely tout precious metal on the air as being a safe, shrewd investment in an environment in which the financial system -- and paper money backed by the rest of the world's faith in the U.S. government's credit -- is viewed as increasingly fragile.

The recently revealed investigation by California authorities into consumer complaints against Goldline International, which has used Beck as a pitchman, and Superior Gold Group (which has not) has put a spotlight on what one liberal leaning politician, Rep. Anthony Weiner, D-N.Y., calls the "unholy alliance" between gold coin sellers, such as Goldline, and conservative talk personalities, such as Beck.

Beck, who through his spokesman, Matt Hiltzik, declined to comment for this story, and Goldline marketers portray gold coins as a better alternative to owning bullion in the event that the U.S. government ever decides, as it did under FDR in 1933, to make it illegal for private citizens to own physical gold. At that time, the U.S. dollar was still pegged to the price of gold; the gold standard was abandoned during the Nixon administration.

Rep. Daniel Lungren, R-Calif., has introduced legislation to repeal the section of the health care bill that would trigger the new tax reporting requirement because he says it's a burden on small businesses.

"Large corporations have whole divisions to handle such transaction paperwork but for a small business, which doesn't have the manpower, this is yet another brick on their back," Lungren said in a statement e-mailed to ABCNews.com. "Everyone agrees that small businesses are job creators and the engine which drives the American economy. I am dumfounded that this Administration is doing all it can to make it more difficult for businesses to succeed rather than doing all it can to help them grow."

The ICTA's Piret says identity theft is another concern because criminals may set up shops specifically to extract personal information that would accompany the filing out of a 1099.

The office of the National Taxpayer Advocate, a citizen's ombudsman within the IRS, issued a report June 30 that said the new rule "may present significant administrative challenges to taxpayers and the IRS."

Copyright © 2010 ABC News Internet Ventures

Federal Healthcare Rationing is On the Way!

Obama Bypasses Senate to Install Controversial “Rationing Czar” at Medicare Center

By Peter J. Smith

WASHINGTON, D.C., July 9, 2010 (LifeSiteNews.com) – Performing an “end-run” around the Senate confirmation process, President Barack Obama has installed Dr. Donald Berwick, an enthusiast for medical rationing and an unabashed admirer of the United Kingdom’s socialized health care system, as head of the Center for Medicare and Medicaid Services via a recess appointment.

The move means Berwick may take charge of the Center for the next year, without first having to go through Senate approval. This will allow him to have an influence on the CMS’s $800 billion budget and the myriad regulations that must be drafted for the national health care reform, the Patient Protection and Affordable Care Act (known by its critics as “ObamaCare”), before it takes full effect in 2014.

Burke Balch, director of National Right to Life Committee's (NRLC) Powell Center for Medical Ethics, called the appointment “disastrous news for the vulnerable, especially the elderly and the sickest of American patients."

Republicans expressed outrage, saying that the president was avoiding a public debate on a man whose advocacy of rationing is way outside the mainstream.

“Democrats held no hearing, allowed no public testimony, and called no votes on this nomination,” said U.S. Rep. Tom Price (R-Ga.), Chairman of the Republican Study Committee. “In short, they did everything to hide Dr. Berwick’s radical views and made absolutely no effort to follow the regular, established process for confirming a presidential nomination. Clearly, they did not want Berwick’s adamant support for rationing health care debated in the light of day.”

Obama justified the recess appointment of Berwick, alleging that Republicans were stonewalling the process "for political purposes" – even though the GOP with its 41 votes in the Senate is hardly in a position to delay confirmation hearings.

Reports have indicated that Democrat Sen. Max Baucus of Montana, the Senate Finance Chairman, had not even scheduled hearings and lacked the nominee’s complete paperwork.

Berwick has made many glowing statements in favor of rationing, stressing repeatedly his belief that the collective interest of the state must trump the individual’s right to seek the kind of health care that he wants.

Berwick went on record with the journal Biotechnology Healthcare last year saying, “The decision is not whether or not we will ration care—the decision is whether we will ration with our eyes open.”

An editorial in the Wall Street Journal pointed out that Berwick co-authored a 1996 book entitled “New Rules,” in which he argued that government health regulations had a primary duty "to constrain decentralized, individual decision making" and "to weigh public welfare against the choices of private consumers."

Berwick repeated this utilitarian attitude toward health care in the May/June 2008 issue of Health Affairs, saying that "rational collective action overriding some individual self-interest" is necessary to reduce per capita patient costs.

Berwick has also gone on record stating that government should "approach new technologies and capital investments with skepticism” and place heavy burdens of proof on those offering medical innovations.

"Donald Berwick is a one-man death panel," said Dr. David O'Steen, NRLC’s executive director. "While Americans may not remember the agency he heads, he will quickly become known as Obama's rationing czar."

Obama’s new CMS chief has described his passion for the United Kingdom’s National Health Service (NHS) – notorious for its rationing practices – in amorous detail.

In 2008, on the NHS’s 60th anniversary, Berwick gushed, “I am romantic about the NHS; I love it. All I need to do to rediscover the romance is to look at health care in my own country.”

The NHS’s National Institute for Clinical Excellence (NICE), which determines what treatments and how much the NHS will pay per patient, Berwick has described as having "developed very good and very disciplined ... models for the evaluation of medical treatment from which we ought to learn."

He has additionally stated, “The N.H.S. is not just a national treasure; it is a global treasure" and has elsewhere praised the British people for having socialized medicine and rejecting “the darkness of private enterprise.”

However, critics of the U.K.’s socialized system have pointed out that the numbers don’t paint the system in a kindly light.

A study published in 2007 in Lancet Oncology showed that England's 5-year cancer survival rate for men is only 45%, lagging far behind the 66% rate in the U.S; England’s survival rate for women stands at 53%, compared with 63% in the U.S. Both figures, say opponents of Berwick and socialized medicine, indicate that the “darkness of private enterprise” may not be so dark after all.

Additionally, in the U.K. patients are limited to a maximum of £30,000 per capita for their treatment each year by NICE, as a way to cut costs. This limit, however, poses a serious problem for the development of new treatments, which often take the form of extremely expensive experimental drugs.

Senate Republican Leader Mitch McConnell blasted Obama’s decision to appoint Berwick.

“As if shoving a trillion-dollar government takeover of healthcare down the throat of a disapproving American public wasn't enough, apparently the Obama administration intends to arrogantly circumvent the American people yet again by recess-appointing one of the most prominent advocates of rationed healthcare to implement their national plan," McConnell said.