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May 18, 2018

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When we plan a war on something, we need to recognize that there will be refugees. If we're not willing to accept and accommodate refugees, we're not ready for the "war on".

Here's a thought: stop fighting senseless (proxy-) wars and there will be less refugees. Designing a refugee policy with the aim to enable "us" to fight wars with a good conscience seems, well, really wrong.

Not that the US takes in any significant amount of refugees from the ME, the region it has caused the most damage in.

Designing a refugee policy with the aim to enable "us" to fight wars with a good conscience seems, well, really wrong.

I agree, which is why I'm glad no one suggested such a thing.

Designing a refugee policy with the aim to enable "us" to fight wars with a good conscience seems, well, really wrong.

It sounds more like we are talking about designing a refugee policy which recognizes that we are, on the evidence, going to end up fighting wars. Which seems like a simple matter of recognizing reality.

Now if we want to talk about ceasing to fight so many, often unnecessary, wars? That fine . . . but it really is a whole different discussion.

Having a humane refugee policy should be a necessary condition before starting or getting into a war. That doesn't make it sufficient.

The Count: This is like last week when McKinney waded in to take issue with the wealth limitation/taxes banter and then ended up proposing a multi-bracketed marginal tax scheme (albeit with all extra revenue raised going to deficit reduction) .... maybe I dreamt that ... which made me think, with conservatives like that, who needs FDR?

Real life intervened before I could comment on McKinney's program as he laid it out in the "Enough" thread. (Feels like a time warp: that thread comes after this one.) Anyway, before scuttling off to his real life, McKinney regaled us with:

... after adjusting SS--pain will be inflicted--to make it solvent in the out years, and after capping all federal spending at current levels except Medicare/Medicaid, I would impose a 1 dollar a gallon tax on gas at the pump specifically dedicated to deficit reduction and I would add additional marginal rates at 5, 10, 20 and 50M of 45, 55, 65 and 75%, again only for debt reduction. Once the budget was balanced, I'd revert to 40% max. Also, cap gains would kick in at 3 years and would drop on assets held more than 5 years. I would want to encourage long term investment by taxing gains on same very favorably.
The bolding is mine, just to remind us that pain is a feature, not a bug, of almost every Republican proposal.

Anyway, McKinney is, like many of us, 60-ish. So his "out years", like ours, are rapidly becoming purely theoretical. The notion that it is we who must (or can) dictate the terms of Social Security "in the out years" is arrogance and delusion. If I were 30, I'd tell McKinney (and Pete Peterson, Chester Bowles, Alan Simpson -- old coots all) to shove it. Today's 30-year-olds will be retiring around about the time of our funerals. How they choose to divvy up the wealth they create in their lifetimes, between private opulence and Social Security, should be (and will be) up to them.

Capping all federal spending except Medicare/Medicaid at current levels is a catchy slogan, not a well-defined proposal. If it means restricting total federal spending to this year's level (in nominal dollars? adjusting for inflation?) it might have some merit: it allows for increased spending on underfunded priorities (e.g. IRS) as long as overfunding of others (e.g. ICE) gets cut back. If it means locking in the current misallocations by capping individual programs, it's merely a ploy to perpetuate He, Trump's "(Republican)" policies. And we'd better get it straight whether Social Security is "federal spending" in this context.

As for introducing more brackets with higher marginal rates at the top, hooray! It's long past time to recognize that it is nuts to have the same "top marginal rate" on a hardworking lawyer like McKinney and a hardworking propagandist like Sean Hannity who gets paid twenty times as much. Not clear what "only for debt reduction" means, though. Presumably it's just a different way of saying "cap federal spending". Anyway, even after "the budget was balanced", it would still be nuts to have a top bracket at the McKinney level instead of the Hannity level.

Almost forgot: imposing a $1/gal tax on the gasoline that janitors, lawyers, and propaganda magnates all need to commute to work is just another form of regressive taxation if the proceeds are strictly "dedicated to deficit reduction".

On the cap gains thing: "very favorably" taxing long-term (5+ year) gains has certain predictable consequences. In theory, it "encourages investment". In practice, and historically, it creates a strong incentive to make income look like cap gains by artful accounting. And BTW, the flip side of "encouraging investment" is "discouraging consumption", which some people keep forgetting is necessary to make real investment worthwhile. A customer class with money to spend is what an investor class needs; "favorable" tax rates are lagniappe.

Also, BTW: for every investment-seeking entrepreneur like Michael Dell with his mail-order PCs, there is surely an entrepreneur like Ralph Kramden with his glow-in-the-dark wallpaper. If it were possible to know ahead of time which investment will yield cap gains and which one capital losses, there would be little justification for "very favorable" taxation of the gains. Since it isn't, we should note that long-term capital losses get written off at the same tax rate as any gains. To a "diversified" investor, "very favorable" can be a two-edged sword.

A question worth asking is how "very favorable" taxation of cap gains is meant to play with inheritance of unrealized (and thus untaxed) capital appreciation.

I am not remotely inclined to ask "who needs FDR?", but I'm always ready to entertain any clarifications or rebuttals McKinney cares to offer next time his real life permits.

--TP

Well said, Tony.

bobby and Tony P. Two P's in a pod.

pain will be inflicted

Everybody with earned income since about 1983 or 1984 has been paying into SS at a rate higher than outflows. To create a surplus, which would be spent down when the dreaded boomer retirement tsunami arrived.

So, now we're spending it down, and folks scream because we're spending faster than we're taking in. Which is what was intended.

The money is held as federal debt. When was the last time we reneged on federal debt?

The answer is never.

Pay up America. We funded W's wars and a generation of (R) tax cuts. The bill is due.

Where's the money, Lebowski? Don't make us geezers give you a swirly.

Excellent Tony P!

"When was the last time we reneged on federal debt?"

Next Fall, because McKinney and Marty aside, the mp republican party are Comanche.

The money is held as federal debt. When was the last time we reneged on federal debt?

Likely to be paid by printing money. So people will pay twice: payroll taxes and inflation tax.

Literally TRILLIONS of deficit spending since a socialist Dem both balanced the federal budget and got a blow-job, and where is the inflation?

I was promised inflation.

Why, it's as if those Austrianoid econ theories from a century ago don't actually work for a modern economy, or something.

why, it's as if all the fears and screeching of the GOP w.r.t. monetary policy are empty threats designed to scare people into accepting their policies.

the Stupid Party is maybe not so stupid, at the top, in some ways.

A dollar in 1998 is worth $0.65 now.

Charles,

A Cambridge MA condo worth $30K in 1988 is worth $300K now. What's your point?

Also, 1MB of storage in 1988 used to cost about what you can buy 1GB for now. Again, what's your point?

--TP

A Cambridge MA condo worth $30K in 1988 is worth $300K now

where's my wayback machine?

where's my wayback machine?

Yeah. That would be convenient for so many things!

Regardless of the change in prices, up or down, of individual items, the Bureau of Labor Statistics says that over the last twenty years, 35% of a dollar's value got siphoned off somewhere.

Since technical innovation and growth in productivity has outstripped inflation, a lot of things have gotten cheaper. Both in dollars and the amount of labor needed to buy them. I'm about to replace the microwave oven I bought in 1983 for about $1,500 in today's dollars. I can replace it with a more functional oven for about $150.

That doesn't change the reality that you can easily end up with less money than you started with on a long-term investment even though you made a nice profit. And then you have to pay capital gains tax on what was really a loss.

Perhaps capital gains taxes should be tied to inflation.

35% of a dollar's value got siphoned off somewhere.

I have the image of a skeevy looking guy with a gas can and a texas credit card sneaking up to parked cars. (though most cars have anti siphon devices now so I'm dating myself) Still, I don't think that image helps illuminate what's going on...

35% of a dollar's value got siphoned off somewhere.

it's the cost of hopes and dreams

What's the problem with an inflation rate of 1.5%? Moderate and controlled inflation is a good thing, it keeps money circulating.

Falling prices of imported manufactured goods have kept inflation well under control. In order for inflation to become a problem in the US, you'd have to do something spectacularly stupid. Like deliberately ramping up the deficit during a growth period at the same time as starting a trade war.

That doesn't change the reality that you can easily end up with less money than you started with on a long-term investment even though you made a nice profit.

The justification for a favorable tax rate on capital gains is that the investor places his or her capital at risk, and the risk must be rewarded.

You need to choose investments that will provide a rate of return greater than the rate of inflation.

Also, too, the value of wage income is likewise subject to being undermined by inflation. Should earned income taxes also be adjusted for inflation?

That doesn't change the reality that you can easily end up with less money than you started with on a long-term investment even though you made a nice profit.

Hate to dog-pile on this, but somehow nation wealth and income keep concentrating in the hands of the people who hold far more in capital investments than everyone else. And somehow real per capita GDP continues to increase.

But how are these poor investors keeping up with inflation?

"You need to choose investments that will provide a rate of return greater than the rate of inflation."

Actually, you need to choose investments, real estate or stock shares especially, that will INFLATE at a rate greater than the overall rate of inflation.

However, Wall Street and corporate America, when it comes to equity shares, have figured out, like the OPEC cartel and diamond cartels, and the Russian oil oligarchs keeping oil on the ground, that LIMITING the supply of shares when it is convenient, via stock buybacks, or the mere promise of stock buybacks, and rarely splitting their shares (am I the only one who has noticed or is willing to point out that nearly all corporate boards now emulate Warren Buffet's distaste for splitting shares, which is why we now have so many shares trading in the mid-triple digits) is the prevailing ethos on Wall Street.

The housing industry, because of the severity of this last downturn, has been very shrewd this time around about keeping the new supply of inventory at a trickle compared to other recoveries, to stimulate housing inflation.

The rental industry now adds supply at rents higher than the prevailing rents in the surrounding areas, and neither private developers nor government will add low-income housing, because .... fuck-all.

This pulls up all other rents as well. It's competitive supply side trickle-up economics.

Or "red in tooth and claw" and "animal spirits" as one Larry Kudlow has enthused for decades, one dainty pinky finger raised to indicate ferocious metaphor.

But not in the interest of lower prices for those who could use them. The price point is always higher.

MS-13 aren't the only animals we've let into this country.

Now, if we really want to make MONEY itself scarce to increase its value, to the point of deflation, there won't be ANY investments that themselves escape deflation as well.

If the cost of money rises, via higher interest rates, corporation will choose to issue more stock, what use to be called "watering their stock", theoretically, to finance their operations, rather than relying on the bond market, and there go your inflated stock prices.

Financially, the part of the elephant we tell ourselves, via our bedtime stories, that we have a hold of, is probably not the part the smart money is moving their strong hands to at the moment.

What I love about so-called "business journalism" is that so-called business reporters, "advertisers" is more like it, can intone dark forebodings of inflation in economic data in one breath, and then with a quick swivel of the chair to camera two and the flash of their capped Burt Lancaster pearly chiclets, wax glorious over share prices, or housing prices, or oil prices rising dramatically to inflate the cost of those industries' products.

There really is no "Truth" in the financial world.

The choice lies in which brand of bullshit you wanna take a position in for the time being.

I read recently that perhaps as much as 40 to 50 percent of stock shares traded in American markets have been retired over the past 30 or so years.

It would be fair to impose CGT on gains net of inflation if you first add in any (after tax) yield. But fiddly to do.

meanwhile, funniest headline of the week so far.

Can't wait to see what tomorrow brings.

Quite liked this one:
https://www.politico.com/story/2018/05/30/roseanne-barr-ambien-racism-611648

"It would be fair to impose CGT on gains net of inflation if you first add in any (after tax) yield. But fiddly to do."

Not really that hard: just compare to what you would have gotten in Fed bonds over the period in question. There's probably an online calculator to do it for you, already.

And yes, I *still* think that CGT should be at a much higher rate than wage income. Investors take risk, but they also get to deduct their losses at the higher rate.

More Roseanne Barr.

American conservatives - all about the personal responsibility.

am I the only one who has noticed or is willing to point out that nearly all corporate boards now emulate Warren Buffet's distaste for splitting shares, which is why we now have so many shares trading in the mid-triple digits

Well, you have to realize that, by keeping prices up like that (and combined with the usual requirement that shares be purchased in 100 share chunks), you make it hard for the hoi polloi to start becoming stock owner. Gotta keep them in their place, after all.

"It would be fair to impose CGT on gains net of inflation if you first add in any (after tax) yield. But fiddly to do."

By "(after tax) yield," do you mean (at least for one example of a kind of yield), dividends received (after tax) over the period the investment was held? I'm not sure I follow.

Roseanne is a total nutbar. please, "conservatives", make her your spokesperson.

Dividends, yes. Or bond coupons, or property rent.

Well, if we're going to make things fair, why not make all income, not just "earned income" subject to Social Security and Medicare taxes. If we do that, and remove the cap on how much income is subject to those taxes....

Well, if we're going to make things fair, why not make all income, not just "earned income" subject to Social Security and Medicare taxes. If we do that, and remove the cap on how much income is subject to those taxes....

Oh, sure. Then they’d be “solvent.” And then there’d be no reason for anyone to try to cut them. What’s supposed to happen after that? Just leave them to their success as social programs? Madness!

What’s supposed to happen after that?

Well, means testing the benefits comes to mind. Which would no doubt cost me the benefits that *I* am getting. (But then, when I started paying into the system back in the early 1960s, I figured that I'd never see a penny back from it. So I'm already ahead of the game.)

This may be a dead thread but this seems apropos

https://www.theonion.com/ice-agent-decides-he-wants-kids-after-seeing-incredible-1826461558?utm_source=Twitter&utm_campaign=SF&utm_content=Main&utm_medium=SocialMarketing

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