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July 25, 2011

Comments

Since the day I broke $70k/year in salary (a decade ago), the government could have doubled my income taxes without putting a crimp in my budget. I wish they had, "Laffer curves" and high marginal rates be d*mned.

Now, the same wouldn't work for somebody living in a higher-cost-of-living area, or a couple that made $70k with both employed... But I'm tired of congresspeople falsely claiming to speak for me and falsely claiming that I won't stand for higher taxes.

My husband and I used to be in the top two percent and I did not think I paid enough in membership dues for my coutry. I do not mind payig taxes to support people who need it and I include in that both the poor and subsidies for various jobs. Farm price supports do't bother me.My main bitch with Republicans is their selfishess and hypocrsy, as exemplified by Michele Bachman and Sarah Palin, both enthusiastic supporters of subsidies and earmarks for their own jurisdictions while coniving for tax breaks for themselves under the entirely false claim to be fiscally responsible.

Now my husband is retired and I work for ten dollars an hour (and great health insurance) so I really feel the Republican party's successful transfer of cost resposiblity off the top two persent and on to everyoe else by way of increased user fees for everything and increased local funding for high ticket tiems such as ifrasctructure and schools.

The Republican party's claim to be the party of fiscal conservatism is just as much a lie as their claim to be the party of Christian values. It's the party of robber barons, has been for about one hundred years now.

Don't go blaming yourself, and don't go asking the gummint to raise your taxes. There's no need to raise your taxes. All they have to do is let the Bush II tax cuts expire.

The main reasons for the expanding deficit are: (1) the Bush II tax cuts, which can expire (2) the Bush II war, which can be paid for, and (3) the Lesser Depression. In the long run Medicare will become a problem, but it is not one yet.

russell
thanks for thunderous exit in Gothic post.
But raising your taxes will make deficit higher and more unemployment, unless you make over half a million greens. US debt is giving no problems to economy at all, it actually helps saving the banks that are insolvent. Banks are using US debt as a collateral to borrow (create credit, print money...) more, 10x more then they have of US bonds to make money and bonuses which pay taxes and raise GDP number.
If you are taxed more while spending all of your cash on consuming (which all making less then $50k do) that means there will be less consuming, less economic production, less jobs, less tax revenues, more unemployment = higher deficit.

Only non consuming income could be taxed more without hurting economy even more.

Savings can be taxed more. 401k, IRA and alike savings are non taxable anyway. Savings such as are called by economists, such as non consuming income saved by investing into stocks and into other derivatives, or into developing countries.
US debt (dollar amount) did not go down since 1932. Never since then. What makes it to be bearable is inflation that made that number smaller percentage of growing GDP.

Only way, in a zero lower bound interest rate, only way is to somehow create inflation. Not hyperinflation but steady single digit inflation. Only way to raise inflation is (which will lower the debilitating debt, personal, corporate and US over time) , only way is by raising the income, but not median but mean income. Median income is including sky high top income, while mean doesn't count both ends of extremes which will give the income of majority or middle class. Higher mean income today in high unemployment environment can be achieved only by raising minimum wage, and drastically. Raise it $1 every six months till it reaches $15 and there will be inflation and a lot of consumerism. Progressively tax millionaires so that income over a $1B is 90% so there is money for building infrastructure.
If the economy overheats Fed can raise interest rate and even lower the collateral ratio below 10 for banks, or raise reserve ratio.

This is so simple to do if we had smart congress. Or smart people who put smart ones in congress. But we don't

But raising your taxes will make deficit higher and more unemployment, unless you make over half a million greens.

um, no.

Cleek
How is this wrong?
If you are taxed more while spending all of your cash on consuming (which all making less then $50k do) that means there will be less consuming, less economic production, less jobs, less tax revenues, more unemployment = higher deficit.

Then why GOP is saying: if you raise taxes it would hurt economy?

All they have to do is let the Bush II tax cuts expire.

Works for me.

Only non consuming income could be taxed more without hurting economy even more.

Fine, tax that.

Then why GOP is saying: if you raise taxes it would hurt economy?

It's their script.

I'm still waiting for somebody to show me, from the actual historical record, a clear cause and effect relationship between the marginal tax rates and the health of the economy overall.

As with almost everything in life, it depends on the context.

Lower taxes are not making this nation fiscally healthy. They are not making this nation economically strong.

They're making us broke.

Raise my freaking taxes, for crap's sake, and pay the bills.

Golly, however could we generate inflation AND solve the debt crisis in one fell swoop?

Man, if only I had a $2 trillion platinum coin for every time we faced this problem...

Russell,

I would tend to disagree. We are not broke. Our political discussion is broken. There is no relationship between marginal rates and overall economic health. There is a relationship between those rates and our political health.

(1) Raise taxes on the rich to confiscatory levels.
(2) Spend way more anyway and don't worry about the debt until we have full employment.

As with almost everything in life, it depends on the context.

The truth is. If taxes are raised on incomes under around $200K it hurts economy, if taxes are raised on incomes above $300k it helps economy.
I already explained how it hurts for lower incomes but let me take a shot at how it helps with high incomes.

Taxing income above $300K (income under $300K of the same person is taxed at 35%) at the rate of 95% is a clear incentive for that person not to pull out of his company more then 300K because it will be taken away almost all.
So that money will be there for the company to be used for other things(higher wages, inventory, share buyback or reducing the debt) which will be put it into economy.
This is just a crude description to show where are the incentives.

This is how it was in the age of prosperity and good middle class, all untill Reagan who changed incentives and wages started to stagnate.

Russell,

I honor your sentiment, but I worry that you're tacitly conceding something you ought not concede. You seem to take it for granted that collecting more tax revenue requires YOUR taxes to go up. That may be true, but it ain't necessarily true.

At the very least, it is possible to collect some additional revenue by raising tax rates only on incomes much higher than yours, and by getting rid of tax preferences designed only for people much richer than you. Logically possible, I mean. Not forbidden by the laws of arithmetic, I mean. Politically possible is a different story.

I'm not claiming that the federal budget can be balanced exclusively on the overburdened backs of the put-upon rich. It may indeed be the case that, mathematically, folks like you have to chip in too.

But don't imagine that your willingness to chip in will in any way inspire, cajole, or shame the truly rich into accepting higher taxes on themselves.

So that's my quibble with your admirable position: by jumping directly to your willingness to pay more, yourself, you implicitly dismiss the possibility that we should soak the rich first, and then hit you up for the difference.

--TP

Raise your own damn taxes. It's not like they're going to turn down the money if you send them more than they demand.

I am utterly unimpressed with people who say "Raise my taxes!", because they can raise their own, with no action by the government. So all they're saying is, "Raise everybody else's taxes!", because that's the only thing they need a law to accomplish.

For my part, do not raise my damn taxes. I don't like much of what they're being spent on, and have no reason to suppose, if they were raised, that the end result would not be a similarly huge deficit at a larger absolute level of spending. Which I rather suspect is the point, rather than reducing the deficit, because I never hear demands to raise taxes from people who don't seem to want more spending, too.

Bring the damn troops home.

End the damn war on drugs.

Stop raving about the damn high speed rail.

When you've done that, and a dozen other things, and not blown the savings on something else, you can talk about raising my damn taxes. Not before.

This is just a crude description to show where are the incentives.

I don't disagree with your point here, ct.

That said, if the Bush II tax cuts were rolled back, my taxes would go up. And, if the Bush II tax cuts were rolled back, we'd be in a lot better financial shape.

Which, as an aside, would improve all of our lives in a number of useful ways.

So I'd be fine with it.

I should also say that, primarily due to the industry I work in, I'm a fairly high earner. Not a quarter-million-a-year high earner, or even remotely close to that, but more than most folks make.

Nothing special about me, I just happen to ply a trade that pays well.

So, if taxes are going to go up, I'd say I should be on the short list. Because it won't actually take food out of my mouth.

You seem to take it for granted that collecting more tax revenue requires YOUR taxes to go up.

I'm saying I'm up for it if that's what is needed.

But don't imagine that your willingness to chip in will in any way inspire, cajole, or shame the truly rich into accepting higher taxes on themselves.

I harbor no such illusion.

To be fair, there are many wealthy people who are perfectly willing to see marginal rates go up. I don't think the issue is wealthy folks as a class.

IMO the problem is some kind of loss of sense of common purpose and mutual obligation.

Letting the nation go into default out of an absolute refusal to raise *any taxes at all* is beyond greedy. It's boneheaded stupidity as a practical matter, and gross irresponsibility as a matter of governance.

And we are all going to pay, and pay, and pay.

We spent the money, now we have to pay the bill.

No, we don't! And we shouldn't! We have to pay the bill someday, but now is the worst time.

This is where Obama has given up the store by completely buying into the other guys' frame of the situation.

The United States has a lot of debt, and a large budget deficit, and other things being equal, this is bad. But interest rates are at historic lows, and the US is in a recession. Any economist who has not drunk right-wing Kool-Aid will tell you that this is the worst time for a country to try to get out of debt; you want to keep borrowing at a time like this.

Now eventually, we have to deal with the problem. But letting the Bush tax cuts expire, ending the wars and reforming health care will go a long way toward fixing that.

The Republicans have completely manufactured this apocalyptic situation by threatening default if we don't eliminate the deficit. But there's no reason we have to default now except for their pigheadedness. And because of them, interest rates are probably going to skyrocket, and the opportunity we could have had to keep borrowing for a while at low rates is going to go away.

The remaining question is just, are they going to successfully get everyone to blame this on Democratic "out-of-control spending" and win? Right now, it looks to me like they're going to destroy Obama but destroy themselves as well in the process. I guess Mitt Romney and House Democrats come out on top, and we get gridlock in the opposite direction; I hope they feel grateful.

Letting the nation go into default out of an absolute refusal to raise *any taxes at all* is beyond greedy.

Also, the last few days have demonstrated that that's not even it. The Democrats have offered to totally cave on this point, and the Republicans still won't take it.

It's letting the nation go into default out of an absolute refusal to grant a victory to Barack Obama.

I think default is unavoidable at this point unless the Republicans can figure out a way to make a deal fatally embarrassing to Obama. Obama so far has been willing to meet them more than halfway without blinking, so nothing they can come up with is sufficiently embarrassing to him. If Obama and Biden resign and name Boehner President and confess to screwing goats on television, maybe that would be enough.

Raise your own damn taxes. It's not like they're going to turn down the money if you send them more than they demand.

OK, someone had to go there. So, someone has to make the official reply.

The reason this won't work is that (a) I, personally, don't have enough money to kick in to make a big enough dent, even if 1,000,000 of my best friends join in, and (b) voluntary tax regimes are prone to free rider effects.

Whatever we do, we all gotta play.

Bring the damn troops home.

End the damn war on drugs.

Stop raving about the damn high speed rail.

When you've done that, and a dozen other things, and not blown the savings on something else, you can talk about raising my damn taxes.

I'd actually support investment in a good domestic passenger rail system. Not gonna happen, of course, it's got "hippie" written all over it at this point, but it would actually be a useful thing to have.

Other than that, I'm fine with the Brett Bellmore plan. At least it has some connection to reality.

If you are taxed more while spending all of your cash on consuming (which all making less then $50k do)

which is it, $50K or $500K ?

So, everybody wants to use the road to drive on, schools to educate their kids, soldiers to fight some ridiculous war, hospitals to admit them in case of medical problems, et cetera, but nobody wants to pay for all that.

In case you did not notice, the US is falling apart because of this insane, and almost religious, obsession with not-paying-taxes.

Everyone has a list of things they think taxes shuld not be spent on.


That's the Republican divide and conquer argument. Play every American off against each other: "Cut taxes so we won't waste money on what you want but we will keep spending for what I want!" It isn't realistic at all. The eniviatble result of that kind of budget is that the spending will keep going, the tax cuts will happen, and the deficit will go up.

Under funding does not work as a way of blackmailing the government into making the budgeting choices of a particlular voter.

Of course what the Republica party leadership realy wants--their budget made this clear--is and end to Medicare, Medicaid, unemployment funding, and "reform" of Social Security. What the Republican party does not want is a vibrant healthy middle class. They do not give a fuck about anyone who isn't weathly. It's class war justified by that "I want tax cuts for me because I don't think we should be spending money on you.." argument.

If someone doesn't want money to be spent on something they can get politically active to oppose the expenditure without bringing taxes into the discussion at all.

I'd add to Matt McIrvin's point that when discretionary spending is reduced to avoid further borrowing, the economic effects will push non-discretionary spending up and revenue down (something along the lines of what critical thinker was saying). Jobs will be lost, people will need assistance and they won't be paying taxes. The paradox of thrift will take an even bigger bite out of economic activity.

They can budget all they like, but the economy will drive the revenue/spending balance, only without anyone having the ability to control it in any sensible way.

What we really need is spending that is well targeted rather than welfare payments replacing working income, as well as some of Brett's suggestions - other than the sweeping dismissal of high-speed rail. Some proposed projects are, if not entirely stupid, lower in priority than many others.

Laura, please avoid using the f-word, as use of the f-word is counter to the posting rules.

Thanks!

Stop using the word "ta*es", too, Laura.

It's counter to the universal Norquistian pledging rules.

I'll go Brett one better. Why should my ta*es pay for (you could ta* those six words alone as they are uttered by the great whining blob of American simps and have the deficit paid off by Friday) bringing the troops home.

They can pay their own way home. All they do when come home anyway is suck taxpayer ti**y for wheelchairs and wooden legs. Or better, since we're not all in this together anymore (we never were, and baby, we're going to get a whole lot farther apart), the countries they are deployed to can take them in.

They could quarter them in THEIR women's vaginas thus pleasing Phyllis Schafly and cutting our ta&-suck rate.

Or Brett could pay for their return his own self. Kind of a libertarian, voluntary troop return program.

I'm with Russell on this.

But after the following happens: a virulent, armed ta* revolt (we shall henceforth pay no ta$es, income, capital gains, SS, Medicare, property, sales, etc) at any level of government administered by any Norquistian pledge signer) from, I don't know, the 90 million ta#payers fed up with this effing sh*t.

We'll allow one question from Grover Norquist, you know, the one he uses to vet his ta$-pledge signers every chance he gets:

How many g*ns (why doesn't that word have trouble getting through the filters?) do we own?

He can ask it in Norwegian, if he doesn't understand plain English.

Whatever it is Brett wants to pay ta3es for, I'm not doing it any longer.

I think the millions of good folks now being subjected to this crap from their "fellow American" sh*theads (first we lay you off, then we blacklist you from ever getting a job, then we refuse to pay ta#es, and then we're going to shred the safety net) will eventually turn out to be rich ground for a seethingly angry, virulent, anti-ta#, anti- gummint-administered-by-Norquistian-murderers
movement.

The Tea Party will sh8t their drawers all over their Medicare-supplied scooters.

Tea Partiers can crawl to their next confab dragging their Obama-is-a-nigger signs, with bullets whizzing over their heads.

I apologize for the f word, I should not have used it.

I'll tell you a little story, I have five clients, all of them o some combination of Medicare, Medicaid, food stamps and Social Security disability. Two are wheel chair boud, one is bedridden, and the one is in kidney failure. Due to Republican policies they would, if they lived in Florrida, have to pass pee tests to get food stamps. If the Republica budget had been passed they would be homelss and unsupported. (Or the moey would have to be made up at the state level which would be opposed, of course, by the state level Republica party). In Wisconsin they would be deined their right to vote because they would not be able to transport themselves the to vehicle lincesing offices to get the special id now required in that state. And the Republicans in that state have closed twelve licensing offices to make it eve harder for people to get the spiecal ID's.

I my opinion "Republican" is a dirty word,

For what it's worth - they have raised my taxes. IL state sales tax was increased from 3% to 5% because of...well...that's a long story and involves some jailed ex-governors, but for the most part it's because of the same lack of long-term insight in spending that got the Federal government in trouble. No one calls for building bridges and infrastructure in a boom, but all* (*most) complain when it's suggesting during a bust.

Here's a thought - why not try to reduce the boominess of the booms and the bustiness (heh) of the busts? Surely one of our mighty two parties will support that concept. Oh wait, there's only 1 party and it's going to keep taxing, building aircraft carriers, fighting wars, letting lobbyists write legislation, convincing us that there are exactly 2 sides to every argument, & working from election to election while forcing its lower income constituents to work from paycheck to paycheck.

Let's get back to a ni hao thread -- I need to work on my Chinese to support my overlords future Chinese bosses.
(note: this is just continued snark...I'd be happy to debate about China but I'm not really taking the position that they're going to swoop in and take over the US...they're not...yet...they're still busy taking over Greece & Africa)

Yes, but until the word "Republican" is disallowed through the servers, we're stuck with it.

Also, Laura, remember that the expensive cup your patients would pee into is supplied by the Governor if Florida's wife's profit-centers, under his new pi*s-up-a-rope economic philosophy, thus keeping low-paid cup manufacturing jobs away from American shores.

Have you shared lentil recipes with your patients?

They can save money by skipping the cooking process altogether and swallowing each uncooked lentil one at a time.

Other ta#-saving measures would be to not apply for Food Stamps at all and forgo the peeing-in-a-cup humiliation and, like some former Indian Prime Minister from long ago, drink their own pee.

I think Brett and his family do this to keep the government wolf away from the door.

Also, Laura, remember that the expensive cup your patients would pee into is supplied by the Governor if Florida's wife's profit-centers

And the fee will be fronted by the person applying for assistance. The state reimburses them if and only if they pass.

Scott's looking for drug testing for all public employees, too. Quarterly. That's a little over 150K employees, at four tests a year.

Economic stimulus comes in many forms.

Brett,

When someone like Russell or I suggests that our taxes should be raised, yes, it is obvious that we're requesting that taxes on everyone making as much money as us should go up, meaning "other people's taxes."

I'm willing to chip in more in taxes to help deal with the debt *if* other people just as rich as me pay too. I've no interest in helping you or anyone else free ride.

A huge chunk of the debt was run up by people I loathe. But it's there, and our nation is responsible for it. I am a citizen. It is, therefore, partly my responsibility, even if I don't like it.

People as wealthy as I am and even moreso people wealthier than I am have gotten repeated tax cuts and seen their incomes rise dramatically, while everyone else has been treading water.

A large chunk of the group that has done so well over the past several decades has spent the entire time whining and crying about taxes, even as they've piled up wealth. That in and of itself is ridiculous.

The debt we have has already been racked up. It was mostly racked up under Reagan and Bush the Younger, the latter of whom had a GOP congress for most of his 2 terms. During that same period of time, the rich who have been getting richer have gotten tax cuts/breaks. Now we are told the bill is coming due and they don't want to pay. Instead, they want to address the issue by bringing non-defense discretionary spending down (hits the poor hardest) and making long-term cuts to SS, Medicare and Medicaid (hits the poor and middle class hardest).

Their agenda, Brett, is clear as day: protect the richest Americans from the fallout. Everybody else pays.

russell, I think it's admirable that you are ready and willing to pay more in taxes. Not that you said that raising taxes is, in itself, enough, but it's not going to make a dent. Not even a little tiny dent.

If you were for instance to implement tax rate hikes that would result in 10% more revenues, that amounts to approximately $100b if we continue to collect revenues at 2009 levels. If you raise ALL taxes to effect a 10% increase in all tax revenues, you've advanced that to $200b. In other times, that would be a nice chunk of change.

But that's only part of the story.

This year we're overspending by over a trillion. That's projected to go down, but I think that US government projections are hopelessly optimistic. For one thing, they're projecting over a half trillion increase in revenues next year; looking at comes from nearly $200b in individual income tax revenues (which, where'd that come from? We didn't even see revenue growth like that during the Clinton administration), $130b in corporate tax revenue increase (also not demonstrate during Clinton admin); basically the whole deficit outlook is crap without substantial jacking-around of the entire corporate, personal and even excise tax structure, none of which is even in the works yet.

So if you think that because projected deficits are shrinking, we're going to be out of the woods, think again. But we'd better hoist taxes and not touch spending right now or grandma gets it.

I'm not against some adjustments to the tax code. I'd practically welcome major modifications to the capital-gains tax. But unless we're willing to cut spending, we're screwed no matter how much tax-hiking we do. We'd best face facts: you can't keep increasing spending during a time when revenues are declining, and you can't just outright lie to the public that the revenue picture is rosy when everyone can see damned well that the employment picture is not.

The Seven Dirty Words You Can't Say In American Politics:

1) "Taxes", if you're a Democrat. The rich must "share in the sacrifice", or "make a contribution" -- any stupid circumlocution will do to avoid saying "tax the rich".

2) "Rich", if you're a Republican. There are no rich people in America, only "job creators" or "small businessmen". This explains why Republicans do NOT accuse Democrats of wanting to "tax the rich".

3) "Stupid", if you're a Serious Person. The essence of Serious Personhood is the refusal to distinguish between stupidity and reality, lest other Serious People get the idea you're distinguishing between Republicans and Democrats.

4) "Ignorant", if you're talking about voters. The preferred term is "independent".

5) "Old", even if you're talking about Alan Simpson.

6) "Fat", even if you're talking about Chris Christie.

7) "Solipsist", even if you're talking about the likes of Brett Bellmore. But mostly because many voters are too ignorant to know what "solipsist" means.

--TP

But unless we're willing to cut spending, we're screwed no matter how much tax-hiking we do.

I have no problem with cutting spending. Although I'm not so fine with many of the specific choices being made.

What I am definitely not fine with is an absolute refusal to consider increases in revenue, at all.

Well, not all spending is created equal. High-multiplier spending would grow the economy, making the debt smaller in relative terms, and result in more revenue even without changes to the tax code. Both the private sector and government are and have been doing a sh1tty job of allocating resources.

Not all taxes are created equal, either. Taxing wealth would go a long way to restoring some sort of sanity to the way our economy works. Well, unless you think neo-feudalism is sane.

Let's look at that wealth tax thing.

Total household net worth in the US is roughtly $55T, according to Wikipedia. Total value of homes in the US is $22T, according to zillow.com. That leaves $33T that's not subject to state/local property tax. You're going to have to spring an annual wealth-tax of something like 3% to close the gap.

And of course you're going to have to address what gets taxed. Do tax-sheltered savings plans get taxed? I think there are a lot of people who would have a problem with that.

NO ONE IS TALKING ABOUT DOING THIS JUST WITH TAXES.

I'm sorry to yell, but I find this really irritating, because I've seen the argument elsewhere.

You're going to have to spring an annual wealth-tax of something like 3% to close the gap.

I don't recall anything about *closing a gap* in my comment.

Actually, there is a gap, it's just not in the federal budget. Not that I'd try to close that one either, not entirely - just make it smaller and more reasonable.

Slarti

We'd best face facts: you can't keep increasing spending during a time when revenues are declining,

Where is the fact here?
I can see only republican dogma that has been debunked 80 years ago. During the prosperous years of US that dogma was never applied.
Even Bush did increase spending when they noticed economy slowing down and lack of revenue in 2008 and send out checks to stimulate. His administration could not wait for new tax cuts for next year so they send checks out quick. The fact that most of it was saved or used to pay for mortgage made it ineffective. They did it hoping to go past election without freezing credit market.
That is a republican dogma that is recreated from history to fit a specific conclusion: Lower the labor cost.

On the subject of the T-word, the absurd (as I recall, that word was thought up by existentialists because the eff word upset traditional philosophers while they were at work) claim that 51% percent of the working population pays no ta3es whatsoever keeps being bleated by the willfully (but I expect they would qualify even if they didn't try so hard) *gnorant.

A lie, natch, but let's entertain the notion that it might be true. It seems to me this would put the Laughing Curve to a good test.

One wonders why the 51% who pay no ta&es haven't very quickly been incentivized and motivated to become fabulously wealthy entrepreneurs and small and large businessmen and elite movers of capital AND haven't moved far ahead of the beleaguered, tremendously burdened, disincentivized successful 49% who must be by now ready to cast off the awful burdens and shackles of their heavy loads and start a life of aimless dumpster-diving and lentil-nibbling.

You would think the layers of the deeply disincentivized in the top half would slump-shouderedly and swiftly switch places with the bottom layers of the totally non-t%x-burdened, kind of like the way hot and cold air currents flip-flop in the atmosphere from time to time, and then rest in abandoned railroad yards and city parks until such time it occurs to them once again (Eureka! or Shazam!, as a traditional lightbulb flickers on and off over their heads)), that hey, I'm not paying any @#*%s, so it's once again time to invent the I-Pad or the Oldsmobile, or the two-in-one mixmaster and vibrator.

What seems to get very little play in the news about the debt ceiling is that the Republicans have alternatives to do what they want.

The Constitution requries that all spending bills originate in the House. So if you are a majority in the House, which the Republicans are, all you have to do is don't include so much spending in the budget that you pass. There is nothing that the Senate or the President can do to force you to spend a dime more.

So why haven't they done that? Pass a budget which doesn't spend more than the tax revenue. Decline to agree to any amendments from the Senate. Presto! A balanced budget -- and proof that it can be done.

Do they really think that, if they passed a balanced budget, the Senate would refuse to pass it, let the government shut down, and that would be a bad thing? It's not that different an outcome from what they are getting to now. And they would have established what they thought could and should be cut to get a balanced budget.

Where is the fact here?

In the bits you left out when quoting me. If you want sources for the numbers I gave, you can go look at where I got those numbers from. If you have an issue with the numbers, you can always object here.

wj: The Constitution requries that all spending bills originate in the House.

Actually, the text is: "All bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills." (emphasis added)

But your basic point is correct, no additional debt would be incurred unless at least some House Republicans agreed to it.

I think the fact ct was questioning was the fact that you can't keep increasing spending during a time when revenues are declining, not the fact that that's what's been happening, which is the fact the tables prove. They have nothing to say about whether or not that can continue.

I'd say that the critical word in the "fact" in question is "keep."

You could probably increase spending while revenues declined for a lot longer if you didn't voluntarily subject yourself to bond markets. You could probably increase spending while revenues declined without damaging inflation so long as the private sector was not competing with government for scarce resources/potential output.

Over the shorter term, you can do it in such a way as to prevent to need to do it in the longer term. But we're probably too stupid for that, given our representation. We'll fruitlessly try to do the opposite, failing in the short term, while also screwing ourselves in the long term.

Slarti,

The only reason the federal government cannot continue to spend 20-something percent of GDP is that it refuses to collect 20-something percent of GDP in taxes. That is, indeed, a fact.

What is NOT a fact is the proposition that the federal government cannot possibly collect 20-something percent of GDP in taxes. You may consider it a political impossibility; you may dislike the idea; but there's nothing in the laws of arithmetic or even of economics that makes it impossible.

So, yeah, "We'd best face facts: you can't keep increasing spending during a time when revenues are declining is a fact-free assertion. Or if you prefer, it is exactly as factual as the statement: "We'd best face facts: you can't keep letting revenues decline during a time when spending is increasing."

The idiotic teabagger line (which I am NOT ascribing to you) that "We don't have a revenue problem, we have a spending problem" reminds me, every time I hear it, of the old George Carlin joke:

"And now for a partial score: Stanford 46."

--TP

What is NOT a fact is the proposition that the federal government cannot possibly collect 20-something percent of GDP in taxes.

I didn't say it was impossible. I said that it wasn't in any current active budget, so OMB projections that assume any such increases are intrinsically horsesh!t.

Well, O.K. raise my tD)es, but not until vermin parasites like this family are cut from the welfare rolls:

http://www.dailykos.com/story/2011/07/26/999075/-Welfare-queen-Michele-Bachmann-loves-to-suck-on-government-teat?via=blog_1

Nor is there anything in the tax code that will effect the kinds of increases being put forth in OMB predictions.

Which is kind of important, no?

I'd say that the critical word in the "fact" in question is "keep."

Fair enough. I'm not really eager to endurance-test the notion that we can indefinitely overspend our revenues by 10% of the GDP, though.

The only reason the federal government cannot continue to spend 20-something percent of GDP is that it refuses to collect 20-something percent of GDP in taxes.

I suppose I don't need to remind you that the most total revenues that the government has collected since the start of WWII is less than 21% of GDP. That's total revenues: personal and corporate income tax, excise tax, Social Security, etc. Historical average is just under 18%.

I don't really understand the ins and outs of why receipts fell to a low of 14.4% of GDP this year, but spending peaking above 25% of GDP also seems to be kind of problematic, doesn't it?

The funny thing is, I understand the Tea-Baggers on this up to a point. Even if it won't hurt them to raise taxes on the rich (which it won't), they're against it on principle because they want to force a slowdown in spending. And can anyone deny we are spending too much in good years and bad alike? Their representatives have chosen a perverse time to take that stand, being as how the budget they would have to cut in order not to have to raise the debt limit has already been passed, but at least I understand what they want. I even approve. Up to that point.

Where I don't get it is, why do they want the cuts to come out of programs they use? Medicare, Medicaid, Social Security, student loans...

Here's my stand: Don't raise my taxes,
Just cut my military already!

I'll take my chances against the screaming Islamofascistcommie(colored) hordes. I've got ammo. Tho somehow I doubt I'll ever have to use it for that purpose. But hey. Prepared! Ready for that fight! Any terrorists come to my door, I promise faithfully to mow them down all by myselfums and never once complain about the lack of cruise missiles forced by my imprudent spending cuts.

So stop spending my money on welfare for Haliburton.

Thank you. Good night!

US government had increasing spending while revenues were decreasing Between 1935 till 1945, that's 10 years. For ten years and it reached debt levels of 170% of GDP.
Japan have increased spending since 1992 til present. that's 19 years and there is no inflation, no negative effects, They borrow at 3.1% interest when debt level is 250% of GDP. Those are facts.

But that's possible only when there is liquidity trap/ zero lower bound interest. Which is right now. And it will stay like that untill wages, middle and low class wages start to go up. Which in our political environment might be never.

When the Rs came into office in January they said they'd focus on jobs. They haven't authored or offered a single jobs bill. Instead they've focused on anti-women and anti-poor legislation.

If we got unemployment down from 9% to 5% the deficit would be miniscule. But the Rs don't care about jobs. They care about deficits, and only when Dems are in the ascendancy do they care about those.

Fair enough. I'm not really eager to endurance-test the notion that we can indefinitely overspend our revenues by 10% of the GDP, though.

If the private sector continually tries to net save, there is absolutely no reason why this could not happen in a fiat currency system. Japan is a classic example.

I don't really understand the ins and outs of why receipts fell to a low of 14.4% of GDP this year

It's called a recession. Tax revenues decline precipitously as incomes and savings v. spending decisions change, in the aggregate, to pay down debt. But this mere fact has virtually undermined just about everything you have asserted elsewhere in this thread.

But unless we're willing to cut spending, we're screwed no matter how much tax-hiking we do.

Cutting spending now would be absolutely the wrong thing to do. cf, Ireland, Latvia, or in the case of a sovereign currency country, Great Britain. Austerity has done wonders there, neh?

It's as if that great deficit spending program known as WWII never happened.

If you were for instance to implement tax rate hikes that would result in 10% more revenues, that amounts to approximately $100b if we continue to collect revenues at 2009 levels.

Federal tax revenues in 2009 were somewhere just north of $1.9trillion.

They care about deficits, and only when Dems are in the ascendancy do they care about those.

no, not even then.

they actually only care about rolling back the New Deal. and getting the public to wet themselves over deficits is one mechanism they use to try to achieve that goal.

they actually only care about rolling back the New Deal.

And also the Great Society programs from LBJ that are still around (primarily Medicare and Medicaid).

My question is, why would they want to do this? Suppose we eliminated all these programs tomorrow, what would happen? It seems to me that the primary effect would be to subject millions of people to poverty and desperation, to whose advantage is this? What is the reasoning of those people who think such a course is a good idea?

What is the reasoning of those people who think such a course is a good idea?

It's blinkered and shortsighted. It lacks imagination. It fails to see the bigger picture. It is erroneously based on a zero-sum model. It's stupid and greedy and ultimately self-defeating. They just don't know it.

Federal tax revenues in 2009 were somewhere just north of $1.9trillion.

That's all tax revenues; I was referring to personal income tax. Which probably wasn't clear enough, but should have been dead obvious if you'd read the very next sentence after the one you quoted.

If the private sector continually tries to net save, there is absolutely no reason why this could not happen in a fiat currency system.

You've made it really clear that you think we can overspend at pretty much arbitrary levels and everything will continue to be peachy. I disagree, and am unwilling to take the risk that you're wrong. Which in no way is intended to be persuasive, note.

It's called a recession. Tax revenues decline precipitously as incomes and savings v. spending decisions change, in the aggregate, to pay down debt. But this mere fact has virtually undermined just about everything you have asserted elsewhere in this thread.

I'm not sure what you mean by your last sentence, but everything else tells me that you have really good reasons for expecting GDP to fall more slowly than tax revenues during a recession. If you do, please share. If not, I'm not sure what to do with this entire chunk of commentary.

What percentage of economic growth over the last year came as corporate profits? Why are government revenues down? What do we do about unemployment?

This may come from a Time magazine blog, but read it anyway (well, if you want to). Here's a quote (of a quote!) from the post (emphasis mine):

Companies have little incentive to invest in technologies that save on labor or otherwise increase the competitiveness of the labor-intensive value-added activities in advanced economies. In short, companies' private interest (profit) and the public's interest (employment) do not align perfectly. These conditions might not last: if growth continues to be high in emerging economies, in two or three decades there will be less cheap labor available there. But two or three decades is a long time.

In the meantime, even though public and private interests are not perfectly aligned today, they are not perfectly opposed either. Relatively modest shifts at the margin could bring them back in sync. Given the enormous size of the global labor force, the dial would not need to be moved very much to restore employment growth in the tradable sector of the U.S. economy.

A bit of the old infrastructure renewal, love? Create some jobs, lower the costs of doing business in the US, wrest control of some of the economy from the FIRE sector - you know, actually build something of lasting and real value...

"What is the reasoning of those people who think such a course is a good idea?"

Got nuthin. Not even a Dagny Taggert joke.

We could look to Pol Pot for comparison, who reasoned that folks who wore specs should be driven into the countryside and subjected to some ultimate privation.

Wasn't there SOME reasonable upside to Nazi dentistry?

I imagine Breivik appeared eminently calm and reasonable to those around him on the ferry to the island.

"Why do you take the ferry?" they might have asked him.

"Why, like any reasonable person, to get to the other side" he might have answered.

I suppose if he'd tucked his hands into his armpits and flapped his elbows, quacked like a duck, preened his feathers, and waddled into the water and started paddling to the island, folks would have asked: "What is the reasoning of those people who think such a course is a good idea?"

I don't even know how he reached the island.

I'm just making stuff up cause I got nuthin.

I don't really understand the ins and outs of why receipts fell to a low of 14.4% of GDP this year, but spending peaking above 25% of GDP also seems to be kind of problematic, doesn't it?

As best I can tell, the kind of cutting being discussed is future reductions in the built-in increases every budget has. Not actual cutting. As you say, future projections are fantasy. The reality is what we've seen since 2000. Bipartisan fiscal insanity.

Medicare, Medicaid and Defense have to be on the block. When I see good faith, actual cutting, in areas other than defense, agreed to by Democrats, I'll be open to a tax increase to pay off the money we've borrowed. But first, quit borrowing and cut spending. Painful cuts lie ahead.

Everyone says it's the other bastard who won't compromise and everyone is right.

A compromise is this: real cuts followed by a tax increase. My two cents on tax rates for debt reduction only: the Clinton rates between 250K and a million, 45% above a million. Cap gains tax at 20% on cap gains income over 500K (with an exception for sale of a closely held, family type business).

A compromise is this: real cuts followed by a tax increase. My two cents on tax rates for debt reduction only: the Clinton rates between 250K and a million, 45% above a million. Cap gains tax at 20% on cap gains income over 500K (with an exception for sale of a closely held, family type business).

Oh, my god - that would explode the heads of many new GOP members of congress. But I like it enough!

I just need to throw in that there's no necessity at all for this big budget debate to be attached to raising the debt ceiling. Not that I don't think just about everyone here knows that, just that I think it needs repeating. There is an actual budget process through which to pass a budget, and it's separate from raising the (silly-assed) debt ceiling.

I just need to throw in that there's no necessity at all for this big budget debate to be attached to raising the debt ceiling.

Necessity is an elastic notion. You can call it opportunity. Regardless, the Tea Party wing of the Republican Party has the same ability to flummox more traditional Repubs as does the Progressive wing of the Dems. So, compromise seems unlikely. Ideologues are happy among their own kind and revile their counterparts. There is a lot of that going on. The "C" word is what the other bastards are expected to do.

As you say, future projections are fantasy.

I do wish sensible people would not say stuff like that. It smacks of the know-nothing-ism of which teabaggery is made.

If you have teenage kids, it is not "fantasy" to project that your future expenses will rise due to college costs. If you have an octogenarian grandmother, it is not "fantasy" to project that you will inherit her estate in the next decade. If you try to run a business, large or small, without indulging in the "fantasy" of "future projections" you're not actually running the business.

The nation is made up of 300 million kids and grandmothers and small and large businesses, and that makes "future projections" actually less fantastical. "Future projections" can be very wrong in individual cases, for life is full of individual accidents. But the continued existence (and profitability) of insurance companies is proof enough that statistics and probability actually work.

Some wag once accurately described the US government as a big insurance company with a sideline in military operations. Taxes are the premiums this big insurance company charges. "Future projections" about premiums and claims are essential to running even a small insurance company, let alone the biggest one there is.

We have all heard the demand that "government should be run like a business". It is usually made by people who also assert that "government is too big" -- but who fail to notice that "growth" is usually a prominent goal of successful businesses.

But never mind that. Whether or not you want "government" to grow or downsize (by outsourcing its operations to China, maybe?), you have to accept that "future projections" -- good-faith projections, not ideologically skewed projections -- are a businesslike exercise. Not "fantasy".

--TP

they actually only care about rolling back the New Deal.

What cleek said.

And also the Great Society programs from LBJ that are still around

What Ugh said.

What is the reasoning of those people who think such a course is a good idea?

I don't know. It's beyond me.

the Tea Party wing of the Republican Party has the same ability to flummox more traditional Repubs as does the Progressive wing of the Dems.

I'm trying to think of the last time the "Progressive wing of the Dems" made a meaningful dent in the public debate.

Actually, I'm trying to think of somebody who you could arguably say is actually a Progressive Dem.

Franken? Sanders is progressive, but he ain't a Dem. Who else?

I don't buy the "both sides do it" argument in this instance. To my eye, virtually every priority of American political liberalism has been put on the table.

What other "compromises" are the tea party faction looking for?

They will get their way or they will do their best to blow it up.

I'm pretty much on the verge of saying go ahead and blow it up. Seriously, screw it. Game over. I'm tired of trying to find common ground with folks like that. There is no common ground there to be had.

Or, rather, there is likely common ground available, but it's not acceptable to them.

So screw it. Blow it up, and we'll see where it all lands.

I do wish sensible people would not say stuff like that. It smacks of the know-nothing-ism of which teabaggery is made.

It is one thing for me to anticipate with reasonable accuracy what my future expenses will be. It is another thing entirely to be told by any side in DC what this or that "cut" or "increase" or whatever is because you never know how the speaker defines his/her terms.

We were assured that the stimulus would have specified positive effects. That was a projection used to sell it. It didn't pan out. The excuse is: it wasn't big enough. Well, that doesn't answer the fact that the projection was otherwise. IOW, the projection was flat wrong, and as best I can tell, most projections sponsored by one side or the other are wrong.

You've made it really clear that you think we can overspend at pretty much arbitrary levels and everything will continue to be peachy.

I 'think' no such thing.

On the other hand, I find bald faced assertions that we are "overspending" or "in a debt crisis" self serving, generally fact free, and wholly unconvincing. The fact that they may be partisan is OK.

If you feel that we are "overspending", make your case. What are the ill-effects of this behavior? What are the specific cures? What is the economic mechanism whereby reduced public spending leads to economic recovery?

Tony, your well-reasoned argument notwithstanding, I can't imagine how a business can justifiably project 20% next-year growth in revenues where prior years go like: 0.5%, 2.7%,-17%,-2%.

That, to my point of view, is fantasy; particularly when you have to go back four decades or so to see that level of revenue growth happen.

A compromise is this: real cuts followed by a tax increase.

Wow. That's pretty funny. "You first" is a compromise? You must be kidding. Please also define "real cuts".

"The excuse is: it wasn't big enough."

It's not an excuse if people were saying all along it wouldn't be big enough and the reason for settling for something smaller was mainly political.

link

If you feel that we are "overspending", make your case.

The only time we've spent ourselves over 100% of GDP that I have data for was during wartime. World War II. When we produced millions of ground vehicles, hundreds of thousands of aircraft, and hundreds of naval vessels.

We're not in any kind of war-time economy just now. So, I say: cause for concern. If you're not concerned, fine. A lot of other people are. I have absolutely no problem with your lack of agreement in this area, but the assertion that I have no basis for concern has, itself, no basis.

Here is Krugman complaining in January 2009 that a proposed stimulus of 700 billion isn't big enough and didn't contain enough stimulus even in that 700 billion.

link

We were assured that the stimulus would have specified positive effects. That was a projection used to sell it. It didn't pan out.

Umm...

Here is the initial CBO projection for ARRA.

Here is a recent CBO impact estimate.

Compare table 2 in the first and table 1 in the second. Give it a good hard stare, then run that first bit by me again.

My eyes are telling me it looks like ARRA did somewhat better than it was supposed to (relative to initial estimates, it does look like it underperformed a little in 2009, then caught up).

So it turns out ARRA did fine. It certainly made things a lot better than they would have been. The problem is we used only one bucket when we had maybe a 3 or 4 bucket leak.

Which is no big surprise. That's exactly what anyone paying attention would have told you in 2009 too.

Oops - it's table 3 in the first link.

"Then why GOP is saying: if you raise taxes it would hurt economy?"

This what is know technically as a "falsehood".

The fact that the OMB is making rosy predictions is no big deal...it is a political document. Did you not notice the drivel the OMB put out 2001-2008 for GW Bush? Also, as I read the tables, the $200billion jump in income tax collections is projected for 2013, not next year. I'd be willing to bet that is based on the assumption of some growth assumptions coupled with assumed expiration of the Bush tax cuts, but I didn't get into the weeds to find out.

Did you not notice the drivel the OMB put out 2001-2008 for GW Bush?

Yes, I did! We had it pointed out quite frequently on this very blog. Difficult to miss.

All I'm saying is that the OMB's extremely rosy predictions about the deficits are already pretty awful, and that the reality will likely (in my estimation) be much worse.

Tony P:

you have to accept that "future projections" -- good-faith projections, not ideologically skewed projections -- are a businesslike exercise.

bobbyp:

The fact that the OMB is making rosy predictions is no big deal...it is a political document.

I realize businessmen and politicians make strange bedfellows, but at this rate "political document" and "business exercise" don't seem to be playing well together.

"...and that the reality will likely (in my estimation) be much worse."

That depends. If we seriously cut federal spending, yes, it will be much worse....pretty much guaranteed.

If the government stops buying stuff, you can expect an economic slowdown. How anybody can expect otherwise, especially in the context of current conditions where the private economy has also decided to "stop buying stuff" is simply astounding. Hence my astonishment at your so-called concern. It has no basis in fact or theory. The fact that many may "share" this concern is troubling. That you seem to take some comfort in this is, in the context of this little back and forth, perplexing.

"I realize businessmen and politicians make strange bedfellows..."

Pretty much SOP since...well, forever.

Re: "government should be run like a business," I know nobody here would ever say it except as a joke, but let me rant a tiny bit:

(a) 7 out of 10 governments should implode within the first 3 years?

(b) When businesses and governments compete head to head (e.g. schools), the government does at least as good a job. It's fairly obvious that a business subject to the same stifling rules as a government agency -- e.g. massive recordkeeping, oversight, auditing, and take-all-customers -- would fail miserably.

IOW, the catch-phrase has no substance. Nobody who says it ever has any concrete vision of how to run the government like a business, because it's a contradiction in terms, the goals of the two entity forms are incommensurable.

OK, all done.

Here are our choices as I see them:

1. Deficits forced by economic conditions despite attempts at austerity, which means a really bad economy.

2. Well-directed deficits and a much better economy than in 1.

3. Forcing reduced deficits despite the economy, resulting in an economy way worse than the really bad one in 1, representing a problem way worse than continued deficits.

Irwin M. Fletcher, you choose.

Let me add that it would be really, really nice if we could get rid of our deficits and reduce our debt while enjoying robust economic growth. It would. Really. But, if that were the case, WE WOULDN'T HAVE A PROBLEM!!!

Sorry for yelling. It's just that we do have a problem, and problems are problems because they're hard and leave us with imperfect alternatives from which to choose.

(I, state your name, do hereby promise, henceforth, to allocate resources to their best use for the good of mankind, and to stop being greedy and gambling away the fortunes of millions of others, and to stop blowing things up on the other side of the world, and to stop throwing lots and lots of people into jail for no good reason, and...)

For one thing, they're projecting over a half trillion increase in revenues next year; looking at comes from nearly $200b in individual income tax revenues (which, where'd that come from? We didn't even see revenue growth like that during the Clinton administration), $130b in corporate tax revenue increase (also not demonstrate during Clinton admin);

I don't know what those projections are based on (e.g., assuming expiration of Bush cuts?), but in general, it's not unreasonable to project quite rapid rebound of revenue if there's a coinciding acceleration of economic recovery. I'm not sure about federal revenue at the moment, but certainly state revenue has recently rebounded quite a bit. There's also clearly no problem with corporate profits lately.

Now, obviously, the pace of further economic recovery occurs is in large part dependent on what our dysfunctional political system decides to do in the coming weeks, so you may be more or less sanguine about that. In any case, I doubt that any comparison with the Clinton administration is apropos. AFAIK, there was no similarly deep "great recession" to rebound from. You'd have to go back decades, perhaps even to the 30s, to find anything comparable.

All I'm saying is that the OMB's extremely rosy predictions about the deficits are already pretty awful, and that the reality will likely (in my estimation) be much worse.

Ok. You're not unjustified in casting a skeptical eye on rosy-sounding projections, but what are the practical implications of that?

I mean, if you're pessimistic about future revenues and deficits, what that means is that you're either pessimistic about the ability of our political system to restrain itself in the future, or you're pessimistic about the direction of the economic recovery, such as it is. (If you're paying attention, you're probably skeptical of both.)

But then what?

The question of the political system is a big one - and probably beyond the topic of this thread - but I think the salient point for this discussion is that there is simply no mechanism for the current Congress to bind any future Congresses to its will. (Except, perhaps, inasmuch as deliberately sabotaging the economy will certainly make the job of future Congresses much more difficult...)

Making massive cuts now will certainly change the current CBO or OMB projections for deficits in 2016, 2018 or 2044 - but it will really do absolutely nothing to guarantee that. The actual deficits will ultimately be determine by whoever is in Congress in 2015, 2017 and 2043 respectively. (And that is leaving aside the fact that massive cuts now will have the predictable effect of further tanking the economy - thus making the revenue problem in the medium term much, much worse.)

There is, I suppose, the idea of a balanced budget amendment (which the GOP is indeed pushing for). However, even if we leave aside the one-would-hope-obvious insanity of enshrining pro-cyclical economic policy in the Constitution, it is still perfectly possible (if somewhat more difficult) for a future Congress to repeal it.

As for being pessimistic about the economy, I sympathize as well. Of course, I would think the most prudent course would be to push for a MASSIVE short term increase in deficit spending of a targeted sort - stimulus - so that we can more rapidly push the economy back into the groove and recover to our full earning/production potential. (I happen to think we could even offset some of that with substantial tax raises on high income earners without negatively affecting demand too much.)

And of course once production, unemployment and revenues have recovered, we'll be looking at a much different picture deficit wise. Even things like pension obligations will look much better as financial markets stabilize. Times will be relatively good. That will be the time to push for targeted spending cuts and additional tax increases - both of which will at that point be counter-cyclical.

But in all of this, I see no justification for massive long term cuts to effective and popular social insurance programs.Particularly not ones that take effect in the short term (and it's perfectly justifiable at this point to take a wait and see approach on wider time horizons).

And, while my recollection is that you yourself are somewhat skeptical of the current direction of the GOP, it bears mentioning that the policy positions - and negotiating strategies - they are employing are now simply unjustifiable on any grounds remotely related to any desire to act responsibly in the interests of their constituents or to make this country a better place. At this point, the only way I can make even a modicum of sense out of the situation is to assume a high level of reactionary ignorance, AS WELL as attributing motives of either pure nihilistic will-to-power, or an overriding desire to serve some minority rentier class - one which actually benefits from the mass-misery inducing policies that Republicans are seriously entertaining.

It is one thing for me to anticipate with reasonable accuracy what my future expenses will be. It is another thing entirely to be told by any side in DC what this or that "cut" or "increase" or whatever is because you never know how the speaker defines his/her terms.

Quite often, the speaker makes damn sure that you misunderstand how he defines his terms. For example, a Democrat may speak of "cuts to Social Security benefits" when he means "slower growth in Social Security benefits". In exactly the same way, a Republican may speak of "cuts to defense spending" when he means "slower growth in the Pentagon budget". (Note the double misdirection: the Pentagon budget is not exactly "defense" spending.)

In a somewhat similar way, some old coot like Alan Simpson or Pete Peterson will occasionally speak of "the 75-year unfunded liability" of this or that program, causing me to pull out my hair and throw things.

First, it is not "fantasy" to make the "future projection" that neither of these guys is likely to live long enough to see the BIRTH, let alone the retirement, of the first American who will be eligible for Social Security or Medicare 75 years from now.

Second, it is totally disingenuous to talk about $50 or $70 trillion of "unfunded liabilities" as if the US will not be generating over a QUADRILLION dollars' worth of GDP over the same 75 years. It is as disingenuous as forecasting, correctly, that about 300 million Americans will die over the next 75 years -- and pretending that this calamity will reduce the US population to that of Boise, Idaho.

Finally, and most germane here, the Simpson and Peterson type of doom-mongering is NOTHING BUT A "FUTURE PROJECTION". Yet many people take it seriously. No "fantasy" to see here, folks; move along, now.

--TP

That reminds me, Tony P. What ARE the unfunded liabilities of the Department of Defence over the next 75 years? And why is that not a crisis?

I thought the government was run like a family, in which we sat around the kitchen table choosing whether to suspend the killer drone operations on the neighbors down the lane or send sis into the streets to raise a little cash.

Pete Peterson and Alan Simpson were unfunded liabilities seventy years ago who seem pretty well funded now.

Maybe they are Made Men, like the Mafia families, who run their business like a family and their family like a business and launder the money back and forth to keep it away from the government, which is then accused of being run like a government instead of a like a family or a business.

I'm sure everyone has seen this already a million times, but here it is again.

I call your attention to the big orange line.

Raise my freaking taxes.

Thank you.

Here's another hit from back in the day. No doubt we've all seen it, but here it is again.

When you cut Medicare and Medicaid, it means somebody with not a lot of money doesn't get to go to the doctor.

When you cut Social Security, it means that somebody who paid into that program for their entire working life doesn't get the income they were planning on. In many cases, that's the *main* source of income that's being cut.

When you cut TANF, you take food out of poor people's mouths. Don't even try to argue it, that's what you do, because that's what that money pays for.

When you raise revenue by letting income taxes return to historically normal levels - actually, historically *low* levels, just not as low as now - you take some disposable income away from high earners.

Those are the choices we are making. By refusing to allow for increased revenue and paying for it by cutting services, we are making high earners marginally wealthier, and making everyday life more difficult for folks who are ill, poor, or old.

One of the most prominent reasons we are in financial difficulty is that we have chosen to prolong a tax cut, which we knew *at the time it was passed* would lead to deficits and thus debt, and which *for that very reason* was time limited, beyond it's intended lifespan.

Our debt load is not something which has landed upon our heads like an unexpected meteor from space. It's the result of policies we chose and implemented.

What we do at this point is also our choice. Whichever way we go will not be forced on us, it will be what we choose.

Raise my freaking taxes, please.

Thank you.

When the coming Civil War II is over, Russell, I nominate you to deliver Gettysburg Address II.

Re "government should be run like a business,"

Take Madicare and Private insurance. Private insurance has 40% higher cost then Medicare. To run Medicare as private, costs would increase for 40%, that is that much less for consuming. Not to mention VA which has even less cost to better health outcomes.

You want more savings for consuming? just turn all private insurance in with Medicare and you get another $2T for consumers in savings. There is almost enough stimulus to kick start the economy.
Want army to be run like business? and then turn against US because China has all that money.
Want courts and judges to be run like business? HA HA HA

Solution was always this: Clean raise to debt ceiling, no amendments: 170 Ds and 50 Rs. Only problem is Boehner has to bring it up for votes in the House. Senate is all D for it, clear pass. That's how its going to be on 8.1. midnight. It was Obama's plan all along. All of this now is just posturing and taking long shots.
Up till now it was majority party doing all votes for it, but crazy times bring crazy out of people

Just read http://michael-hudson.com/2011/07/debt-ceiling-for-progressive-repealing/>Michael Hudson about debt ceiling games. Obama is threatening with SS benefits not being paid out while at the same time talking about SS not bringing a cent of debt. That means SS is self-sufficient and it will pay out all benefits even without debt ceiling being raised. Unless they plan to rob SS fund again. That goes the same with Medicare, almost.
Actually, last year's payroll tax cut is bringing $120B less in revenue this year for SS.

"Medicare, Medicaid and Defense have to be on the block. When I see good faith, actual cutting, in areas other than defense, agreed to by Democrats, I'll be open to a tax increase to pay off the money we've borrowed"

Oh. Cause harm to old people, disabled people and children first. Then the wealthy, whose tax cuts caused the propblem, will be willing to sacifice some of their discretionary income to help pay off their deficet. But screw the disabled and the elderly first.

Your values are showing.

"I'm sure everyone has seen this already a million times, but here it is again.

I call your attention to the big orange line."

I don't have a lot to say, except we'll see.

But this graph is just BS. It takes every dollar of interest on all that stuff below and adds it to the "big orange line" like somehow we are getting charged interest on the money not collected.

That interest is on the stuff we already bought, or are signed up to buy. The Bush tax cuts have nothing to do with that interest, except to pay some of it down if repealed.

When Obama agreed to extend them in December everyone was all up in arms over him selling out. But I guess his word isn't worth the time it takes for him to give it. Here we are 7 months later redebating the cuts he agreed to extend for two years.

He has also never got a proposal on the table that saved a dime, he just lobbied for tax hikes, again. Yes, he kept saying he agreed to cuts, but he never proposed which ones or how to do it in a way they could be measured. Smoke and mirrors.

Now he also wants to not discuss this anymore until after he gets to run for reelection. Despite the fact that it is clear that actually coming up with a solid plan to reform taxes, actually fix Medicare (which he supposedly fixed in the healthcare bill)or anything else that might be a real fix will take longer than next week.

Then the House Republicans pass a bunch of stuff that won't pass, even if it was a good plan, that just wastes time.

Whatever the solution the argument has come down to which side can get the public to believe their hysterical lies.

I have to say it is barely worth the time I spent writing this, it will be another POS bill that will be too little and accomplish nothing. Then we will wait 18 months and hope the next administration and Congress can use the first 100 days to actually fix something.

Oh yeah, someone please raise russell's taxes so we can see for sure that won't help.

And the only way I want mine raised is to permanently IMPROVE SS and Medicare

In Marty's reality, where the Bush tax cuts no doubt resulted in an economic boom the likes of which this world has never seen,

When Obama agreed to extend them in December everyone was all up in arms over him selling out. But I guess his word isn't worth the time it takes for him to give it. Here we are 7 months later redebating the cuts he agreed to extend for two years.

He has also never got a proposal on the table that saved a dime, he just lobbied for tax hikes, again.

It would be nice to have a cite from Marty's universe for the proposition that Obama has proposed early repeal of the Bush tax cut extension. I'd repeal it tomorrow myself, mind you, but I can't imagine Marty confuses me with President Obama.

In my own universe, which may be less fun than Marty's, Obama did bring the debt ceiling "crisis" on himself by not insisting on raising the limit back in December, as part of the extension deal. The one possibly good thing that may have come from that oversight might be that the current "crisis" has afforded us a peek at Marty's reality.

--TP

Here we are 7 months later redebating the cuts he agreed to extend for two years.

Yes, *we* are debating them, here on this very important blog.

They're not, remotely, on the table anyplace that counts.

Cuts to services are on the table. Revenue is off.

You may well be right, the graph may be utter crap. But "cuts on the table, revenue off" means that reducing the deficit is going to come from reductions in services. Mostly to folks who will feel them, acutely.

So yeah, raise my taxes, even if just to prove that it won't make a damned bit of difference. I'm happy to take that bet.

Repealing the Bush cuts will cost folks, max, something like a nickel on the dollar, and only if they're making pretty solid money to start with.

I'd trade that for leaving the safety net stuff the hell alone, in a New York minute.

cleek said everything there is to say. The Republicans in the House f***ing hate, hate, hate, hate, hate the New Deal and Great Society programs. They think they're wrong on principle, they think the feds have no business being involved in any of that stuff.

Playing chicken with federal default is just a handy way to put that stuff on the chopping block.

In real life, SS is fine. Medicare and Medicaid are at risk because medical care costs are rising at a rate significantly higher than inflation. That's true whether Uncle Sam pays, or your insurance company pays, or you pay out of pocket. If anything, the entitlement payers are more efficient than any of the private sector payers.

The issue is ideological. And the Republicans in the House are perfectly happy, if not eager, to burn it all down to get their way.

So yeah, we'll see.

But this graph is just BS.

Actually, no, it is not.

It takes every dollar of interest on all that stuff below and adds it to the "big orange line" like somehow we are getting charged interest on the money not collected.

How does one get to this fantasy conclusion? Where on the chart is "interest" shown?

The Bush tax cuts have nothing to do with that interest..

Similarly, if one simply ignores the credit card statements, the staggering amount of interest charges that shall accrue have ABSOLUTELY NOTHING to do with the initial decision to cease paying the bill.

Yep. Pure. Unadulterated. Fantasy.

Here we are 7 months later redebating the cuts he agreed to extend for two years.

Yup. Only Republicans get to move the goal posts. Show me where that is in the Constitution (favorite TeaBagger debating parlor trick).

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