« BACK  |  PRINT

RS

EDITOR OF REDSTATE

Things to Cut?

By: Erick Erickson (Diary)  |  November 28th, 2011 at 09:50 AM  | 

RESIZE: AAA

Paul Krugman wants to tax all sorts of things and in his zeal to tax (coupled with his partisan hackery) he chooses to ignore the GOP was willing to raise taxes on the Super Committee.

Krugman wants to tax the rich, tax financial transactions, tax pretty much everything. It has become the Democrats’ mantra: tax, tax, tax.

But they still can’t deal with this question: if we raise taxes on everybody earning $200,000.00 a year or more to the Democrats’ preferred level, whatever that level might be, we still won’t have enough to close this year’s budget deficit, let alone actually start whittling away at the national debt. So what do we cut?

But wait, there’s more.

Historically, tax revenue into the federal government has averaged 18.5% of GDP. It has gotten as high as 21%, but only during the major economic boom and dot com bubble of 1998. It didn’t last long. The historic average returned.

The historic average existed both before and after the Bush tax cuts. That’s right. The rate of revenue into the Treasury was not significantly impacted by Bush’s tax cuts. The biggest impact on tax revenue has been the loss of American jobs.

As Marco Rubio said earlier this year, we don’t need new taxes. We need new tax payers.

So again, if we raise taxes and it won’t even close the budget deficit and if we raise taxes and still average out at about 18.5% of GDP, what should we cut to close the deficit and what should we do to get Washington’s spending back to 18.5% of GDP?

The Democrats won’t answer that because at the end of the day they, like the GOP, agree with Dick Cheney. To them, deficits don’t really matter. It’s all politics.

Tags: , ,

COMMENTS

POSTING RULES  |  LOGIN TO COMMENT  |  REGISTER TODAY
  • tailfins1959

    http://politicalticker.blogs.cnn.com/2011/11/28/rep-barney-frank-wont-seek-re-election/

  • johnt

    If you listen carefully the sound you barely hear comes from Congress and Media grinding their thighs together in erotic anticipation of broad tax hikes. The gangsters dream of a VAT, laid on everybody, keeps them writhing in bed at night, sweating and moaning, and ahem, doing morally, personal, manipulative things to themselves.
    If not a VAT, some other combination of horrors. It’s progress, you see.

  • PubliusII

    “To them [i.e. both Democrats and Republicans], deficits don’t really matter. It’s all politics.”

    But deficits do matter. Greece, Ireland, Portugal, and now Italy show what happens when spending is unrestrained. The failure of the supercommittee shows that we won’t cut spending at all. We are headed for a Greece-like crisis. Maybe not this month, but every day it gets closer.

    It is depressing that our politicians won’t lead until forced. The Europeans haven’t really made any hard decisions to solve their unsustainable spending either, and seem unlikely to do so until the markets force them. We have had better leaders in the past.

    In one sense, I almost understand the Dick Cheney attitude: People have been warning that our deficits are unsustainable for as long as I can remember. Yet the Day of Reckoning has never arrived. I can understand why politicians would conclude, wrongly, that the Day of Reckoning will never come.

    But it will. And woe to incumbents who hold office on that day.

    Why can’t we elect people who will get ahead of this impending crisis?

  • gawken

    ..if for whatever reason you still have one..

  • jaykali

    If it was all ab revenue, then really it would just be a math problem, how do we maximize revenue? The issue is that Democrats also believe in the punitive effect and in ‘fairness’, even if it does not yield more money they believe that the ‘rich’ should ‘pay their fair share’ and be held in check. I mean we can argue ab tax rates, to me the capital gains tax is the stupidest to raise of all taxes bc it never yields more revenue. Democrats never admit that raising taxes could a) actually backfire and lose revenue and b) could hurt the economy.

    As for whether or not tax cuts should be ‘paid for’ I agree with the thought that keeping your own money shouldn’t be something you have to ‘payfor’ but I don’t think it’s realistic that the govt or even the public will ever see it that way. That is bc basically we operate where any change to the status quo requires (in theory) an offset. So if we cut taxes, that in theory would yield less revenue than the govt is ‘accustomed to’ therefor it has to be balanced with spending cuts or increased revenue somewhere.

  • skorrent1

    And at the time, Cheney was right. When revenue was at 18.5% and spending, including “emergency” spending. ran 18.9 to 19.2%, the deficits, i.e., rate of accumulation of debt, was relatively unimportant and more about politics than fiscal soundness. Now, however, with base spending running up toward 25% and revenues stuck between 16 — 17%, I think most politicians recognize that we have a problem. The difference comes in how you solve it.

  • edintexas

    “The Democrats won?t answer that because at the end of the day they, like the GOP, agree with Dick Cheney. To them, deficits don?t really matter. It?s all politics.”

    If I remember, we don’t have Cheney on record saying that deficits don’t matter. We do have a fired SecTreas (Paul O’Neill) claiming in his book that Cheney said that to him.

    Cheney might believe that, and it is clear many Republicans agree with the Democrats on that issue. But unless I’ve missed Cheney on tape or video (or even in person) saying that to more than one pissed off former Administration employee writing a “tell all” book, I’ll take that with more than a grain of salt – no matter how many times various people on the Left regurgitate O’Neill’s claim as an established fact.

  • winstondodson

    Canard – “Historically, tax revenue into the federal government has averaged 18.5% of GDP” This is a canard pushed by Libertarians that somehow this level of tax revenues is as much as can be collected. Implying that, by some reason only a “conservative” (non) educated economist can fathom, if you impose higher, the economy fails thus limiting the revenue. This MIGHT be argued if it was a higher %, say 35%,but at the margin of ~ 18%, that is ridiculous. Besides, that is why they are proposing other taxes like financial transaction taxes etc. This leads to the illuminating fact.
    ” The rate of revenue into the Treasury was not significantly impacted by Bush?s tax cuts” since the Bush Tax cuts were, as admitted by Bush, and his advisers, tilted towards the highest wage earners because, as the famous quote says “That’s where the money is”. So, if their taxes were cut, and the overall rate stayed the same, then proportionally, someone else’s increased. There in lies the problem.
    So unless the cuts in spending that, even the Dems admit are going to have to happen occur, and Repubs are saying must betaken mostly from who need and appreciate gov’t benefits, occur, then taxes will be raised as well.

    My Repub creds – I have never voted for a Dem but out of self interests I will never vote for a Repub again until some non-”popular” sanity is returned to the party. They “owe” me hundreds of thousands of dollars for allowing the Tea Party to use my finances to try and foist their political philosophy on the country. This is the embodiment of “throwing the baby out with the bath water” in that, they tell themselves that, for my own long term good, they will. in the short term. lose me money. I could have paid, more than 20 years of increase $10,000 more a year in Fed Govt taxes and still broke even with what the TP has wrought.

    When I read RS, it is so that I can understand how to screw-up the TP strategy. I used to donate to the RNC / Repubs now I look to see what the losing-est strategy is for the TP via RS and I back that. In the last cycle I contributed (early) to O’Donnell and Angle and have this cycle contributed to who I feel is the most destructive candidates – first Bachman then Cain now it looks like we have the final nail in the 2012 TP / Repub coffin – Gingrich. I just got offline from giving him a small contribution. If he is nominated you / he will lose and I will win. What YOU do not understand is that that, we will all suffer together so I’d rather take my chances with Obama than any moron that you can find.

    I agree with most opinions on RS that say that if Romney is nominated he would lose. He would because a significant enough RINO’s like me will not believe that, after elected, he can lose the TP baggage that he has acquired by running and enough TP will be disillusioned enough not to vote. So Obama wins.

    I will not vote for any candidate who is acceptable to the TP / RS and vice versa so the Dems win by default. In fact, I find your views so repulsive and the actions of the politicians that you support so destructive, that I, as I sad above, actively thwart you.

  • ceili_dancer

    By the way, why are you here? I know that the blam stick has probably been used and I am probably talking to a ghost.

  • gator_hoo

    Isn’t that deficits don’t matter, it is that all the Congress people, Republicans and Democrats alike, have decided that anything that might improve the country for the next two years, but will totally hurt the country in the long run, is okay, because in the next two years is when you get reelected.

    Congress’s agenda never looks more than 2 years (occassionally 4 years) ahead, which is shorter than most businesses and families. What might have an impact on the country 10 years down the road doesn’t matter, because 10 years might as well be the next paleontological era in politics, and for those who survive politically those ten years, they’ll just do something else that pushes an even bigger problem into the future.

    The Congressional solution to every hard problem is to hope that the Next Congress has the solution.

  • in_awe

    Check out http://www.youtube.com/watch?v=661pi6K-8WQ called “Eat the Rich” based on Iowahawks analysis that even confiscating all the income of the rich AND all their assets plus other “revenue enhancements” only gets you through 1 year of spending. Then what? I can never get any liberal or progressive to answer that question. So, bottom line, class warfare is a political ploy pure and simple and has no basis in addressing the fundamental fiscal causes for our national crisis.

  • in_awe

    I can tell that you are a long time conservative…and I am Peter Pan. Nice try, but hardly convincing.

  • Common_Cents

    to meet the next quarterly earnings announcements. Hardly long term strategic. This is a key area to look as how to align longer term strategic interests in govt.

  • curtmilr

    The 18.5% is NOT a tax rate, but an average share of GNP for taxation. Perhaps you should take a reading comprehension course. The reason that revenues tend to return to that norm is that folks avoid taking income when the marginal rate of taxation goes up. When that rate goes down they indulge in greater income-producing activity, so it oscillates around that norm. All of this is perfectly legal and abundantly clear psychologically.
    By claiming that the TP has cost you anything is ridiculous! The TP has unfortunately not been able to pass a single plank of their program. The financial crisis, which began soon after the policies of the Pelosi/Reid Congress took effect in the Fall of 2007, cost most of us abundantly in 2008. It occurred BEFORE the TP came into fledgling existence in the Spring & Summer of 2009.
    So frankly, you are so far off base as to be irreconcilable with reality. Blaming the messenger for pointing out truths and others for your own investment and income fallacies is juvenile and ignorant. It seems like you must be pouting because you were thrown out of your OWS campsite!

  • johnt

    bad move if you seek to lecture people.

  • acat

    the upper rate was significantly higher than it is now.

    The point is, at that higher rate, it becomes more cost-effective for those who can afford to find and exploit loopholes to do so. At the lower rate, loopholes are less attractive.

    Think of it as supply and demand for tax rates – the higher the rate, the higher the demand (and therefore the price) of loopholes.

    You’re welcome to vote for the Dem nominee, just remember that elections have consequences; should you choose to do so, please don’t claim any credit for anything the GOP candidate achieves if they win, and be aware that you should feel quite a bit of guilt over all the damage the Dem candidate achieves if the GOP loses.

    Mew

  • uselogic

    Go away.

    Next!

  • uselogic

    Go away.

    Next!

  • adamcarralejo

    Shares of Aggregate Income by Percentile; Money income distribution (2010)

    Bottom 20% – 3.3% of all money income
    Second 20% – 8.5% of all money income
    Middle 20% – 14.6% of all money income
    Fourth 20% – 23.4% of all money income
    Highest 20% – 50.2% of all money income
    (top 5% – 21.3% of all money income)

    (you can find this information from the US Census Bureau at http://www.webcitation.org/query?url=http%3A%2F%2Fwww.census.gov%2Fhhes%2Fwww%2Fincome%2Fhistinc%2Ff01AR.html&date=2009-04-12 click on the first PDF, its on page 11, table 3, also on A-3 on page 41)

    Now, that highest 20% earns $169,633 on average. This income group earns HALF of all the income in annually. Your telling me that taking all the income from this group won’t balance the budget? Now, the top 5% (earns 21.3% of all income) starts at 180,000 (they don’t give a mean income of this percentile).

    “I can never get any liberal or progressive to answer that question” Now, I’m no liberal or progressive, but my guess is that if you want them to answer your questions, you’re going to have step outside of the conservative media echo-chamber and ask them. Short answer – you facts are wrong and the richest companies and individuals do have enough income/dividends/capitol gains to pay.

  • adamcarralejo

    You make several conclusory statements in this post that are very much up for debate, including:

    “if we raise taxes on everybody earning $200,000.00 a year or more to the Democrats? preferred level, whatever that level might be, we still won?t have enough to close this year?s budget deficit, let alone actually start whittling away at the national debt.”

    “Historically, tax revenue into the federal government has averaged 18.5% of GDP. It has gotten as high as 21%”

    “The historic average existed both before and after the Bush tax cuts.”

    “rate of revenue into the Treasury was not significantly impacted by Bush?s tax cuts” (my favorite; cutting taxes didn’t impact revenue? really? I should just take this a face value?)

    If you’re going to make this statement and have any credibility to skeptical readers that are open to your opinion (like me) you’re going to have to provide sources for these opinions. It’s should be disturbing to you that liberal blogs tend to source their arguments better. The facts do exists, please show them – otherwise you’re not having a debate or converting anyone, you’re just preaching to the choir.

  • gekster

    You saying “you?re going to have step outside of the conservative media echo-chamber” gave you away.

    And if you took all the money from the rich, then all you would have is poor,
    and would still not have balanced anything.
    Being willfully blind is not a good thing.

  • donald_24

    Things I would cut immediately:

    1. Farm and ethanol subsidies
    2. Defense spending (ie: reducing troop levels in Germany and Italy… yes we have troops there)

    3. Conduct a true audit to determine whether outside contractors are chepaer or more expensive than havng govt. employees doing the work and choose whomever is the cheapest option

    4. Increase enforcement of CURRENT tax laws and crack down on unlawful tax evasion

    5. All energy subsidies

  • donald_24

    I don’t buy this premise that raising taxes doesn’t increase revenue. Did revenue not go up after the Clinton and Bush 41 tax increases?

  • winstondodson

    I understand the 18% and the fact the % of taxes paid by the wealthy was higher before the Bush tax cuts makes your argument silly. I will say again, your arguments that people shield income at 18% is silly. Bring back your point at a higher rate and it might fly. The reason why the US collects 18% of GDP is that the RS believe in the old “starve the beast” / run up the deficit argument. So yes, do so and don’t tax the wealthy. Also read the past about non-income taxes.

    PS – there are NO, read NONE, academic studies that back up your argument(s) they are just Norquistest talking points.

    2 other empirical points – every election cycle the RS Repubs say “cut tax rates” to increase revenue. It has NEVER happened yet they have gotten away with it since Reagan. Yes, he STIMULATED the economy by running up the largest (at that time) debt since WWII. He cut taxes (once) and then took ~ 50% of those back by raising them over 6 years 11 times! So yes, Keynesian economics works as deficit spending is stimulative whether you do it by cutting taxes and not spending or increasing spending and not raising taxes.

    Western Europe successfully collects much more than 18% GDP.

    It is widely held that collecting taxes, not just spending, is one of Greece’s problems. They have individual corruption to thank for their deficits we have the RS Repubs.

    Iowa Hawk’s analysis – purposefully incomplete so that it could be misleading. Please see Senator Coburn’s CBO study that SHOWED, without a doubt, that for people with incomes > $1 million per year, they “receive” in both tax breaks (child care, etc) and direct payments (Medicare) > $80 Billion / yr. So, I either go with Iowa Hawk who was / is the fool who argues against ACC or Coburn / CBO – I bet I know who most RS will go with!

    And I am NOT a “populist” as that is a euphemism for ignorance nor am I a progressive nor liberal and as I said above, I still be do anything to screw TPer’s!

  • donald_24

    I’m just curious, how do conservatives in Congress plan to balance the budget? They refuse to increase revenue. They don’t want to cut defense spending. And they don’t want tu cut entitlements for current beneficiaries. Anyone who says you can balance the budget without touching taxes, entitlements (for CURRENT beneficiaries) and the Pentagon is lying to you. It cannot be done.

    Instead, when it comes to budget cutting time, we get Enron style accounting, with cuts to “baseline” spending and the assumption of $300 billion in new revenue that may or may not come when the economy improves.

    Guess what? When the European debt crisis blows up and hits America, there is going to be a 2nd dip and the deficit will hit $2 trillion. Good luck finding $2 trillion to cut. But don’t take my word for it. The San Francisco Fed just predicted a 50/50 chance of a 2nd dip.

  • gekster

    you look it up.
    You want to find something out, you do the reaserch.
    And while your at it, look up JFK’s taxcut to revenue ratio, along with Reagans and GW’s.
    When you find it, tell us all about it.
    .

  • donald_24

    I actually have the date for the Bush tax cuts right in front of me. For all 8 years, tax revenue as a share of GDP declined from a high of 19.5% in 2001 to 17.5% in 2008. I can’t find anything on the Clinton tax hikes from non partial sources despite spendng a lot of time looking.

  • acat

    If so, the baseline time frame needs to be from at least Nixon if not earlier.

    Prior to Reagan, tax rates and the sun both went up .. seemingly every day.

    See also the Laffer curve which, for something first drawn on a cocktail napkin, is pretty darn genius.

    Mew

  • donald_24

    I just checked the CBO website and finally found some info about the Clinton tax hikes. The Omnibus Budget Reconciliation Act of 1993, as the billl was officially called, did in fact increase revenue. In 1993 revenue startd out at $1.1 trillion and increased every year through 2000, when it hit $2 trillion.

    http://www.cbo.gov/ftpdocs/108xx/doc10871/HistoricalTables.pdf

  • drfredc

    It’s long past time for Politicians to sort out their spending mess. The taxpayers can quickly sort this mess out by some variant of a Taxpayer Directed Budget (TDB). A TDB might allow taxpayers to direct a portion of their tax dollars directly to various government programs, within ranges set up in an orderly Budget process by the Congress and WH.

    A TDB would also put the productive segment of society who pay the most taxes in charge of the nations direction, instead of politicians and the entitled and privileged bureaucrats and unions. This would also establish a missing check and balance against raising taxes on the productive as this would mean they’d have more, not less say — contrary to our current system where those who pay little taxes have the most say…

    A TDB would also provide a means for eliminating and combining programs that politicians can’t touch into lean, but effective programs…

    One might also allow for private charities to compete directly for providing various benefit programs that are currently limited to government programs. One might even privatize various government activities, such as Planned Parenthood, so the taxpayers that wanted to fund PP could do so and those who don’t could support something else, like a local church based hospital that provides lots of charity care…

  • gekster

    Bush tax cuts boosted federal revenue

    excerpt
    But the real jolt for tax-cutting opponents was that the 03 Bush tax cuts also generated a massive increase in federal tax receipts. From 2004 to 2007, federal tax revenues increased by $785 billion, the largest four-year increase in American history. According to the Treasury Department, individual and corporate income tax receipts were up 40 percent in the three years following the Bush tax cuts. And (bonus) the rich paid an even higher percentage of the total tax burden than they had at any time in at least the previous 40 years. This was news to theNew York Times, whose astonished editorial board could only describe the gains as a ?surprise windfall.?

    the key part:
    From 2004 to 2007, federal tax revenues increased by $785 billion, the largest four-year increase in American history.

  • donald_24

    Tax revenue did not actually increase under Bush. As a perecentage of GDP, tax revenue fell for all 8 years.

    On top of that, we had a massive housing and credit bubble from 2004-2007. That had far more to do with revenue than the tax cuts.

  • gekster

    Regardless of the percent of GDP, the $ amount was the most.
    Another who’s willfully blind.

  • donald_24

    Tax revenue for 2009 is only $79 billion more than it was in 2000. Adjusted for inflation, that is actually a significant drop in revenue.

  • ceili_dancer

    BZZZT, try again.

  • gekster

    You willfully ignore this part, ’2004 to 2007′.
    The houseing bubble, and then the employment decline in 08 &09 accounts for your #s. Less people working, less revenue.
    Nice try, no sale.
    I see you are another who plays an Economics Major on the web.

  • ceili_dancer

    …

  • winstondodson

    “You?re welcome to vote for the Dem nominee, just remember that elections have consequences; should you choose to do so, please don?t claim any credit for anything the GOP candidate achieves if they win, and be aware that you should feel quite a bit of guilt over all the damage the Dem candidate achieves if the GOP loses”

    As I said above – it’s not the Repubs that are getting elected, it the TP Repubs. They won the last election and it has cost me dearly so I understand. So yes, if the TP influenced Repubs accidentally get a Repub elected, I will blame them for us ending up like Greece.

  • Bill S

    Note that Democrat talking points are explicitly forbidden here. I suggest you lay off.

  • acat

    That “Reply To This” button under the post you’re reading? You want to start using it. Think of it like an IQ test, of a sort.

    By the way, the “Austerity” that the E.U. is trying to ram down Greece’s throat (and also the supposedly sovereign throats of Italy, Portugal, Ireland, and Spain…) is much more draconian than the Tea Party proposals…

    Margaret Thatcher got it right – England in the early ’70s had the same problem we’re having now – the Big Government types (in both parties) have run out of Other Peoples’ Money.

    Mew

  • gekster

    ..nt..

  • donald_24

    How is citing CBO data and reciting it verbatium considered a Democratic talking point? I despise talking points and do not use them, regardless of whether they come from Democrats or Republicans.

  • serpounce

    Ds want to pretend that fix our budget problems by taxing imaginary rich people, and Rs want to pretend we can do it by cutting imaginary spending.

    Time to grow up and start talking about the big ticket times: Medicare, Social Security, and Defense.

  • donald_24

    I specifically mentioned the housing bubble in an earlier post and said that it was the main factor behind the revenue. But housing bubbles, as well as bubbles of any kind, are incredibly bad economic policies that destroy wealth in the long term. This is one of the few areas in which Ron paul is right, and I am by no means a Ron Paul supporter.

  • serpounce

    Seriously, they haven’t done anything, so I don’t see how they could cost someone except in the form of lost opportunity.

  • donald_24

    The U.S. won’t have to have the type of darastic austerity as Europe because unlike the PIIGS countires, we can print our own money. Unlike Greece, it is physically impossible for the U.S. to run out of money as long as Bernanke keeps the printing presses running.

  • wonkish1

    $hit! I couldn’t believe that a diary just made it on the main page giving a BS analysis reminiscent of the Dems budget games on the upcoming defense cuts.

    People need to wake up and smell the coffee. This party is over and that goes for Medicare, SS, *and* Defense.

  • donald_24

    In order to have meaningful dericit reduction, entitlements will need to be cut for CURRENT beneficiaries. That is a political 3rd rail and those who vote for the entitlement cuts will likely lose their jobs in the next election.

  • donald_24

    I’m glad that several RS posters have brought up cuts to defense spending because I was feeling loney advoctating for them. The fact is that we can close bases in non-hostile countires like Germany and Italy. And in Afghanistan, I would take Jon Huntsman’s appraoch and leave a contingent force in place while withdrawing the majority of combat soldiers. A predator drone is a cheap and effective way to kill terrorists and I would buy more drones instead of more costly manned aircraft.

  • wonkish1

    That would likely allow you to keep your job.

    Means test social security and medicare for a decent number of people with very high net worth’s and then scale in the means testing over time from that original group to the upper middle class retirees. Change the COLA calculation in SS.

    Moving to just a premium support option for current retirees in Medicare instead of it being mandatory premium support and you’ll be able to lower the costs out of Medicare considerably. Privatize the administration of both systems and you’ll save tons of money in both direct savings and anti fraud savings.

  • bonnman

    While everyone’s gut reaction is to go after entitlement spending, in this down economy it would be political suicide. This is one aspect of the primary candidates that has me concerned for the general proposing cuts or even perceived cuts to social security, unemployment or medicare will not make a winning campaign.

  • winstondodson

    I tried the reply and it will not work due, I think, to an add-in that I have on my Chrome. So thanks for the IQ coaching acat.

    Let me return the favor:

    1) The relative size of the Greek austerity plan’s size in relation to the TP / Repubs cuts has nothing to do with the fact that the Repubs are standing in the way of those who could and would pay those taxes doing so.

    2) The relative size of the % of taxes taken by the UK Govt has always been and was after Thatcher, much larger than that of the US.

    You seem to be struggling with judging relative relationships especially when it comes to relative IQ’s which is why spouting your facts only works in arrangements with those of your same relative IQ.

    Which is why, out of self interests I will say again, I would have been and will be better off if the Dems raise my taxes by $10k / year and I keep my investments whole because the business climate would improve. As long as the Repubs allow the high income / wealthy to not pay their fair share (their incomes have increased by 227% but their taxes have only increased by 30%) then why would the economy prosper?

    PS – acat you should do a little more critical thinking on facts and less reliance on discredited slogans because “you’ll get farther”. The facts are, since Thatchers time, the average US citizen has drastically fallen in relative prosperity to those high income / wealthy and where he or she has felt improvements, as in health care, they haven’t paid for it – the Fed Govt has as part of the deficit / debt.

    PPS – I am going to give you a hint, I am in the lower band of those who have benefited in the post Reagan / Thatcher era. If you will read my post above where I give my Repub creds I will add that I am a highly educated former US Marine who is now a successful professional in the corp world and I got there with facts, reason and active management of my and others affairs. If the Repubs don’t raise taxes there is no more US military to speak of (look at GB now), if they don’t raise taxes there is no more Medicare / Medicaid also to speak of, so as a rational person what would I do in respect to the later? I would decrease my discretionary spending and save more for my old age. Guess what happends then? I spend less so that the economy takes a hit. I know of NO one making more than $1 Million / yr that would even blink at paying $5-$10-$20K / yr more in taxes. As I have said above (as you so intelligently pointed out because I can’t get my reply function to work) is that I would gladly pay, and vote to have everyone pay more taxes to keep us from a world that is just hinted at by you.

    PPS – the first real, sober, brave, realistic Republican who says the words “Bowles Simpson” once again gets my support / money / votes.

    Back to ya acat!

  • donald_24

    I like the idea of premium support, but it should be optional. If seniors want to stay in the current system, they should. The Ryan budget was mandatory premium support and that was what led to its death. It could have passed the Senate if it was optional.

  • acat

    is “standing in the way” of people paying taxes, that’s utter horse-{manure}!

    Should anyone *want* to pay more in taxes, they can do so.

    You’re also wrong, by the way, regarding your investments – the bubbles would have popped for they are, by definition, unsustainable, regardless of who won the election. Conservatives are supposed to have the sense to not try to reinflate a burst bubble. …

    Mew

  • winstondodson

    The expiration of the Bush Tax cuts (which I supported but now I support repealing them – all if required) and the auto sequestration is worth about $4 trillion over 19 years. Those are real cuts and “the party isn’t over” as all the programs will survive.

    The Repubs emphasize changing the law in regards to taxes and defense spending and the Dems cuts to Medicaid and Medicare. They will probably both succeed a to a degree and that is a detriment to us all.

  • donald_24

    If the Dems and Republicans chicken out and eliminate the triggers without any offsetting spending cuts, that will be a disaster and we will see another credit downgrade. Just politicians talking about eliminating the triggers could cuase turmoil in the markets. Both parties need to accept the triggers that they AGREED to and leave well enough a lone. If that means defense cuts, so be it. As Admiral Mullen said, the biggest national security risk is our national debt. Not Al Qaeda. Not the Taliban. But our debt.

  • serpounce

    Premium support and privatizing admin are both fine ideas to streamline the systems, but in terms of major, long-term, cost controls it’s more just smoke and mirrors. Real cost controls means reduced benefits.

    Our budget problems are bigger than run-of-the-mill government inefficiency, and even if such quasi-private solutions were to be vastly more efficient (and having worked for such “private” firms that do most of their work for the gov I have my doubts) we would still have a huge problem regarding medicare costs.

  • winstondodson

    acat – Instead of contacting Neal I’ll reply

    1) “Should anyone *want* to pay more in taxes, they can do so.” – I am optimistic when it comes to others so when they repeat something silly I try and show them why, Then, if they continue to say it then ….that is their own “relative IQ problem. Let’s use, as they say, a parable (or metaphor, or thought experiment but you get the idea). Suppose we had a table of 10 people that I am eating dinner with and just suppose that it is my friends restaurant. After eating and drinking our fill we ask for the check and it comes to $500 ($50 each) but it comes after closing and my friend left and said “Just leave the money on the till”. But some of the group, those who I know are well off enough to pay say”That meal wasn’t worth it and besides, we all know that the raw ingredients didn’t cost him that much so let’s just pay $30 each. So, I can pay more, $50 – my share, or I could decide to pay the total difference ($200) or I could ask all to pay their fair share. acat, the American people are eating and some are NOT paying their fair share and the only difference is that the restaurant is . . . . ours! So let me ask you, the next time a very silly person, a politician or even, dare I say a Red Stater, says “anyone can pay more taxes if they want to” are you going to think that they are smart? or silly and selfish?

    Bubbles popping – the Repubs could stimulate us out of this if they would suspend their anti-intellectual, unreasonable denial of Keynesian economics but they are tied the populist vote of people like RS. Perry said that we should worry about inflation – we are 4 years after we lost $12 Trillion out of our economy and if he, who graduated with C’s and D’s from Texas A&M and those who voted for him knew that one of the definitions of inflation is “too much money chasing too few goods” would know that the threat of inflation, at least in the medium term (4 years) is 0 and that those of us who can do simple math would prefer 4-5% inflation in order to inflate our depts away, so as Rick Perry so infamously said in a NH speech “bring it on!”(And I am not talking about the silly “conservative” slogans.

  • bonnman

    And there are far too many reasons to go into but for starters how would a government program plan around a budget that can radically change year to year? What if Defense spending went from $500B to $400B in a single year? And then the following year rose to $900B? This would be chaotic. What about veterans and service men and women who, on average, earn far less than most in the private sector and thus paying less taxes, they’d have less say under your system? Are they not productive enough? I’ll stop there. Terrible idea.

  • winstondodson

    “And Newt, although somebody said he’s a stupid man’s idea of what a smart man sounds like, but he is more plausible than the other guys that they’ve been pushing up.”

  • reggie182

    Aside from looking like a lawn gnome (only a bit smaller) is a smart man’s idea of what a stupid man sounds like.

  • acat

    You are also laboring under a number of false assumptions.

    First, I get the problems with the tax system. Your class-warfareist “The rich must pay more” is stupid on its’ face, the problem isn’t that the rich don’t pay enough, it’s that the number of people who don’t pay anything is too high.

    I’ve written about a minimum “floor” rate on gross income of about 2% – i.e. the minimum amount someone making $100,000 would pay yearly is $2000. The “ceiling” amount would be calculated as it is now, off adjusted income, but the “floor” remains constant.

    This would increase the number of taxpayers from 54% to somewhere around 80% of us, and would also increase revenues right along with it. It also wouldn’t help anything.

    The problem isn’t the revenue. The problem was, is, and remains, the spend. We can’t tax our way to prosperity any more than you can increase long-term productivity through large-scale layoffs.

    Somebody has to be doing the work for your company to make a profit, just like somebody has to be reporting income for the government to pay taxes, and tax loopholes respond to supply and demand just like anything else – the higher the top end rates go, the greater demand (the more the rich are willing to pay accountants to find and make use of) loopholes.

    Used to be stashing money in the Caymans or taking paper losses – got any idea how many flower shops exist only so doctors can claim a paper loss? – or buying poor-quality farmland – ask Sam Donaldson about sheep ranching. I haven’t kept up.

    Finally, nobody is stopping you from taking out your checkbook and writing a check to the U.S. Treasury. If it helps your guilt, do so. If you want to brag about it, post a picture. Do not presume to tell me what to do.

    D.C. have gotten themselves into this pickle through uncontrolled growth, and while the GOP under Denny Hastert had a hand in it, most of it belongs to the Dems. Period.

    I view D.C. bureaucrats as a cancer, and as with any good chemotherapy treatment, the rest of the body may feel like it’s dying, but the cancer will be starved to death. That, to me, is the goal. Starve the beast before it starves us.

    If you do not agree with my goal, perhaps that explains your problem in communicating with me.

    Mew

  • baserunr

    No one says that a greater percentage of the GDP is not collectable in taxes, that’s the inference you’re drawing from the data. There are reasons that this holds true in large measure for the US. Some of those reasons include the fact that Americans will only tolerate so much intrusion into their lives and restrictions on their freedom, and the fact that capital is mobile; it migrates to where it is better treated.
    Mr. Krugman’s static analysis of projecting trends into the future likely ignores this.

  • acat

    (nothing further)

  • wonkish1

    And then did things like means testing, premium support(which is a huge cost saver and a long term one to boot), privatized admin, changed the inflation calculator, etc. You would quite easily produce a good track line for the next 10 years or so.

    The problem as you point out is longer term liabilities(which are the elephant in the room). The only way you knock them down considerably is with private accounts in Social Security(trading some payroll taxes today for complete removal of the liability in the future) and watching as premium support takes over Medicare(because people will then take out plans with real co-pays and deductibles and huge savings occur when people don’t have limitless demand of healthcare expenditure because someone else, the gov., is paying for it).

  • acat

    and while that’s generally true, it’s also generally not perceived as welfare because of the absence of means testing.

    Good luck selling that one… not to the GOP, but to the Statists in both parties who recognize that means testing means the end.

    Mew

  • winstondodson

    Newt is like the really smart guy in your graduating class in high school. He could tell you how stupid it was to ride a motor cycle not realizing why he graduated a virgin!

    Seriously, I just moved my monthly auto donation (not much but enough for any campaign to notice because it helps their numbers) to him as I think that he needs the money in order to be the nominee. I want him to be so that the Repub party will hit bottom then maybe we could move on from this “Bozo show” of the 2012 Pres elections. And even though I want the Repubs to look stupid and lose big (I think Romney will further that cause) we will lose the lesson of having a TP backed candidate from losing so the TP will say (as many conservatives do now) “we lost because our candidate wasn’t conservative enough”. Until recently I had all my money on Bachman even though watching Perry run would be like watching the famous Jerry Lewis movie “The intern” he never needed the money.

    If the Repubs could nominate a serious candidate then I would surely support that person but none of these guys are ready to even run, much less win and serve. So, due to “enlightened self interest” I, as well as a significant group of other RINO’s, are doing what ever we can to ensure that Obama is reelected.

    Obama isn’t a communist or socialist but what people do not realize is that he isn’t even really a Dem. He ran, with the reluctant acquiescence of the Dems , as an outsider. He only “let them in” when he picked Biden and then, had his own campaign funding – direct from his supporters. He can’t even lead them,, Obama Care should be called “left over 80′s from Newt dredged up and passed by Pilosi” Care. If Obama and the Dems are communists /socialists then the Repubs of the ’80′s beat them to it. I was there, I loved Newt and the “conservatives” for, among other things, the individual health care insurance mandate.

    I have to say that Obama is “leadership challenged” but I do not agree with Carvil when he quipped “If Hillary gave OIbama one of her “cahones” he’d have one and she would still have two”. I think that she’d still have three! I would still vote for him over any candidate backed by Eric.

  • wonkish1

    If your married two income at the poverty level you’ll be getting around a 2% rate of return on your payroll tax contributions going forward. If your at the max contribution you earn around 50 basis points or less and its plummeting like a rock. You remove the cap and everybody over that cap starts getting way negative returns on that money.

    Its beyond pathetic to tell a high net worth individual that the cap on their payroll taxes is going away before you remove them from the benefits via means testing because all your telling them in that case is that you want them to drive more money into a system to receive crappy benefits.

    Ultimately though if they don’t do something like this then they’ll just learn the lesson the Eurozone is learning now, you are then forced to cut even more than you would have to today because you have to take into account the extra debt service acting now would have avoided. And the Dems are just too stupid to realize this.

  • westcoastpatriette

    stupid restaurant analogy as a comparison to, I guess, try to show that conservatives are either smart, silly, or selfish.

    The only way the analogy would fit is if you added to the equation that the ten people were forced at gun point to go to that restaurant, be told what they must eat and drink and have a twenty percent tip included in the bill.

    Now, tell me, winstondodson, just why should any of those people be told they are silly or selfish if they resist the entire plot?

    Arrogant leftists and mindless progressives do this very thing to the taxpayers–and then demand that we pay our fair share. Needless to say, we not buying the guilt trip and see through your stupidity.

  • acat

    I suppose it’s just that I think the Dems are smarter than you do. Or more evil. Whichever.

    Mew

  • serpounce

    when you say “premium support” what you’re really taking about is using a premium support system to put a hard cap on costs which would reduce benefits long term.

    I agree that would be a good way of going about controlling costs through benefit cuts, but it’s a bit disingenuous to suggest that you’re getting those costs savings through switching to premium support. It’s not an alternative to cutting benefits, it’s a way of going about cutting benefits that’s (relatively) politically digestible, and basically fair.

    I think I”m pretty much on the same page with you in terms of policy (defense, regulatory agency, and misc cuts + Medicare reform), but I think if we say “no benefits are getting cut were just switching to more efficient premium support” and go about putting a hard cap of spending, people are going to look back and say “lie.”

  • wonkish1

    Just pointing out that the Dems notion that it isn’t already welfare is a lie which we appear to be on the same page about.

  • acat

    Here’s the article .. but a precis is that, while Fitch rates the U.S. at AAA, they expect to downgrade in the next 12-24 months unless we get serious about the deficit and the debt.

    Mew

  • wonkish1

    Because low cost healthcare expenditure paid by 3rd party vs. out of pocket/HSA is not 1 to 1, very far from it in fact.

    When you go to the hospital with 100%(or near 100%) 3rd party payment all you care about is getting care and quality and you don’t care at all about price. When you go to the hospital with substantial cost coming out of pocket then you care about cost and you choose not to utilize a lot of the healthcare expenditure.

    Take a look at the difference in cost today between a HDHP plan and major medical(with a very low deductible and co pays) the gap is absolutely huge. Medicare has practically no cost sharing(outside of D) so its the epitome of an overpriced system. That is why you could actually give all of the cost reductions of the switch to the insured as a direct HSA handout each year and they would all be instantly wealthier and have a better insurance policy(i.e. less restrictions). If you split the savings 50-50 then not only does the insured get instantly wealthier from the switch, but the government saves a ton as well.

  • serpounce

    If you’re talking about premium support, providers are still going to be paid by a 3rd party and you’re going to have roughly the same moral hazard problem that you have now with Medicare.

    Heath savings accounts are a completely different can of worms. Yes you address (at least to an extent) the moral hazard problems, but you give up all risk pooling benefits of an insurance system . So at the very least you’re going to have to couple that with some sort of catastrophic plan.

    And it will still be a benefits cut. Even if you’re right -and I think you mostly are – that by putting spending decisions in the hands of health care consumers the “cuts” will be pretty efficient mitigating reductions in outcomes, people are still going to cry bloody murder when they cant get that MRI that the doc says “might a good idea” for “free.”

    IOW, just because you have a good system for cutting benefits in a way to minimize reductions in outcomes doesn’t mean it won’t both be, and be see as, a cut in benefits. .

  • winstondodson

    acat – take the time to respond to each of your points so I am sorry that you take those responses as “lectures”. So, I can only attribute your perception to the fact that you spend too much time on sites like RS and not enough time out in the real world where. less than well thought out opinions are treated as I treat yours.

    I think that it is ironic but you are bound and determined to pull out and allow me to publicly sully every old conservative trope. In you last post, you said that anyone could pay all the taxes that they want and when I warned that you’d look silly if you repeated it, you did. It is selfish and silly to say that people who can’t afford to pay for a meal that they can afford can be made to pay for it while the same people that can’t afford it don’t!

    So, your solution is to increase the % of people who pay for the meal to people who don’t make enough to pay for it. A concrete example is healthcare. The US spends ~ 15% 0f ~ $15 Trillion GDP on it. Divided among us all, that is ~ $7k each / yr. Most of the people to whom you would extend your taxes to don’t pay that in total taxes each year! If you include defense spending and other things that we say that we require then it looks even more silly.The effort you expend to ensure that someone who makes $100k / yr pays at least $2k is a waste of time as the vast majority of people making that muck pay much more and those that are it will not will not contribute much at $2k. Everyone over a certain level should pay AT LEAST what we spend as a % of GDP.

    Next you throw out the well used and silly line “The problem isn?t the revenue. The problem was, is, and remains, the spend”. Take out the “spend” associated with the need for counter cyclic spending. If you will more and discuss less then you would know that you can no more not deny Keynesian Economics than you can the laws of physics /reality. Of course some do, deny physics / reality, as they believe in such things as the literal description of the Great Flood in Bible while deny it requires a miracle in order to have occurred. So, we now “spend” about the same / person as we have for the last 30 years and we were much better off in the past. No, spending hasn’t decreased tax revenues have decreased and we have the RS / Repubs to thank for it.

    You have said what you believe. Frankly acat and couldn’t care less in what you believe as the only way I can learn frm you is to engage you and find out what you know. I have yet to here much of that.

    Class-war fare – facts of what I KNOW to be true. One class of citizens INCOME has increased by 227 % in 30 years. FACT. In 30 years their share of the nations WEALTH has increased 15 times! They are paying 30% more taxes than 3o years ago. The remaining have “prospered” on relying on what they need from running a deficit. acat – there is NO ONE that I know of who has said that we can live at the levels of spending that you seem to propose. And to do so and not first require those who have benefited from our country is Class Warfare.

    Your statement regarding “uncontrolled growth” are simply silly and I take it that you are a fan of Hastert. Like I said. except for the spending due to the largest financial crisis since the great depression we are spending the same as when Hastert was speaker. And, if I am not mistaken, he was Speaker when the Repubs passed the Medicare prescription drug benefit. That is > $50 billion / yr in spending. Your claims re: “uncontrolled growth” and spending seem to be based on beliefs rather than facts – but I lecture again.

    Again, your comments regarding tax shelters are simplistic and only work with the uniformed. There is NO evidence that there were more people using tax shelters under Clinton era taxes than now – FACT.

    So acat, have you and other silly RS / Repubs learned anything yet? You can’t argue with facts and you depend upon unexamined feelings to form your opinions. Believing in something doesn’t make it true. I mentioned the belief in the Biblical Great Flood for a reason. And now lecturing and fueling a seriously dangerous mixture between politics and religion but, you can say that you believe that the Great Flood really happened because you can say that you believe in miracles. That is someone’s faith and only a fool is contemptuous of another’s faith. But only a fool would subject ones faith to examination by claiming that they know that the Biblical Great Flood really happened without a miracle (suspending the laws of physics / reality) when is is / has been shown that it couldn’t have occurred that way (without a miracle) but also that it didn’t as shown by empirical science, chemistry, biology, geology, archaeology etc. If you were to try and evangelize me with your faith, good for you. If you try and tell me what I know about reality based on your faith, then then your are a faithful fool.

    Your arguments here are laced with talking points and based on beliefs that are easily challenged and often found wanting. You are trying to tell me about reality, which is foolish. but all you are really doing is trying to evangelize me with you faith. Anyone that continues with that is foolish.

  • wonkish1

    Because not every insurance plan has the same coverages, co-pays, and deductibles as Medicare. Once you add choice into the situation nobody would pick a plan like Medicare. If they were chronic they would rather take a higher co-pay based plan with a HSA check for as least some of the difference, and if they were relatively healthy they would take a HDHP plan with a HSA check for at least some of the difference.

    Risk pooling is a not a good thing for everyday expenses. If they can afford it you want them paying out of pocket. The purpose of insurance is to cover low probability, high cost occurrences that aren’t easy to budget for. You don’t have to couple anything with a catastrophic plan, if they have a choice and get a check for at least some of the premium differences then most will pick it on their own.

    Again if you write the check for at least a part of the cost differential than really nobody will be crying bloody murder they can’t get the MRI for “free”. They’ll either pay for a small share of it from their HSA or they’ll pass and keep the money.

    Again not if you pay them a good chunk of the savings.

  • winstondodson

    He called the housing bubble years before it happened. I don’t particularly like his politics but I will vote for a politician who understands economics. If I thought that a Repub could “don’t a say that we did” in that, if he could get elected with the votes from the TP then once elected, ignore them, they would have my vote. I don’t think that there is someone in the field who can or will.

    Krugman’s knowledge of economics and knowing every detail while being wrong about many larger things reminds me of an experience I had. I grew up in a very conservative part of the country, went to a conservative university and joined the Marines. So, naturally conservative.

    Two of my wife’s friends went to Cambridge and studied economics. Over a few beers I heard them discussing Marks in economics class. I remarked that why waste your time studying someone whose ideas were so discredited. They remarked that even though he was wrong in regards to how all economic theory came together he was right about all the details. He was so right about all the details of economics all modern economics are based on his analysis methods. I challenged them and they proved it. They so me where dozens of the world’s leading economists used his analysis methods but came up with different economic models. So, even conservative free market economists analysis depend upon Marx’s ideas to explain capitalism..

    Since I am a physics major they explained it by saying it is sort of like studying Newton first so that you can use his physics to prove Einstein was right.

    So, I have found that with people like Krugman, you can doubt their overall conclusions but ignore their methodologies at the peril of being wrong.

  • serpounce

    I appreciate the points you’re making, and agree that those are good ideas for cutting medicare while miinimizing the reduction in outcomes, but I’m just much more skeptical than you that we’d ever be able to realize that level of improved efficiency.

    Entrenched providers resisting cuts, poor individual decision making, inevitably flawed laws, etc will all conspire to make reality far less efficient than you imagine. But, hey, I hope I’m wrong and you’re right, and we can realize a system that is 3x as efficient as today. But I’ll believe it when I see it, until then my position is that significant (more than 20%) costs cuts will require benefits cuts.

  • winstondodson

    If you are going to use one’s model analogy against them you have to try a little harder.

    I don’t know about you but I’ve never been forced at gun point to eat a great meal. So, you think that you have to force people at gun point to make a lot of money? Do you think that people that have large incomes were forced to go to a university and study hard? Coerced into working for a bank or hedge fund? Start their own business?

    If you went to a university, even a private universities benefit from our society. Banks and hedge funds benefit from acting on our economy and entrepreneurs sell products into a society thus benefiting, Sounds like Elizabeth Warren huh? Just like my analogy of the restaurant where I said people should be forced to pay when they benefit from something, a most capitalist idea, she is correct in this case.

    So, just like people who don’t have to be forced to eat a good meal then people who earn high incomes by WILLING participating in a society, even a great one based on capitalism should pay their fare share. No one forces them to live here or make a lot of money, they could grow organic sweet potatoes and not make as much money, not benefit as much and thus not be required to pay as much.

    Now, anyone. Repub, Dems or otherwise can act smart, silly or selfish. You can even act in a way that makes you seem stupid.

    Doesn’t it seem to be a correlation between making obviously silly remarks about analogies and consciously picking a stupid account name like westcoastpatriette? You think that there is any pattern to making throwing around silly like “arrogant leftists and mindless progressives” and not being burdened with enough cranial horsepower to be ever confused with a elite? Is there any connection between not requiring people who benefit from society to pay their fair share and not having enough character to compete with those who do and thus not have those benefits yourself?

    At the risk of asking one more question and sounding like Andy Rooney (did) and reading more into your comments than is polite – are you a loser westcoastpatrette?

  • Bill S

    You have a multi-faceted fail going on here:

    1) Promoting Democrat ideas about taxation and hawking Keynesian economics. You’re a regular Leftist talking point machine today.
    2) Attacking Christian faith in Biblical accounts as being “un-scientific”
    3) Attacking another commenter.
    4) Oh, and one more I forgot: favorably quoting Krugman. That’s a tell in and of itself.

    You’re gone.

  • westcoastpatriette

    because, as I said, you think like a brainwashed elitist.

    You’re so far gone you’re unable to distinguish between people choosing what to do with their lives and livelihood from being forced to pay their “fair share” for corrupt government socialism.

    And you really think you are smart enough to get us to buy into your propaganda. You’re at the wrong place and I predict you won’t last long here.

  • gekster

    Your “everyone should pay thier fair share” is what gives you away.
    And your remarks about wcp lead me to believe you may be a remake of pttp,
    another arogant donkey who was banned from this site.
    You can take your leftist, progresive, socialist ranting elswhere.
    And if you are left to post here in the future, it would only be because we need someone to fill our short bus quota.
    And yes, the remark is directed ot YOU. ;)

  • westcoastpatriette

    while you were busy axing him. My prediction came true.

  • gekster

    ./nt./.

  • acat

    “Since I am a physics major” .. present tense.

    I do hope, winston, that you pay more attention in your classes than you have here.

    Mew

  • wonkish1

    I can just go with reality. Do you have any idea how much of a premium difference a major medical policy is and a HDHP policy is? The difference is absolutely massive because of the differences in behavior.

    Do you have any idea how much premium differences can be for the exact same policy between two states today? States like New Jersey, Maine, Massachusetts, etc. are about 4 times as much as states like Iowa, Florida, Wisconsin, Texas, etc. for the exact same policies.

    The level of efficiency savings we are talking are massive and what already exists out there in differences prove that.

    I disagree.

  • wonkish1

    That there are substantially larger savings to be found in restructuring most of government spending than in directly trying to make even medium sized cuts under the existing structure.

    Take for example Bachmann and Newt’s correct criticism of how government defense procurement(and actually all innovation spending) works today. We pay companies based on the cost of development which incentivizes companies to elongate the procurement process and extend out the date of delivery.

    If instead you offered a prize for end development plus price per item then it would incentize a company to make delivery as soon as possible and develop it as efficiently as they could. So not only to you speed up the process, but it comes in way, way, way under budget. Compare that with the current plan to just cut a few billion in real cuts($1 trillion in 10 year baseline, LOL), but maintaining the current procurement process. The numbers aren’t even close.

    Compare an optional private account system in social security and the ability of that to completely wipe out the future government liability for that individual with plans to raise the retirement age by a couple years for when young people retire in the future.

    I would much, much, much rather have a GOP politician maintain existing benefit levels, but restructure practically all of government into finding these massive efficiency savings than to have a GOP politician thinking the best he could do is make some cuts to benefits, federal employees, employee comp, etc. but keep all of the existing horribly inefficient structures in place.

  • goodolboy

    from non-hostile countries and using drones rather than ground troops a few points I’d like to make. We need forward bases in non-hostile countries from which to operate in a hostile country if needed. If needed in a hostile country there is a lot lost if we have to go thru the process of finding, locating, negoiating etc for a forward operating base. If we don’t have a presence forward therer will be a vacuum created and as always it must be filled. Who will fill it? China? Russia? Someone is going to be the major super power in the world and I don’t want it to be anyone other than the USA because we are the only free world country who can do it. As to drones and not troops on the ground. It takes years and years to train an army to operate totally from top to bottom. You have to train military personnel from private to general and everything in between. That includes establishing trianing schools at all levels and having soldiers progress thru these levels as they mature and gain experience. That requires many troops on the ground with all the necessary logistical support. For instance, in our Army today it takes about 6-8 years to train a highly qualified soldier progressively from private to staff segeant as an Infantry Squad leader. So building and training an army that can train (while in a hostile environment) and fight takes time. For officers a new second lieutenant takes about 18 years of training to become a Lieutenant Colonel Battalion Commander. That is one reason wi will pay a dear price for the pull out of nearly every troop from Iraq. Too many times various types of air power have been erroneouly suggested for troops on the ground. I’m sorry this is so long but I’m just trying to get a “boots on the ground’ point of view to the discussion.

  • donald_24

    You make some good points. I know drones can’t be used everywehere, so isntead of having a large gorund army, I would instead use small teams of elite special ops, like the team that killed bin Laden. Large ground armies actually make us less safe because then we are spread way too thin. Our enemies know this and that is why they, such as Iran and North Korea, continue to ignore the U.S. Iran knows perfectly well that we will never send a single soldier into Tehran since we don’t have enough so they have continued to enrich uranium despite sanctions.

  • greyeagle

    If you are not on Medicare, then you may have limited understanding regarding what we face. We already have real co-pays and deductibles. But you haven’t seen anything yet. Obama and his IPAB will soon take care of that problem. Care, including hospice will be rationed to the point, people on Medicare will be lucky to have any medical care of any kind. We already have considerable difficulty finding a physician who will even take Medicare now, and if Obamacare goes through, it will be much worse. Many seniors now have to make a decision on whether to buy medicine or food. A large percentage of seniors currently live below the poverty line. I am sure with Obama’s help we will start dying quickly. That should take care of the “limitless demand of healthcare expenditure” that you mentioned.

  • serpounce

    You only get *some* of your healthcare for free. Having to make choice about what you can consume based on your resources is the natural state of things.

    If you have to choose between food and medicine I would recommend food.

  • serpounce

    … it probably is.

  • serpounce

    that there needs t be a discussion about the role of role of the US military in the world and the weapon systems that they need that doesn’t involve calling people anti-military, or that they don’t believe the US has enemies, etc. With the deficit in the shape that it is we can’t be expected to write a blank check to the pentagon for whatever they think is needed.

    Personally my big area of skepticism is whether we really need all of these hideously expensive new weapons. Too often the response I hear when a cut is proposed is how many jobs it would, but of course that’s true with any government cuts. I don’t doubt that the pentagon would make good use of a new weapon like the F-35, but is the upgrade really worth the massive cost, or is it just clever politicing by lockheed by putting plants in lots of congressional districts and pressuring the congressmen?

    Maybe it is, but the case needs to be made, not just assumed.

  • wonkish1

    And you prefer not to look at numerous examples of costs being substantially different already today.

    I guess if you want to stay blind when I bring out example after example after example of instances when large cost differentials already exist in the world today then there isn’t much I can do for you!

    I could give you hundreds of examples of large government expenditures(thousands more if you were looking at small things) that wouldn’t be substantially less if they just utilized something that already existed today. That isn’t to good to be true, that is looking at the real world and applying it to the problems the government is facing.

  • serpounce

    Just because I’m not engaging in a point-by-point doesn’t mean I’m ignoring anything. For a variety of reasons, some general, some specific, I’m skeptical of how much improvement you can get out of no-loss-in-benefits restructuring. It’s an interesting topic, but not one i have time for here.

    Just a couple examples though:

    1. You’re never going to get the full efficiency of the private sector when you’re using government money. Just because people have to make real choices with their monopoly money doesn’t mean that the treat it like earned money. And in my experiece firms that run on government funds start to act more like the government than private firms.

    2. You’re comparing apples and oranges. Medicare recipients are much sicker on average than the general population. Thinking that you’re going to have the same low cost catastrophic plans for seniors that you do for working people is silly. Despite the inefficiency of the system (and they certainly exist) the driving force behind the cost of medicare is that the covered population requires a lot of health care.

    3. My wife, mother, and many of my friends are doctors, so I know first hand that the medical community is not going to adapt easily to cost controls. It’s been ground into them from medical school on that they can never take into account costs. Getting costs conscious medical care is going to take generations.

  • serpounce

    That came off harsher than it should. I realize that cuts will mean hardship for people that didn’t do anything wrong to get there, and relied on a promise that they assumed the government could fulfill.

    But unfortunately you were lied to and the government cannot afford it. That’s a sad thing for a great country to have to admit, but it’s the truth.

  • wonkish1

    1) Agreed! Not monopoly money(HSA’s for example can turn into essentially trad. IRA’s at 59.5 and are left to heirs. People can make use out of the money outside of healthcare expenditure otherwise I would agree that people would just use it up all of the time). And firms that competed for government prizes over government cost payment would act a lot more like the private sector. And what prevents firms from acting like the government in things like admin is the bidding process

    2) I’m not comparing sick senior costs to healthy young people HDHP. I’m comparing healthy young people HDHP and major medical and pointing out that similar if not larger price differences would exist when you make a comparison between sick seniors in one vs. the other. But I should point out that people who are chronic would prefer a High and frequent Co-Pay plan then a HDHP given the much lower costs of each relative to a no or low cost sharing models. ….All the more reason to have people voluntarily forgo much of that expenditure.

    3. My Uncle is a specialist, practioner, surgeon, and chief of medicine. My sister is high up in healthcare consulting where essentially she comes into struggling hospitals and tries to prevent them from going bankrupt. Another uncle writes a bunch of the major group plans at many large companies you would recognize, and one of my best friends is an analyst at one of the major health insurers. And I have studied the subject for years. I think I am in an unique position to see the problems from all angles here. And your doctor family should already be pissed by the cost controls already present in 3rd party payers and should invite options that allow more patient centered payment.

    And it doesn’t need to take generations. The incentives and relationships in the system are screwed up and the system is just eating more and more money because of it and you can thank the federal government for that.

  • goodolboy

    I think the first thing to do, and I know this is being idealistic, is to look at the functions of the federal government laid out in the Constitution and start prioritizing everything we are doing from there. There will be a loooonng list of things we are doing not laid out in the Constitution and it would be foolish to think we could just cut everything there cold turkey. What we could do is to look at each agency and its original mission statement and compare that to what it is doing today. Anything that is not in the original mission statement should be put on the chopping block with a timeline to eliminate it. The other day I heard someone mention drastically reducing the Dept of Education because the test scores by any measure has gone down beginning exactly with the creation of that department. Someone then followed with the comment, “Do you realize how many jobs would be lost?” That is the attitude we are facing and it’s just not from one party. I can’t document this so don’t ask me to cite the exact source. I will tell you it came from Neal Boortz and I think he said he was using Dept of Treasury figures. The point was if you take all the money and assets from everyone making over $250,000 and all the profits and assets from the Fortune 500 companies and gave them to the federal government it would be enough money to run the government from Jan until August. So you see we have a spending problem. The spending under Obama has increased by 25% since he took office. When you get a chance look at the spending increases which came about after the Democratic took over in 2007. One fault I have with Bush is he never vetoed things he should have; but, then again he had some conservative ideas but he was not a conservative. Thanks for letting me speak my mind.

  • http://www.oasg.org darkmit

    Check this out.

    http://lmgtfy.com/?q=hausers+law

    You will never be able to tax the rich enough to satisfy someone else’s spending habits. When the wealthy get tired of a confiscatory tax policy and shelter or leave with their money, what’s next?

    I don’t know, you may think it’s FAIR that the rich should pay more, but as a non-rich person I don’t think it’s fair that one group of people should be forced to pay a quarter or more of their hard earned money to support almost half of a national population that pays nothing in federal income tax.

    I have often heard that the rich are rich because of the infrastructure provided to them by the taxes that others have paid, i.e. the roads, schools, utilities, etc. What about those 50% that are not paying taxes? Should we not let them use the roads and schools and utilities that they are not paying for? Denigrating your argument down to class warfare levels is lazy and pathetic.

    It’s not a revenue problem it’s a spending problem. Until this country learns to control its spending there will never be enough other people’s money to spend.

  • davesinsanantonio

    the guy in Kansas.

    Martha: The weatherman says we’re in a Tornado Watch.
    John: So, watch!
    Martha: Now he says it’s a Tornado Warning.
    John: He’s just a wimp.
    Martha: I hear the siren.
    John: They are just trying to scare us.
    Martha: It’s getting awfully dark outside.
    John: That’s just clouds.
    Martha: There’s a funnel coming out of it.
    John: It’s not down to the ground yet.
    Martha: It just touched down.
    John: It’s way over there. It won’t come this way.
    Martha: It’s coming this way!
    John: It’s not on our property yet.
    Martha: It just crossed the fence.
    John: It hasn’t hit the house.
    Martha: Now what will we do, Mr. Smarty-pants?
    John: Just as soon as we get back on the ground we will head for the basement.

  • davesinsanantonio

    to “convert” the libs won’t really work, because they are happy with their lefty religious faith. Oh, occasionally one of them will become curious enough to look elsewhere. Or, some shattering experience will cause an epiphany that moves them elsewhere. But, most of them never let mere facts get in the way of their blind faith.
    Now, if you personally want some sources, just ask for them politely, without all the innuendo, and they will be forthcoming. Attack mode should be saved for those actually endangering the country, not those trying to save it.

  • beaker60

    Greyeagle,,,absolutely correct,,,but I have a question for everyone,,serpounce was correct,,,we were lied to,,I accept that,,,and I deal with that in my own way,,,but,,,and this is a big BUT.I,,,,,like all of the retirees,people on medicare,people on Social Security,all of the disabled,,,we spent a majority of our lives working and puting money into the “system”,,and some,,,a lot more than others.I never broke any records in the income department,,,I think the most I ever made in a year was probably $50,000.00,,so I realize that there are a lot more than me that made much healthier contributions to the government,,Ok,,now,,,I’m on disability,I’m on medicare,,and I actually get what they call,,”extra help”,from the state medicaid which helps pay for the deductibles and helps with my perscriptions,,,I also receive food stamps,,but that is only $138.00 per month,,,so,,all in all,,,I live on around $1200.00 per month,,,what I need,,is for someone to explain to me WHY,,,there are multitudes of “Illegals”,,,with no SS#’s and are not employed,,,making thousands of dollars per month because they happen to have 6 to 10 kids and are allowed huge subsidies,,”just because”,,,please explain to me WHY,,,this government doles out millions of dollars to young “African American”,,women,,that all have 6 to 10 kids,,,all from different fathers,,,and 50% of the women are junkies.These are not made up numbers,,,go and sit in a hospital or clinic and observe what is going on.At the moment,,I am going through testing for cancer,,,for the 4th time and yes,,I am NOT complaining because I am receiving benefits that take care of this,,,it’s just my thought that if you want to cut the deficit,,,than we need to cut the benifits to a reasonable level,,of the receipients of all of this welfare.Believe me,,,they know exactly what they are doing,,if someone asks them if they are employed,,,the answer is YES,,,they live off of the government.Why are there millions of seniors,,living below the poverty level,,,way below!,,,and so many people living way ABOVE,,alll at the expense of the taxpayer,,and don’t misunderstand me,,,my remarks are NOT racial,,this dilema is across the board.There are just as many caucasions in this part of Georgia,,,that are doing exactly the same thing,,,,,”pushing out children”,,for no other reason to get a “pay raise”,,and again,,,the taxpayers pick up the tab.This kind of mentality,,is what has ruined the Medicare system since day one,,,and yet,,,none of out political officials do anything about it.

  • davesinsanantonio

    We should not be conducting audits to see if contractors can do it cheaper. We should be conducting policy checks vis a vis the Constitution to see whether it should be done AT ALL!!! So, your premise is faulty, and that is why government has been growing leaps and bounds for a century–doing things inefficiently that they should not be doing in the first place.

  • wonkish1

    Medicare has historically been more prone to restrict payment and not cover things to handle costs.

    Otherwise I agree with everything else you posted.

  • davesinsanantonio

    that revenue is more important than spending, is like a family close to bankruptcy who take what little cash they have and buy lottery tickets instead of paying on some their debt. The surest way to right any budgetary ship is to cut spending, because that is they part you actually have some control over. If there comes an increase in revenue all well and good. But, to bet that revenue will somehow increase is always iffy. And, to increase spending while insisting that revenue will increase somehow is insanity! And, increasing spending more than any possible revenue increase is criminally so!!!

  • davesinsanantonio

    when Europe collapses!!! Tell me this: which part of the budget equation do we have more control over, spending or revenue receipts. If you guessed revenue you have no grounding in reality. Revenue is dependent of taxable income. All that anyone has to do to cut their effective tax burden is to insure they have less taxable income. That can be done by not selling of their investments that would incur a tax, hiding their money somewhere in the Caribbean, or putting their wealth into something that wouldn’t be taxable, or would require very low taxes, such as agricultural land or a charity. Or, even wasting it on luxuries they can enjoy while the world is collapsing around us all.
    As for spending cuts: Part of the solution is to freeze current benefits for those “CURRENT beneficiaries”. This will be politically okay, and will have an anti-inflationary effect (as opposed to automatic increases that come with longevity).
    The wise course is to do what we can with spending and use any revenue increases to pay down the debt. This would lessen interest payments in the future, further lowering the deficits. If revenue says steady, or even if it falls, at least we are doing what we can do, instead of just wishing something would change in our favor.

  • davesinsanantonio

    that all my money would go to A would just mean that more of somebody else’s who didn’t direct where his went, would go to B, C, and D. And, good luck on “making” everybody decide. Most people would just check the box that says “let the politicians decide for you”. And, I guarantee you that such a box would be on the list!!!

  • ihateliberals

    Like it said inthe article we dont need new taxes we need new tax payers. During the good economy times revenue always goes up. The more people working the more money that comes in. along with that the higher the wages are the more money comes in. It is a win win situation. Most of the cities would not be in trouble now if people were working. The country woudn’t be in trouble if people were working and the budget was cut and spending was restricted and the deficit was being reduced. Again it is simple math that liberals have never figured out. Their little minds can only think that raising taxes brings in more revenues. I’ve been around for 64 years and I haven’t seen that formula work yet. If the country wants and needs more revenue than quit sending jobs off-shore and put Americans back to work.

  • johnhandel

    Sorry, some things need saying here.

    1. Canard of historical averages. The 18.5 actually strikes me as slightly high, but as it does include the growth after the Reagan tax cuts and growth leading up to the dotcom bubble, it may be as high as 18.5 average. That average ALSO includes years where the top marginal rate exceeded 90%. In those years, collections were around 15-16% GDP. So top marginal rate above 90%, 15% GDP collection (and the economy was beyond stagnant). 28% top marginal rate, 20%+ collection (and the economy was growing constantly.) The system is so self-managing (and so immediately influenced by the top marginal tax rates) that the only way to hope to raise income taxes significantly beyond 18.5% is by pushing for a LESS graduated tax rating system and let the swell of the economic boon raise the money. You only other chance of raising money is to come up with new taxes and take even more of people’s money from them by taxing the same money over and over again. Personally, I would endorse a bottom marginal rate of 10% and top of 17%, permanent.

    The reasons are not that hard to fathom. It boils down to the way people react to being taxed. When taxes are higher, people look for ways to reduce their taxable events. The higher income mobility of the wealthier people allows them to better flow this in ways that the tax increase is indirectly carried by those less well off. Tax rates may be higher, but there are fewer taxpayers. When the marginal tax rates are dropped the economic activity greatly increases, making more jobs and more taxpayers. You raise more taxes on 10 workers paying $15 in taxes than one worker paying $95. The Reagan tax cuts showed such economic growth and job creation that not only did it break the 18.5% level on tax collection, it also showed a 100% increase in total tax revenue. (What killed that was a Democratic Congresses push of 400% increase on spending, which desire they have never really slowed.) It will work again. A permanent tax rate cut, with the greatest benefit to the top tax rates, would generate an economic boom that would swallow any lost revenue from the lower taxes by generating floods of new taxpayers. (We have how many million out-of-work Americans? Imagine getting unemployment down to a few percent. Before you say that is not enough people to make the difference, we are adding thousands to the workforce every pretty much every month, and we NEVER have a problem with getting people to move here for available jobs, just keeping them away when the jobs AREN’T available.)

    Illuminating fact not quite so illuminating:

    The rate of revenue did was not significantly impacted by Bush tax cuts. There were several contradictory reasons why this had no real effect.

    1. The rate cut was temporary. It did not require an act of Congress to change. It required an act of Congress not to expire. People making large economic decisions, including if they hire people or not, look closely at such things. This dramatically reduces the benefit of tax cuts.
    2. The tax cuts did have some benefit as revenue did not take a dive when taxes were cut. It did not have enough benefit because they were short-term cuts with near-guaranteed expiration. Such cuts just do not push the economy along the same way as permament cuts do.
    3. “That’s where the money is” happens to be absolutely correct. Money drives the economy. Taxing earnings slows and discourages earnings. By punishing the people that have money for making more, you create disincentives for people wanting to take chances to earn more money. They don’t put money back into the economy in ways that create jobs and new taxpayers. If you wanted to permanently stall the US economy, all it would require is a 90%+ tax rate on everyone earning more than $200,000.
    4. Assuming that balancing money had to come by increasing another groups overall portion of the tax burden is a fallacy requires by assuming the economy is a close system. The economy is an open and almost infinitely flexible system. After the Bush tax cuts, in spite of them being temporary, the overall tax burden as a percentage of total tax revenue paid by the top 1%, 5%, and 20% all INCREASED. (Imagine that, they got a tax cut and ended up paying for even MORE of the economy at the same time.) That means that if the overall tax revenue of GDP percentage was still 18.5%, some things had to happen. The GDP had to increase. Everyone earned more money, making the top percentiles also make more money, paying even higher taxes. More people made it into the upper percentiles to enjoy the higher marginal rates.

    The fact of the problem:

    Increasing taxes, either by raising top marginal rates or by creating new taxes elsewhere will hurt an already struggling economy. While the tax revenue as a percentage of GDP can fluctuate, it has never hit the level of our present spending. Even raising new taxes, which will hurt our GDP, and thus our tax revenue, will not close the gap between taxes taken in and spending going out. The only long-term solution that has any real chance of helping is a two-pronged approach.

    1. Reduce the tax rates to a level that reflects what we can reasonably expect to collect anyway, and make those tax rates permanent. (Heck, put them in a Constitutional Amendment, making it much harder for future Congresses and Presidents to screw it up.) If we base our tax structure on the notion of collecting 17-19% of GDP, we would see overall tax revenues significantly rise.
    2. Cut spending. Eliminate baseline budgeting in government and make each organization fight for (and earn) their keep. Cut wasteful spending. Cut unnecessary spending. Cut unconstitutional spending. We need to cut our spending, preferably to 16.5-17% of GDP. I say below the tax rate, because while small, occasional deficits don’t hurt a government, permanent, long-term deficits and debt will destroy a country. (See Europe for an example of what will happen economically here if we do not start spending less than we collect and working on some of our debt.)

    We have seen the first of those changes enacted in the past, and create an economic boom. We have seen spending program reform (though not serious cuts) create a short-term government balanced budget. Enact those two changes together, and I can guarantee some results.

    1. Tax revenues will increase. The economy will start showing near-immediate growth, creating new jobs, creating new taxpayers. In the end, GDP will grow, tax revenues will skyrocket, and available tax money to spend will be greater than it is today.
    2. Because of the economic boom, spending will not need as much cuts as people thing, though we still need to be pushing for a leaner, less wasteful government.

    Done properly, which would require some austerity measures in government spending programs, we could balance the budget inside two years, and significantly reduce our debt within 6.

  • johnhandel

    that unless we tax other than revenue, we cannot collect much more than 18.5% in GDP in taxes. So long as income is the target, and the believe solution is raising taxes on income more, not only will I say that we cannot top 18.5%, I will say that each increase in taxes will drop tax revenues as a percentage of GDP. (That is exactly what has happened in history.) Now if we want to break 18.5% by dropping taxes and creating more taxpayers, we could potentially ride around between 19% and 21% for a long time. Of course, this still doesn’t help with spending at 25%+.

  • geoph

    Cut everything, then let’s start talking about what to fund.
    I understand a sudden zeroing out budgets for government would be dramatic and traumatic, but we could begin with zeroing budget increases.

    Who knows, once we get new spending under control – we just may start whittling away at our debt by subtracting agencies and departments.

  • Repair_Man_Jack

    Krugman didn’t call the housing bubble. He advocated it as a form of economic stimulus. #facepalm, #historyfail

  • rubb

    First, always deal with verifiable numbers. Self reported numbers from the census are not reliable. Many people make a joke out of filling out the forms anyway. Some cold hard numbers from the IRS, what paople pay taxes on and risk liberty and property to report.
    People earning over $200,000 a year earn 25.8% of AGI reported to the IRS
    People earning between $40,000 and $200,000 earn 55% of the AGI.
    Limit yourself to people making over $500,000 a year, %13.9 of AGI
    Limit yourself to people making over $1,000,000 a year, 9.5% of AGI
    That tells you right there where the money is, right smack dab in the middle class, so if you really want to make money by raising tax rates, that is where you are forced to go. Trying to get real money by taxing only 1/4, 1/8 or 1/10 of the income in America is not going to be able to run the government at 19% of GDP, let alon 25%

  • johnhandel

    It is so nice to see that class warfare is alive and well. It would be nice to bury it forever, but that will likely never happen.

    These numbers still refute adamcarralejo if you believed the census number, and as rubb pointed out, those are dubious, at best.

    The top 5% of income earners (earning 21.3% of GDP, according to the Census he cited) pay over 70% of the total US tax burden. Now I don?t recall the exact percentage of total money earned by the top 5% of wage earners, but it WAS well below 50% of total US wages. (I seem to recall 30-40% range, approximately.) Either way, what they pay in the overall tax burden is extremely disproportionate to what they earn. (Many liberals complain that we need a progressive tax structure. We already have an overly-progressive tax structure.)

    The IRS numbers also indicate that approximately the bottom 50% of wage earners (it has fluctuated between 45 and 47+% in recent years, though broken 50% several times) pay absolutely nothing in income taxes AND a large percentage of these ALSO get money back beyond a 100% refund of withheld taxes.

  • johnhandel

    I do not have the all the sources in front of me, but the work has been done, checked, double-checked, then checked again.

    1. The numbers have been run MANY times from the IRS earnings and tax reports. The $200,000 figure works very well, though most the math I know of was done with 250,000.. It has been mathematically proven (repeatedly) that if we took a 100% tax on every dollar earned over $250,000 in a year (a pretty significant tax hike, I think you must agree) it would not even fund the government for half a year. While dropping the 250,000 to 200,000 increases the number of people taxed, it would still not provide enough revenues to fund the government. (Interesting side-note for those saying tax the corporations, which is also a very bad idea: If every company in the Fortune 500 was taxed 100% on all their earnings, it would not even fund the government for 6 weeks.)

    You see, the problem with attempting to close any budget shortfall or paying off the debt by taxing the rich is that there simply are not enough rich. (The other set of numbers that will probably cause you to choke and splutter is that according to the IRS’ numbers, calculated by the same sources, if we seized 100% of the earnings AND assets of everyone that earned over $1 Million last year, it STILL would not fund the government for the year, let alone start chipping at the debt.)

    The tax revenue to GDP ratio has also been solidly established. The number is fairly easy to come by and has been checked over and over again. 18.5 is about right, and 21 is about where it has peaked, which it did at the times of LOWEST taxation. It has never hit 22%, even when the top marginal rate on the rich was over 90%. (Actually, when the top marginal rate was over 90%, the tax revenue as a percentage of GDP hovered around 15-16%.)

    The historic average is just that. It is an average over history. They can check the up-to-date average against any given year as a result. Some years have been higher, some lower. Some years ride close to the average, as the Bush years did.

    No, don’t take his statement on the impact of the Bush tax cuts on revenue into the Treasury. Treasury and tax numbers are publicly available. Go look at them yourself, if you want to check. It does not surprise me that the Bush tax cuts did not significantly impact revenue. (In part because of the housing crash and in part because of the impermanent nature of the cuts, their overall impact was almost designed to be negligible. Of course, historically, tax cuts DO impact revenues into the treasury. Historically, cutting taxes increases revenue into the treasury. (More money staying in the economy creates more demand, more demand creates more jobs, more jobs creates more taxpayers, more taxpayers means more tax revenues.) Historically, any time we have permanent tax cuts, rather than cuts set to expire in a few years, the economy sees near-instant growth that generates significantly more in tax revenues than was lost by lowering the overall rates. Perhaps the best example is the Reagan tax cuts, which pretty much immediately doubled tax revenues. (Indeed, the Reagan tax cuts generated more income than the government spent the year before, and would have paid off a significant portion of the debt had Congress not forced through a 400% spending increase at the same time. Even if you are breaking even, a 400% spending increase with 200% earnings increas will bankrupt you.) Note: There is an equilibrium point below which dropping tax rates will NOT increase the amount of revenue. We have not yet hit this rate. With all the class warfare about taxing people that earn more than you do, no matter how they earn it or what sacrifices they had to make to earn it, we will probably never reach that equilibrium point as the media and Democrats will riot in the streets before allowing tax rates on the rich to be cut that far (or before allowing lower income brackets to be taxed at the level they should be).

    I don’t know how many liberal blogs you have read. I have yet to read one that sources much of anything with a suitable, reliable, or accurate resource.

  • johnhandel

    In a closed system, raising taxes increases government revenue and lowering taxes reduces it. The problem is that our economy is NOT a closed system. It is extremely open AND flexible. A closed system is incapable of growth. In our open system, more money left in the economy (read: not taxed OUT of the economy) provides a vehicle for growth in the economy that the government can never match. The reduction of tax rates, at least permanent ones, have (at least in the last 100 years) always produced a net increase in tax revenue because the economic growth made up for the lost revenues in greater numbers of taxpayers. A closed system approach cannot account for this, but it is always what we hear propounded when someone is pushing for tax cuts. That the closed-system, static economy argument always falls apart when actually examined in the light of history and economic change NEVER keeps people from yelling about the lost revenues from cutting taxes.

    Tax increases SOMETIMES produce a short-term revenue increase. This is because steps to adjust your income to protect from taxes or just earn more to overcome the taxes take a little time. (For the rich, it is usually a matter of 1-2 years, while the lower economic classes frequently never adjust because the costs are all handed down to them.) The end result of increasing tax rates is fewer taxpayers, more sheltered incomes, or people that don’t NEED to earn anything to live well off just stopping all earnings and thus dropping off the tax field altogether. (The money on which they are then living has already been taxed, and they are earning nothing new.) In the end, the rich adapt or pull themselves out of earning money at all, the poor suffer, and the tax revenues as a percentage of GDP show decline. The adjustments take a few years for this, the overall economic impact may not hit for 4-6 years while the economy gradually slows and slip, until some economic catastrophe or another shines the light on how bad it really is.

  • johnhandel

    People talk about the rich getting rich because of infrastructure paid by others. Every time that I hear that argument made, they talk about various points ranging from education to roads to sidewalks, etc. They ignore that the rich, that became rich in business/etc, paid proportionately MORE for those roads, sidewalks, education, etc, than anyone else in the area.

    Perfect example in Ada, MI. Amway corporation. Ada is a small town, but prosperous. Ada has no income taxes. 100% of the economic needs of town have been covered through one form of property tax or another. What it boils down to, in Ada, is 2 wealthy families running 1 VERY prosperous company, paying for the vast majority of everything in town, including roads, sidewalks, schools, parks, etc. That is BEFORE you get to the money the company and families voluntarily give to the local communities. Does Amway benefit from the roads? Sure, but they also paid for them. Do they benefit from sidewalks? Some, and they paid for those. Do they benefit from better education? Well, when you own 1/3-1/2 the town and pay all those property taxes at commercial zoning levels, you are paying for any benefit you receive. (And for the small amount that doesn’t get paid by Amway or the owner’s families, the people they have provided jobs to cover another 80-90% of the residual.

  • johnhandel

    Since the US can just print their own money, they will instead hit out-of-control inflation such has been seen in Central America and other places. I am reminded of a time in living memory where Argentina had daily inflation increases so bad that people took their paychecks directly to the store and bought everything they could afford (leaving the excess at the cashier because their check literally lost value on the way to the store. They did not have single/double-digit inflation. It was inflation in the hundreds and thousands of percent.

    Imagine that. $100 paycheck. By the time you get to the store after work, it is worth $60. By the time you get to the cashier, it is with $40. By the time you are done checking out, it is work $37.

    Taking us off the gold standard and near-endless printing of money is why goods and services that cost 10 cents decades ago cost multiple dollars now. When more and more money get printed to fill the gap, it reduces the value of that money compared to everything it is supposed to buy. In the end, you have more money, but it isn’t worth any more than the old money.

  • acat

    I don’t think we’re going to see the same hyperinflation you’re talking about, where it’s cheaper to paper the walls with dollar bills than it is to buy wallpaper .. Carter-era is what I’m expecting.

    We could do, I hope, without Gerald “WIN”* Ford.

    Mew

    *Wip Inflation Now – if you don’t remember it, ask your grandparents.

  • quad4x4

    Get Serious

    Get Serious now

    Get Sincere with themselves and the public

    Get a Sincere effort started to do SOMETHING NOW.

    Get off their dead butts and push for the things we elected them to do and cut the process down to size.

    For the pay they receive and their staffers, they should be working in DC 12 hours per day 6 days per week, 50 weeks a year, till all this mess is cleared up. It can be done, it just takes effort and now is the time.

    Especially that which was originated in the halls of congress, JUST DO IT comes to mind…is anyone listening?? Hello Earth….