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Discussion: (41 comments)

  1. Max Planck

    Did someone say something?

  2. SeattleSam

    C’mon. Obama did not get reelected by being fiscally responsible. He got reelected by promising to keep handing out federal money. That’s what the people want.

  3. the obvious question is WHERE is the GOP’s DIRECT counter-proposal to Obama’s “inadequate” one?

    Why is it Obama’s responsibility to put in HIS proposal
    what he might think is the GOP’s proposal?

    this is bizarre.

    The GOP owes everybody:

    1. – the specifics of how increased revenue is generated

    2. – their proposals to cuts entitlements

    this is not Obama’s job, it’s theirs.

    1. Max Planck

      The GOP won’t say a word with a hard suggestion, because once they do, everyone will jump down their throat. So the GOP plan is to keep saying “no” in order to force the President to keep throwing horseshoes at them.

      In the meantime, a stunning majority of Americans want taxes raised on the rich, and NOW, but Boehner has to keep his Norquist knee pads on, like the Great House Speaker he is.

      So the President can tell Boehner to get stuffed. I DO hope we go over this cliff. Then the AEI will finally shut up about the dangers of running deficits. Maybe….

      1. Are you and larry g taking a course in Obama’s alternative history?

        BTW just where did that Democrat budget go for the last 1,000+ days?

        1. no, no no.. you don’t go to the WH in secret. You release your f’ing counter proposal to the public so Gawd and everyone can see your position.

          this is dumb.

          it takes TWO to negotiate and each side has to put forth their proposal.

          The GOP refuses to put forth a real counter-proposal ad keeps insisting it’s up to Obama to put forth the GOP’s position.

          WTF?

          Is the GOP so FECKLESS that they cannot make public their own specific counter-proposal.

          These guys are weenie weasels.

          they did this for 4 years… and they are STILL doing it and people are starting to notice… what a bunch of hypocrites the GOP really is.

          95% of the 1000-day budget is costs approved prior to Obama taking office – things like two wars, doubling the DOD budget and adding two new massively subsidized Medicare programs D and C.

          and what is the GOP position on that spending they approved?

          What is their position of Medicare Part D and C that they approved?

          where is their position?

          1. Max Planck

            Boehner will keep his big mouth shut and hope to trip up the White House. In the meantime, the GOP alienates itself further from the American people.

            The GOP has it’s d*ck caught in the wringer, and they know it.

          2. Is the GOP so FECKLESS that they cannot make public their own specific counter-proposal“…

            You’re seriously delusional aren’t you larry g?

            95% of the 1000-day budget is costs approved prior to Obama taking office – things like two wars, doubling the DOD budget and adding two new massively subsidized Medicare programs D and C.“…

            Is this what’s happening in larry g La La land?

            Pelosi syndrome in action?

            I think Keith Hennessy has a point: Time to Call the President’s Budget Bluff

  4. Jon Murphy

    Government revenue is certainly not the problem here. Revenue is higher now than at any point during the Clinton Surplus Years, with a tax rate that is lower. Hell, the only reason revenues are not higher is because economic activity is not as strong.

    Spending has exploded, first under Bush and again under Obama. Both parties’ proposals are red herrings. Neither one really addresses spending. Both just temporarily slow the rate at which spending is increasing. To call that “spending cuts” and “austerity” is Orwellian Doublespeak at its best.

    Raising tax rates has no historical track record of raising revenues. In fact, regardless of where the tax rate is, government revenue as a percentage of GDP hovers around 18%. The reason for this is simple: as Steve said on a previous post (and economists of all stripes and leanings agree) “When you tax something, you get less of it.” People respond to incentives. If tax rates are too high, then people will seek to protect their money, even if that means storing it in the Caymen Islands.

    This whole discussion on tax rates is nothing more than a placebo. The talk has not been focused on economic well-being. No, it has been focused on forcing the rich to pay their “fair share.” In fact, both sides are using the threat of a recession in 2013 as a hammer to force their social engineering plans through.

    The problem we face here is not a revenue problem, or really even a spending problem (I have my own thoughts on spending, but they come from my Libertarian political views rather than economics). What we have here is an economic growth problem. The mere fact that neither side is willing to address this problem shows how little they really care. All the Democrats care about is social engineering. All the Republicans care about is moral conformity. The Democrats prey on anger and greed. The Republicans prey on fear. Both sides should be ashamed.

    There are genuine problems facing our economy right now that can be easily addressed without all this tax bull. Let’s tear down our trade barriers, reduce regulations that prevent people from working, open our borders, lower the corporate tax rate so it is in line with the rest of the developed world, stop demonizing our best producers, and promote, not hinder, competition among businesses.

    The arguments for raising taxes on the rich is not economic, it is social. If history is clear on anything, when economic policies are dictated on social grounds rather than economic grounds, it tends to lead to increased poverty, poor economic well-being, and (in extreme cases) war.

    I mean, for Christ’s sake, be smart about this! Put aside your jealousy for the rich and your disdain for the poor. Let us work together so that we may all improve our lot in life. We live on a planet with 7 billion other people. The resources at humanity’s command are epic. We have the ability right now to end world hunger and poverty within 5 years. Imagine it! We could conceivably reduce war, maybe even eliminate it. Drug cartels, human trafficking, piracy, gone! All we need to do is stop letting invisible lines on the ground separate us.

    Open the markets. Reduce the barriers. Tear down the walls.

    1. I think we’re going to find out if spending is the problem.

      We currently take in about 1.5T and we spend about 2.5T.

      A principled counter-proposal from the GOP would be something like their version of Bowles-Simpson where they address the issue head on and stop blaming those who they say don’t address it.

      Why can’t the GOP address the issue itself regardless of the other side?

      It just seems feckless to whine about the other side. What prevents them from putting forth their own proposal?

      1. Jon Murphy

        It just seems feckless to whine about the other side. What prevents them from putting forth their own proposal?

        Both sides are already in damage control mode. Both sides have made half-assed proposals and the blame game has started. We’re going over the fiscal cliff (although it will not be the Apocalypse that is predicted).

        This conversation just goes to show it (by the way, when I say “this conversation”, I mean the one in Washington, not what you and I are doing right now, Larry. I don’t want you to think I am making a jab at you). Taxes and spending are arbitrary. Their effects on the economy are fairly limited (at least in a generally free market like ours. In a more centrally-planned market, it is a different story). There are significantly more important challenges facing us than what the government spends. But rather than face the tough questions, our politicians just focus on hot button issues and whip the crowd up into a frenzy. Go out onto the street. Ask someone, anyone, what they think of their own economic position. I doubt you’d hear many people say “Well, I would be better off if the rich just paid more taxes.” No, their concerns would be “I need a job” or “I have too much debt” or something along those lines.

        Congress and the President should be focusing on the stumbling blocks on the road to economic growth. “The rich don’t pay enough in taxes” is not a stumbling block.

        There are serious structural changes that must occur before any substantial recovery can really begin in earnest. Our educational system is a mess. Our health care system is a mess. Just as “No Child Left Behind” didn’t fix education, PPACA will not fix health care. If you’ll forgive the pun, they are just Band-Aids. There is a perception in this country among the people and politicians that competition is bad and monopolies are good. This needs to be fixed. The amount of regulations have been trending steadily upward since Bill Clinton left office. We need to reduce the regulatory burden on businesses. Our interest rate regime punishes savings, that needs to change.

        All these things need to be dealt with before any major, non-bubble economic recovery can begin. If we go over the fiscal cliff beforehand, so be it. What’s another recession? I am being a tad sarcastic here, but the point remains. Tax hikes/spending “cuts” are not going to do anything but provide short term benefits. The long term problems are still there. We cannot keep ignoring them.

        1. Max Planck

          “To Paul N. Van de Water, a Senior Fellow at the Center on Budget and Policy Priorities, this sounds as if Speaker Boehner is suggesting that the increases he favors would arise from “dynamic scoring” and not actual higher rates on the rich. This way, Republicans would not violate their sacred pledge to never, ever raise taxes (especially on the rich), ever.

          The “dynamic scoring” budget-foolery allows Republicans to pretend that continuing tax cuts for the rich isn’t completely irresponsible at a time when the nation considers cutting essential safety net programs.

          Van de Water opposes the use of dynamic scoring in any budget plans. As he told The National Memo, there is no clear connection between marginal tax rates and economic growth. The deep uncertainty of the dynamic scoring projections damages the credibility of the budget process.

          In fact, it’s reasonable to believe that tax increases on the rich are more likely than tax cuts to spur economic growth.

          Since 1944, the United States has only raised taxes on the rich twice—in 1992 and 1994. What followed those tax increases was one of the greatest economic booms in American history. Though Clinton’s decision to raise the top rate didn’t build the World Wide Web or spark global trade, it certainly didn’t hurt the economy either — despite Republican predictions that hiking taxes on the wealthy would drive America into recession or worse. Well before the end of the decade, tax revenues had increased sufficiently to transform the Reagan-Bush deficits into a surplus, and the Treasury was looking forward to paying off the national debt.

          Then the Bush tax cuts drove the budget into unprecedented deficits and the national debt to stratospheric levels (along with the wars in Iraq and Afghanistan). Still, Republicans are promoting policies that echo George W. Bush’s belief that tax cuts can solve the nation’s fiscal problems — and they are ridiculing President Clinton’s strategy of asking the rich to pay more.

          Former Reagan advisor Bruce Bartlett points out that people just don’t buy that argument. “Even without looking up government statistics, they know that the 1990s were a time when the economy boomed, while the 2000s were a period of economic stagnation,” he wrote.

          So if Speaker Boehner is insisting that tax cuts will increase revenues, President Obama should be just as confident in insisting that carefully targeted tax increases will not only pay for themselves, they’ll make other spending cuts unnecessary.

          At least he has the 1990s to back him up.”

          1. Jon Murphy

            In fact, it’s reasonable to believe that tax increases on the rich are more likely than tax cuts to spur economic growth.

            Since 1944, the United States has only raised taxes on the rich twice—in 1992 and 1994. What followed those tax increases was one of the greatest economic booms in American history.

            Wow…that is so incredibly stupid, I don’t even know how to respond. You’d think a guy with a PhD from MIT would be able to tell the difference between correlation and causation.

            Still, it goes to my point. In that whole article, everything that is talked about is social. There are three sentences on economics, one of which isn’t even accurate (taxes were raised on the rich in 1970). None of it talks about the actual problems facing our country. NONE OF IT. It perpetuates the red herring chase.

          2. Max Planck

            “Wow…that is so incredibly stupid, I don’t even know how to respond. You’d think a guy with a PhD from MIT would be able to tell the difference between correlation and causation.”

            That would seem to be YOUR problem. When the history doesn’t validate your theories, you trot out that old rubric. Forget it: YOU HAVE NO CASE.

            In fact, there IS no historical correlation whatsoever between marginal rates and economic performance, especially considering the piddling levels we’re considering now.

            Chris Wallace actually asked Geithner in an interview yesterday if the administration would consider a hike to 37%!!! That’s you’re big scare? 4.9% vs 2%, WITH deductions? That’s the “Grand Compromise?” Are you frikkin kidding me?

            Once again you’re in the laughable position of suggesting that this pissant hike on 2% of the population will have ANY effect on consumption.

            Ludicrous on it’s face. It doesn’t even amount to the cost of a dinner for two at a decent restaurant once a month.

          3. Jon Murphy

            I mean, seriously, those sentences I highlighted are irresponsibly bad.

          4. Max Planck

            So says our bankrupt, 23 year old idiot savant.

          5. Jon Murphy

            *facepalm*

            Max, you are an idiot. Go back and read what I wrote. Show me the exact sentence where I claim raising taxes by any amount will halt consumption.

            If you want the tl;dr version, here is what I said:

            The discussion on taxes and deficits are a red herring. They do not address the major problems facing our economy. Until we address those problems (health care, education, government anti-competition bias, and regulations), then we will not get economic growth.

            If you want to comment on that, be my guest. But if you want to keep hocking that stupid argument Van de Water, knock yourself out. I will not respond. But do know this: myself, and everyone else who knows statistics and the economic history of the 1990’s, will be laughing our butts off at you. If you want to avoid looking like a complete idiot, I suggest you shut up and move on.

          6. Max Planck

            “Max, you are an idiot. Go back and read what I wrote. Show me the exact sentence where I claim raising taxes by any amount will halt consumption.”

            Hey, meathead- read your response to the piece I posted- that’s that I was responding to, not your response to Larry.

            “If you want to comment on that, be my guest. But if you want to keep hocking that stupid argument Van de Water, knock yourself out. I will not respond. But do know this: myself, and everyone else who knows statistics and the economic history of the 1990′s, will be laughing our butts off at you. ”

            Believe me when I tell you that the misery the policies you and your ilk have brought upon this nation are no laughing matter, and your attempt to drag in the time frames YOU like and ignore the others that utterly invalidate your BS aren’t impressing me.

            Go get a job.

          7. Max Planck

            “But do know this: myself, and everyone else who knows statistics and the economic history of the 1990′s, will be laughing our butts off at you. If you want to avoid looking like a complete idiot, I suggest you shut up and move on.”

            You “know the economic history of the 1990s, huh?”

            YOU WERE BARELY BORN THEN, while I actually lived through those times, including buying my house, raising my kids, and working my ass off.

            It is a demonstration of your puerile mindset, that someone like you could pretend to know more about a period of time that occurred in the fullness of my life while you were a zygote.

            You’re brainwashed. You live by yourself in a dumpy apartment in the middle of nowhere, you can’t pay your bills, and you offer us the conceit that you “really” know what you’re talking about when it comes to this stuff- things that I’ve seen with my own eyes and you’ve only read about without even having the intellectual maturity to comprehend.

            Get off it, loser. And I mean L-O-S-E-R.

          8. Jon Murphy

            Oi…

            Please, either respond to something I said (or answer my question which was “where did I say…”) or leave me alone.

          9. Max Planck

            I guess you can’t even follow a thread. Do you have ANY talents or abilities?

          10. Jon Murphy

            This is the last time I am asking. Either respond to something I said, answer my question, or leave me alone.

          11. Max Planck

            You WERE answered. And yes, you can go play by yourself.

          12. Jon Murphy

            Max,

            I want you to know that at this point, I consider your actions to be harassment.

            If you hurl one more insult at me or anyone else on this forum, I will ask for you to be banned.

            You have been given fair warning.

          13. you can’t be serious Jon.. have you noticed some of the other folks here?

            Max is just playing the same game they do but on the opposite side.

            you called them “aggressive”.. remember?

          14. Max Planck

            Nothing changes on these forums. They can dish it out, but run like crybabies when they get it thrown back at them.

          15. They can dish it out, but run like crybabies when they get it thrown back at them“…

            That’s rich coming from you maxie boy

            Thanks for the chuckle…

          16. Max Planck

            Yawn….

          17. Jon Murphy
        2. thanks Jon.

          I think my point is that taking in 1.5T and spending 2.5 is indeed a spending problem – but we never seem to get around to explaining what spending increased to cause the 1.5T deficit -and would we cut the same things that increased to get us into this…

          OR would we raise more revenue to pay for it?

          I’m sort of an agnostic on how much is the right amount to spend except for two things:

          1. – it ought not to be in deficit
          2. – we ought to allocate based on percentage of revenues not percent of GDP.

          1. Jon Murphy

            Yeah, Larry. I generally agree with you. Obviously, we will disagree on what “right”spending is (what with me thinking your government spending is statist social engineering and you thinking I am a cold-hearted anarchist:-P ).

            I can see a need for deficit spending in certain circumstances (specifically war). I’d hate to have to jack up taxes during a war to pay for it, and I’d have less issue with war bonds (of course, one could argue that forcing the government to raise taxes would discourage war, but that is a discussion for another time). But I do agree with you the need to shun debt wherever possible.

            Spending is as spending does. The basic law says if you spend more, you’ll have to pay for it eventually. I just don’t like the argument that because someone makes an arbitrary amount of money they should have to pay more taxes. I like the idea that someone is taxed based on what they actually do as opposed to some arbitrary baseline.

          2. Actually my view is that like a home budget or a state budget – you have to pay back what you borrowed no matter what good reason you had for borrowing.

            we spent the money and now we don’t want to pay it back.

            I still think we need to have a discrete metric for how much of our revenues we will devote to national defense, entitlements, etc.

            then – if our revenues drop – there are previously agreed to across-the-board cuts.

            you can even make it a non-linear slide but it still has to maintain balance.

            by the way.. New Hampshire seems to fund it schools from property taxes – state property taxes on local property – in addition to local taxes.

            do you pay two separate property tax bills?

          3. Jon Murphy

            Well, I’m a renter Larry, so I really don’t know. However, extrapolating what I know from my car taxes:

            Both the state and my city (Concord) collect excise taxes on the car. You are given a choice of paying you taxes: send one check to the town and another to the state. Or, for a $3 fee, you can send the entire bill to the town and let them pass it along to the state. Without knowing for sure, I imagine this is a similar situation to property taxes. The town acts as an “agent” for the state, and you get one bill. The town takes their cut and passes it along to the state.

          4. so that’s how NH does not have income or sales taxes…
            which is provocative …

            sales and income taxes are assessed directly as money – a percent of your income and purchases… which vary in a different way than the value of properties….

            Here is Va, the law requires 100% value assessments no less than every two years.

            more than 1/2 of the local property taxes go to schools

            about 1/2 of the states collection of income taxes goes to schools.

            2% of the sales taxes goes to the localities for schools and county services.

            1% the state collects and redistributes to county schools based on need.

            there are a lot of moving parts…

          5. Jon Murphy

            Well, I did a little research on the property tax for you (this is also good for me. I am looking at buying property up here).

            So, at least in Concord, taxes are paid on a quarterly basis (but billed twice a year. In other words, you get two bills at a time).

            For the state, it is done annually on Tax Day.

          6. Jon Murphy

            New Hampshire doesn’t have a lot of taxes, but the taxes we do have are high.

            But seeing as I am a renter and don’t have to directly pay most of those taxes, I make out like a bandit :-)

  5. i’ll agree Federal spending is the problem; not enough of it, prolonging the recession…1 out of 5 are underemployed, capacity utilization is below 78%..the Federal government can spend through keystrokes that credit bank accounts, thus it can afford anything for sale in dollars…

  6. Thomas Sullivan

    The House should just pass the Ryan budget plan (again). Then adjourn for the year and go home.

    The Democrats’ plans are nonsense, including the increase in taxes on the top 2%, which will simply slow the economy further and increase unemployment. Democrats are either deliberately trying to crash the economy, or too economically illiterate to realize what they are doing.

  7. You might want to update your chart, Jimmy P. Fiscal 2012 spending is in the books at 22.8% of GDP. Lower than even “Iconic Ronnie” in 1982 and 1983. Fiscal revenues clocked in at 15.8% and having spent its 4th consecutive year below 16%.

    Using your averages, it is equally a revenue and outlay issue.

  8. MacDaddyWatch

    EXCESSIVE SPENDING IS 70+% OF THE PROBLEM:

    1. MacDaddyWatch

      HERE’S WHY:

      The analysis is simple. Measuring spending and revenues as a percentage of GDP provides the answer. Spending is still well above its post-War average (23% vs. 19.3%), whereas revenues are only slightly below their post-War average (16% vs. 17.3%). If you assume that post-War averages are the norm, then 72% of the current budget deficit of 7% of GDP is due to excess spending, and 28% is due to a revenue shortfall. It’s important to note here that federal revenues exceeded their post-War average from 2005 to 2008 despite the Bush tax cuts. Those same tax rates are delivering disappointing tax revenues today because of a shortfall of jobs and the fact that our economy is about 12% below its potential output. It’s the shrunken tax base, not lower tax rates, which is responsible for today’s revenue shortfall. A healthier economy and faster jobs growth would do much more to close the deficit than any amount of higher tax rates on the rich.

      Tax hikes are clearly not the answer–they will make an already too slow economy even slower.

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