CBO data on taxes and income
CoRev asks if anyone wants to discuss the justifications of the beneficiaries of the different parties policies. So I though this gives me an opportunity to present some recently published
CBO data on income and tax that could give people something to tie the discussion to.
Republican policy has been to favor the more affluent in our society and justifies it with the claim that increasing the wealth and/or income of the “investor class” will make everyone better off — a rising tide lifts all boats. If this worked I would strongly support such policies.
But look at what this data shows has happened between 1979 and 2007. This is a good set of dates for comparisons because it is essentially a peak to peak comparison from just prior to the 1980-1982 double recession and the current recession. Moreover, it is an era dominated by the Republican policy of tax cutting and the investment boom of the 1990.
First, as everyone knows this has been an era of a great surge of income inequality driven both by natural economic forces — the winner take all economy — and tax policy.
The net product of this 30 year era was a shift of about ten percentage points of the economic pie from the bottom four quintiles to the top quintile.
This shift in the share of income share by the top quintile has also generated a significant
increase in the share of taxes paid by the top quintile.
But the shift in the distribution of the tax burden is due entirely to the growth in income
rather than a shift in tax policy as the average effective tax rate paid by each quintile has fallen. Actually, on a proportional basis the lowest quintile had the largest drop in its tax burden.
The federal tax burden is quite progressive as the last chart shows. But in general state and local taxes such as sales taxes and property taxes are much more regressive, so the total tax burden is much less progressive than this chart implies.
If this shift in income to the top quintile had generated the increase in savings and investment and generated widely shared prosperity it would be a good thing, and the
greater income inequality would be a fair trade-off for greater growth.
But the actual results since the early 1980s has been a significant slowing of economic growth and a drop in private savings– just the opposite of what republicans and economic theory says would happen. Rather the results has been that since the early 1980s the US has increasingly lived beyond it means and ran up a major foreign debt to finance this consumption binge. The two major drives behind this shift in the US has been the Reagan and Bush tax cuts.
So I’ll take on CoRev and argue that the reason I oppose Republican policies is that they have been a complete and utter failure to deliver the results they promise. They have just ran up a massive foreign debt to finance our living beyond our means and now blame Obama because he has failed to reverse the adverse impact of the failed republican policies.
Supporting the republican “starve the beast” strategy reminds me of the comment I use to make back in the early 1970s that if Arthur Burns — the Fed Chairman — was a friend of business, business did not need any enemies.
I’m sharpening my pitchfork
“Republican policy has been to favor the more affluent in our society and justifies it with the claim that increasing the wealth and/or income of the “investor class” will make everyone better off — a rising tide lifts all boats. If this worked I would strongly support such policies.”
I’d argue differently about what investment does. It does lift all boats………..but here’s the problem, what the “investor class” has been doing the last 20+ yrs, certainly the last 8+, is NOT invest. They term it investment but its NOT adding to any kind of economic activity which produces new income and jobs. As macroeconomists use the term, investment requires the creation of a new product or financial asset. Buying bonds or stocks on the secondary market, trading in currencies or derivatives is NOT investment anymore than me buying Coberlys house is an investment. Yes Coberly made an initial investment to build the house but me paying him double is not investment on my part.
A large portion of activity that takes place in brokerage houses on behalf of the “investor class” these days is of the “me buying Coberlys house” type. Not a new asset that will create something, its a simple nominal increase in an existing asset.
As Rob Parenteau argues (here)
http://www.nakedcapitalism.com/2010/06/parenteau-marching-to-austeria-and-other-neolib-fibs.html
we need capitalists to start acting like capitalists again. They havent been acting as such for quite some time. Content to play casino games amongst themselves and watch all the prices of their toys climb, thinking thats making them (and all of us) wealthier.
The investor class does have the capacity to lift all boats if they start acting like investors again.
Spencer, this was my point: “This administration is helping super-rich folks like G. Soros, Fannie and Freddie, academia, state and local Govts and the labor unions. While the republicans try to help, businesses, resources (discovery and development), energy generation, and the general populace by via taxes.
Stimulating which of these two sets are more positively impactful on the eocnomy? So, Spencer, your disagreement with my point one shows why this economy has not significantly improved, and why this stimulus has not worked. “
Your response does at best only touch on one of the benfactors, the wage earners.
I noticed you ignored G. Soros (Al Gore, the Clintons, etc), unions, academia, Fannie and Freddie, State & local Govts, etc.
What’s interesting, a 2008 survey showed this regarding the super rich voting preference: “Of those worth more than $30 million, two-thirds support Sen. Obama, while one third support Sen. McCain.”
So if you are believer (I am not) that the uber-rich control the Govt, then they control or prefer to control the Dems.
“There are two ideas of government. There are those who believe that if you just legislate to make the well-to-do prosperous, that their prosperity will leak through on those below. The Democratic idea has been that if you legislate to make the masses prosperous their prosperity will find its way up and through every class that rests upon it.”
— William Jennings Bryan, “Cross of Gold” speech, 1896
Things haven’t trickled down for a long, long time, have they?
CoRev — you will believe any propaganda the republicans put out.
You are as bad as the academic economists that teach that the minimum wage hurts poor people even though essentially all the evidence directly contradicts their theory.
Just never confuse you with the facts.
I love your style of arguing by demonstrating how many of the wealthy are “helped” or favored by democratic policy. Maybe it is that the people you cite are actually smart enough to know that the republican policies at a minimum or not working and may in fact be counter-productive.
I tell you what, I take you seriously when you show that my argument that republican policy is not one of borrowing abroad to finance living beyond our means is not supported by the facts. While you are at it why don’t you show how republican policy has increased the share of the economy allocated to consumption from about 60% to some 70% of GDP has been exactly what they promised us and all those businesses that were forced out of business by foreign competition is what the republicans were trying to achieve.
I seriously doubt that making smart comments about democrats is not going to convince many people that you know what you are talking about. But maybe you actually believe that and it is why you are still taken in by the republicans failed policies.
Spencer:
Thanks for the data trove. I will certainly put it to good use.
good a place as any:
three points:
lots of folk will look at spencers chart and say.. oh see, the poor rich pay more than their share of income.
coberly will say, the fact that the share of income going to the poor is less is not necessarily proof of anything we need to worry about. the rich can get richer, and as long as the poor don’t get poorer- in absolute terms, not as a smaller percent of a bigger pie, that is not necessarily bad. it might be bad, but you haven’t made the case.
it is possible that “the poor” have reached a natural saturation point. they have what they need. there is no chance they will ever have yachts, and they may decide they don’t want the plastic toys on offer for “a days work”. hopefully they will find a way to work fewer days.
meanwhile “the rich” may have reached another kind of saturation point: there is nothing productive that will soak up all of their excess money, so they have no way to entertain themselves except by gambling with it. i think this has always been a problem for the stinking rich.
CoRev
I have always maintained that the real rich are not idiots. the idiots are the people who vote for the politicians who tell them that low taxes will make them rich.
it seemed to me that your two classes of benefactors included the “natural” benefactors of “government spending” and the class of people who claim that government spending hurts the economy. so why would we expect Obama to be giving money directly to “business”. When the problem with a recession is exactly that “business” is not investing?
Spencer, I’m just not gonna bite. You are changing the message and then arguing your new message. I wonder why knowing that your party is the party of the uber-rich is so disquieting to you. Too many years of buying the propaganda?
You have yet to address any of my other points of who benefits. When you do then we can have a discussion.
BTW, saying this: “But maybe you actually believe that and it is why you are still taken in by the republicans failed policies.” in light of today’s results from your party is truly flabbergasting.
(apologies on formatting, I’m using a phone here) corev, I’m coming from the outside, but 1. Methinks “$30+mm” earners is one of the more absurdly useless stats I’ve seen in a while. That’s not ‘the rich,’ nor I would argue even the ‘mega-rich,’ that’s the super-unbelievably-positively-ridiculous rich. Maybe when you’re so rich you couldn’t spend your income unless you made an effort to waste money, you are quite free to vote based solely on considerations removed from further increasing your material wealth and reducing your potential tax bill. I’m quite confident Mr. Soros does not vote dem because his checkbook will be aided by higher cap gains and dividends tax rates. Further, I work with some very wealthy folk, but as far as I know have never spent time with anyone making $30+mm per year. Further, how many in the $30mm group are in Hollywood? Probably more than a small percentage at that level. 2. I don’t understand how you throw around the labels ‘state and local govt.’s’ and ‘labor unions’ as though these are a tiny group of people. Highway and construction workers, a whole number of trades, and a whole lot of low wage employees in this country are in unions. My father worked as a parole officer for NYS for many years, so he was a member of ACSME and worked for state government. And yes, if he’d been laid off due to budget cuts it would have devastated our family financially and probably emotionally, and instead of tracking down people causing trouble after getting out of jail he’d have spent some time on an unemployment line. Police and parole and probation and correction officers, firemen, teachers… These are real reasons our society here looks and functions as well as it does. Why on earth does cutting a parole officer from the payroll, handing them unemployment checks and related support, possibly make sense over issuing 2.9% yielding 10yr bonds? I mean, as far as I can see, the financial markets are basically shoveling cash by the overflowing bucket at our treasury, and you think its in our interest NOT to put that cash to use keeping people like my father employed and helping prevent criminals from repeat offending? prevent criminals from repeat offending isn’t worth the coupon price?
i think co rev and i both meant “beneficiaries.”
Miguel
well said. the right, however, figures it can save money by doing away with probabiton. just lock em up.
Correct
So folks, which policy(s) need to be changed and how. I have made several proposals here, on what is needed to change today’s policies/laws/budget actions.
Your turn!!!
CoRev
gradual increase in top marginal income tax up to about 3% more on all income over 100k… until debt is paid down to “sustainable” level.
one tenth of one percent increase in payroll tax whenever Trustees Report “short term actuarial insolvency.”
reregulation of banking industry.
“stimulus” focused on creating jobs doing useful work, not tax cuts.
serious thinking about problems of poverty that don’t stop at “welfare.”
reduction in defense spending.
examination of farm “subisidies” to reduce payments to ‘large” farms.
cut prison populations.
some others that would be hard to explain here.
You are too kind coberly, given the slogans presented as proposals.
Dale, that an interessting proposal. RE; your tax increase of 3%, for 2009 “Income tax revenue dropped 44% from a year ago.” From here: http://www.usatoday.com/money/perfi/taxes/2009-05-26-irs-tax-revenue-down_N.htm
So 3% is not going to get it.
As for the 1/10th percent increase for payroll taxes, that too is too small. Medicare, and medicaid are the big entitlement hogs.
Tell us again how reregulating the banking industry helps? Or for that matter tell us how regulating the oil industry helps the Gulf spill. Both MIGHT have some positive future impacts, but that depends on how the bills are crafted and implemented.
Changing the stimulus bill “to creating jobs” I fully agree with; however, that is not extending unemployment benefits. So how do you propose to change, other than sloganeering?
Instead of just cutting Defense spending and Ag subsidies, how about reviewing each agency against its core mission. Those who are more successful get a bigger chance at a budget increase than those who are not. For instance, The Dept of Energy was created to lessen our demand for foreign oil. We already know how that has worked out. Or Education, AG. Interior, HHS, Labor, Justice etc. all should be reviewed against perfomrance on core mission. Yes, that does include Defese and Homeland Security.
Cut prison populations? OK, as long as they are done rationally and for the correct crimes. But, where are these felons going to get jobs in today’s economy? So we take them from prison roles and put them on welfare/unemployment. How’s that help the economy.
Remember, my point was: “This administration is helping super-rich folks like G. Soros, Fannie and Freddie, academia, state and local Govts and the labor unions. While the republicans try to help, businesses, resources (discovery and development), energy generation, and the general populace by via taxes.
Stimulating which of these two sets are more positively impactful on the eocnomy? …”
Overall, I think your proposals are too small to be of much value to all but a few (prisoners), and will not at all stimulate the economy. There are very few who are helped and several industries that are hindered and/or taxed.
Pro-growth, pro-growth, pro-growth, until you accept that as the goal of a strategy, then we will flounder in ever increasing levels of mediocrity of economic growth/job creation.
CoRev
if you just think about something long enough to find an excuse to stop thinking about it, you won’t get very far.
a 3% increase in the tax would make up for a 45% “reduction” in 15 years if all other things were equal… and if your number actually means anything. Actually the3% is based on income,and the45% is based on “tax”, so if the tax is 20% of income, the 3% of income tax would be a 15% increase in the tax collected, so maybe it would make up for this years shortfall in 3 years.
but if the “stimulus” creates jobs and that leads to a recovery in the economy, then the 44% gap will disappear and the combined tax increase and increase in incomes should make short work of this years deficit anyway, and start to whittle down the debt from the past 30 years. and, personally, i can’t see why an increase in taxes would not restore the bond market confidence in our fiscal responsibility. like they said it did when Clinton imposed about the same size tax increase.
but i am only spinning off the top of my head. same as you. only i don’t have any preset conclusion i HAVE to reach.
lots of those prisoners would have jobs. had themwhenthey were arrested. you’d be surprised. i bet even bernie madoff could find something useful to do.
small error in the above. makes no difference in this kind of b.s. argument.
“As for the 1/10th percent increase for payroll taxes, that too is too small. Medicare, and medicaid are the big entitlement hogs.”
Health care is expensive. I dont see how conservatives, who propose to CUT the entitlements, are on any kind of firm footing. What they want but wont come out and say is RATIONING, based on income level.
Some sort of rationing needs to be done. Conservatives just want to make sure it none of what they want that gets nixed. I get that desire,I dont want mine cut either, but come out and say it. Dont hide behind the bullshit argument that WE cant afford it. I’m willing to say dont cut anyones including mine.
“Tell us again how reregulating the banking industry helps? Or for that matter tell us how regulating the oil industry helps the Gulf spill. Both MIGHT have some positive future impacts, but that depends on how the bills are crafted and implemented.”
How about no selling mortgages to secondary market? You loan the money you keep and service the loan. The entire reimbursemnet system was screwed up, bankers got paid full fee if the loan was serviced for 3 months. Thats bullshit. Also dont let real banks play in currency markets and derivative markets, thats PURE casino activity. If they INVEST in new things fine, buying already existing things on secondary markets is not what banks should be doing, and they werent alllowed to do for quite sometime (thanks Robert Rubin and Phil Gramm)
As for oil companies, how about they actually PAY for the land the wish to explore on AND how bout they have unlimited liability for their disasters? Think that would change their behaviors?
“Changing the stimulus bill “to creating jobs” I fully agree with; however, that is not extending unemployment benefits. So how do you propose to change, other than sloganeering? ‘
Extending unemployment benefits while not CREATING jobs, it certainly saves jobs by putting a floor under aggregate demand. Its absurd to think that people collecting unemployment are being disincentivized from seeking employment. No one who voluntarily quits their job gets unemployment. ALL recipients were wanting to work and got laid off and are no making no more than half what they made as workers. The idea that this is a disincentive is crazy. It rests on the argument that labor is TOO EXPENSIVE, which is ridiculous on its face. How did it suddenly get too expensive, none were calling for pay cuts in 2007? Nothing changed except credit conditions.
“Instead of just cutting Defense spending and Ag subsidies, how about reviewing each agency against its core mission. Those who are more successful get a bigger chance at a budget increase than those who are not. For instance, The Dept of Energy was created to lessen our demand for foreign oil. We already know how that has worked out. Or Education, AG. Interior, HHS, Labor, Justice etc. all should be reviewed against perfomrance on core mission. Yes, that does include Defese and Homeland Security.”
CoRev…. is that you. You must have been temporarily inhabited by a lefty?? Your disappointed with how the Department of OIL err I mean Dept of Energy has performed???
“Cut prison populations? OK, as long as they are done rationally and for the correct crimes. But, where are these felons going to get jobs in today’s economy? So we take them from prison roles and put them on welfare/unemployment. How’s that help the economy. “
How about stop privatizing prisons? NO ONE should be looking to profit by a […]
Thanks Greg.
I lost my courage for a minute. You can’t talk with someone who is just waiting to pounce on what you say and offer “reasons” that don’t add up.
When I said a tenth of a percent increase in the payroll tax as needed, i was thinking of Social Security which won’t need that increase more than one year out of four. But I will bet, without actually doing the numbers, that a tenth of a percent per year WOULD cover the increase projected for Medicare.
As for Medicaid, that is a welfare program and has nothing to do with the payroll tax. Frankly i think all medical care costs could be cut in half with government clinics. Let the people who like “our sacred way” of paying for medical care continue to do so. And let the poor be treated in a government clinic, funded by a payroll tax. At some point the quality of care will be better than what you can get in private practice and that should solve the “health care problem.”
this would indeed add up to a pretty big percent of wages after 75 years or so. but not more than you are going to have to spend for medical care and retirement expenses anyway. and has the huge advantage of being real “insurance.” insurance that doesn’t go away because of inflation, or market failure,or discovery of an unreported “pre existing condition.”
and it’s a big percent of an income that is going to be more than twice as large as what you make today, leaving you with twice as much money AFTER TAXES as you have today. PLUS paying for your retirement and medical expenses.
people who can’t hold more than one number in their brain at a time can’t understand this.
Greg:
When Fannie and Freddie buy up mortgages, they free up a bank to make more mortgage loans. This is usually done after 6 months. Lengthening that time to a year would be helpful and being able to return a flawed loan to the “ORIGINATOR” would be a solve much of the problem. Then too, ninja loans should be banned.
I believe what you truly want is no tranching of MBS within a CDO that are insured by non-reserved backed CDS and falsely rated based upon those CDS by Moodys, etc.
Coberly:
It would take more than 1 tenth of 1% to solve it for the long term. Perhaps 1 tenth of 1% every 5 years or so would do the trick. Under Healthcare Reform, Medicare will be running some pilot programs which will result in cost saving measure within Medicare and spill over into private healthcare. Why should those who pay for priivate healthcare escape? Would you do the same for SS? I don’t think so Coberly.
Dale, this is even worse than your original set of proposals. Your math is so wrong and your analysis so convoluted even you got confused. I believe it was here you were saying there was a ?small? error, and yes, this is getting well into BS-land.
If you have no “… preset conclusion i HAVE to reach. ” then why did you even suggest this wish list of social initiatives? What is their purpose?
Dale said: “ But I will bet, without actually doing the numbers, that a tenth of a percent per year WOULD cover the increase projected for Medicare.” Without actually doing the numbers????
You didn’t just lose your courage: “I lost my courage for a minute. You can’t talk with someone who is just waiting to pounce on what you say and offer “reasons” that don’t add up.” You were so wrong it was embarrassing to read your response. All the while covering your own ineptitude with an attack on my/other’s “reasoning.”
Greg said: “…RATIONING, based on income level.” I believe is often described as means testing. I dunno of anyone who has yet actually proposed this in legislation, but there have been comments from the pundits.
Greg also said: “How about no selling mortgages to secondary market? ” That’s and excrellent idea. I agree completely. Why are Fannie and Freddie ignored in the new bill?
Greg said: “As for oil companies, how about they actually PAY for the land the wish to explore on…) I agree again. I’m not sure that all land is available for sale, and I am also concerned the oil companies actually owning the land wiykd generate more environmental issued due to their ownership status. I also do not think you mean to take public domain land and sell it to oil companies for exploration.
You just ranted on the unemployment issue without answering my question, how does this create jobs?
The next couple of issues you counter with seem just to be throwing things against the wall. Saying this: “Getting them out of prison may not stimulate the economy but its certainly better socially. ” Is essentially a capitulation to reason. If it does not help stimulate the economy, and may raise more economic and social issues, then why propose it?
You also seem confused over the validity of your tax issue/solution. You admit this: “In practice, in our system, taxation is NOT coherent, nor is it targeted wisely.” I actually do agree, and is (only) one of the reasons I do not recommend increasing taxes to get us out of a recession.
I think you have some good points that might be pursued. Next we need to make some assumptions to start an analysis of their value or possible positive impacts.
CoRev
please identify the math error.
i apologize for the sloppy exposition. i was giving a lazy answer to an irresponsible objection. if it seems convoluted to you it’s because you never recognized in the first place that you were comparing apples to bushels.
CoRev
I have been trying to be nice to you, but I am losing my patience. Doing the numbers is tedious. But if a tenth of a percent every four years will raise the payroll tax by 2% total over 75 years (warning: round numbers), then raising it every year should raise it 8%. The 2% will cover the cost of SS, and the other 6% will cover the expected cost of medicare. double both numbers to count the employers share, and you will see that the result is very close to that reported in the 2009 Trustees Report projection for 2083.
run
sorry. this makes no sense to me at all. what are you trying to say?
please note i said one tenth of one percent about once every four years. you once in every five years is less than what i said. i was talking about the projections from the last trustees report. i have no knowledge of, nor faith in, future pilot programs. be nice if they succeed. then the estimates can come down. what does this have to do with private healthcare. what same would i do for SS… i don’t have any idea what you are talking about.
CoRev
gtting them out of prison would not stimulate the economy, but it woudl cut government expenses.
run
I was hasty in my writing and left out an important modifier …..ALL. I should have written “not selling ALL mortgages to the secondary market” Keep within the confines of “qualifying” by its original intent, 20% down and loan/income ratios at original levels
CoRev
I was hasty in my original response and left out the modifier ALL. I should have said “Not selling ALL mortgages to the secondary market. Return to the original charter of Fannie and only qualify those mortgages that have 20% down and loan/value ratios as originally stated.
“You just ranted on the unemployment issue without answering my question, how does this create jobs? “
Unemployment insurance DOESNT create jobs, it protects jobs. Other peoples jobs who actually continue to sell to the previously employed person who is now consuming at a lower but not insignificant level. The argument being made by the conservatives is that unemployment insurance is KILLING jobs by making people not seek work and that is DEMONSTRABLY false. They think if we stop paying them something they will take whatever employment is available………………but there is NONE available. So the stimulus bill providing for UI is NOT counterproductive. UI should be a PART of the jobs bill.
“Saying this: “Getting them out of prison may not stimulate the economy but its certainly better socially. ” Is essentially a capitulation to reason. If it does not help stimulate the economy, and may raise more economic and social issues, then why propose it?”
Im really not sure how you can argue that keeping a higher and higher percentage of working age people out of prison is not helpful. Incarceration is expensive and even the privatized prisons are paid by taxpayers (they dont charge the inmates) so how can an ever increasing incarceration rate not be a significant drag on the economy ? This is one of those “long term structural problems” that needs to be addressed if we are to have a stronger economy.
The parameters of your questions seem to indicate your only interested in what will make us better tomorrow. “How do we turn this thing around NOW??!!” Thats an extremely naive and, I think, unserious view of the problems. Its this type of short term “lets make the next qtr GDP/stock price look good boys” view that led us to this place. I reject that view COMPLETELY.
“You also seem confused over the validity of your tax issue/solution. You admit this: “In practice, in our system, taxation is NOT coherent, nor is it targeted wisely.” I actually do agree, and is (only) one of the reasons I do not recommend increasing taxes to get us out of a recession. “
No, I’m not confused at all. Our tax policies need to change but they need to be changed with an eye to the purpose of taxation. It is NOT to raise revenue for govt to spend and until we break that we will continue to have inane statements by McConnell stating “We cannot extend unemployment benefits until we PAY FOR THEM with a cut somewhere else”. This is neanderthal thinking and it simply leads to political stalemates that never let us proceed with rational policy. We shouldnt have to cut some teachers salary to pay unemployment benefits for a laid off factory worker. Its not the zero sum game we’re being led to believe. Increasing taxes WONT get us out of the recession, thats not the point. They will balance the budget and reverse the deficit, which seem to be important to many conservatives today (I dont share that concern) and they also wont WORSEN the recession if targeted at the right areas. Again, I’m tired of this focus on taxes but its the conservatives mantra that taxes are key. History has shown us impressive growth in low and high tax environments……………….. I kinda think there’s more to it than taxes, […]
“Rather the results has been that since the early 1980s the US has increasingly lived beyond it means and ran up a major foreign debt to finance this consumption binge.”
There appears to be a leap here that I do not follow. Yes, we (except for the upper crust) are living beyond our means, but our debt is mostly to domestic creditors. Where is the link to foreign creditors? (I know that a lot of foreigners and foreign gov’ts buy Treasuries, but that is a different matter.)
Greg said: “The argument being made by the conservatives is that unemployment insurance is KILLING jobs by making people not seek work and that is DEMONSTRABLY false.” That is not that argument I have seen. What I have seen is an argument that the funding should come from the delayed payments from the current stimulus and/or TARP. There is existing budget authority waiting onthe sidelines still to be spent. Why? How long must we wait until the pain and suffering is addressed by this administration.
And Greg, I reject this argyumet completely! “The parameters of your questions seem to indicate your only interested in what will make us better tomorrow. “How do we turn this thing around NOW??!!” Thats an extremely naive and, I think, unserious view of the problems. Its this type of short term “lets make the next qtr GDP/stock price look good boys” view that led us to this place. I reject that view COMPLETELY. “
That was the very same argument used agains the Bush stimulus, and the one used to support the current stimulus. One and 1/2 years later we see what that has gotten us. So pursuing a policy that is proving to be unsuccessful and accepting that the pain and suffering should continue for future gains is at once shallow, uncaring, and hypocritical. Why does politics trump the pain and suffering of the populace?
Greg, I mostly agreed with you on the tax issue. Stop digging, and stop the snark, once you have agreement. Makes for a better discussion.
BTW, it’s the CBO that says continued deficit spending is unsustainable. Of course that does agree with the conservative view point. So, I do mistrust yours and others’ of the opposite viewpoint.
That list, right there, implemented well, would go a long long way to fixing what’s wrong with this nation.
A little more, and better, healthcare reform, and a good energy policy, and we’d be all set.
“ So pursuing a policy that is proving to be unsuccessful and accepting that the pain and suffering should continue for future gains is at once shallow, uncaring, and hypocritical. Why does politics trump the pain and suffering of the populace?”
You seem to assume that I agree with the focus of the previous stimulus. I dont. It wasnt big enough OR targeted enough. It should have had NO tax cuts outside of payroll tax holidays, in my view. These are the only taxes that would give the predominantly strapped part of the population, those making below 110,000 a 15% raise. You also seem to be disingenuously ignoring the role of the GOP in insuring that “pain and suffering should continue for future gains”. This is the stance decidedly taken by the ANTI stimulus crowd. This is the Austerian view. Those that think we just need to let all the prices of everything, labor, housing, commodities etc etc fall, so that our financial ratios improve.
“it’s the CBO that says continued deficit spending is unsustainable. Of course that does agree with the conservative view point. So, I do mistrust yours and others’ of the opposite viewpoint”
Its not a matter of trust its a matter of logic.
Why is it unsustainable now? It was sustained for over 28 of the last 30 yrs? Why now do we suddenly have to match every federal dollar spent with equal taxes removed? This is all completely arbitrary, these debt to GDP ratios. All spending will drive more economic activity which is what we want.
You’re essentially arguing that the pool is full enough we just need to make the water “purer” or “cleaner”. I know your not arguing that we need to redistribute water from the deep end to the shallow end.
I happen to think that there is enough water but we’ll never convince those with enough to move it to the shallow spots so why try. The price of the bribery goes up every day. Thus we need to simply add more water to the pool, the WHOLE pool, and dont drain any of it. Yes the deep end folks will lose some purity of their water but tough. They dont get to hold the rest of the pool hostage any more.
Thats the price they pay for hoarding. For forgoing consumption when they earned their money they now lose the right to consume at the same level they could have consumed before. Times are tough and theres no guarantees what you passed up yesterday will be around today. Get it while you can, nothing lasts. This is the issue at hand. Deficits are completely sustainable, those with just dont like it when “theirs” suddenly doesnt get what they were planning on being able to get. I understand that but they are completely wrong to expect the world to behave in such a way, every where and always, that they get what they want.
Greg
a “payroll tax holiday” takes money that is the workers (most economists say) and instead of letting them save it for their retirement, gives them half of it and says “go spend at walmart.”
how does this help the worker?
how does it help the economy? the payroll tax is the money that pays the social security benefits. are you going to take money away from retired people, who spnd it, or are you going to have the government make up the difference… out of what funding? and if the government is going to make up the difference, why get the payroll tax involved in the first place.
your analysis would be helped if you had the remotest idea of what the payroll tax is.
Greg said re: the current stimulus bill: “You seem to assume that I agree with the focus of the previous stimulus. I dont. It wasnt big enough OR targeted enough.” We’ve had that “Big Enough” argument many times over in the past year +. It no longer washes. As far as targeted, I don’t quite know where you would want it to go, but my opinion is that it did little to nothing for growing the economy. It should have been pro-business, and instead it and most of the legislation since has demonized nearly every sector of the economy.
Greg also said re: the CBO report on sustainability of the current growing budget deficits. “Why is it unsustainable now? It was sustained for over 28 of the last 30 yrs? Why now do we suddenly have to match every federal dollar spent with equal taxes removed? This is all completely arbitrary, these debt to GDP ratios. All spending will drive more economic activity which is what we want. “
I wish the debt to GDP ratios were arbitrary, but they are in reality math. And what is not sustainable is the continued massive growth of that ratio. At some point not too far in the future paying the annual interest will take what is left of our available discretionary spending because we could not control ourselves and our spending as a nation.
Greg, Greece is not out of the question for us. It is already about to happen to several of our states, CA is the most obvious. Couldn’t control their spending and now they are near budgetary collapse. There are several others just behind them.
Greg, I don’t know your age, but we are going through one of the toughest times our country has had to endure since the 30s. I am a child of parents of that era. I learned from them to be prudent. Most Boomers have lived without any serious conflicts and economic turmoil. I suspect you are of that age group. In my opinion it was, in fact, that Boomer attitiude that “it hasn’t happened in my liftime so how could it happen now,” that has gotten us in this economic predicament. Imprudent, overzealous confidence, coupled with greed have been the over riding causes of much of our economic travail.
The need to feel better about ourselves due to guilt of our own greed has driven much of our social agenda. Even your writings reflect/describe, indirectly, some of that guilt.
In asking which set of policies benefit the general economy more (not gonna find me sliding down the “impactful” linguistic path), we are back at Kimel’s house. CoRev wants us to look at the dichotomy he offers and conclude what he would have us conclude – the GOP puts money where it will do the most good. Kimel has spent the past couple of years demonstrating that it isn’t so. What is remarkable, I think, is that CoRev continues to act as if none of what Kimel turned up is known. As if waving around the same old tricke-down claims still carries weight. Trickle-down arguments are demonstrably wrong. The facts don’t support them. So, when asked whether the GOP of the Democrats put their money where it will do the general economy the most good, I think the data support the Democrats. I also think that, as spencer says, there would be an argument for GOP policies if they worked. If our economy were the simple, old-fashioned competitive price-taker market that is the basis of classical economic claims, we might see gains from letting the rich take fuller advantage of the benefits the wider society provides to business. Our economy is full of powerful, externality-generating, lobbiest-toting multi-nationals in which economic decisions are largely made without reference to markets.
Dressing trickle-down notions in the emporers clothes time and time again seems a waste of time, but somehow, they keep showing up in the same transparent attire.
So, KH, you have no answer. We’re talking policies here, and When pushed to defineing actual economic policies we most often see equivocation form Mike.
BTW, which policy on my list is trickle down? And, since 70% of the uber-rich voted for Obama, which party is the party of the rich?
“ We’ve had that “Big Enough” argument many times over in the past year +. It no longer washes. As far as targeted, I don’t quite know where you would want it to go, but my opinion is that it did little to nothing for growing the economy. It should have been pro-business, and instead it and most of the legislation since has demonized nearly every sector of the economy. “
How was the stimulus “demonizing” nearly every sector? This is absurd. How could the stimulus have been more “pro business”…. let me guess….. TAX CUTS!! Businesses are not firing people because they are paying too many taxes. They are firing people because they initially lost credit and now are suffering because all there previous customers have been fired from their jobs. The lay off spree is simply a downward spiral race to the bottom that business tax cuts will NEVER help.
The ratios ARE arbitrary. No evidence AT ALL that 90% is a magic number. USA ran over 90% for much of the 30s 40s and Japan has been over 90% (200%of late) for over 10 years. These people peddling this crap lump gold standard govts in with pegged currencies and pure fiat currencies. Not the same animals AT ALL. I know you dont care to investigate the differences in currency regimes and what they mean regarding debt so you simply continue to regurgitate the deficit terrorist talking points without ANY thought. You actually think we (the US govt) can run out of money.
Greece IS out of the question for us and to continue to peddle that crap is indicative of your reluctance to think more than one layer deep about what it means to issue your own currency vs using a currency issued by someone else. The difference is FAR from trivial.
I am quite aware of the gravity of our times. I probably have a lower debt ratio than you do and have lived more prudently than you so please dont lecture me. That attitude you ascribe to my generation pretty much describes ALL the republican voters I work with. “America is the greatest”, “We can do anything” , “We dont need to save oil, thats defeatist!!” and you are right it HAS gotten us into this predicament. If we’d listened to Carter 30+ yrs ago and started working towards solar we would have the alternative energy ready NOW or in 5 more years. Instead we let Dick Cheney write “energy” policy (aka oil industry capture of the US govt).
I have no guilt about anything . I DO recognize that we have a better more livable society when we arent throwing people in prisons, arent making military the only good option for our young people or skimming all the worker production to the upper 2%.
Coberly
I know we are just going to have to agree to disagree on this issue. I’m quite aware how the payroll tax is used, and totally agree with it at most times. We however right now are not in “most times”. There is no reason at all that anyones benefits have to change, EVER, while we forgo the payroll tax til the economy improves. Think of it as a transfer of 15% of income up to 106,000 to all working citizens AND a 7.5% (of salaries) transfer to each employer. There is no reason to take anything from anyone else. The govt needs no other funding to pay for this. That is McConnell/Boehner reasoning.
Like CoRev, I know you dont totally “buy” my view here so…… so be it. Lets just say, once you understand we cant “run out of money”……… EVER, it opens up lots of possibilities.
Greg, I did not say this: “…the stimulus“demonizing” nearly every sector?” What I said was: “it (the stimulus bill) and most of the legislation since has demonized nearly every sector of the economy. Implrementation has demonsized several industries. The most obvious is “fast food” to support Michelle O’s war on fat.
Your comment re: “ratios” makes no sense. Are you talking about some magic number or the impacts of reaching some deficit level.
We will disagree re: Greece. We are the equivalent of the EU and there are many statres approaching the greece issue. How many of them eill it take for you to recognize the problems we are facing.
I’m happy for you that you are not over your head in debt. The rest of what you present is just personal rant.
coberly:
I answered your firt reply to Greg.
In Healthcare Reform, pilot programs for Medicare are the equivalent of reforms just said in a less than intelligible manner. Private Healthcare has and will ride on the coat tails of Medicare.
The Healthcare Reform Bill is complex and I know you know the minutia of SS. It is not so complex it can not be learned. Read Maggie at least