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What's so wrong with tax cuts for the wealthy, Caroline Baum wonders - after all, most Americans...
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Wednesday, December 15, 2010, 6:15 PM ETWhat's so wrong with tax cuts for the wealthy, Caroline Baum wonders - after all, most Americans aspire to being rich. It's "voodoo economics revisited," Simon Johnson says - "childishly reckless" fiscal policy that digs the U.S. into a deeper debt hole.
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"But we can't afford it." Maybe not, but it's a little late to be suggesting that easy credit and low taxes might wreck the U.S.government's fiscal balance, now that the U.S. economy has already crashed and burned.
The U.S. is either going to stimulate the economy by letting people keep more of their own money, or they are going to "tighten up" like Europe -- at exactly the wrong time, I would submit.. If fiscal austerity was a good remedy for severe recession, why are investors voting with their feet and dumping European equities?
We have "tax and spend" on one side, and "don't tax and spend anyway" on the other.
I suspect that it is the exact opposite. One of the most basic economic principles is that lower prices leads to more consumption. If the cost of government is taxes, lowering taxes (as we did in 2000) will lead to more demand for government services (which we saw for the next 10 years).
You will never get government spending under control when nearly 1/2 of the country pays no income tax. This isn't just the wealthy. Everyone needs to have some tax to pay, or the government will continue to grow and our choices will continue to erode.
The "extend the tax cuts" crowd has suggested social security reform, replacing it with a partially privatized account, tort reform, competition across state lines which attack two of the biggest unfunded liabilities on government today(social security and medicare).
The left has fomented agitation against such reforms, embedding these entitlements even deeper into the balance sheet that will cause a death debt spiral.
You will probably now whine about the war.
Cue Oliver Stone theme score here. Violins...
The problem is that you could have decided to do nothing after 9/11. Clinton probably would have. Or, you could have done something. If you chose to do something, would you have chosen a fiscally sound, destructive and quick resolution to war or a protracted, gentle and nice one?
We chose the latter hoping to placate the left who have emasculated the country. We chose candy bars and training 'the local police" whatever that means.
Instead, we could have chosen incendiaries dropped from a C101 transport and indiscriminately have caused enough disruption to get TF out in after a year's time. So, the American taxpayer was forced to become a real nice war/candy bar monger.
As for the rest of government, we could cut it overnight and not notice a damn thing.
www.usa.gov/Agencies/F...
The ALPHABETS are useless. They have no earnings. They produce nothing, only TAKINGS. The ALPHABETS have strong unions to support their graft off of the private sector's back. The ALPHABETS rot in cubicle farms and collect pensions, destroying capital and robbing the taxpayer blind.
Unlike the private sector which does create real things like air conditioners, hamburgers and laptops. The ALPHABETS only create DMV filing forms, onerous regulations and fines.
The ALPHABETS suppress GDP, destroy innovation and kill jobs.
We do not need more alphabet soup in our lives.
Now, you're talking about "redistribution" I can support. Every taxpayer should pay some level of taxes, so every, single one has a veste dinterest in measuring what he/she's getting for his/her taxes.
The top 10% have experienced tremendous growth in wealth and income over the last decade.
Given this is the case, it seems pretty obvious who needs to pay more taxes.
Because, that's what Dems use to incite class warfare and promote their supposedly social benefits...How is that War on poverty going,eh? Every Democrat administration, is the same, they promote more spending on the name of benefiting everyone...but that hasn't worked and it would NEVER work...
I would have to ask whether you are assuming that the 10% are the same 10% from the start of the decade. I saw an article that said IRS data shows that while the top 10% of Americans are making more, it wasn't the same people as at the start of the decade. Something like 2% of them came from the lowest 10%. This is social mobility, and it is a good thing.
Separately, the rich do pay more than the the bottom 80% combined. The top 2% pays something like 25% of all income taxes. As a question, what percentage of the total should the top 2% pay? And as a question, how little should the bottom 1/3rd pay? This stat goes back to the Bush adminstration that 1/3rd of the country pays no income tax. Is it fair that they pay nothing?
By kicking the can down the road AGAIN it seems to me that we are guaranteeing that we will have BOTH.
It is virtually impossible to cut taxes and cut spending. It is like saying we are going to eat less because the food costs less. When government costs nothing, people demand more government services and more entitlements. When it costs you nothing, who doesn't believe that the poor are entitled to golf lessons. When it costs you nothing, who cares how much a bridge in Alaska costs or where it goes?
When the government takes money out of a paycheck the worker blames the government. The government's loose monetary policy leads to inflation the voters blame the store not the government.
It is virtually impossible to cut taxes and cut spending. It is like saying we are going to eat less because the food costs less.
When government costs nothing, people demand more government services and more entitlements. When it costs you nothing, who is going to say no to unemployment benefits. When it costs you nothing, you will support bigger Social Security benefits. The less it costs the more we consume. It is true of groceries. It is true of government.
Until more than 85% of the people pay something in taxes, there will be no pushback to the growth of public spending. This is what everyone in DC wants... more government.
1. Increase spending and entitlements while allowing banks and corporations to have their way.
2. Raise taxes which most of the wealthy can avoid with accountants, attorneys, offshore accounts/investments.
3. Dangle more entitlements and social programs in front of the proletariat to buy votes and obfuscate the truth.
4. Find some politicians and responsible middle class citizens to "fight" against spending and taxes. Let them have their way for 5-10 years, it only makes them think they have won, quiets the objections to growing government, and grows crony capitalism.
5. Let crony capitalism run rampant, encourage debt and speculation along with government spending. When crisis comes along, bail out the banks, insurers, corporations, etc. Don't cut spending, don't change tax laws, pass phoney healthcare legislation that will allow continued rape via insurance premiums, deductibles, pharmaceuticals, AND continued proftis for the health insurance and the attorneys.
6. Devalue the currency while inducing inflation; which will bleed out assets faster than the incentive to save or be able to maintain a standard of living and health.
7. Lather, rinse, repeat.
Problem is, as 'the rich' grows smaller compared to the ever growing entitled base of stunned cows with pilled in eyes, pretty soon it becomes unsustainable.
We are learning that lesson now with stubborn unemployment.
Its like watching bad, college-taught theory unfold in the real world and seeing a sitting president get his on-the-job training like a part-timer at DeVry in Econ 101. Its embarrassing to be an American these days when the entire world laughs at us(Hu Jintao) or disrespects us(Putin, Merkel, Sarkozy).
But we wanted to feel real cool about ourselves for electing the Chi-town kid.
We have to go DOWN into the fire -- purify ourselves of all the bad loans we are still hiding (transferred from banks to the government in a strange robber baron manner). Now we get to scream at the government instead of the banks. Very odd. The government is now the fall guy and the banks stand back like innocent creatures. But we know what has happened. Debt has been laundered. But now it will destroy the country through the bond market instead of individual banks. (Pick your poison: deflation for ever; or civil war and depression. Those are the choices.)
The last US election was all about the debt. SO...the first thing (THE FIRST THING) that Congress does is extend tax breaks while also extending unemployment benefits.
That equation looks like this "Take in less tax revenue" while also "spending more". Can someone with addition/subtraction experience explain?
It sure looks like continuing to dig.
My premise remains the same: There is neither the appetite nor leadership to deal with the US debt.
Short the US economy at every opportunity.
Fire all the bureaucrats, sell their buildings and then make them learn real work like shoveling gravel.
That equation looks like this "Take in less tax revenue" while also "spending more". Can someone with addition/subtraction experience explain?"
Absolutely. I can explain. Its called a lameduck Congress. Say it with me LAMEDUCK.
What's a lameduck Congress you ask?
A lameduck Congress is one that knows there's no consequences to its actions. Kinda like an employee that gets fired but before it leaves the building it trashes its cubicle and clogs the company toilet with everything in the filing cabinet and breaks a window on the way out.
The voters said one thing. The lefties that got voted out on their ass are saying another, right in their faces.
> essentially be forfeited upon their death
If you're going to use examples, keep them within the realm of reality -- there has always been a large exemption (previously $1M, now $5M) and a /percentage/ of the rest (previously 55%, now 35%). No one is giving up everything.
And the old saying "you can't take it with you" comes to mind.
And, while this is an obnoxious comment, if the extremely wealthy couldn't direct the majority of their assets upon death, it would encourage consumption now. I am not a proponent of our consumption based economic model, but it is what TPTB want to goose our economy with. Consumption now.
Pretty much all of us. I'd venture to guess that leaving a lot to one's heirs is secondary to a comfortable lifestyle here and now.
And then there is the satisfaction of winning. That's why millionaires and billionaires keep working.
Whatever you think of them, if the Tea Party hadn't rolled over the Democrats in this last election, the exemption would have still been $1M instead of $5M -- and the tax rate would have gone to 55%.
Prune the garden. Take everyone back to Ground Zero. Have a new race every generation. Give everyone the same chance. Might be interesting -- and might generate a LOT of good new ideas and technologies. Old Money tends to try to hold on to what it has, and keep others from climbing up to challenge them.
Part of our problem as a culture is that we define success only one way, in terms of money. There are a lot of different forms of success. Was Vincent Van Gogh a success? He sold one painting when he was alive. Herman Melville wrote the greatest American novel so far...he died penniless and his name was even misspelled in his obituary. We won't be a great culture/civilization if we only value money and power, forgetting about the other side of the circle: knowledge, art, culture, music, philosophy, literature as well as the humanitarian side. Was Mother Theresa a success? Her bank account says she was a 'loser'.
We are afraid of death -- so we put all our energy into money, which represents (we think) distance from death. This is an illusion, of course. Rich people get cancer. Rich people die. Rich people turn to dust. And always will.
Is the mother who raises three children and helps them become hard-working contributors to our society a success? Not by the monetary scale, she isn't.
We have a very narrow, limited view of life in America. The American Dream should not be about living in a McMansion and driving a German car, to show your neighbors you made it -- it should be about fulfilling your potential on whatever path chooses you. A good school teacher who helps even a handful of students find themselves out of the forest of confusion may be a success, even if he has to take a second job to try to keep the bank from taking his house away from him.
Every one is a winner and a loser and moves throughout his or her life between these two poles regularly, being a loser at one time, in one endeavor, and a winner, later, in the same or a different direction. Be slow to judge others. Others are you, at a different stage on the wheel.
Instead of tax more - why not try spend less. A LOT LESS.
I think that philosophy would make a whole lot more people happy.
US debt as % of GDP has exploded up to 10-12% annum the past 3 years. Take it back down to 3% of GDP or (dare we) 0% and GDP will implode as the "government ATM" that has replaced the "housing ATM" goes away.
I am not saying that is NOT what we SHOULD do for the long run - I am just saying we'd be exposed for what a sham economy we are now running when government spending overwhelms everything.
en.wikipedia.org/wiki/...
The counter-argument is, of course, we can't afford to do so, but I think that argument generally ignores the economic implications associated with tax policy. If you have higher taxes, you lower GDP over the long-term. Lower taxes means higher GDP over the long-term. So, yes, lower taxes probably means a bigger overall deficit in Year 1, but it could also mean a smaller overall deficit in Year 10, because economic growth is going to create a higher level of governmental revenues.
www.treasurydirect.gov...
It doesn't matter what the tax rate is (or was). The deficit grows.
www.usgovernmentspendi...
Debt-to-GDP has fallen numerous times in the nation's history. The peak was actually in 1940's and it fell very rapidly in the years after the Second World War.
The higher debt-to-GDP ratios in modern times are, of course, no laughing matter, but it has more to do with an increasingly bloated defense budget and entitlement spending, rather than falling tax rates. If I had my way, we'd cut those, as well.
Hence, raising the rates "on the wealthiest Americans" is sort of a fiction created by politicians.
Fee is not spelled tax, and a tax is not spelled fee; therefore, there is no increase in taxation at all.
I do feel sorry for anyone that would actually buy that line of thinking.
And still they scream. They like their military BIG; they like their roads BIG; they like their policemen BIG; they like their cities clean; they like their drinking water clean; they like schools staffed and quiet.....but they like their taxes small.
They like their old people out of sight and out of mind. They like their poor people invisible. They don't like food stamps and unemployment benefits. They think people should work until they die.
Yes, they like their taxes small.
Most Americans can do things for themselves. Don't believe the left that tries to lie and tell everyone that Americans want to be treated like infants. We don't.
Smaller govt. is fine. Smaller taxes are also fine.
Unless you talk to a lefty. Indeed, they are incapable of taking care of themselves. So I can see why they might want big govt.
Ask the sane people who were raised on what this country used to mean. They'll tell you. We're just fine doing things on our own, TYVM.
As opposed to corporations, which have no inefficiencies, fraud, waste, or abuse?
The government is an easy target for throwing those particular stones (many of them well-deserved), but corporate America should also look in the mirror.
This is why we hear all the whining about corporate tax rates being too high when in fact the effective rates are far lower than individual rates. Combine that with preferential treatment for capital gains and dividends and you have the specter of Warren Buffet's tax rates being lower than his secretary's.
Sure, but profit for whom?
Corporations and governments often suffer from much the same problem: people.
In government, the people in charge are often more interested in staying in charge than in doing what's best for the country.
In corporations, the people in charge are often more interested in lining their pockets quickly than in doing what's best for the corporation.
Note, however, that the people problem in government is capped at however much monetary and political capital it takes to get re-elected (or re-appointed).
The people problem in corporations has no bounds, where monetary capital is desired in ever-increasing amounts.
Not unlike the center of the financial crisis, government presents a linear problem while corporations present an exponential one.
Plus, governments can be changed by an informed and motivated electorate.
Is there a similar construct for changing corporations? The bottom 90% doesn't have control of enough % of the wealth to 'vote' with their money, so what does that leave them?
Meanwhile, government has decided that you don't need to involuntarily buy healthcare or be fined.
Oh wait, reverse those.
heh
Government does.
Big difference there in your shopworn script.
The left and right are the same, except they are looking at one another in the mirror, an opposite reflection. In the world of physics, matter and anti-matter are perfect mirror-images of each other. So are democrats and republicans, condemning their opposite but being essentially the same as their opposite: a mirror reversal.
This is the illusion that triggers wars and social upheaval and political chaos. The opposite we are condemning is our self, in a different time and set of clothes.
Your comment is filled with wisdom.
November's deficit was $150 Billion or $5 Billion a day. Thus the revenue only addresses 20% of the deficit problem leaving 80% of the deficit problem to be resolved another way.
The problem isn't the tax cuts...it's government overspending.
If we don't share the pain in this depression (which means higher taxes on the rich, who DID cause this crisis, through their bankers and accountants and shadow banking system), and we demand the poor carry the entire load, through social program dismantlement, then we'll have what Greece is having, riots in the streets, hotels burning, banks burning -- and what London, Rome and France are having: civil war.
You decide: higher taxes and lower spending, less debt...or civil war. It's your choice.
Take a chill pill, Frances.
But, about your point, I disagree of course. Americans aren't French. They aren't Greeks. They don't riot when they don't get their free crap.
Well, at least the civilized Americans I know.
Americans used to do most things themselves. That was a long time ago before government got to be so... uh... accommodating.
Americans used to be hardscrabble folk. We came from the pioneers, did things for ourselves, worked hard, relied on no one but ourselves. Does that ring any bells at all with you? Are you and your kind so lame and desperate that you really can't get by without government doing it for you?
I'm just not buying it. Sure, its pathetic if true. But we aren't eurotrash. Not yet.
The issue with our government (the 2 party system is symbiotic...the only difference is rhetoric) is that the more money they get the more they spend.
The government should first dramatically cut spending and show responsibility with the people's money BEFORE asking for more. Repub or Dem doesn't matter....neither can control themselves. the solutions are very simple... eliminate temptation of corruption via:
- Term limits for congress.
- Tax evaders are treated to a higher standard than regular citizens.
- No insider trading for members of congress (the only group legally allowed to do so)
- Balanced budget amendment (except in times of declared war...sovereign not organization....or energy crisis....the next looming disaster anyway)
- Ban on corporate special interest subsidies until debt is below 10% GDP
- Ban on foreign loans and subsidies.
- Elimination of the income tax for a consumption tax. The present tax code allows for too many special interest aspects as well as confusion and corruption. Simplicity prevents confusion and corruption.
I'm sure many will boo hiss....but the fact of the matter is...political party doesn't matter...this country is in trouble due to polticians trying to please voters and special interest money....greed screwed us. Time to swallow the bitter pill and clean up the mess.
Politicians need to go back to being public servants as opposed to the public being the servants.
Street violence, trade union demos cast shadow on EU summit
Trade union chief Monks: 'There's something new going on'
LEIGH PHILLIPS
Today @ 00:36 CET
EUOBSERVER / BRUSSELS - Fresh, extremely violent riots in which the Greek finance ministry was set ablaze and an ex-minister was beaten and left with blood streaming down his face rocked Athens on Wednesday (15 December).
Anger at EU-IMF-imposed austerity is boiling over in Greece.
Some 20,000 workers according to police and 100,000 according to organisers marched through the Greek capital and descended on the parliament as part of a union-co-ordinated 24-hour general strike. Furious protestors threw chunks of concrete, bottles and molotov cocktails in pitched battles of street fighting with police, who responded with tear gas. Demonstrators launched fire bombs at the second floor of the Ministry of Economics, setting the entrance alight.
Former transport minister Kostis Hatzidakis from the conservative opposition party New Democracy was set upon by a 100-or-so strong group of young protesters after he exited the parliament building. Left bleeding from his head, Mr Hatzidakis sought shelter in a nearby building and was unable to reach hospital.
Violent rucks took place in front of the Athens Polytechnic, where police on motorcycles were attacked and thrown from their vehicles when they attempted to drive into the demonstration. A few thousand strikers attempted to occupy the main offices of the national trade union, the GSEE, complaining of the unions' close links to the governing Pasok party.
Protesters also attacked shop windows and banks across the capital city and set fire to cars, a riot police bus and rubbish dumpsters, as well as starting blazes near luxury hotels close to parliament.
Another 20,000 protesters struck the second city of Thessaloniki, with young people hurling molotov cocktails at a government building and attacking shops and banks.
The general strike itself has paralysed the country: flights are grounded, trains silent and ships stuck in harbours. Schools are closed, rubbish has not been collected, bank workers have been on strike since Tuesday and hospitals are providing minimal services only.
Splits emerging in Pasok
The violence comes after the centre-left Pasok administration won a crucial vote on Tuesday on labour market changes that will see massive pay cuts and severely limit unions' right to collective bargaining with private sector employers.
For much of the past year, the governing party has managed to hold itself together despite the draconian nature of its legislation.
Prime Minister George Papandreou is increasingly bleeding support amongst his own troops, however. He has been forced into meetings with opposition leaders as an insurance policy to get measures through and has resorted to an emergency procedure to pass the latest bill, a method which limits discussion in the chamber to just two MPs from the government's side.
"The way you are behaving is creating a crisis of confidence in the government among Pasok MPs," Pasok MP Costas Geitonas said in Greek daily Kathemerini this week.
Greek case not isolated
The Greek violence comes in the context of wider social unrest in Europe in recent days.
Also on Wednesday, anti-government student protesters clashed with police at the Middle East Technical University in Ankara. On Tuesday 100,000 anti-government demonstrators took to the streets of Rome. Young people set cars alight, hurled rocks at police and hit officers with metal bars, causing an estimated €20 million of damage. Last week students fought police in London in anger over tuition fee hikes.
In a different set of well-organised and peaceful protests, trade unions on Wednesday also organised a pan-European day of action designed to fall ahead of Thursday's EU summit, which will tackle the latest EU response to the financial crisis.
Events were held in Belgium, the Czech Republic, Denmark, France, Ireland, Luxembourg, Slovenia and Spain.
Another one-off day is planned for spring, but left-wing activists in Greece are calling for an indefinite pan-European general strike to oppose the EU-led austerity measures.
The head of the European Trades Union Congress, John Monks, speaking to EUobserver explicitly ruled out the strategy, saying that especially in Germany, France, the UK or the Nordic countries it could not happen.
"I understand if you're in Greece, you might feel, hey, where are the rest of you [in Europe], but the reality is this is a multi-speed crisis, affecting countries differently. And countries have different cultural traditions and legal systems," he said.
Commenting on the recent upsurge in violence, Mr Monks warned that the EU's chosen path of austerity "will be marked by greater social unrest, more nationalism, more protectionism."
"There has been an upsurge in militancy and social unrest. There's something new going on," he said.
He added that he was sympathetic to the call for wider action but that now is not the right time: "I'll call a pan-European general strike on my last day in office."
I feel like an elevator operator: "Going down, sir?"
Rather, take a look at Cuba. They just fired 500,000 state workers. Raoul said they can't afford them anymore.
That is the trend. Better get with the program. Better learn a skill or a trade. Better learn to be productive again.
There is a collapse coming here too. The public pensions. The SS bubble. The medicare bubble. All the things govt. promised you to buy your vote. And none of it can be paid. Politician's mouths bigger than their brains. Oh, wait a minute... you didn't fall for it, did you?
*chuckle*
Maybe you did. Awww. You wanted somebody to take care of you. Obama said he would. Said you needed him. Said you couldn't get by without him. And you... voted... for... him. That's rich.
Listen, Mikey. Learn the lesson from China, from Brazil, from India. Don't live in the past of the Entitled States of America. There's no unemployment insurance in China. If you don't work, you don't eat. Guess what? They decide to work. Not too many riots either. And a damn stellar GDP growth rate.
Yeah, that thing called 'work'. It really does work!
Remember the 1930s. Europe collapsed; and this DID affect America, in a big way.
It is a disgrace that 50% of the people aren't paying any federal income taxes. Its also a disgrace that the carried interest 15% rate is being allowed to continue. How can it be that a man shuffling papers will pay a lower % of his income to the government than a man operating a factory?
We need to get back to everyone having skin in the game, common sense (the estate tax agreement actually strikes me as being fairly reasonable), and balancing the freaking budget EVERY year.
The president needs to use his state of the union address to letting American's know that 1. the gravy train is over and you need to be more self sufficient. 2. We ARE going to prosecute all the fraud that took place before, during, and after the financial crisis. and 3. Propose specific spending cuts to SS, military spending, and Medicare that will balance the budget this year.
That would be leadership.
www.cato.org/pubs/poli...
Problem is, we don't have any serious adults in DC to attempt a responsible system of real workable reform that is actually fair.
Light/darnkess. Ying/yang. Left/right. Up/down.
I get it Sen Sei.
Shine on. Shine off.
With that said, we do have people abusing the system. But the solution is not to steal money from everyone (through taxes), its should be to attack the abusers. This means demanding that laws be enforced and rules of fair play exists and are enforced.
To do this we need to remove the loop holes in the current tax code and leave the percents alone.
This "tax the rich" idea is a pure lie. Its never been that way and it never will be, because they get too many breaks and special considerations. If you believe anything related to anything the Administration says about "tax the rich" then you are ignoring whats really going on.
However, the middle class do not get the same breaks and it does impact them even if the lying Administration says it does not. The result is that the numbers lie and the middle class is paying most of the taxes. This is where the destruction is happening and if it continues America will no longer exists as a good place to live.