"Taps"-Time, At Camp McBush!

[BigRob]

How about occasional budgeted "earmark bills" apportioned in a way that congress can haggle out.

I think that this sounds alright, but will never happen. Congress will have to be the one to enact this, and they love their earmarks to much.

Consider this example. When Bush came to office in 2000 he did want to cut down on earmarks. What he did was state that all earmarks in the conference reports should be ignored, (these come with the bills) and only earmarks in the actual bill should be honored. What did Congress do?

Congress simply then wrote into the law that the conference report had the power of law.

Foreign ownership is a result of our deficit spending. I don't trust Asian or Arab countries owing more and more of the US.

Well, I think there is a difference between holding treasury debt and having a foreign company purchase an American company.

I think most people do not see the distinction however. Many Asian and Arab countries are strong allies of the United States. It can also easily be argued that this interdependence will limit the frequency that major wars will occur, as they become to costly.

I would say that they both add to the deficit. Supply side economics would work if we could really sustain growth, but my opinion is that it may seem to work only because we go into debt.

Consider this projection:

For the past half-century, tax revenues have generally stayed within 1 percentage point of 18 percent of GDP. The CBO projects that, even if all 2001 and 2003 tax cuts are made permanent, revenues will still increase from 18.4 percent of GDP today to 22.8 percent by 2050, not counting any feedback revenues from their positive economic impact. It is projected that repealing the Bush tax cuts would nudge 2050 revenues up to 23.7 percent of GDP, not counting any revenue losses from the negative economic impact of the tax hikes. In effect, the Bush tax cut debate is whether revenues should increase by 4.4 percent or 5.3 percent of GDP.

Spending has remained around 20 percent of GDP for the past half-century. However, the coming retirement of the baby boomers will increase Social Security, Medicare, and Medicaid spending by a combined 10.5 percent of GDP. Assuming that this causes large budget deficits and increased net spending on interest, federal spending could surge to 38 percent of GDP and possibly much higher.

Overall, revenues are projected to increase from 18 percent of GDP to almost 23 percent. Spending is projected to increase from 20 percent of GDP to at least 38 percent. Even repealing all of the 2001 and 2003 cuts would merely shave the projected budget deficit of 15 percent of GDP by less than 1 percentage point, and that assumes no negative feedback from raising taxes. Clearly, the French-style spending increases, not tax policy, are the problem. Lawmakers should focus on getting entitlements under control.

I agree that Obama must cut spending, but I strongly disagree that lower capital gains, and less government involvement is the way to go.

We agree to disagree here I take it, but cutting capital gains rates has historically (under Clinton and Bush) resulted in higher tax revenues. If we are going to spend anyway, it makes the most sense to do what generates more revenue, which is cutting the capital gains rate.

 

[Lagboltz]

I think that this sounds alright, but will never happen. Congress will have to be the one to enact this, and they love their earmarks to much....
What did Congress do?
Congress simply then wrote into the law that the conference report had the power of law.

Yes, I agree it won't happen, and Congress sucks. I wasn't saying to get rid of earmarks, I was just suggesting an alternative way they could be handled. Earmarks are also used as bribes. You support this bill and we will give you a planetarium for your state.

Well, I think there is a difference between holding treasury debt and having a foreign company purchase an American company.

I think most people do not see the distinction however. Many Asian and Arab countries are strong allies of the United States. It can also easily be argued that this interdependence will limit the frequency that major wars will occur, as they become to costly.

Also foreign countries that hold American companies will be encouraged away from policies that will cause the US to go insolvent. (However, we seem to be doing that without their help.)

Consider this projection: etc.

OK, I will accept the statistics, wherever they came from, but the projections are debatable. Is the CBO projecting the revenue to increase to 38%? I would have given that more credibility, but we are in an era of housing bubbles and oversold derivatives. Did this projection come before the current meltdown?

 

[BigRob]

Yes, I agree it won't happen, and Congress sucks. I wasn't saying to get rid of earmarks, I was just suggesting an alternative way they could be handled. Earmarks are also used as bribes. You support this bill and we will give you a planetarium for your state.

Yes they are done this way sometimes, but many times they also are simply done because members think the area they want to do it in is the best location. Many times members put in earmarks for military in other states or districts.

Also foreign countries that hold American companies will be encouraged away from policies that will cause the US to go insolvent. (However, we seem to be doing that without their help.)

I agree. However, this seems to further the case for interdependence and not for solely American ownership.

OK, I will accept the statistics, wherever they came from, but the projections are debatable. Is the CBO projecting the revenue to increase to 38%? I would have given that more credibility, but we are in an era of housing bubbles and oversold derivatives. Did this projection come before the current meltdown?

Well, they were made before the meltdown, but I think statistically, given the other eras of supply-side policies, they do tend to work in the manner laid out. Obviously as you state, the housing market crash and oversold derivatives will be an issue now, but I am not sure these negate the theory.

I also think that this points back to the fallacy of Clinton level tax rates will bring us back the Clinton economy. We are in a different era, the Clinton economy worked so well because of the tech boom, we have no idea (only speculation) how they would work in an era of a crashed housing bubble and overselling.

I am always weary of raising (even letting expire) taxes in a slowdown.

 

[Unite Our Nation]

This is a very educational discussion. Thanks to both of you!!

Letting tax cuts expire is the same at increasing taxes.

 

[Lagboltz]

This is a very educational discussion. Thanks to both of you!!

Letting tax cuts expire is the same at increasing taxes.

No doubt about that. One point I was trying to make is to get away from the SOCIALISM!!!! bucket that supply-siders try to throw Obama in. His "socialism" is really a fall back to a decade or so ago. You can argue that Clinton's success with the economy had nothing to do with taxes at that time, but, the tax structure certainly didn't ruin the economy either.

In 1965 the tax for the wealthy was 80%. The country made tremendous progress since then -- more than any other socialist country. In that light it is unrealistic to call Obama's tax roll back "socialist."

 

[Phoenix68]

Shame on Shaman. Look, I have always been a Democrat, and I prefer Obama to win too, but don't think the next four years will be a cakewalk. We don't want sore losers nor sore winners. If you want the Democrats to hold on to the government in the future, you can't keep increasing the polarization like you are.

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Watergate Revenge:
Republicans Yearning To Impeach Obama Over Benghazi "Cover-Up"
May 13, 2013
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[Phoenix68]

Here is a counter argument:
If you raise taxes by 10%, the money goes to pay the government debt.
If you don't raise taxes, the person will buy more foreign products and much of the money will be exported.
The increasing debt ($1.5 Billion per day) puts us on a collision course with US insolvency.

There are a few choices for moving forward
Stop buying so many foreign products?
Prepare for inflation?
Let our children worry about it?
Any one of these will reduce our standard of living. Any choice is hard to make, and both parties will continue to ignore the problem.

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The Choice is obvious.....for the well-informed.
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VOTE DEMOCRATIC!!!!
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[Phoenix68]

No doubt about that. One point I was trying to make is to get away from the SOCIALISM!!!! bucket that supply-siders try to throw Obama in. His "socialism" is really a fall back to a decade or so ago. You can argue that Clinton's success with the economy had nothing to do with taxes at that time, but, the tax structure certainly didn't ruin the economy either.

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"Not only was the entire national deficit eliminated after raising taxes on the wealthy in 1993, but the economy grew so fast for the remainder of the decade that many conservative economists thought that the Fed should raise the prime interest rate in order to slow it down."

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[Phoenix68]

In 1965 the tax for the wealthy was 80%. The country made tremendous progress since then -- more than any other socialist country. In that light it is unrealistic to call Obama's tax roll back "socialist."

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Obama's A Sell-Out On Taxes? Not So Fast!
December 8, 2010
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Obama Signs Tax Deal Into Law
December 17, 2010
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