Guest Post by Willis Eschenbach
I don’t usually wander too far off of the climate reservation, but this excellent cartoon by Michael Ramirez deserves wider publication, as it addresses a critical problem. It shows the US Budget for 2011, along with the cuts proposed by the Democrats (liberal) and the Republicans (GOP, conservative).
The US Government is about to shut down because the two sides can’t agree on a budget.
Can the rest of us agree that despite all the posturing, neither side is actually serious about the problem?
w.
PS – Anyone who thinks that CO2 is more important to the US than the above pie chart is fooling themselves badly …
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Ed_B says:
April 9, 2011 at 8:03 am
“This site is now inhabited by the brain dead! ”
Please….. You really haven’t spent much time at WUWT, have you? You would know better, if you had.
Raising taxes to service debt is like having intercourse to service virginity. Neither one achieves the desired result and both can get you into more trouble, real fast!
Or as R.Bateman observed above “Trying to solve the debt by raising taxes is like trying to cure a gambling addict by increasing thier (sic) credit limit.”
Our country is economically grid locked by unnecessary regulations, excessive tax rates, the adverse effects of noncompetition created by unions, huge and unsustainable debt, enormous amounts of tax revenue squandered on subsidies to inefficient companies and inefficient ‘alternate energy’ scams, and political malfeasance. These problems were created by politicians and a willing electorate. We can’t solve them without defeating the political mind set that created these problems and defeating the politicians that support these problems.
When we defeat these problems, the dynamic economy of the US will regain it’s momentum and revenues will rise. The rising revenues must be committed to pay down debt, not increasing spending. It really is that straight forward… but certainly not simple. Yet, all other argumentation is chimera. That is the problem… and those are the solutions.
Have a rainbow day! };>)
NikFromNYC says:
April 9, 2011 at 10:02 am
Ed_B wrote: “Anyone who thinks otherwise is saying the USA will self destruct. Past history says NO, it will not. Face it, TAXES MUST GO UP!”
Well you certainly got my attention the first time but such reduction of a complex system of feedbacks to a single tunnel vision variable is akin to claiming that climate depends only on water vapor feedback controlled solely by CO2. Raising taxes would be great, eventually, but it would be jumping the gun prior to freeing the economy from being shackled by statism. The government in this era needs to be starved, not fattened up. The more the current system is fed money the more it is merely used for personal and corporate welfare rather than the promotion of new wealth creation.
Ans:
That is the answer you have been spood fed by the lame stream media. The fact is, taxes were cut when GWB started two wars. Were you hollering to starve THAT deficit spending?
No, the USA is in deep do do. Cutting everywhere is surely needed, especially health care and windmills, BUT, it is delusional to think someone else is going to pay off the debt. Those with the money, will pay, with higher taxes.
I will bet you that 99% of posters on this BB do not know how much taxes were paid by their grandparents. The current political climate is one of whine, whine, whine, but no FACTS, no DATA, no perspective.
The facts say one thing.. YOU will PAY… along with your neighbors.. or your country is going the way of 3rd world status, quickly.
Ed_B wrote: “Face it, TAXES MUST GO UP!”
Instead of raising taxes, hold a lottery. Pass a law that every penny of profit from the lottery MUST be used to pay down the debt. Make sure the payout can get big enough so that big players will get interested. It’ll be just like the nasdaq bubble only this time the debt will actually get paid down. We’ll probably still wind up with a couple playboy billionaire basketball franchise owners, but that’s the price one has to pay to fix this thing.
I know Rep. Paul Ryan is the hero to many Tea Party folks, but I find his actions and “Path for Prosperity” to be a nice hand-out to the rich. In this proposal, he want to dramatically reduce the taxes for corporations, because they are so burdened with taxes. Hmm…, I would gently guide the reader to this excellent NY Times article about how much taxes one of the riches companies in the world, GE did NOT pay (in fact, they got money back from we (the taxpayers):
http://www.nytimes.com/2011/03/25/business/economy/25tax.html?_r=2&partner=rss&emc=rss
And the Honorable Mr. Ryan wants to give companies like GE even more of a tax break? Huh?
While it will take a major shift in thinking, SIMILAR to Rep. Ryan’s approach, his “rob from the poor to give to the rich” mentality is not the right formula, and is simply the result of his participation with the very system we need to get rid of…i.e. we need to have true campaign finance reform, a true balanced budget Constitutional Amendment, and term limits. Rep. Ryan seems the champion of “poor” companies like GE, who, despite their tax REFUND, are so “oppressed” by the burden of taxation.
To see some of the industries and companies that Rep. Ryan received campaign money from, please see:
http://maplight.org/us-congress/legislator/445-paul-ryan
http://www.opensecrets.org/politicians/contrib.php?cycle=2010&cid=N00004357&type=C
http://www.opensecrets.org/politicians/summary.php?cid=N00004357&cycle=Career
One final note: There can be NO SACRED COWS in balancing the budget. The bloated Defense Department needs to be included in any dramatic cuts. So long as we can choose to participate in campaign like the bombing of targets in Libya without seriously asking ourselves if we can financially afford such adventures (that do not make Americans any more secure), then the military budget is too big. We spent hundreds of millions of dollars in just this little military adventure alone. If we have this kind of fat to spend, then its a good indication that there is lots more fat to be trimmed. Again, if we honestly want to get our fiscal house in order in this country, there can be no sacred cows. and ALL Americans, rich, poor, middle-class, military families, non-military, will need to equally feel the real pain and sacrifice to get us back on the right track. Respectfully, I don’t feel Rep. Ryan’s proposal spreads the pain around enough to everyone, especially corporations and the military.
And a follow-up to my previous post…to see how much the poor old tax-burdened GE paid to lobby your elected officials, to make sure laws were in place to allow them to get their tax-refund for 2010, see:
http://www.opensecrets.org/orgs/summary.php?id=D000000125
And Rep. Ryan wants to reduce their tax “burden” even more? Sorry, but corporate welfare is as addictive as any other kind.
Tax revenues need to go up, but marginal tax rates probably need to go down (while closing assorted private and corporate loopholes – broaden the tax base). The only way we’ll get out of this mess is to couple solid growth with far less spending. Paul Ryan’s tax plan is a decent, serious document, but it needs a lot of details – and a lot of education of the U.S. population on just how badly we need to start clawing our way out of this hole before everyone stops buying our debt (or requires 10%+ interest in order to be enticed to do so).
The $38.5B in cuts here aren’t big enough, but they aren’t tiny either. They’re going to be applied to 6 month’s worth of 15% of the federal budget. Scale that up across the board, and it would amount to about $500B on an annual basis: not tiny. The key of course is to get the mandatory (entitlement) reforms done so we really can cut the growth of these programs going forward. Without that, it’s hopeless.
Ed_B wrote: “I will bet you that 99% of posters on this BB do not know how much taxes were paid by their grandparents. The current political climate is one of whine, whine, whine, but no FACTS, no DATA, no perspective.”
I had no idea, myself either, though I’m sure I once ran across it back when I was reading the likes of ‘The Way The World Works”, a complex argument book that claims tax burdens are nasty, long term. One model of tax rate effects is compare nations and to compare US states. My original point here reflects what North Dakota and Texas are up to with a policy of “drill, drill, drill!” and of lesser tax and regulation compared to California. You are making a very good point but your presentation is so blunt that it seems to scream that I should support Obama’s re-election or else I’m an idiot. I’m glad you don’t like windmills though.
A small price to pay for having the best president of all times.
And he will solve the problem during the 2nd and 3rd term.
Another chart showing one of the causes of our problems.
Scottish Sceptic says: April 9, 2011 at 1:23 am
“What is that they say about democracy … it can never succeed, because sooner or later the people will find a way to vote themselves a lifestyle of luxury which simply cannot be sustained in the real world.”
Which is exactly why the Founders created a Republic instead of a democracy, and established Constitutional Limitations on our governments. Democracy is mob rule, and it makes no difference if the mob is Union, Corporation, Theocratic, or Anarchist – the result is the same, increasing oppression to tyranny. Having lived under both religious and mercantile oppression supported by European ruler militaries, the Founders did put solid restrictions on those permissions the government was allowed to wield.
Nowhere in the US Constitution is there anything to allow spending on social programs; indeed even the Army was constrained to a two year allowance requiring reaffirmation of on-going expenses. But then the lawyers and judges, acting much like termites, undermined those foundational precepts to where today fully 70% of the budget is for non-constitutional expenditures. To my mind, Ryan’s proscriptions don’t go far enough – but it is a good start.
We have one of the highest corporate tax rates in the world. We also have a ridiculously complicated tax code for both corporations and individuals. GE is simply following the regulations as they are written. I do not begrudge them the right to pay the minimum allowed under the existing tax laws anymore than I begrudge an individual the same right.
The problem is the tax laws themselves. Who would invest capitol here in the US to produce goods for export when they could produce those same goods in a country with much lower tax rates. China, India, and Mexico’s labor rates are convenient political excuses. They are perhaps a reason that some simple manufacturing will not be done in the USA but they do not explain Germany or Japan’s success in exports.
>>Joe Lalonde says: April 9, 2011 at 5:12 am
>>At least gold has a value when currency does not.
Correction – gold does not have a ‘value’ except perhaps as an ornament. You cannot eat it, you cannot heat yourself with it, you cannot travel on it, nor can you shelter from the rain with it. In fact, it is pretty useless.
The only reason gold has ‘value’, is because politicians and bankers cannot keep ‘inventing’ more of it, as they do with fiat currencies like the dollar (printing currency). Therefore, it has scarecity value, which is the basis of any sound currency.
However, if you went back to the gold standard, the ability to reflate your economy and invest in the future would be dictated by the volume of gold in reserve, and therefore by the gold produced by gold producing nations. So the entire macro economic policy of the USA would be dictated by Russia and South Africa.
Not a sound policy, I feel.
.
R. Gates says:
April 9, 2011 at 11:11 am
And a follow-up to my previous post…to see how much the poor old tax-burdened GE paid to lobby your elected officials, ……yaddayadda”
Please cease trying to tie Paul Ryan to GE. GE is the fair haired BFF of Barack Obama and the current adminstration. Your assertions are baseless but we understand your political motivations. The man (Paul Ryan) has made serious proposals for cutting spending. NO ONE ELSE HAS. He did not create the tax structure that gave GE the tax breaks you find so offensive. Please, stop trying to imply that he did.
What is irrational is your savaging his deep cut proposals with false correlations (and implied causality) before they have been given the barest of examination by the citizens. As such, you are part of the problem, not potential solutions.
There is plenty of time to honestly evaluate his proposals and offer thoughtful changes. What is needed at this critical point in time is for the majority of US citizens to unite by firmly and publicly supporting those very few politicians actually working to achieve some semblance of fiscal discipline. Standing on the outside and throwing rocks at the only serious proposals going is self defeating. The ‘tax and deficit spend’ incumbent politicians applaud your efforts, however.
Ralph said: “Correction – gold does not have a ‘value’ except perhaps as an ornament. You cannot eat it, you cannot heat yourself with it, you cannot travel on it, nor can you shelter from the rain with it. In fact, it is pretty useless.”
That’s like saying water or kittens have no intrinsic value. Unlike diamonds there is no DeBeers monopoly (despite Russian influence) that created artificial scarcity. But there’s a reason connectors are gold plated and it’s not just to create Monster Cable branding. It’s the most amazing metal! Twice as dense as lead. It shimmers lime jewels in heaven. There’s no way to suddenly increase supply, very much unlike aluminum and titanium both of which don’t “rust” much but which occur as ore instead if pure metal veins. Titanium is white house paint. Aluminum is the stuff of rocks. Gold is ideal for sputter coating, ideal for ductile hammering of ornamentation, and ideal as a status symbol. Please don’t try to devalue the age old value of bling. It is valuable especially due to it’s nobility (as in “noble gas”) which allows it’s utterly unique properties to be taken advantage of even in near molecule thin (gold leaf) thickness. It’s even edible, as decorative flourish atop haute cuisine appetizers. Gold reminds us that not all pure things are dull and boring, and sometimes rarity really means something, unlike how misprinted old stamps or coins are “worth” a million bucks.
So says the socialist. As if they haven’t had their way for nearly a century now. Clearly you are either a foreigner that has no horse in this race, or an American welfare baby living off their parents or living off of me. Care to disclose your Federal Income Tax, FICA, State, County, Town/City, School, and Property tax bills? Can you say TEA Party? Taxed Enough Already. Which one of those words do you not understand?
Now about your cut’n’paste talking points (Corrections in BOLD …):
Of course your clueless propaganda website treats tax rates as a presidential policy, not as an act of Congress. The dates there are pretty much irrelevant since the Congress has been mostly under democratic socialist control since before WWII (really since progressive socialism reared it’s ugly head) with two short exceptions. Any statement that begins with: ‘under president xxx the tax rates …’ is utterly ignorant of constitutional government. There were a few exceptions when a president actively pressed for income tax rate cuts (JFK, Reagan) and to which it is accurate to say they are largely responsible for them, but nothing gets done without Congress. And the Congress has been all or in part controlled by socialists and luke-red spineless RINOs for a very long time. Look for a graph that plots spending/deficits versus Congress control. Here are some recent ones … Graph-1 :: Graph-2 :: Graph-3 :: Graph-4.
Furthermore, only non-taxpayer like yourself cannot distinguish between an ‘income tax’ and a tax on wealth (not that either of them is good). Income tax and/or its evil spawn the ‘capital gains tax’ will include the sale of a home (or car or boat or stocks or lotto winnings or anything), consequently your poor grandmother on SS and Medicare could be considered wealthy the year when she sells her house. Such is the ‘income tax’ given us by those oh so enlightened progressives. It is nothing more than a gigantic sales tax, as are the so-called ‘corporate’ or ‘business’ taxes which are also a sales tax on consumers. A true wealth tax has never been implemented (nor should it be) because (1) their isn’t enough ‘wealth’ to erase liberal spending and (2) it would be as far from constitutional as any liberal idea ever was.
Finally, people like you clearly believe that ‘wealth’ and ‘income’ are state controlled assets, the people being allowed to keep their money if the government approves. This is why the Founders were adamant about explaining that the power comes from God (not government) and rests in the people, who grant some of it to their State and Federal representatives. At some point in your young life you have managed to invert this relationship.
LOL, now that is funny (with or without a /SARC tag. But, your logic is reversed, the leftists, progressive democratic socialists (neo-Comms really) populate the warmie cult almost without exception. But like the saying goes, ‘someone is a liberal until they are mugged’, and once the mugging is done by their wonderful socialist government, forcing the sale of their home or farm to pay the taxman they will likely wake up. Either that or they will move their assets offshore or bury them in a pile of paperwork.
I’m not sure what psychobabble sounds nuttier, your comment here: “It is all about making the rich richer, and wiping out the middle class” or ‘heavy snow is from global warming’ or ‘republicans want to kill women’, (but it reinforces the fact that liberals/progressives/socialists are natural global warmers). But I absolutely encourage you to keep it up. Please keep it up. The only way the socialists have survived this long is through masquerade, if you continue to speak your mind freely we can finally finish you off. After a century of welfare spending the USA is close to collapse and people are waking up. So keep talking and keep clearly identifying yourselves.
You’re classy too. Well the feeling is mutual, I believe all socialists are brain-dead. They are little more than slaves (voluntary slaves no less). Too many people died to end slavery here so I’ll be damned if I will be made a slave again just because the socialist religion is so popular among liberal democrats. Truth is truly stranger than Orwellian fiction.
Once again, this is plain stupid. It is like saying the 2007 low sea ice extent was because of the Pelosi becoming Speaker of the House! As explained before, using presidents as historical placemarkers usually fails when applied to fiscal matters because the Congress drives the train. Exceptions being FDR pushing the New Deal, LBJ pushing the Great Society, Reagan and JFK pushing for tax cuts, and the three stooges Barry/Pelosi/Reid ramming through dramatic spending increases and socialized medicine. See the graphs I linked to above. More thorough graphs that clearly delineate control of Congress versus spending/deficits will show this: the idealogical makeup of Congress represented by it’s control will spend more money the more liberal/progressive/socialist it is.
You left out 9/11 being an inside job and Bush 41 flying an SR-71 to Iran to free the hostages 🙂
Seriously, the fact that high tax brackets of 90+% ever even existed in the USA, a nation founded on a tax revolt revolution, is a testament to the fact that a nation of sheep can in fact be led by progressive/socialist/communist sheep herders. It is a clear example of mob/majority rule where the ignorant masses punish the so-called wealthy. In a different era you simply replace ‘Wealthy’ with ‘Negro’ or ‘Jew’ to achieve similar scapegoat methodology.
There is some hope though. It appears that we are near critical mass with regards to spending and taxing now. The Internet has seemed to have helped get the facts out. Will it be too little too late? It’s a close call to be sure. Maybe we should hope for natural-born slaves like Ed_B to get their way yet again and have another round of tax increases and perhaps finally break the camel’s back. Like a drug/alcohol intervention the patient here, the USA taxpaying citizen, just might need to bottom out completely before straightening out. I’m 50/50 on this at the moment. The current budget argument as represented by the illustration from the great Ramirez is no different than many others I have witnessed. The spending cuts are mere crumbs. The timebombs left by FDR (Social Security) and LBJ (Medicare) are still present and on auto-pilot. Either one, like the Blob, will consume the entire budget eventually. Barry Hussein rammed through the final timebomb (Obamacare) knowing full well that the previous two alone will destroy America. Drastic action need be taken or this whole thing goes down in flames.
Ed_B says:
April 9, 2011 at 8:03 am
This site is now inhabited by the brain dead!
=//=//=//=//=
I’ve been insulted twice online today, once as an individual and once as a member of a group. But Cee Lo Green makes it feel *all* *right*! 🙂 Ain’t that some $#|+.
http://www(dot)youtube.com/watch?v=L4-2QoPkzj0
(No, the link won’t work as is. If you wanna hear cussin’, change (dot) to a period.)
The Federal government’s budgeting process is a nightmare as a result of the off Baseline budgeting.
To put it bluntly the budget keeps getting bigger because it has to. Close to 50% of the government spending is in the category of entitlements and nearly all of them have statutory language that makes increasing their budget mandatory year after year. In order to prevent the mandatory increase you almost have to change the orginal law. The big three entitlements are Social Security, Medicare and Medicaid, the disabled, and some Other mandatory programs include some farm subsidies, some welfare programs, and unemployment insurance. Any time a politician even proposes a reduction into the mandatory increase their opponents start demagoguery about cuts. Can you imagine how quickly you or your business would go bankrupt if half your expenses went up 5% per year automatically? Baseline budgeting is also used in Military and discretionary spending but most programs to not require by law to increase spending. Until the practice of baseline budgeting ends and the government takes a hard look at spending with common sense accounting principles the budget process will always be a food fight.
NikFromNYC says:
April 9, 2011 at 11:14 am
“You are making a very good point but your presentation is so blunt that it seems to scream that I should support Obama’s re-election or else I’m an idiot”
Defintely not!(sorry about being so blunt, btw).
Obama has failed big time IMO to do his ‘science’, and thus has failed at his energy policy, and thus job creation, and the balance of payments. That looks to be rectified by the Republicans. I would not vote for him again. He failed to deliver on his promise of being ‘sciencee based’.
My beef is that posters on this BB do not do any research and spend their time only discussing the need to cut spending.. OK, I agree, especially the EPA, but there is the reality that only revenue increases will pay off the debt. Yes, you can try to stop making it worse, by cutting spending, but to pay the DEBT off, well, the poor can’t do that. Hoover tried it, remember?(Hoovervilles)
If this generation (baby boomers) cannot step up and share the sacrifice with higher marginal rates, like their grandparents, then the USA is toast imo. What ever happened to patriotism?
Finally, what happened to the hard thinking science approach of this BB?
Mac the Knife says:
April 9, 2011 at 12:01 pm
“Please cease trying to tie Paul Ryan to GE.”
___
Paul Ryan wants to cut corporate taxes and yet one of the largest most profitable companies in the world paid no taxes to the U.S. in 2010 and got back in excess of $3 Billion. I think he and his proposal are quite relevant to GE. In spreading around the pain of balancing the U.S. budget issue, where does GE have to feel some pain? Not it Paul Ryan’s proposal…
To Ed_B,
You state: “This site is now inhabited by the brain dead! Look at the DATA: ” and
“My beef is that posters on this BB do not do any research…”.
Really? It’s you have been throwing out the same set of numbers over and over without any appreciation of the context in which those marginal tax rates occurred.
During those times, for example, the total amount of the debt was much less–and thus debt service payments were far less. In addition, you fail to point out that when income tax rates were lower, in the 1920s, the nation had not created an enormous welfare/Social Security/Medicare/Obamacare entitlement state.
Then you throw in the classic Obama-supporter diversion about “George W. Bush cut taxes for the rich, blah, blah blah.”
Well, to throw your own phrase back at you, “look at the DATA”. Yes, the Bush administration incurred persistent deficits–but the SCALE of those deficits was nothing like what Obama and the Democrats have thrown at us.
Bush deficits:
2002 -157.758B
2003 -377.585B
2004 -412.727B
2005 -318.346B
2006 -248.181B
2007 -160.701B
2008 -458.553B
Now Obama:
2009 -1412.688B
2010 -1293.489B
2011 (est.) -1645.119B
Try this:
http://blog.heritage.org/2010/02/05/past-deficits-vs-obamas-deficits-in-pictures/
Oh, look at that. Obama and the Democrats in 1 year–this-year–are going to rack up more total debt than Bush did in his first five. In 2009 and 2010, they racked up more total debt than Bush did in his entire 2 terms.
The problem is not taxes. The problem is out-of-control deficit spending. And if you claim that “Obama HAD to run a deficit”, you are out of your mind. I have no idea why Keynesian economic theory climbed out of its grave, but it was discredited in the 1930s, and it has been shown to be a failure again by the tiny response of the U.S. GDP to the so-called “stimulus”. What really burns me is that Christina Romer KNEW this–or at least she did in 1994. That year, she published a paper, still available on the NBER Website, that examined the Great Depression of the 1930s.
Keynesian economic theory depends on a “multiplier”. The claim is that any government policy change will have an impact on GDP. If the multiplier were greater than 1, then the Keynesian stimulus of increased government spending would work–the GDP would grow by a factor greater than 1.0. Well, in Romer’s 1994 paper, she stated that the Keynesian multiplier for government fiscal policy and government monetary policy were both MUCH LESS THAN ONE. Thus, these government interventions were worse than doing nothing at all!
But once Obama was paying her salary, surprise, surprise! The so-called stimulus bill was supposed to prevent unemployment from going over 8%, remember? Well, that model included assumptions about a whole bunch of multipliers–and THIS time, every single one of those multipliers was greater than 1.0.
The stimulus was a bill of goods.
And Ed_, you are unnecessarily repetitive, and unnecessarily insulting.
R. Gates says: “Paul Ryan wants to cut corporate taxes and yet one of the largest most profitable companies in the world [GE] paid no taxes to the U.S. in 2010 and got back in excess of $3 Billion.”
What does GE do with their profits? They pay stockholders’ dividends. Those dividends are taxed. Unless you include the taxes paid by the stockholders into your equation, you are not using complete information. And more profit means more dividends, a lot of which are going to retired or disabled people, and which flows out into the economy to purchase goods and services. This is better than the government collecting the money, and spending it on Cowboy Poems and other essentials.
In addition, GE pays workers money, which is taxed, but that is part of overhead and not profit. And when GE purchases any expendable goods, those are taxed, again part of overhead. Just because the company doesn’t seem to directly pay taxes, doesn’t mean they aren’t paying any at all.
You should come to the UK where the government is cutting with such gusto it is plunging the country back in to recession. As Churchill said “We are now entering a period of consequences”
Janice says:
April 9, 2011 at 2:56 pm
R. Gates says: “Paul Ryan wants to cut corporate taxes and yet one of the largest most profitable companies in the world [GE] paid no taxes to the U.S. in 2010 and got back in excess of $3 Billion.”
What does GE do with their profits? They pay stockholders’ dividends. Those dividends are taxed. Unless you include the taxes paid by the stockholders into your equation, you are not using complete information. And more profit means more dividends, a lot of which are going to retired or disabled people, and which flows out into the economy to purchase goods and services. This is better than the government collecting the money, and spending it on Cowboy Poems and other essentials.
In addition, GE pays workers money, which is taxed, but that is part of overhead and not profit. And when GE purchases any expendable goods, those are taxed, again part of overhead. Just because the company doesn’t seem to directly pay taxes, doesn’t mean they aren’t paying any at all.
_____
Sorry, but making excuses for one of the largest companies in the world not paying any taxes and actually getting a tax refund from the American People is very sad. And yes, what it seems like IS what it is…GE doesn’t pay U.S. taxes. Taxes that shareholders pay for their personal cut of the GE profit pie is completely irrelevent. Again, making excuses for mult-national companies who have no allegiance to the U.S. (and who could, quite frankly, care less whether the U.S. goes broke or not) is very sad. Rep. Ryan’s proposed tax cut for big companies like GE who already get huge refunds is completely anti-American.
Chris R. says:
April 9, 2011 at 2:46 pm
Really? It’s you have been throwing out the same set of numbers over and over without any appreciation of the context in which those marginal tax rates occurred.
During those times, for example, the total amount of the debt was much less–and thus debt service payments were far less”
Hmm something funny about your math, and research. The USA has still less in debt per GNP than when it came out of WWII, so debt payments were more then.
The US government deficit has many parts to it. When Bush was elected the Federal Government had a cash surplus. Social security was taking in more money than it paid out because of provision for the baby boomer retirement bulge.
The Bush administration proposed 2 rounds of tax cuts, and started 2 wars, and boosted the Penatagon’s budget. This accounted for about a $500B chronic budget deficit during the Bush administration prior to the recession. The proponents of tax reduction for the wealthy claimed it would result in higher government revenues because of increased economic growth, because of the so called Laffer curve. Economic growth was tepid, and revenues did not increase to make up for the tax reductions that were enacted. In addition, much of the money collected by the wealthy was used to create jobs abroad. Median personal income went down, and poverty went up.
As a result of the economic crash, brought on by unsustainable private debt, marketed by fraudulent securitization of sub prime bonds, mostly by the private banking sector, federal (and state) tax receipts decreased, unemployment, welfare, food stamp and medicaid payments went up. More people slipped into poverty and the need for government support went up. This boosted the deficit from about 500B to 1.5Trillion. The wealthy are relatively unscathed in this time. Narrowly defined unemployment, which is normally 5% in good times is still 8.8%. Broad unemployment is now about 16%.
Most economists say it would damage the economy severely if the budget were balanced before unemployment went down to tolerable levels and the economy shows some real recovery.
When the recession related deficit starts to decline, and poverty related spending goes back to normal levels, we are still left with the deficits caused by the Bush tax reductions and wars. In addition, escalating health care costs will cause the deficit to expand.
There are provisions in the Health Care Reform Act that will start to tackle the rise in health care expenses, which are about twice what the rest of the developed world has on a per capita basis. It is noteworthy that these countries, which have good health care outcomes all have heavy government involvement and many have single payer health care systems. The Ryan plan, which relies on private insurance will not fix this problem, based on the experience we have to date, and is severely misguided.