Tax increases are coming because they’re necesssary
The federal deficit for fiscal 2009, which ended Sept. 30, was an astounding $1.4 trillion, bringing the total national debt to a little less than $12 trillion. The interest alone on that debt last year was $383 billion, more than a billion dollars a day.
Those are startling and unsustainable numbers. The ‘09 deficit is more than triple the previous record deficit of $455 billion, set just a year ago. And even though conservatives have tried to hang the ‘09 deficit around the neck of Barack Obama, it’s a hard argument to make with a straight face. Back in January, the Congressional Budget Office estimated that the 2009 deficit would be $1.2 trillion. That estimate was released before President Obama even took office, and was based on policies already in effect at the time.
Furthermore, most economists — even most conservative economists — agree that deficits are needed in times of economic crisis such as these. When private sources of demand have dried up and everybody is too scared to spend money, government spending can keep people employed and businesses running.
If you’re serious about deficit reduction, the time to take action is when the economy is more or less healthy. So the question should be asked: Did those in Congress now preaching the dangers of deficits insist on raising taxes to pay for the wars in Iraq and Afghanistan, as we have wisely done in every other major war in American history? Were they concerned about the legacy they were leaving our children?
No, they were not. They just added that bill to the debt total.
Did they insist that the Bush administration pay for the Medicare Part D prescription drug program, either through higher taxes or cuts in other programs? No, they did not, and as a result that program will add $800 billion to the debt over the next decade.
Because of those and other decisions, the national debt almost doubled during the Bush budget years of 2002-09, soaring from $5.8 trillion to $11.9 trillion. So please, spare us the GOP sanctimony about fiscal responsibility.
From this point forward, of course, the budget will be President Obama’s responsibility. Ben Bernanke, the chairman of the Federal Reserve, this week called for “a clear commitment to substantially reduce federal deficits over time.” Peter Orszag, director of the White House Office and Management and Budget, acknowledged that reality as well. “As we move from rescue to recovery, the president recognizes that we need to put the nation back on a fiscally sustainable path,” Orszag said.
Inevitably, any real effort to cut future deficits is going to require tax increases, and those tax increases will just as inevitably focus on those most able to absorb them, meaning the rich. (Given that mandatory entitlements, pensions, defense and interest on the debt make up so much of the budget, spending cuts aren’t likely to contribute much. If you care to argue otherwise, show me some Republicans who have actually identified areas of major savings.)
Of course, talk of tax hikes will send many into fainting spells; among others, it will inspire renewed charges that the current administration is pursuing socialism, Marxism, etc. But as American history demonstrates, that rhetoric is nonsense.
For example, from 1932-1981, the top income tax rate on the wealthiest of Americans never dropped below 63 percent; for most of that period it was above 70 percent. Throughout the 1950s, it was above 90 percent. From 1981-85, it was 50 percent.
Today it is just 35 percent, soon to rise to 39.6 percent with the expiration of the Bush tax cuts.
Corporate taxes tell a similar story. From 1946-1970, a period of great economic growth and prosperity in America, corporate income tax revenue never dropped below 3 percent of GDP. Since 1970, it has never been above 3 percent.
So if you want to argue that a top personal income tax rate above 40 percent is Marxist, socialist or merely unAmerican, you also have to argue that Dwight Eisenhower and Richard Nixon were socialists too. In other words, it’s nonsense. Next argument please.
Those who oppose tax increases by citing the potential economic impact make a more serious point. Raising taxes in a deep recession is not a good idea, because it takes money out of private hands. However, cutting the deficit is a long-term process, and over the long term, tax hikes that reduce the deficit are good for the economy.
Tax hikes good for the economy? Such a statement will of course inspire another round of fainting spells on the right, but logic and history demonstrate its accuracy. Two examples should suffice:
– Under President Bill Clinton, the marginal tax rate on personal income rose from 31 percent to 39.6 percent, an increase that helped to eliminate the deficit by the end of his presidency. And how did the economy respond to that tax hike, enacted in 1993? During the Clinton years the economy boomed and the prosperity was widely shared — median household income, adjusted for inflation, rose by 14.2 percent.
– President George W. Bush, on the other hand, cut the marginal tax rate from 39.6 percent to 35 percent, a step that should have created an extended boom. It did not, to say the least. Over the course of Bush’s presidency, the economy tanked and median household income — probably the most telling gauge of general prosperity — fell 4.2 percent when adjusted for inflation.
Now, it is absolutely true that other factors contributed both to the boom under Clinton and the decline under Bush. The economy is a complex system, with many factors contributing to its rise or fall. But that has never been the story as told by the GOP and its followers. Their story has been as stark and as simple as a fairy tale:
If you cut tax rates, the economy booms.
If you raise tax rates, the economy tanks.
The economic history of the last 20 years thoroughly negates those claims. It tells us that sometimes tax cuts are smart economic policy; however, sometimes the opposite is true — sometimes tax increases are smart economic policy. You have to be flexible enough to adjust the policy to the situation.
And in this situation, with the country facing the prospect of a burgeoning national debt, tax increases will be a necessary part of any responsible solution.
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515 comments Add your comment
stands for decibels
October 21st, 2009
11:51 am
“tax increases will be a necessary part of any responsible solution.”
yep.
Commence Dittohead whingeing in 3… 2… 1…
I Report (-: You Whine )-: mmm, mmmm, mmmmm!
October 21st, 2009
11:54 am
Blame Bush and ignore Obozo’s, mmm, mmmm, mmmmm, kampaign promises.
Typical childishness.
And even though conservatives have tried to hang the ‘09 deficit around the neck of Barack Obama, it’s a hard argument to make with a straight face.
Which branch of government proposes spending, bookman?
Doggone/GA
October 21st, 2009
11:54 am
“So please, spare us the GOP sanctimony about fiscal responsibility.”
“story has been as stark and as simple as a fairy tale:
If you cut tax rates, the economy booms.
If you raise tax rates, the economy tanks.”
If you could actually ban any comments based on either of these…the conned would have NOTHING to contribute to the discussion. These are ALL they have.
I Report (-: You Whine )-: mmm, mmmm, mmmmm!
October 21st, 2009
11:56 am
A tax increase in the midst of the Obozo depression, mmm, mmmm, mmmmm, the United States economy is done dealin.
Say buh bye.
To the democrats.
And all you half wits who voted for them, how’s that job search going for ya?
Doggone/GA
October 21st, 2009
12:00 pm
“A tax increase in the midst of the Obozo depression”
I rest my case.
Peadawg
October 21st, 2009
12:01 pm
If he does increase taxes, just add it to the list of broken campaign promises.
Kamchak
October 21st, 2009
12:01 pm
Which branch of government proposes spending, bookman?
The same branch back in 2004
Doggone/GA
October 21st, 2009
12:03 pm
“If he does increase taxes, just add it to the list of broken campaign promises”
Which campaign promise?
AmVet
October 21st, 2009
12:06 pm
Again…
Since 1973 American worker productivity has DOUBLED.
Yet 80%(!!!) earn LESS in adjusted-inflation dollars then they did when Tricky Dick was leaving with his tail between his legs.
Try to comprehend that, conned. Four out of five Americans are actually doing WORSE than when Dark Side of the Moon was released!
How did that come to be?
I guess it was all just an amazing “trickle down accident”, huh?
Hef
October 21st, 2009
12:07 pm
Lets make the tax increases voluntary, then we’ll see who thinks them necessary. I myself pay enough in taxes. Question-What God determined who can absorb the most?
thomas
October 21st, 2009
12:07 pm
So raise taxes on the rich, but not a dime on the over 30% who pay nothing for all of the benefits of being an American.
Why no mention of them having to actually pay something?
I saw no specific mention of the lower 35% having taxes increased.
Why is it a bad thing to be prosperious, and accumulate wealth?
We don’t make kids who study and get A’s give up part of their grade so the kid who didn’t study can have a passing grade.
I Report (-: You Whine )-: mmm, mmmm, mmmmm!
October 21st, 2009
12:09 pm
Little small conniving and corrupt children, they think we can’t remember anything-
May 13 (Bloomberg) — President George W. Bush said he will veto the farm bill approved last week by House and Senate negotiators because it exceeds spending guidelines, distorts trade and provides subsidies at a time of record crop prices.
Bush’s threat sets the stage for votes expected in Congress later this week on the farm bill, which spends $307 billion on agricultural programs over five years.
President Bush suffered the first veto override of his presidency Thursday, as the Senate enacted a $23 billion water resources bill to fund dams, sewage plants and hundreds of other projects.
US President George W. Bush on Tuesday (Nov 13) vetoed a spending bill that aimed to boost federal funding for the National Institutes of Health. The bill, which was passed by Congress last week, sought to increase NIH funding by about $1 billion from a 2007 budget of about $29 billion to a 2008 budget of about $30 billion.
Who enacted the Schip expansion?
Bush?
Who does Porkulus belong to?
Is Bush proposing government health care?
hmmmm?
professional skeptic
October 21st, 2009
12:10 pm
Completely agree. Enough with the borrow-and-spend mentality to finance wars and entitlements. If the American people want these things, then we must pay for them. Tax cuts have resulted in the crumbling of our nation’s infrastructure and the deterioration of our education system. We absolutely must get back on the road to financial responsibility. Namely, raising enough revenue to cover our expenses. Simple concept, really!
Taxpayer
October 21st, 2009
12:12 pm
The coming tax increase was signed into law by Bush and the legislation came from a Republican controlled Congress. So, if the Republicans feel a need to blame someone for the coming tax increase, call Bush or your Republican representative.
Mrs. RepubLady
October 21st, 2009
12:13 pm
I will not pay taxes. Period. Taxes are communist, socialist, and anti-God. Furthermore, they’re anti-military and anti-soldier. I demand a strong military that can and will invade any country we don’t like for whatever reason. All schools should be private schools. Pay as you learn. Can’t pay? Get a job you lazy slob! A 9 year old can earn his way. What I do want is for the government to pay Halliburton, KBR, Blackwater, and Parsons billions of dollars year to improve Iraq. I don’t care whether Iraq improves, but my stock dividends in those companies are making me very comfortable in the lifestyle I deserve. Since all my income is and always has come from family money and investments, I have never had to work. Therefore, I should pay no taxes, ever! Government is the problem! Now sign that contract extension and pump some more money into my account.
I Report (-: You Whine )-: mmm, mmmm, mmmmm!
October 21st, 2009
12:14 pm
Thanks for the AmSpec article, Upchuck-
They (deficits) have also never influenced the outcome of an election unless a President reacted to them by raising taxes.
Point well taken.
Jimmy Carter
October 21st, 2009
12:15 pm
Necessary, huh? Riiiiiiiiight. But only on those making over $250K per year, right? Can’t wait to see what affect this will have on Rasmussen’s next poll.
http://www.rasmussenreports.com/public_content/politics/obama_administration/daily_presidential_tracking_poll
Normal
October 21st, 2009
12:16 pm
I am no economist, and I certainly am not one of the wealthiest people on earth. I have to save a couple of weeks to be able to afford to rent a movie, but if I have to pay a little more to help get us out of this fiscal quagmire, then so be it. I’ll just forego renting movies.
I Report (-: You Whine )-: mmm, mmmm, mmmmm!
October 21st, 2009
12:16 pm
I suspect I’ll have a few more comments on Upchuck’s AmSpec column, perhaps you libs should read more than the title, no?
If deficits are bad and surpluses are good, as former Treasury Secretary Robert Rubin tells anyone who will listen, then why did manufacturing and investment falter in late 2000 and why did the economy fall into recession in early 2001? Why did the recovery begin just when budget deficits were returning?
Tax increases, maybe, hahahahaha
Kamchak
October 21st, 2009
12:16 pm
How did that come to be?
I guess it was all just an amazing “trickle down accident”, huh?
Congressional Budget Office data issued this summer indicate that after-tax income has increased dramatically since 1977 for the highest-income one percent of the population but risen only modestly for those in the middle of the income spectrum and declined for those in the bottom fifth. The CBO data, which start in 1977 and include projections for 1999, are widely regarded by analysts as the best data available on income and tax trends. These data include various forms of income that standard Census data miss, such as capital gains income and income from the Earned Income Tax Credit
Hef
October 21st, 2009
12:16 pm
professional skeptic-yeah I agree if taxes for everything you mentioned were’nt already being sucked from us and mismanged by the almight govnmnt,all of them right/left/center whoever.
Jimmy Carter
October 21st, 2009
12:19 pm
Mrs. RepubLady
October 21st, 2009
12:13 pm
Multiple choice. Are you also:
(A) Mrs. Godzilla
(B) USinUK (don’t really think so)
(C) AmVet
or
(D) All of the above.
Jimmy62
October 21st, 2009
12:19 pm
Ummm…. Bush’s actions helped lead to a boom that lasted until late 2007 or so. Clinton’s actions led to a boom that ended in a similar crash, the tech bubble. Neither of their actions led to long-term prosperity, they simply created gigantic bubbles. Clinton was lucky enough to be out of office before his bubble burst, Bush wasn’t.
Instead of raising taxes, how about you show some real courage and talk about cutting benefits and entitlements and wasteful programs of all sorts. Heck, just making Democratic politicians to actually pay their taxes would be a good start, that’s an entitlement that needs to end.
I Report (-: You Whine )-: mmm, mmmm, mmmmm!
October 21st, 2009
12:19 pm
OK, last one, this is what I was looking for-
WHILE DEFICITS ARE CLEARLY back for the time being and the just-released Bush budget forecasts a peak deficit of just 4.5 percent of GDP in 2004, this deficit is small compared to the past. Between 1982 and 1986, the federal budget was in deficit by an average of 5.0 percent of GDP. The economy continued to grow, with low inflation and falling interest rates, throughout the 1980s, and there is no reason to believe that deficits in the 2000s will result in any different outcome.
They are talking about responsible deficits, not Obozo monstrosities.
Turd Ferguson
October 21st, 2009
12:21 pm
Raise taxes, NO. Cut services to the lazy, cut welfare, cut food stamps, cut out the govt waste, FIRE tons of govt workers, ABSOLUTELY!
And here is something else to really turn your stomack…*PUKE*
Fatty Carnie Wilson goes ‘Unstapled’ for reality series
http://www.accessatlanta.com/celebrities-tv/carnie-wilson-goes-unstapled-168168.html?cxntlid=thbz_hm
Jimmy Carter
October 21st, 2009
12:22 pm
Jimmy62
October 21st, 2009
12:19 pm
A M E N B R O T H E R !!!
Jimmy62
October 21st, 2009
12:22 pm
And, BTW, many, many, many conservative leaning folks were very upset about the Medicare D plan Bush created, and also very upset about his deficit spending. But since the media only cares about what fits their narrative, they neglect to acknowledge any of that, just like how now they call the GOP the party of No, and completely ignore the many great ideas and alternatives for health care reform coming from the right.
Hef
October 21st, 2009
12:22 pm
Normal-God bless you with your sentiment. But when will it ever be enough, and what is the brake-point? I got an idea why not cut from govmnt programs before coming to public which is already taxed enough.
professional skeptic
October 21st, 2009
12:23 pm
I was thinking Mrs. RepubLady was Redneck Convert’s missus.
Jimmy Carter
October 21st, 2009
12:24 pm
Jimmy62
October 21st, 2009
12:22 pm
I was one! The Medicare D plan was what finally convinced me that W was NOT a conservative.
Taxpayer
October 21st, 2009
12:24 pm
Deficits are just great as long as you don’t have to pay them back and as long as someone is willing to keep on lending to you. That’s the kind of deficit that Republicans love. It’s also known as funny money.
Jimmy62
October 21st, 2009
12:24 pm
Also, it should be scary to Bookman and everyone else that the only industry growing right now is government. We should be supporting growing businesses, now growing more government and taking money away from the private sector. Every dollar the governments spends is another dollar that a company could have used to hire a new worker or invest in capital improvements.
Normal
October 21st, 2009
12:25 pm
Hef, Thank you, but what programs? Military spending? Political pork?
Social programs, like Medicare, social security, Unemployment? All of the above? What?
AmVet
October 21st, 2009
12:25 pm
A little Atlanta story germane to the topic…
There used to be this amazing little company called MindSpring. Great products and services for the time and hands down the very best technical support of its kind. Not even close. (1997 – MindSpring wins first national award, “1997 NetGuide People’s Choice Award for Best ISP.” 1999 – MindSpring receives the highest ranking in overall customer satisfaction among Internet Service Providers in an independent study conducted by J.D. Power and Associates.)
Then this California based monstrosity called EarthLink purchased it. And pretty much gutted their support staff. And turned a grade A company into a Grade C one.
To the tune of 1,300 jobs in its support operations in January 2003.
And then in 2004 it outsourced nearly all its support operations, and cut another 1,300 of the company’s 3,300 U.S. jobs.
Obviously what was once the pride of the industry quickly became an Indian-based (no offense intended, just saying) POS.
I emailed the then CEO, Garry Betty with a suggestion.
I recommended that he outsource HIS job to an Indian replacement, who would likely work for MUCH less money and do a better job anyway.
Then bring back all of those support jobs to Americans who actually could provide great service again.
I never got a response…
Peadawg
October 21st, 2009
12:26 pm
“Which campaign promise?”
uummm uuummm uummm the one where he said he wouldn’t raise taxes on people making less than $250,000.
I Report (-: You Whine )-: mmm, mmmm, mmmmm!
October 21st, 2009
12:28 pm
Let’s try this slow so that all the half wits can follow along-
PRINCETON, NJ — Thus far in 2009, 40% of Americans interviewed in national Gallup Poll surveys describe their political views as conservative, 35% as moderate, and 21% as liberal.
Bush was not a Conservative.
Republicans under Bush and McCain we’re not Conservatives.
Obozo, mmm, mmmm, mmmmm, kampaigned as a “conservative.”
Bush’s approval rating was 23%, seems like there were many, many unhappy Conservatives the last couple of elections.
We’rrrrrrreeeeee bbbbbbbaaaaaacccccckkkkkkkk.
Robyn
October 21st, 2009
12:29 pm
Typical leftist cure for all ills. Raise taxes on the producers while the worthless continue to get a free ride.
Normal
October 21st, 2009
12:29 pm
AmVet
October 21st, 2009
12:25 pm
Good for you! Wish I could have been in the room when he read the email…
Peadawg
October 21st, 2009
12:30 pm
“Typical leftist cure for all ills. Raise taxes on the producers while the worthless continue to get a free ride.”
Well said!
Taxpayer
October 21st, 2009
12:31 pm
I Report (-: You Whine )-: mmm, mmmm, mmmmm!
October 21st, 2009
12:28 pm
Type as slow as you need to, whiner.
Kamchak
October 21st, 2009
12:32 pm
They (deficits) have also never influenced the outcome of an election unless a President reacted to them by raising taxes.
Unless of course the lack of deficit has been used to buy an election.
Bush: It’s the president’s job to make sure Congress doesn’t have the money to spend in the first place. It is the president’s job to stand up to express the will of the people, advocate and fight for a meaningful real tax cut. And that’s what I’m going to do.
Hef
October 21st, 2009
12:33 pm
Normal-Your welcome,take your pick,cause right about now I could care less which ones.
pat
October 21st, 2009
12:34 pm
I told you so….All you apologists babbling about how it’s only for the rich. Well guess what, you’re wrong and obama lied.
F. Sinkwich
October 21st, 2009
12:36 pm
How about killing the rest of the so called Stimulus package?
How about killing useless bureaucracies like the Dept. of Education?
How about killing useless programs like the NEA, NPR, CPB, etc.?
How about firing the czars?
Gotta start somewhere.
Normal
October 21st, 2009
12:37 pm
Hef, then if it were me, I’d cut Military spending, especially the products the military doesn’t want, but the politicians do. But…being the “Leftie” I am, I’d keep the social programs at all costs…
Bosch
October 21st, 2009
12:37 pm
Peadawg,
Name one social program for those individuals who are just worthless and want a free ride.
USinUK
October 21st, 2009
12:37 pm
poor whiner …
http://thehill.com/homenews/campaign/63985-polls-say-republicans-arent-closing-the-gap#
conservative / liberal … it’s how people plan to vote that counts … and in those polls, the Republicans are still loooooooosing …
Under $250K / year
October 21st, 2009
12:39 pm
Big deal. Obama said it would affect me, right? I’m banking on Barry to keep his campaign promise. And I know that Joe (three letter word J – o – b – s) is holding firm on that one as well.
Taxpayer
October 21st, 2009
12:41 pm
By the way, I really really really do apologize for voting for Bush. That was a tremendous mistake on my part but I keep on spreading the word so others will know what I now know. In bumper sticker format, it boils down to GOP=BAD. Bad to the Bone. I also understand how it must feel for an alcoholic to admit that he/she has a problem. It is the first step that one must take on the road to recovery though.
Hard Right Hook
October 21st, 2009
12:42 pm
Of course taxes will be raised. Congress has an incurable, insatiable obsession with spending others peoples money on things & programs that produce nothing, and cost 15 time more 10 years later.
Just wait till the interest rates begin to rise, and inflation kicks into hyper-drive. Make JC’s misery index look pale.