The truth behind the nation’s massive fiscal problem
Political narratives are precious things these days. They give people a story line, an explanation for why the world is as it is and why their side isn’t to blame. And at the moment, the right’s most important narrative is that the nation’s dangerous and unsustainable budget deficit is the fault of Barack Obama.
Well, it isn’t, as the chart on the right demonstrates. “Together with the economic downturn, the Bush tax cuts and the wars in Afghanistan and Iraq explain virtually the entire deficit over the next ten years,” Kathy Ruffing and James R. Horney conclude in a study published by the Center for Budget and Policy Priorities.
The CBPI is a liberal policy-analysis group, and those who are more interested in preserving their faith in conservative narrative than in discovering the truth can and will dismiss its findings on those grounds alone.
But numbers are numbers. If the numbers driving this chart are “liberal,” if the assumptions behind those numbers are “liberal,” then it should be possible for conservatives to explain how and where they’re wrong. The center “shows its work,” as our math teachers used to say, which should make it possible for others to come along and rebut it.
Take, for example, the impact of the economic downturn on the deficit. As the CBPI report notes, the Congressional Budget Office issued projections on Jan. 7, 2009 — two weeks before President Obama even took office — putting the 2009 deficit at well over $1 trillion.
“The recession battered the budget, driving down tax revenues and swelling outlays for unemployment insurance, food stamps, and other safety-net programs,” the CBPI reports. “Using CBO’s August 2008 projections as a benchmark, we calculate that the changed economic outlook accounts for over $400 billion of the deficit each year in 2009 through 2011 and slightly smaller amounts in subsequent years. Those effects persist; even in 2018, the deterioration in the economy since the summer of 2008 will account for over $250 billion in added deficits, much of it in the form of additional debt-service costs.”
Significant tax cuts enacted in a time of war — the first time in U.S. history that such cuts have been enacted — also had a predictable effect:
“Just two policies dating from the Bush Administration — tax cuts and the wars in Iraq and Afghanistan — accounted for over $500 billion of the deficit in 2009 and will account for almost $7 trillion in deficits in 2009 through 2019, including the associated debt-service costs. (The prescription drug benefit enacted in 2003 accounts for further substantial increases in deficits and debt, which we are unable to quantify due to data limitations.) These impacts easily dwarf the stimulus and financial rescues. Furthermore, unlike those temporary costs, these inherited policies (especially the tax cuts and the drug benefit) do not fade away as the economy recovers.
Without the economic downturn and the fiscal policies of the previous administration, the budget would be roughly in balance over the next decade. That would have put the nation on a much sounder footing to address the demographic challenges and the cost pressures in health care that darken the long-run fiscal outlook.
Of course, what happened in the past doesn’t get President Obama off the hook for what happens next. If Obama did not create this problem, he will certainly be judged on whether and how he gets us out of it. Ruffing and Horney also acknowledge that fact.
“While President Obama inherited a dismal fiscal legacy, that does not diminish his responsibility to propose policies to address our fiscal imbalance and put the weight of his office behind them,” they write. “Although policymakers should not tighten fiscal policy in the near term while the economy remains fragile, they and the nation at large must come to grips with the nation’s long-term deficit problem.”
That’s going to require both serious budget cuts and significant tax increases, neither of which will be politically popular. But after the G-20 summit in Toronto, Obama noted that a bipartisan deficit-reduction commission that he appointed is expected to produce its report this December, setting the stage for real debate.
“I’m doing it because I said I was going to do it,” Obama said. “And I think it’s the right thing to do. And people should learn that lesson about me, because next year when I start presenting some very difficult choices to the country, I hope some of these folks who are hollering about deficits and debt step up, because I’m calling their bluff. And we’ll see how much of that — how much of the political arguments they’re making right now are real, and how much of it was just politics.”
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451 comments Add your comment
NJ
June 29th, 2010
12:41 pm
Stiglitz predicted the current economic crisis. In 2001, shortly after George W. Bush borrowed 2.3 trillion dollars to give a tax cut. Stiglitz was awarded the Nobel Prize for this. The Nobel Committee was certain that the economic collapse would come WHEN Stiglitz predicted and exactly HOW Stiglitz predicted it.
He did not just predict it. He predicted every tiny detail of the current market collapse. At micro and macro economic levels. In precise exact detail.
jconservative
June 29th, 2010
12:42 pm
This goes way back before Bush 43.
In 1961 when Kennedy was sworn in the national debt was $650 billion.
20 years when Reagan was sworn in the national debt was $957 billion.
That is an increase of $307 billion over 20 years, roughly $15 billion a year. Wouldn’t you all love an annual deficit of just $15 billion today?
Then in 1981 Reagan decided that we could decrease taxes and did so. But he forgot to decrease spending. As a result of that policy, which we have continued to FY 2011, is a national debt of over $12 trillion.
Yeah I know the tax cuts were to spur business activity and increase tax revenues. And they did, but way below the expected rate. What business did was not invest in US domesticate business but to start sending businesses overseas. And it was financed with the Reagan tax cuts.
Top tax rate in 1981 was 70%. By 1987 the top tax rate was down to 38.5%. But spending kept going up. And deficits kept going up. Funny how that works; tax rates go down, spending goes up, all of which equals deficits going up.
And don’t tell me the increase spending was for defense to defeat the Commies. Reagan only increased defense spending $750 billion over his 8 years. There is $1.9 trillion in deficit not accounted for by defense spending.
And except for a brief tax increase under Bush 41 & Clinton, we have continued the Reagan policy of tax cuts/increased spending.
Solution? Two simple solutions. 1) Reduced spending and increased taxes. Or; 2) Become Greece and just declare we are broke.
Outhouse GoKart
June 29th, 2010
12:42 pm
Obama lied our troops died!
jewcowboy
June 29th, 2010
12:42 pm
“It takes time for bad economic planning to have an effect.”
This is most prescient statement on this subject. Conversely, it takes time for good economic planning to have an effect.
Libertarian
June 29th, 2010
12:42 pm
@Joseph 12:39
Agreed.
neo-Carlinist
June 29th, 2010
12:44 pm
williebkind, why do I keep asking myself; “willie ever be smart”? you really have to let go of the “Obama is a socialist”. what you must learn to say is; Obama (and Bush, and Clinton, and the other Bush, and Reagan, and Carter, and Ford, and Nixon…) is a plutocrat; or at the very least, a shameless servant of the plutocracy. for the last time (everyone); to paraphrase George Bailey; “you’re looking at this all wrong”. what is the national debt? $5 trillion? $11 trillion? where did it go? it went somewhere because we sure as sh*t are holding the tab. I’ll tell you where it went; it went to Northrop Grumman, Lockheed Martin, CSC and IBM; who have IT outsourcing contracts with just about every government agencie from the DoD to the CCD, to the SSA, to NASA. Some of this then flowed through to shareholders, but the visit was temporary, as those shareholders then bought cars, furniture, vacations, and flat screen TVs, or paid for healthcare and education.
ken R
June 29th, 2010
12:45 pm
Pat, don’t you know by now that the truth just confuses liberals.
Jay, the reason that Mike frequents your place of business is because he wants to educate your few liberal followers.
What is the percentage of liberals vs conservatives on your blogs? if you did the math it’s probably 15% libs vs 85% conservatives, you should be thankful that the conservatives visit you so often otherwise you would be out of a job, and so would C.T.
jewcowboy
June 29th, 2010
12:46 pm
Has anyone on here ever played SimCity? If so, try maintaining a city you’ve built on continual tax cuts or continued deficit spending and see how long the game lasts. There are a time for each, and neither is a long term solution.
jewcowboy
June 29th, 2010
12:49 pm
“There are a time for each, and neither is a long term solution.”
IS not “are”…I hate it when I hit “submit” before I re-read my post…
Steve
June 29th, 2010
12:50 pm
Can we discuss significant tax increases matched by significant cuts in government personnel, cuts in waste/theft within existing government programs, reduction of government pension benefits, require ALL government employees to use Obamacare, and stop providing government funded benefits to illegal immigrants as a way to correct our longterm fiscal problems?
Doggone/GA
June 29th, 2010
12:52 pm
“Can we discuss significant tax increases matched by significant cuts ”
How much would you expect to be able to save with all of those?
neo-Carlinist
June 29th, 2010
12:52 pm
I wasn’t finished. Most of the funds end up with the exuctives or majority shareholders (and in the revenue streams of the hedge-dund owners and managers who buy/sell/short the stocks). The same is true for much maligned “food stamps”. This money doesn’t stay in SW Atlanta or the South Side of Chicago, in a coffee can buried in a backyard. It ends up in the coffers of Archer Daniel Midland, General Foods, Coca-Cola, and Hormel. When Blackwater or some other outfit gets a $2 or $10 billion contract to protect VIPs in Iraq, or secure transportation routes, or train police officers in Kabul, do you think ALL the money goes to the $250,000/year contractors? No, it goes to the executives at Blackwater. Anyone whose ever tried to manage or reconcile a checking account when you’re spending more than you’re taking in, knows this. Just add about 11 zeroes to you checkbook and you get the picture. This nothing to do with ideology, unless greed is an ideology. the very essence of ALL governments is socialism (the herd is more important than the individual)
Joe B
June 29th, 2010
12:52 pm
Jay – go ahead and point fingers all you want. We all know that’s what libs do.
What is the Community Organizer in chief doing to lead us out of this mess. And he better not raise taxes, “not one dime”.
Doggone/GA
June 29th, 2010
12:54 pm
“And he better not raise taxes, “not one dime”.”
“better not”? What happens if he does? (and you DO realize, don’t you, that he CAN’T raise taxes? Or did that little aspect of our governmental system escape your notice?)
AmVet
June 29th, 2010
12:55 pm
What is the percentage of liberals vs conservatives on your blogs? if you did the math it’s probably 15% libs vs 85% conservatives…
??????
Even given the innumerable monikers preferred by the various mystery meats here, this goes far beyond remedial mathematics. This goes to the very heart of the cons parallel reality.
Reagan only increased defense spending $750 billion over his 8 years.
jconservative, I believe this number is extremely inaccurate. Would you please cite your source?
Mick
June 29th, 2010
12:57 pm
**Jay, the reason that Mike frequents your place of business is because he wants to educate your few liberal followers.**
The dreaded liberal label, cause thats all it is – a label that for conservatives conjures up the image of some type of superiority. As soon as the “label” appears the debate becomes almost pointless because of a prejudged stereotype. The damned truth is that just about every conservative “principle” was enacted during bush – all were failures and left us where we were in 2008.
DannyX
June 29th, 2010
12:57 pm
Jay, excellent job today defending your column!!!!
mm
June 29th, 2010
12:57 pm
NIF,
There is nothing to argue. Jay presented you with facts, and your argument (along with the other wingnuts) is BS.
I’m not going to waste my time restating the facts to a brainwashed wingnut. Now go listen to Rush and get your talking points (lies) for the next article.
Dan
June 29th, 2010
12:58 pm
Well given the fact that the tax cuts caused a surge in tax revenue, due to reinvestment by producers, Jays argument is immediately undermined by anyone with freshman economic/accounting apptitude. You don’t simply apply a higher rate and assume the taxable revenue would have been the same. But when logic is eschewed in forming an opinion, logice doesn’t help in changing said opionion. One other note, if mortgage holders simply paid their mortgage…. no problems in the housing market it is really quite simple
Scout
June 29th, 2010
1:02 pm
Question:
Does Supreme Court nominee “Lady Kaga” have a tattoo ?
John Birch
June 29th, 2010
1:03 pm
Mick – Many conservatives were/are very dissatisfied with W because he so obviously was not a fiscal conservative. He was also too soft on the illegals for most conservatives, so the only conservative principle he was true to was his foreign policy of keeping America strong.
NJ
June 29th, 2010
1:03 pm
Actually Dan you are only PARTIALLY correct. The original surge from the Bush tax cuts came from the 56 percent that went to the bottom 98 percent of wage earners. The other 44 percent which went to the wealthy is responsible for kicking off the wave of speculative investment in real estate based derivatives which caused the market bubble and then collapse of the economy.
So if the net effect is a short term increase in government revenues, caused by the fact that those who got a few hundred dollars to a few thousand went out and IMMEDIATELY spent it does not divert from the long term damage of the tax cuts caused by the rich who did NOT go out and immediately spend it in the consumer market, but went looking for some hot investment to put it into, so as to see 20 percent returns on that money. This overheated that sector, the largest sector in the American economy, and cause a massive crash.
John Birch
June 29th, 2010
1:07 pm
Dan – I’m pretty sure you’ll find that tax revenues increased more in the ten years following the clinton tax increases then they did following either the Reagan or Bush tax cuts. “Furthermore, an analysis from the Center on Budget and Policy Priorities argues that “history shows that the large reductions in income tax rates in 1981 were followed by abnormally slow growth in income tax receipts, while the increases in income-tax rates enacted in 1990 and 1993 were followed by sizeable growth in income-tax receipts.” Specifically, the analysis calculated that the average annual growth rate of real income-tax receipts per working-age person was 0.2% from 1981 to 1990 and a much higher 3.1% from 1990 to 2001.
During both Ronald Reagan’s and George W. Bush’s presidencies, White House budget staff cited in the Laffer Curve a forecast that tax rate cuts would increase overall tax revenues, but instead tax revenue increases slowed[18], requiring large debt increases to cover Reagan’s and Bush’s large spending increases over the short term.”
Government Worker
June 29th, 2010
1:10 pm
Can we discuss significant tax increases matched by significant cuts in government personnel, cuts in waste/theft within existing government programs, reduction of government pension benefits, require ALL government employees to use Obamacare, and stop providing government funded benefits to illegal immigrants as a way to correct our longterm fiscal problems?
Uh, could we hold off on all this stuff for another 18 months till I can retire?
Granny Godzilla
June 29th, 2010
1:10 pm
The truth is…..we are all responsible for this.
AmVet
June 29th, 2010
1:12 pm
Keep on with the talking points, Republicans.
Obviously none of you have the first clue what conservatism even is…
Balance Our Budget
June 29th, 2010
1:13 pm
Jay and his lib buddies are trying to spin their way out of the thrashing they have coming in November.
Scout
June 29th, 2010
1:14 pm
Granny:
Never you !!
TGT
June 29th, 2010
1:15 pm
Total federal revenues during Bush’s first full year in office, 2001, were $1.99143 trillion. Total federal revenues during Bush’s last full year in office, 2008, were 2.524 trillion. See here:
http://www.usgovernmentrevenue.com/downchart_gr.php?chart=F0-fed
pat
June 29th, 2010
1:19 pm
Jay I provided the raw proof to you. It is anything but twisted…On the contrary it could not be straiter…It is you who is being dishonest now.
Chris D.
June 29th, 2010
1:20 pm
Obama’s blunders…puts the world asunder
AmVet
June 29th, 2010
1:21 pm
“Jay and his lib buddies are trying to spin their way out of the thrashing they have coming in November.”
But will it begin to compare to those back to back annihilations of 2006 – going an unimaginable ZERO WINS and 36 LOSSES – and 2008? For a combined LOSING RATIO of 93%?
Ninety three percent???
And that reverse Joe Dimaggio-like record of 2006 will likely never, ever, ever be touched.
So you fake conservatives got that going for you!
You gotta admit, those results still make the average American laugh long and hard at you silly neo-cons…
neo-Carlinist
June 29th, 2010
1:21 pm
TGT, did you ever hear the expression, “it’s not what you earn, it’s what you keep”? if the government is spending more than it is taking in, it’s losing ground. for example, if tax revenues increased by $1.5 trillion between 2001 and 2008, it is moot if spending increased as well (especially if say a $500 billion per year was “off the books”).
NJ
June 29th, 2010
1:24 pm
And even more simply, everyone knows the figure conservatives often tout that 70 percent of all American jobs are created by “small businesses” No one ever bothers to ask what percentage of ALL businesses in the US makes up those small businesses that create 70 percent of the jobs. It is 7.9 percent
The other 92.1 percent of all businesses create the other 30 percent of jobs.
But the small businesses barely if ever benefit from Republican tax cuts.
It is the Democrats who have offered the most initiatives ( as well as two old style Republicans, Olympia Snowe and Susan Collins) that benefit the 7.9 percent of small businesses in the U.S. It has been Republicans who have filibustered every bill that would do something to give tax relief to small businesses.
I love hearing the old argument that “X” proved he was not a “fiscal conservative”
Fact is no one who runs as a fiscal conservative ever ends up acting as one when they get into office. The simplest reason for this is that what sounds good on paper or when spoken, does not work in reality.
This has been the case ever since 1913. No Republican has ever managed to balance a budget and always ends up spending more. On the other hand during the same period, Democrats have managed to balance budgets and lower the deficit in every presidency.
And it gets better. They do a better job of reducing deficit spending and debt when a Democratic President is working with a Democratic Congress.
Every Democrat since the end of WWII has LOWERED the national debt relative to GDP. The old style Republicans, Eisenhower, and Nixon also managed to do this as well. But the key thing to note about these guys is that they NEVER lowered the top marginal tax rate. Never,
The record on this is clear. No matter how much Republicans try to dance around this, when there is a Republican President with a Republican Congress, spending goes through the roof and government revenues do not keep up.
Everyone forgets that Reagan ran on this. He asserted that America could lower taxes and simply BORROW its way to prosperity, because as the police force of the free world, no one would ever call in the debt. This is not just an analysis, This is directly from Reagan speeches.
RB from Gwinnett
June 29th, 2010
1:26 pm
Jay, how much more out of YOUR pocket are you willing to fork over to the government to solve this problem? In real dollars, Jay. YOURS!! Not everybody else. I’ll await your reply once again…..
Jay
June 29th, 2010
1:28 pm
RB, I’ll gladly pay my fair share in additional taxes, because I recognize that this is one of those situations in which we’re going to pay one way or the other. I prefer to do it through taxes than through financial collapse or insolvency.
TGT
June 29th, 2010
1:28 pm
More interesting: average federal revenue as a % of GDP under Clinton: 35.21.
Average federal revenue as a % of GDP under W: 34.61.
Pretty close.
neo: I agree that spending was a significant issue under George W. However, it is more of an issue now with the current administration.
pat
June 29th, 2010
1:28 pm
Here’s the complicated math I laid out for you Jay…I took the tax revenue from the 8 years Clinton was in office, added them together and came up with an average. Same thing with Bush, the numbers added up to the Bush years AVERAGING 21.5% higher tax revenue, period..
By all means, don’t take my word for it, see for yourself…:
http://www.taxpolicycenter.org/taxfacts/Content/Excel/fed_receipt_sum_historical.xls
Note that the numbers on this chart are adjusted for inflation….
If I am a liar, then it’s my source “Source: Office of Management and Budget, Budget of the US Government” that is providing me false information.
Rate of inflation hovered between 2.8% and 3.8%….21.5% is higher than this number….
TGT
June 29th, 2010
1:30 pm
Source: http://www.usgovernmentrevenue.com/downchart_gr.php?year=1902_2014&view=1&expand=&units=p&fy=fy11&chart=F0-total&bar=0&stack=1&size=l&title=&state=US&color=c&local=s
NJ
June 29th, 2010
1:32 pm
And the easiest way to determine HOW the Bush tax cuts “increased revenues” is easy to see when one looks at when parts of his tax cut bill expired. The general tax cuts to the bottom 99 percent expired in 2005. Every year taxes on the working middle class creeped up because of bracket creep Republicans inserted into the bill. Next, the special tax credit for small businesses expired in 2006. They went up to paying pre Bush tax cut tax rates after this year.
So the assertions that the Bush tax cuts increased tax revenues must be looked at by looking at WHERE the additional revenues came from. They came from parts of the Bush tax cuts expiring long before those on the wealthiest did.
Another was the expiration of the “child tax credit” in 2005. It went from 1000 dollar to 700 dollars
This is the schedule for sunset dates of ALL parts of the Bush tax cuts:
Child Credit: This credit will shrink from $1,000 to $700 per child on January 1, 2005.
The 10 Percent Bracket: The upper income level for this bracket will decrease by $1,000 per filer on January 1, 2005.
The 15 Percent Bracket for Joint Filers: On January 1, 2005, the upper limit of this bracket will shrink from 200 to 180 percent of the upper limit of the 15 percent bracket for single filers, creating a marriage penalty.
Standard Deduction for Joint Filers: On January 1, 2005, this will shrink from 200 to 174 percent of the standard deduction for single filers, creating a marriage penalty.
Alternative Minimum Tax: Exemptions will decrease by $6,500 per filer on January 1, 2005.
Bonus Depreciation: This provision, which changes depreciation schedules for businesses in a way that encourages investment, will expire on January 1, 2005.
Small Business Expensing: On January 1, 2006, the maximum amount that a business may deduct will fall from $100,000 to $25,000, which will not be indexed to inflation.
Capital Gains: Rates will rise to 10 or 20 percent, depending upon income, on January 1, 2009.
Dividends: Rates will rise to match standard income tax rates on January 1, 2009.
Child Credit: This credit will shrink from $700 to $500 per child on January 1, 2011.
The Income Tax: Rates will increase between 3 and 4.5 percentage points in each bracket on January 1, 2011.
The 10 Percent Bracket: The bracket will be eliminated on January 1, 2011, raising the income tax burden of many workers by 5 percentage points.
The 15 Percent Bracket for Joint Filers: On January 1, 2011, the upper limit of this bracket will shrink from 200 to 167 percent of the upper limit of the 15 percent bracket for single filers, creating a marriage penalty.
Standard Deduction for Joint Filers: On January 1, 2011, this will shrink from 200 to 167 percent of the standard deduction for single filers, creating a marriage penalty.
The Estate Tax: The top rate for this tax will increase to 60 percent on January 1, 2011, and the value of an estate exempt from taxation will shrink to $1 million, which is less than it is today.
So kids how did Bush increase those federal revenues. By RAISING the taxes on MILLIONS of Americans a little bit, while keeping the tax cuts for the wealthiest in place for his entire presidency.
NJ
June 29th, 2010
1:35 pm
Or to put it simply. Republicans create this ILLUSION about the Bush tax cuts by making blanket statements and ignoring the details. Like Reagan Bush RAISED taxes on millions of Americans in an extremely quite fashion while boldly making political capital with their initial tax offering.
Most Americans are too dumb to have noticed that a huge amount of their tax cut vanished in the first year or two.
NJ
June 29th, 2010
1:36 pm
Or to put it even more simply. The devil is in the details.
M Percy
June 29th, 2010
1:36 pm
One problem with the numbers provided for “Bush tax cut losses” is that any projection of these numbers is made simply based on what the person doing the projection wants them to be. Without specifics for the methodology used, there’s no way to know that various driving factors have been or even could be accounted for.
In particular, changing the tax rate impacts people’s behavior in non-linear fashion that needs differential equations to describe. Any oversimplified model used to predict future revenues will ignore this and be very, very, wrong. Consider the Maryland’s millionaire tax. When it was passed, it was projected (by naive people) to bring in an additional $100M+ to the state coffers. Instead, millionaires simply moved away and restructured their assets and incomes to avoid the tax: the state took in $100M less than in it had before the tax, with fully one-third fewer millionaires paying taxes. It could very well be that the numbers for projected “missed revenues” are similarly overinflated.
And finally, it is a cold fact that federal revenues jumped and jumped sharply after the Bush tax cuts, and grew nicely along with the economy as it recovered from the recession with impressive year-over-year revenue growth. Right up until Democrats took control of Congress.
Comparing year-over-year, we had revenue growth of 8.2% (’04), 14.6% (’05), 11.7% (’06), 6.7% (’07) before dipping by 1.7% in ‘08 as the more recent recession started. Revenues exceeded $2T every year after the Bush tax cuts except for ‘04 ($1.88T) and in ‘06 & ‘07 exceeded $2.5T.
Surely $2.5T is enough to run the country?!
It wasn’t enough, as Congress (even though controlled with a small R majority) continued deficit spending. Year-over-year spending increases were 6.2%, 7.8%, 7.4% and 2.8% from ‘04-’07. Then the Democrats took over Congress and things really caught fire, as they spent 9.3% more in ‘08 and a whopping 34% more in ‘09.
Interestingly, with the increased revenue (even larger than increased spending over ‘03-’07), the amount added to the debt (not the deficit, which has lots of $$ off-book, but the actual amount added to the debt) each year was steadily decreasing, especially when viewed as a percentage of GDP: 5.5% in ‘03, then 5.3%, 4.3%, 4.1%, and finally 3.4% in ‘07 (which is less than the 3.9% in ‘02). That’s over now, with more than $1T added by Democratic Congress ‘08 and ‘09 and more than $1.5T in the new budget.
Disgusted
June 29th, 2010
1:37 pm
What are we going to spend more stimulus on? Traditionally, stimulus spending has brought recovery by focusing on manufacturing and related services. Now we have very little manufacturing. Most has been exported. No long-lasting jobs are going to be created by funding infrastructure projects. At the end of such projects, people are still thrown out of work. And certainly providing stimulus funding for states to keep existing workers on the job will not create any new jobs. And unemployed people don’t pay the taxes necessary to fund the services we desire.
There is only one way to go: down. Until our standard of living reaches the level of countries where we have shipped our jobs, we can’t be competitive and manufacturers will continue to ship jobs overseas and import their wares. NAFTA and other “free trade” legislation has shafted us, and we are unable or unwilling to adapt. Where are the jobs now? They’re at fast food joints and other low-wage employers. People working at such jobs are unable to afford the goods that will bring the economy back. We’re now looking at an underclass consisting of the permanently unemployed, and those permanently unemployed aren’t the traditional kind. They’re former middle class and upper class workers who will never return to their prosperity.
I simply don’t see an exit from this fiscal problem. Extending unemployment benefits is a compassionate thing to do, but it won’t bring a dying economy back. The unemployed can’t buy the housing, the cars, the refrigerators, and other goods that result in increased employment. Buckle up, America. This roller coaster is going down.
Jay
June 29th, 2010
1:37 pm
Pat, I’m not arguing with the numbers you present. I’m arguing that it is a fundamentally dishonest way of presenting those numbers. Here’s an example:
If I increased revenue from this blog from $1 to $1 million over 10 years, the average revenue would be $500,000.
If the next guy DECREASED revenue from this blog from $1 million to $800,000 over the next 10 years, his average revenue would be $900,000.
Who did the better job? Me. But not by the fundamentally dishonest measure that you try to create. By the Pat Standard, the second guy did a better job.
In addition, you write:
“Rate of inflation hovered between 2.8% and 3.8%….21.5% is higher than this number….”
Not compounded over a nine-year period it’s not. This is pretty basic stuff, Pat.
A CONSERVATIVE
June 29th, 2010
1:40 pm
FOLKs…..JAY is paid by the Socialist owners of the Obama-Atlanta-Urnal to SPIN…SPIN….SPIN….LIE..LIE..LIE about the news..JAY IS A LIAR AN UTTER LIAR
Scout
June 29th, 2010
1:43 pm
Jay:
I hear you. It’s kind of similar to when Democrats demagogue and accuse Republicans of “cutting the funding of a program” when all they are doing is “cutting back the growth of spending” ??
DawgDad
June 29th, 2010
1:43 pm
Bush tax cuts DO NOT “explain” the deficit in the manner depicted. Fact is, without the Bush tax cuts and resulting multiplied tax revenue collected the deficit would probably be far worse. Go back to school; you got cheated in your economics class. Another point: Government doesn’t “own” the money supply, the people own it and governemnt confiscates it. I don’t want any part of political leadership that thinks we exist for the benefit of government.
Start cutting spending. Reverse health care deform, stop bailing out Wall Street and the big international corporations, and work diligently to get us out of the military entanglements in the Middle East. Incentivize investment in American business employing US citizens with investment tax credits. Cut corporate income taxes to attract investment in America.
NJ
June 29th, 2010
1:44 pm
What is simply forgotten M Percy, is that a lot of the Bush tax cuts for the working poor and middle class expired by 2005. By nickel and diming millions of Americans, these tax “increases” as Republicans would call them if they happened under a Democratic President, were responsible for creating revenues. No one ever announced to this group of people that they were LOSING their tax cuts. That this meant their taxes would be going up. And they did.
Next small businesses paid a huge price when their the maximum amount that a small business could deduct as a legitimate business expense was dropped from 100,000 dollars a year down to 25,000 dollars a year. That raised a HUGE chunk of change for the Bush Administration to claim as resulting from their “tax cut bill’ unfortunately this was typical Republican misdirection. It was the fact that these portions of the tax cuts expired that raised the revenues.
As of 2010 the only remnants of the Bush tax cuts that really exist are not those for wage earners, but for the wealthy and those who earn their income by investments.
Lord Help Us
June 29th, 2010
1:44 pm
Jay,
This is simple…just wait six more years and see if Pat applies the SAME ‘logic’ to these SAME numbers for Obama to Bush.
Simple, huh?
stands for decibels
June 29th, 2010
1:45 pm
> 21.5% is higher than this number….”
Not compounded over a nine-year period it’s not. This is pretty basic stuff, Pat.
Jay, you are ever so much nicer about this than I’d be.
Extending unemployment benefits is a compassionate thing to do,
It’s also, probably, the single most efficient means by which to stimulate the economy by government spending that we have. More or less every dollar that goes to UE bennies goes smack-dab back into local economies.
(yeah, you could simply mail checks to everyone, but not everyone who’d receive such a check needs to spend that money. People getting by without regular paychecks, generally, do.)
Maybe you or others think our economy’s recovered sufficiently so that such stimulus isn’t needed, but seein’s how we’re still around 9.7% unemployed, I don’t think so.
RB from Gwinnett
June 29th, 2010
1:46 pm
Dollars Jay. Give us a number. $3,500? $1,000? What? Don’t give me the libleral line of “my share” cause to a liberal that usually means I’ll give my $2 and everybody else can pay $5,000.
What do you think is your “fair share”?
Gordon
June 29th, 2010
1:48 pm
Jay,
You are correct that Pat’s argument doesn’t hold water, but wouldn’t it also be fundamentally dishonest to not include the following points:
1) Clinton was heading down the same path Obama was during the first two years of his administration. Then the Republicans took over in 1994. Clinton, to his credit, moved right. It was the combination of a Republican Congress and a Democratic president that “balanced” the budget during the latter stages of the Clinton years. I put the word balanced in quotes because no one ever takes into account the unfunded liabilities which accrue every year in Medicare and Social Security.
2) Much of the revenue during the Clinton administration is due to the dot com bubble. As you have pointed out, Obama gets a lot of blame for things outside his control. Clinton gets a lot of credit for things outside his control as well. People made lots of money and paid taxes on it during the late nineties.
M Percy
June 29th, 2010
1:48 pm
NJ has some valid points.
But the Bush tax cuts also exempted more people than ever before from having to pay any taxes at all, while growing the number of people who pay negative federal income taxes (and also those you pay negative combined federal income taxes and payroll taxes). And both the absolute dollars and the %share of taxes paid by the high-income earners rose quite a bit, while the share paid by the lower-income household fell.
NJ
June 29th, 2010
1:49 pm
Look at this Republican placed list of increases to Revenues under Bush and then compare them to the years that parts of the Bush tax cuts expiring:
Comparing year-over-year, we had revenue growth of 8.2% (’04),
14.6% (’05),
Child Credit: This credit will shrink from $1,000 to $700 per child on January 1, 2005.
The 10 Percent Bracket: The upper income level for this bracket will decrease by $1,000 per filer on January 1, 2005.
The 15 Percent Bracket for Joint Filers: On January 1, 2005, the upper limit of this bracket will shrink from 200 to 180 percent of the upper limit of the 15 percent bracket for single filers, creating a marriage penalty.
Standard Deduction for Joint Filers: On January 1, 2005, this will shrink from 200 to 174 percent of the standard deduction for single filers, creating a marriage penalty.
Alternative Minimum Tax: Exemptions will decrease by $6,500 per filer on January 1, 2005.
Bonus Depreciation: This provision, which changes depreciation schedules for businesses in a way that encourages investment, will expire on January 1, 2005.
Theres the source of that 2005 increase in tax revenues. By tax increases on working income earners.
11.7% (’06), 6.7%
Small Business Expensing: On January 1, 2006, the maximum amount that a business may deduct will fall from $100,000 to $25,000, which will not be indexed to inflation.
Small businesses picked up the tab for the 6.7 percent increase in government revenues in 2006.
(’07) before dipping by 1.7% in ‘08 as the more recent recession started. Revenues exceeded $2T every year after the Bush tax cuts except for ‘04 ($1.88T) and in ‘06 & ‘07 exceeded $2.5
In 2007 when the baseline tax cuts, for the poor and middle class were gone, and those for small businesses had expired, we see the FIRST drop in revenues and the start of a recession.
Further proof that the Bush tax cuts to the rich did no good, and caused harm
jewcowboy
June 29th, 2010
1:53 pm
“I simply don’t see an exit from this fiscal problem.”
Math and science education…when the Latvia has higher math literacy scores than the U.S, perhaps it’s time for a little less Intelligent Design and little more Pythagorean theorem…
stands for decibels
June 29th, 2010
1:54 pm
Fact is, without the Bush tax cuts and resulting multiplied tax revenue
good god, we are plagued by Teh Stupids this afternoon.
Dollars Jay. Give us a number. $3,500? $1,000? What?
see above.
NJ
June 29th, 2010
1:56 pm
Another false Republican claim. The Republican congress had no part in the Clinton economic miracle. They attempted to block, filibuster and prevent every budget he submitted from going through. Remember when they tried to shut down Congress over the budget? No.
Typical short Republican memory and rewrite of history. In the end, public opinion nailed the Republicans for shutting down 14 critical government departments and in the end, the Republicans had to cave to Clinton. Back in 1995.
What the shutdown indisputably did do was sour Republican approval ratings. Gingrich’s personal approval rating was at 27% during the shutdown, and Congress as a whole had a 24% approval rating–one of its lowest points historically.
And this sour turn may have had some unforeseen consequences: Eager to repair his standing post-shutdown, Gingrich suddenly turned cooperative, striking deals with President Clinton on welfare reform and other measures. Those deals in turn undermined the Republican case against the Clinton presidency, sacrificing the presidential campaign of Robert Dole.
Disgusted
June 29th, 2010
1:57 pm
It’s [unemployment benefits]also, probably, the single most efficient means by which to stimulate the economy by government spending that we have. More or less every dollar that goes to UE bennies goes smack-dab back into local economies.
It’s robbing Peter to pay Paul. It’s transferring borrowed money from the federal level to the state level. It still isn’t creating any jobs, and given the reduced spending of those who’ve lost their jobs and now must rely on unemployment benefits, the level of revenue garnered at the state level as a result of UE spending is still lower than it was formerly.
Extend unemployment benefits—absolutely. But do it on compassionate grounds, not with the expectation that it’s going to solve the fiscal crisis.
TaxPayer
June 29th, 2010
1:59 pm
I see a whole bunch of whining from the GOPers but I don’t see much from them regarding the fiscal problems. Bush and the Republicans gave us the illusion of prosperity by borrowing from our future in order to give us tax cuts, more benefits and wars in the present. All that has to be paid back with interest and we are still stuck in a major economic downturn with high unemployment and no rosy short-term prospects. So, how do we cut our deficit spending while stimulating economic activity. Come on, Republicans. Give us your ideas.
Jefferson
June 29th, 2010
2:00 pm
If Bush had grew jobs to keep up with the population growth we would not be in such a deep hole. Private sector should hire or be prepared to be taxed for the gov’t to stimulate. Like it or not we are in it together.
An Inconvenient Response
June 29th, 2010
2:01 pm
NJ said, I love hearing the old argument that “X” proved he was not a “fiscal conservative”
Actually, truth be told, Jerry Brown, in his first term as governor of California proved himself a fiscal conservative that one cannot imagine many republicans aspire to. This Democrat did not care to live in the expensive governor’s mansion. Instead he rented a $275 apartment. Governor “Moonbeam” also drove a Plymouth rather than being chauffeured in a limo. He took a salary cut and he slept on a futon. When is the last time we heard of a republican going that frugal?
Hillbilly Deluxe
June 29th, 2010
2:04 pm
It took decades to get into this mess and it’ll take decades to get out, if indeed we ever do.
stands for decibels
June 29th, 2010
2:04 pm
the level of revenue garnered at the state level as a result of UE spending is still lower than it was formerly.
well sure–it’d be better if these folks were working. No argument there.
do it on compassionate grounds, not with the expectation that it’s going to solve the fiscal crisis.
You and I aren’t that far apart on this; I’m not arguing that it’s going to solve the fiscal crisis, just that it can be pretty easily economically justified.
Gordon
June 29th, 2010
2:06 pm
NJ,
Republicans controlled Congress, the branch of government from which all spending bills originate, for three fourths of the Clinton term, and yet had no effect on the fiscal results of those years.
Interesting.
uhoh
June 29th, 2010
2:11 pm
How’s about fast fowarding that graph and project the deficit as Obamacare kicks in. You’re gonna need a bigger box.
thomas
June 29th, 2010
2:11 pm
Why is Obama going to wait a year until he presents his changes and cuts?
Does he know what needs to be cut and is keeping it his secret?
Or is he playing politics waiting until after the Nov. elections looming with the financial stability of our nation at stake
Scout
June 29th, 2010
2:15 pm
Jay:
I am not a chemist but I believe there is a point in a chemical reaction where “nothing” can be done to stop the reaction in progress.
I am also not an economist but my common sense tells me we have also reached that point in our economy.
As Julius Caesar said when he crossed the Rubicon, “Alea iacta est” (the die is cast).
getalife
June 29th, 2010
2:15 pm
The orange guy wants to raise the retirement age to 70.
Joe
June 29th, 2010
2:16 pm
Yes Jay, I do dissmiss these ridiculous findings becuase it comes from libturds. I do agree that numbers don’t lie but unfortunatly when they are made up to suit your ideology they can’t possibly be taken seriously….. A good example is the so called scientists who skewed the numbers to promote their global alarmist agenda….
Jimbo
June 29th, 2010
2:16 pm
dare to watch
http://www.youtube.com/watch?v=TxgSubmiGt8
jewcowboy
June 29th, 2010
2:18 pm
Scout @ 2.15,
You mean the “tipping point”? I wonder where else that might apply…
M Percy
June 29th, 2010
2:18 pm
Before the bush tax cuts, a married couple with two children and no unusual tax situations could earn about $38.8K and owe $0 in federal income taxes. After the Bush tax cuts this jumped to $47.4K! With a nod to NJ, this did fall slightly as some of the provisions expired, to about $45.5K.
Today, that same couple can earn over $50K and owe $0 in federal income taxes. (All $ figures above are in constant 2010 dollars). This income would put them solidly in the upper one-third of incomes, too.
In 2009, some 65M “tax units” (households) or about 43% of filers had zero or negative tax liability. This does not include about 15M non-filers. When non-filers are included almost half of all households in the US pay zero or negative federal income taxes. In addition, some 17.5M households (11.6%) pay zero or negative combined federal income plus payroll taxes. Under Pres. Obama’s plans, by 2019, almost 15% (25M) will be paying zero or negative combined federal income plus payroll taxes (according to the left-leaning Tax Policy Center).
Pretty much by definition, if rich is “more than average income” and nearly half the people are non paying *any* taxes (and an unknown number of them are paying *negative* taxes), only “the rich” are effectively paying taxes. So any tax break will necessarily be to the benefit of “the rich”, and unless those people who are paying zero or less in taxes are once again placed in the position of having to pay some taxes and get skin in the game (which is doubtful) there’s no way that a tax cut can benefit them (excepting more refundable credits to let them pay more negative taxes–i.e. tax welfare).
Face it: no matter what your position is, the tax system is broken. It is a grossly inefficient beast that invites fraud and noncompliance at every turn. About $300B+ goes uncollected every year, about $250B is spent by honest people and businesses to comply, and the left’s favorite tax break, the EITC approaches 30% fraud rates and costs tens of billions of dollars every year in fraudulent payouts. There’s no good way to estimate how much is never reported.
Scout
June 29th, 2010
2:20 pm
jewcowboy:
Same concept ……… also known as “deep doo doo” and “up to your neck in alligators”.
DawgDad
June 29th, 2010
2:20 pm
“Another false Republican claim. The Republican congress had no part in the Clinton economic miracle.” Actually, Clinton benefitted from the technology based economy spurred on quite successfully by the Reagan economic and tax policies. I lived it; I was in the computer industry in the eighties and saw first hand what impact the investment tax credits had on our economy and the foundation that investment laid for the nineties.
getalife
June 29th, 2010
2:20 pm
Joe,
Still clinging to your failed ideology of tax cuts and no regulations for the 1%?
M Percy
June 29th, 2010
2:20 pm
“It’s [unemployment benefits]also, probably, the single most efficient means by which to stimulate the economy by government spending that we have. More or less every dollar that goes to UE bennies goes smack-dab back into local economies.”
Well, heck, let’s increase UI benefits 10x and that’ll yank us right out of the recession. Heck, let’s just give all the unemployed people $1M! That’ll really fix it!
TaxPayer
June 29th, 2010
2:22 pm
We got our huge tax cuts in 2001 and 2003. About ninety-five percent of us are paying out a lower tax rate than ever before yet here we are neck deep in the worst economic downturn since the Great Depression. So, what now folks. You can only cut taxes so much. Last time I checked, zero percent is as low as it goes. After that, you gotta borrow it in order to give it and folks are not too keen on loaning us bunches of money right now. So, we can chop out social security and Medicare and get rid of those payroll taxes and what will that amount to for the average person. Not much. It will put a more substantial sum of money in the pockets of some of the major corporations but not small businesses. Then, there is the DoD. There are hundreds of billions that could be cut there. Of course, that prescription drug company program needs to go, along with the farm subsidies and oil company kickbacks. What are we waiting for. Let’s do it.
Scout
June 29th, 2010
2:22 pm
Jimbo:
They are too blind to understand and too biased to believe it. Thanks for trying.
Jimbo
June 29th, 2010
2:22 pm
benefit all with FAIR TAX
Get with it ladies….
pimps,hookers, welfare scammers, illegal aliens, etc all pay their share.
Or would you prefer we foot that bill too?
stands for decibels
June 29th, 2010
2:25 pm
Well, heck, let’s increase UI benefits 10x and that’ll yank us right out of the recession.
what part of “I’m not arguing that it’s going to solve the fiscal crisis” don’t you get?
professional skeptic
June 29th, 2010
2:25 pm
USinUK
June 29th, 2010
9:56 am
Thank you. Brilliant. Truer words never written/spoken/uttered.
I'm here from the government and I'm here to help
June 29th, 2010
2:29 pm
TO ALL BUSH WAR BASHERS…
Which branch of the Government overwhelmingly approved the wars? You have three choices and I hope you get this simple question right because if not, you are not worth my time! Once answered correctly we can move on to more important things.
Like JOBS, JOBS, JOBS!!!
professional skeptic
June 29th, 2010
2:31 pm
Thanks, Jay, for this. Oh, how the rightists squirm when confronted with uncomfortable, inconvenient facts that shatter their fantasy-world view about our nation’s fiscal reality.
Unfortunately, when the numbers don’t stack up the way they prefer, it all gets dismissed as “fuzzy math.”
MARCEL MARCEAU
June 29th, 2010
2:32 pm
,,.?.’.,?,,.”".,!
stands for decibels
June 29th, 2010
2:34 pm
water-crisis sheets, bitches.
BADA BING
June 29th, 2010
2:36 pm
I remember when a billion dollars was a lot of money.
Swede Atlanta
June 29th, 2010
2:40 pm
The deficit is symptomatic of a serious negative change in American attitudes relative to money and consumption.
There was a time when Americans were net savers. People saved until they had a 20% downpayment for a car or a house.
But somewhere along the line we lost that. We have become an “instant gratification” society driven by gross commercialism. People don’t want to save and for a long time the banks continued to bankroll the consumerism with relatively cheap and abundant credit.
At the same time we were buying McMansions, SUVs, HD TVs, taking expensive vacations, saving nothing and running up the charge card, our elected representatives were also infected.
There was no need for public services to be paid for. We would just print more money and issue more debt. We could be the policeman of the world with overpriced, unnecesssary weapons systems, spend on discretionary programs and support entitlement programs at the same time taxes were kept extraordinarily low.
I hope the tide is turning on individual consumerism. Gone are the days of cheap and loose credit. I hope it stays that way. Now we need to take hard decisions on public consumerism.
What are our values? Do we want to try to police the world or use our tax dollars here at home on fixing our crumgling infrastructure and caring for our own? The rest of the world laughs at the U.S. as they enjoy 5 or 6 weeks of mandatory vacation, substantial public pensions, free healthcare, etc. As long as the U.S. continues to play world policeman we will never have the resources to care for our own.
And we have to decide among those programs at home which ones are meaningful and which ones need to do? Once we can agree on what we want then we have to accept the need to pay for it on a “pay as you go” basis.
Until there is a change in mindset we are doomed to failure.
professional skeptic
June 29th, 2010
2:42 pm
Jay
June 29th, 2010
1:28 pm
I second this. To save education, to preserve infrastructure, to keep us safe… in short, to own up to the personal responsibility of paying for the things that make our nation strong TODAY, rather than shamefully putting those costs off onto future generations.
theyeshaveit
June 29th, 2010
2:43 pm
Bada Bing, a billion dollars still is a lot of money in my wallet. I remember when I could buy a popsicle for 3 cents.
RF
June 29th, 2010
2:46 pm
I’m here: how exactly does one “create” jobs? What jobs can be created when income and spending are down? Unfortunately, lasting jobs won’t be created until many Americans dig their way out of debt and can actually afford to spend. It will take several years, and in the meantime unemployment will likely stay high. Looking back, something along the lines of New Deal work programs might help, but how many people are desperate enough yet to actually take a job requiring so much physical labor for little money? We may get to that point, but we’re not there yet.
War is usually good for the economy. It gets jobs going to produce the materials needed to fight and puts more income out there to spur spending. The fairly gluttonous budget of the DoD though, coupled with two expensive and long wars is creating deficit spending faster than domestic spending and income can generate tax revenues to balance. People need to spend money and generate demand for goods and services. Until that happens, and until we can scale back the size of the wars, we’re not going to reduce the deficit significantly.
Jimbo
June 29th, 2010
2:46 pm
scared to watch?
http://www.youtube.com/watch?v=_MGT_cSi7Rs
TaxPayer
June 29th, 2010
2:47 pm
Jimbo,
Your monthly prebate check has been delayed indefinitely.
Huckabee The Next POTUS 2013
June 29th, 2010
2:49 pm
Jimbo, give it up. You can’t explain the Fair Tax to a bunch of dimocraps. Unless the evil rich aka: Hard Working Americans are paying 90% of the taxes in this country, then it’s not FAIR, somebody has to support the useless, lazy and illegal people. Remember to the bedwetters, if you work hard, do the right things, invest wisely and aquire wealth, then you were just LUCKY!!!!
theyeshaveit
June 29th, 2010
2:53 pm
RF, to an extent I agree with you on the effect a war can have on the economy. Perhaps, the only decent example of that which we have, however, is World War II. But just prior to WW II, America was still struggling to pull itself out of an economic downturn that began with the Great Depression. For the economy and job creation, war turned out to be a good thing. But the circumstances today are different. The Iraq and Afghanistan wars are destroying us. And to make a bad thing even worse, we must borrow money from China to pay for these wars?
Del
June 29th, 2010
2:54 pm
This continuing lemming chorus that it’s all Bush’s fault and Obama inherited this mess so he should be absolved of all blame just doesn’t resonate with the majority of Americans. Obama looked like the fool he really is at the G-20. He kept pushing for more stimulus spending, which hasn’t worked, while the European leaders ignored him and spoke about spending cuts and budget reductions. The only ones who were on board with Obama were the third world countries, so evidently he wants to take us to that level. Once again we have the neo-comms attempting to defend the indefensible.
Wes
June 29th, 2010
2:55 pm
Jay,
First and foremost, if you really want thoughtful analysis, you should give the class a day or so to work on the problem.
Second, there is at least one thing that confuses me. Personally I’m agnostic about tax cuts. I tend to think that the more complicated the tax code the easier it gets gamed. That being said if you look at some OECD data, it suggests that we end up with revenues between 25% and 30% of GDP regardless of rates (Data from 1975 to 2006). Do we really think that changes the rates is that impactful?
Third I’d need some time to run down some numbers but I think that the liability from Fannie and Freddie may be questionable as in too small.
Fourth I think the wars both need to be stopped as soon as possible; however both parties are responsible at this point. Obama may feel that it is inhumane to leave without providing an adequate government, but there are a number of places (Somalia and North Korea spring to mind) where things are just as bad. This is a decision where both parties bear responsibility.
Finally can we just acknowledge that neither party has the country’s best interests at heart. It’s not a Republican thing or a Democrat thing. If we want government it needs to be at a level where people can influence it. It should not be where each rep has 700,000 constituents.
I’ll take you up on your offer Jay. You can raise taxes if we get rid of Social Security, Medicare, and trim defense to the point where it defends our borders not our interests.
DawgDad
June 29th, 2010
2:57 pm
“The rest of the world laughs at the U.S. as they enjoy 5 or 6 weeks of mandatory vacation, substantial public pensions, free healthcare, etc. As long as the U.S. continues to play world policeman we will never have the resources to care for our own.”
Yes, American blood and dollars have enabled the socialist gluttonny in Europe. Their day of reckoning is fast upon them. I do not call 5-6 weeks of vacation, substantial public pensions, and “free” healthcare “care” or “caring”, I call it socialist indulgence and it’s selfish because SOMEONE ELSE ULTIMATELY PAYS THE BILL (America for defense, future generations for the burgeoning debt).
RF: Jobs can be created by investing in the creation of wealth. You transform resources into something someone else is willing to pay a premium for (i.e., manufacturing, art/entertainment, technology, etc.). This is what causes tax revenues to GO UP when tax rates are cut. Government handouts are merely transfers of wealth and the multiplier effect in the economy is far, far lower.
DawgDad
June 29th, 2010
2:59 pm
“Then in 1981 Reagan decided that we could decrease taxes and did so. But he forgot to decrease spending. ” No, he had a Democratic Congress.
Swede Atlanta
June 29th, 2010
3:03 pm
DawgDad
I want some of that socialist indulgence. As long as America is stupid enough to carry the security freight for the rest of the world I wish the Europeans long and enjoyable vacations, pensions, etc.
Yes some of the Eurozone countries have gotten caught by their deficits but not all of them. Europeans, especially the Germans, were foolish to give up the Mark in favor of the Euro. They now have to deal with the consequences of the lack of political cohesion among the Eurozone countries.
But give me some of that long vacation time, early pensions, etc. I wouldn’t mind trying it out for a while.