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
Jay
June 29th, 2010
3:05 pm
Sorry Dawgdad. Year after year, the final amount appropriated by Congress year after year was almost exactly the amount that Reagan had requested.
A fact of history.
Marko
June 29th, 2010
3:07 pm
Nothing is stopping you from writing a check this very moment for any additional amount you’d like to pay. Heck, you can even add up the amount you got from the Bush tax cuts since 2001 and send the treasury a check for that amount today. As they say, “money talks, BS walks”.
Jay wrote:
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.
DawgDad
June 29th, 2010
3:17 pm
Swede: You and me both, buddy, but I’m too busy working (thankfully). Socialist ideals may be excellent motivators, such as accumulation of wealth or material goods is for some people, but too much of a good thing not fairly earned can be very corrupting and damaging. Helping others can be a good thing; there is a place for secular social safety nets. But people in power (politicians and big business/bankers/Wall Street) are gaming our social safety net funds and creatively raiding the US Treasury for their own selfish interests, not for the benefit of the mainstream American citizen. The problem extends to both parties, and it is why we have this movement called a Tea Party.
Thomas
June 29th, 2010
3:19 pm
I’m an independent who tried the Republican party and learned what a fraud it is. They always promise tax cuts and spending cuts to give the appearance of fiscal responsibliity. And they always do the tax cuts because it’s politically easy to dispense money. But they never do the spending cuts because that takes political courage and they are political cowards. My response to the Republicans is spare me all the PowerPoint numbers, charts and ideological crap, just stop handing out tax cuts and starting wars until you grow a political backbone and become responsible enough to pay for them. Their supporters on this blog come across as silly bozos when they defend Bush. After all, Obama would not be in power had the Repubs not been an unprecedented fiscal disaster.
A CONSERVATIVE
June 29th, 2010
3:20 pm
JAY….Both U & the entire AJC newsroom are now totally irrelevant…irrelevant..etc…
gbs
June 29th, 2010
3:21 pm
Fascinating to read the continual liberal-conservative blame game. Both parties are at fault. The issue is spending more than you receive in taxes. All talk and no fiscal restraint.
M Percy
June 29th, 2010
3:21 pm
stands, I copied that from someone else who quoted you (disgusted at 1:57). I didn’t see your original…
M Percy
June 29th, 2010
3:35 pm
“Sorry Dawgdad. Year after year, the final amount appropriated by Congress year after year was almost exactly the amount that Reagan had requested. A fact of history.”
I recalled seeing some useful numbers on Reagan’s budgets vs Congress’s budget, but right now all I can find are Reagan’s proposals compared to actual expenditures (which might not reflect what Congress approved in their budget). Jay’s right, for certain values of “almost exactly”.
Outlays
Fiscal Year Proposed Actual % Difference (Cumulative)
1982 695.3 745.8 7.3
1983 773.3 808.4 4.5 (12.1)
1984 862.5 851.8 -1.2 (10.8)
1985 940.3 946.4 0.7 (11.6)
1986 973.7 990.3 1.7 (13.5)
1987 994.0 1003.9 1.0 (14.6)
1988 1024.3 1064.1 3.9 (19.1)
1989 1094.2 1144.2 4.6 (24.5)
______________________________________
Totals $7,357.6 $7,554.9 Avg 2.8 (3.1) (averages for 82-9)
Steve
June 29th, 2010
3:36 pm
What this “analysis” ignores is the stimulative effect of the Bush tax cuts. When they exprie next year, we will see just how painful the drag on the economy will be when tax rates go up.
Surely even Bookman is not dumb enough to call this collection of a litle arithmetic on a chart an “analysis” from which one could draw policy conclusions.
M Percy
June 29th, 2010
3:39 pm
Thomas, technically tax cuts are not “dispensing money”. It’s allowing people to retain money that’s already theirs (barring “refundable tax credits”). The problem is not one of revenue, but spending. If you don’t have $2.5T in revenue, then by god, don’t spend $2.5T!
Hmmmmmmm
June 29th, 2010
3:41 pm
By the way, allowing the Republican tax cuts to expire does not mean that the Democrats will raise taxes. It simply means that the Republican plan of returning to the old tax structure is being followed. So, why would the Republicans complain about following their own plan.
This is the kind of IGNORANCE that rules our country. It’s people like this, who vote these clowns into office. I mean, how in the world can it not be a tax increase…… Good grief, Taxpayer, if you would like to send more of your hard earned money to D.C. then send all you want…… For know get some HELP!
Scout
June 29th, 2010
3:43 pm
theeyeshavit:
3 Krystals, fries and a coke for 26 cents.
Alex
June 29th, 2010
3:48 pm
Jay,
Do you remember during the 2000 election how there was talk about surpluses as far as the eye could see? I went back and found a CBO outlook paper for FY2001-2010. It showed surpluses of $176B for FY2000 (outlook at the time) with a gradual increase up to a $489B surplus in 2010. Continuing with that math using a Compound Average Growth Rate we could expect the budget surplus to be $1,227B in 2019. Your friends at this Think Tank indicate that if we had no tax cuts, no wars, no recession, no bailouts that our predicted budget position in 2019 would be slightly negative – based on the chart maybe around -$50B. I’m not quite sure how to reconcile these two positions. Obviously the starting points of the CBO report and the Think Tank study are different but the assumptions are similar. In 2000 there were no Bush tax cuts, no wars, no recession,no bailouts. The Think Tank makes the agrument if none of those things I just mentioned had happened our position from 2010 to 2019 would close to a balanced budget. Maybe there are some stupid things Bush did they decided not to include (I’ll throw you a bone and say the giveaway to big pharma contributed to this mess and for whatever reason they did not mention that)…. or maybe this is simply a case of our friend Mark Twain who said “there are three kinds of lies: lies, damn lies, and statistics”. Lets just admit the truth. Bush and BOTH the Dem and GOP Congresses (Dems and Senate for most of 2001 and 2002 and both houses in 2007 and 2008) made drunken sailors look bad with their reckless spending. Horffic. Unfortunately the crowd we have now make Bush and company look like the amatuer hour at the Apollo. The unfortunate truth is that even if the GOP wins in November nothing much will change because the overwhelming bulk of our spending is tied up in “entitlements”, defense spending and interest on the debt. None of our feckless political leaders are willing to touch entitlement spending or defense spending (both filled with massive amounts of waste) because ultimately the game is about how to stay in power and the Chinese have us by the short hairs on the interest payments. I have no problem bashing Bush on his irresponsible budgetary policies (and I voted for the man twice) but lets call a spade and a spade and recognize that Obama is just as bad, if not worse, with his spending. We are already seeing that the house of cards he built his “deficit neutral” healthcare plan on is falling apart as anyone with a brain knew that 21% pay cut for the doctors would not happen. He has created a fiscal monster in this healthcare plan that be on par with Medicare in terms of fiscal predictions and fiscal reality.
r
June 29th, 2010
3:50 pm
Hey ReyJay,
Use your bat phone to call Obama to stop this market sell off.
N-GA
June 29th, 2010
4:07 pm
I’ve posted this before. During the Eisenhower administration (Republican), the highest incremental federal income tax rate was 91%. Now it is 35%. Back then we believed in paying for things.
At the state/local level, income taxes have increased, sales tax has tripled, state gas taxes per gallon are higher than what a gallon of gas cost back then, millage rates are higher than ever, excise taxes are higher than ever.
If people want to whine, you should go to the governor, the state representatives, the county officials and your local mayor and ask what the hell are they doing with all those tax increases.
NJ
June 29th, 2010
4:08 pm
There are ALWAY surpluses available because to date, Social Security takes in three dollars for every one dollar it pays out in Social Security Checks.
Republicans love to deny that these surpluses exist, but in fact they do and they always do.
The problem is that the reason that we are in a recession is because the so called “stimulative effects” of the Bush tax cuts vanished in 2006. The vast majority of the tax cuts to the middle class and small businesses ended that year.
All that is left is the income tax cut to the richest 2 percent and the capital gains windfall given to the rich.
But if these actually WORK. If giving investors a bigger chunk of their profits after taxes actually created JOBS, we would see the private sector creating jobs, because they are getting a much larger amount of their investment dollars given back to them.
The fact is that the best thing that can happen for the economy is when the Bush Tax cuts for the rich expire.
Then they will have to leave their money inside of investments and businesses, rather than do profit taking. And they will have to SPEND those dollars in ways that a business can spend them and avoid corporate taxes.
And the ONLY way to do that is to open more businesses, hire more people, provide more benefits, any “business expense” which will offset being taxed at the higher rates…
This is why a mere TEN PERCENT increase in taxes created the economy of the 1990’s The ONLY way to avoid paying taxes on their wealth was to create a business, rather than to take a million dollar bonus.
I'm here from the government and I'm here to help
June 29th, 2010
4:10 pm
I’ll take the silents from all you Bush War Bashers as a surrender.
The Government sets the tone to job creation by getting the hell out of the way and letting businesses operate without government intervention. i.e. EPA
We do not need FDR’s New Deal BS. We need a leader who has ran a business not a community organizer with an open checkbook that is $13 Trillion overdrawn.
buddi love
June 29th, 2010
4:14 pm
Are you dumb or just stupid? Th government doesn’t have a revenue problem it has a spending problem. I’m sure if the government could give us a date certain where these mythical problems will be solved we would all be in total support. But the programs are more about sustainability of the government employees and grant recipients than about the outcome.
pat
June 29th, 2010
4:17 pm
Jay, the evidence I presented was adjusted for inflation…Facts are facts and you are twisting them to suite your needs.
ken R
June 29th, 2010
4:18 pm
Stands for decibels,
Not all of the unemployment benefits goes 100% back into the local economy, you forgot Uncle Sams cut.
Thomas
June 29th, 2010
4:27 pm
M. Percy. You say tax cuts to taxpayers is money “that’s already theirs”. Well, the deficit is “theirs” too. Give all the tax cuts you want, just pay for them and stop pushing the trickle-down theory on the gullible. Tax cuts with no spending cuts has become standard Republican philosophy since Reagan. I repeat, the Republican party is a fraud.
NJ
June 29th, 2010
4:28 pm
Of course the primary assertions made by conservatives that money gained when the top tax rate is lowered will be used to create jobs or start businesses is the largest pile of buffalo bagels imaginable.
No amount of giving tax cuts to the wealthy will ever create a single job or result in a new business being created. This has been a fact since 1919 when our economy became a totally mature industrial economy.
Tax cuts have never, I repeat, have never caused increased investment—not in the 1920s, not in the 1960s, not in the 1980s, and not in our own time. The empirical record is uniform: net investment keeps falling no matter what. Don’t take my word for it. Consult Peter G. Peterson, a co-founder of Blackstone (a private equity group just gone public), and a former cabinet member under Nixon and Ford.
There is no cause-effect correlation between lower taxes and greater investment because, again, economic growth no longer requires, or even allows, increasing net investment. At the macro level, we can improve productivity and output just by replacing and maintaining our existing capital stock—we certainly don’t have to make any additions to it.
So to cut taxes for the wealthiest individuals is to invite them to place their augmented incomes in the hands of people who have no choice except to bet this new money on the available speculative site, in this instance on the housing/mortgage market. There’s no place else to put it if they want to get a return better than a savings account or a stodgy mutual fund.
If you look at the stock market closely, what you find is that none of the money invested there is ever used to create new jobs, or to purchase new business equipment, etc. It never stays in one place long enough for that to happen. The stock market is basically a casino where money changes hands too fast to be used for anything even remotely related to business purposes. It is where the excess wealth of the rich is used to gamble on what is actually happening in the Main Street economy.
Basically ALL of the money that is used to create new jobs and to open new stores or factories or offices comes from the productivity gains of the existing work force.
Since 1979, the worker productivity of the American worker has increased by 80 percent. But their wages have not even come close to seeing a similar increase. If wages kept pace with productivity the average income for an American worker would be close to 80,000 dollars a year. Rather than the current 38,000 a year.
The Reagan revolution ENDED the period in which the worker shared in his own productivity gains.
This would NOT have done anything to prevent the business owner from getting a decent share of profit for his “risk taking” as conservatives love to call it. (but when corporations and businesses are protected from much risk by bankruptcy laws, while workers can no longer avail themselves of the same laws, it is hard to accept this “risk based” assertion for the goodness of the corporation for the American people)
Before Reagan, each sector of the population saw gains in their personal income. If the economy saw a ten percent growth in any year, every quintile, from the poorest 20 percent to the top 20 percent saw their REAL income grow. Everyone got a little something for their efforts.
After Reagan changed the tax codes, this vanished. Every single deduction which could be taken by both a real flesh and blood person, and a fictional one called a corporation was taken away from the real person. Before Reagan’s tax changes, anyone could deduct the interest on any sort of loan. Car loan, credit card interest, etc. After Reagan these deductions were only the privilege of the rich. And Reagan made sure he got those changes in while he had a Republican majority Congress between 1980 and 1986. After that he had a “split” Congress which meant the Democrats who had a majority in one house could be blocked by the Republicans in the other.
Republicans love to repeat this old BS line about tax cuts stimulating the economy, but there is no evidence that tax cuts, except those given to the lower income brackets, ever have any stimulative effect at all.
Which is why Republicans LOVE these “Flat across the board, ten percent tax cuts”
The mathematical results of this, given the current ranges in the tax percentile brackets will ALWAYS result in about 55 percent of any total dollar sum going to the bottom 98 percent, and the other 45 percent going to the top two percent.
And the money given to that top two percent almost never used to create new jobs or businesses.
Even after years of analysis David Stockman finally found that only 4 percent of the Reagan tax cuts were used to create jobs or improve businesses. The rest was simply play money for the wealthy.
It kicked off both the junk bond phenomenon, as well as the REIT real estate investment collapse late in Reagan’s presidency
Thogwummpy
June 29th, 2010
4:45 pm
Jay, in order for you premise (which is an article of faith of the Left) to hold water, you’ve got to prove that the Bush tax cuts caused a tax revenue DECREASE. However, the CBO and Treasury Department numbers solidly demonstrate that in the years subsequent to the Bush tax cuts—-FEDERAL TAX REVENUE ACHIEVED RECORD HIGH LEVELS. People who read Jay’s nonsensical columns should be aware, that liberals in study after study are shown to be economic pea-wits. If Jay wants to contend that the Treasury Department numbers are “lies”, then he should have the guts to say that. But, Jay—-you’re wrong.
John Birch
June 29th, 2010
4:48 pm
NJ – Please keep your stupid opinions and poor research to yourself. You do know almost all of that tax data you were listing earlier today was wrong don’t you? You quoted expiration dates from the original bill but almost all of those were extended through this year. For example, the child tax credit did not revert to $700 in 2005, it is still $1000 for 2010. Moron!
Alex
June 29th, 2010
4:53 pm
NJ,
Check your facts on Social Security – http://www.cbsnews.com/8301-503983_162-20001135-503983.html. This year payouts will exceed revenues.
NJ,
I enjoyed your post about tax cuts being bad. I disagree that tax cuts do not lead to greater investment as there are plenty of instances where we can see the stock market responding to tax cuts.
The problem with our current situation is that 47% of adults in this country pay ZERO federal income tax and a full 25% of adults are a net receipient (i.e. they are subsidized). So, when there IS a tax cut, like in 2001 and 2003, of course the bulk of the tax relief goes to the more well off because they are the only ones paying taxes. The argument that the Bush tax cuts were just for the rich is a total red herring and anyone who is honest about the situation would acknowledge this fact.
Tax cuts do spur the economy but they do not spur it enough to pay for themselves. I wish it were true but it is not. This mess we are in is due to reckless spending by both parties and by reckless tax cuts that were not paid for by Bush. If we had had spending cuts back in 2001 that mirrored the tax cuts there is no telling where we might be right now. We had an opportunity back in 2001 to put ourselves on a path to being debt free with a secure social security system. Unfortunately we crapped it away and we will probably never see that type of opportunity again.
John Birch
June 29th, 2010
4:53 pm
Oh, and please try to limit yourself to 100 stupid words or less. Long, wrong, and stupid is really bad. BTW, there is still a 10% bracket, it didn’t expire yet either.
Thogwummpy
June 29th, 2010
4:56 pm
Look at the chart folks:
http://www.treas.gov/press/releases/reports/revenue%20growth.jpg
Jay Bookman is a LIAR.
John Birch
June 29th, 2010
4:56 pm
Alex – The dividend and capital gains cuts were the worst. The richest woman in the world, Jay’s de facto boss Ms Cox, makes about $1B a year, almost all of it in dividends and capital gains. Her marginal rate is 15%. A working stiff like me has a marginal rate of 28% (or 31% if you use NJ’s bad numbeers). That is a regressive tax and is an outrage.
A CONSERVATIVE
June 29th, 2010
5:04 pm
THOMAS……You, sir, are an idiot..pure & simple..
Grumpy
June 29th, 2010
5:06 pm
Still waiting for Jay to answer…if the answer is so obvious, and Bush’s tax cuts are to blame, why aren’t the Dems SHOUTING FOR THEIR ENTIRE REPEAL AT THE TOP OF THEIR COLLECTIVE LUNGS?!?!
After all, if simply repealing ALL THE CUTS will close the budget gap, seems like a no-brainer. So quit crying about Bush and FIX THIS OBVIOUS MISTAKE!
(not holding my breath)
Jay
June 29th, 2010
5:15 pm
As I understand it, Grumpy, some of those tax cuts will be allowed to sunset as the Republicans intended, but many will be extended at least for a while. Others, like the estate tax, will be adjusted but not eliminated. Why? Because raising taxes with the economy in such a fragile state would be a mistake.
tm
June 29th, 2010
5:26 pm
Simple poll. Family of four. Children are ages 7 and 9. Both parents work and have a combined income of $200,000 after social security and medicare are deducted from their paychecks. How much Federal Income tax do you think it would be fair for this family pay??
$25,000
$50,000
$75,000
$100,000
$_______
Jay
June 29th, 2010
5:29 pm
And Thogwumpy, the biggest of the Bush tax cuts were enacted in 2001. That thus becomes the base year if you want to compare what tax cuts did to revenue.
So let’s run the numbers, in constant 2005 dollars to take out the impact of inflation;
Total government revenue:
2000 2.310 trillion
2001 2.15 trillion (tax cuts are passed)
2002 2.03 trillion (more tax cuts)
2003 1.90 trillion (more tax cuts)
2004 1.95 trillion
2005 2.15 trillion
2006 2.32 trillion
2007 2.41 trillion
2008 2.29 trillion
2009 1.91 trillion
If you can find significant revenue growth in those numbers, let me know.
tm
June 29th, 2010
5:37 pm
“As I understand it, Grumpy, some of those tax cuts will be allowed to sunset as the Republicans intended, but many will be extended at least for a while” Can we then rename those that are extended Obama’s tax cuts?????
John Birch
June 29th, 2010
5:45 pm
I have a BBA from UGA and these are the facts I know. The US economy is so large and complex that relationships I learned in macroeconomics do not necessarily hold true and it’s almost impossible to tell for sure because there are so many variables.
Jay, your numbers are very good and indisputable. However, there are people who would argue the single largest cause of the poor tax revenues in the years you list was the dot.com bubble burst recession not the tax cuts. That’s why the 2002-04 numbers are so much worse than the 05-07 revenues (by then the cuts were stimulating the economy and, therefore, the tax revenues). Think of it like this. If not for the tax cuts 06-07 revenues would have averaged 1.9T.
This is the same argument the Dems now use to say O’s stimulus bill did not keep unemployment below 8% as he and the CBO originally projected but it kept it around 10% instead of the 12-13% it would have gone to otherwise. These arguments cannot be proven or disproven because they did not happen in an economic vacuum or lab but in a huge economy where lots of factors effect tax revenues or unemployment percentages.
DawgDad
June 29th, 2010
5:49 pm
“My response to the Republicans is spare me all the PowerPoint numbers, charts and ideological crap, just stop handing out tax cuts and starting wars until you grow a political backbone and become responsible enough to pay for them. Their supporters on this blog come across as silly bozos when they defend Bush.”
The government does not “pay” for tax cuts. Properly structured tax cuts would generate MORE tax revenue for the government, as recent history suggests, unless the outright objective of the cuts is to shrink government in absolute terms (which it hasn’t been; cuts may hold back the rate of growth of government but in recent history they have shrunk it not one bit). I agree they should stop starting wars until they can “fund” them (to use the proper term here), except in times of dire national self-defense where borrowing may be necessary.
Bush is indefensible, and most true conservatives would agree with me on this point. He did nothing to hold spending in check for eight years, he was evidently powerless to stop the bad mortgage underwriting fraud and derivative trade problems (or maybe he was culpable), and in the end he publicly disavoved the very economic and moral principles that he should have been doing everything in his power to uphold. Like Obama, also being a puppet, he proved too weak to keep his party leaders from raiding the hen house. Has there ever been a Bush that hasn’t stabbed his core constituency in the back (”read my lips . . .”)? I wonder.
That does NOT mean the prescription for our economic woes is tax and spending increases. We’re slitting our own throats in that regard. Learn Chinese, you’ll need it soon.
RF
June 29th, 2010
6:08 pm
I’m here: “We do not need FDR’s New Deal BS. We need a leader who has ran a business not a community organizer with an open checkbook that is $13 Trillion overdrawn.”
What about the fact that 3 trillion plus, SO FAR, has been spent fighting two wars that have no end in sight? I’m not blaming Bush anymore than I am blaming the current administration that chooses to continue to listen to the Pentagon when common sense says it’s time to quit doing what we can’t afford to do. When are we as a nation going to admit that we can’t take care of our own and the entire middle east? Even as we fight two wars, many are calling for war against Iran. When is enough?
FDR realized the simple fact that, if you want to increase production which leads to creation of income producing jobs, you have to give people a way to earn money to SPEND. Creating wealth, in the hopes that it will spur investment that will possibly trickle down to company expansion and job creation isn’t going to answer the job creations question long term. If that were true, we’d already see companies rebounding and reinvesting in expansion much faster than they are. As it is, layoffs are still occurring as companies downsize to protect profits. God help the CEO has to give up the yacht and the house in the Hamptons because the “little people” need to work. This is almost a mirror image of the early 20th century when the corporate magnates held the greatest chunk wealth and weren’t really using it to spur economic growth, just profits to line their mansion walls. It’s time to quit waiting for the trickle down economics and get people doing something to earn a survivable wage. When they can pay the rent AND buy a car, their spending will create demand on the producers who can then offer jobs to create supply. Until then, we have to hope that unemployment doesn’t go up, and that those of us who have jobs will be able to spend enough somehow to increase demand. It’s going to be a long, slow recovery. Those of us who cling desperately to the fallacy of being “middle-class”, who are the spenders and creators of real demand for goods and services, simply don’t have the spendable money until the personal debt gets paid off. Tax cuts, while they sound good and get popular support, simply won’t fill in the gaps in our income enough to get us back out there buying.
hryder
June 29th, 2010
6:11 pm
PLEASE, whether people accept the prevailing thoughts or not it does not alter them as being true. The president’s job is to be responsible for all federal governmental problems in existence whether becoming problems prior to or during his tenure in office. He could have avoided this responsibility by not running for the office. A second point, whatever you label the people who did not follow the perscribed steps in permanetly entering the USA are CRIMINALS since they entered ILLEGALLY.
casual observer
June 29th, 2010
6:31 pm
First of all Bookman wouldn’t know the damn truth it it fell in his lap. He and Cunthia Tucker are so “in the socialist tank” it gives me the fraking gag reflex. To take some liberal Molksop graph and try to sell it is laughable. Get you head out of the Obama , Pelosi Reid rear – end a come up for some much needed air.
JDW
June 29th, 2010
6:36 pm
TM at 5:26
Pretty familar with those numbers, assuming home ownership and other normal deductions Fed Tax bill is about $25K.
JDW
June 29th, 2010
6:38 pm
Follow on to prior, I don’t think it would be unjust to ask for another $3K to $5K from that hypothetical family.
NJ
June 29th, 2010
6:47 pm
We can even go back the Reagan years and get data for what caused the creation of the jobs.
There were two major tax changes in Reagan’s first term, which began in January 1981. ERTA, aka the Reagan tax cut, was signed in August 1981; TEFRA, which raised taxes, was signed in September 1982.
If you look at what happened after Reagan signed his bill lowering the top tax rate from 70 percent to 28 percent is that unemloyment started going through the roof.
Why. Because Reagan gave the rich, expecially CEO’s and other business executives a choice. Basically he said, you can give yourself a ten million dollar bonus, or hire ten thousand new employees, and the tax consequences will be exactly the same.
The other part of the insidious Reagan tax cuts is that they also removed the ratio between the earnings of a worker and an executive in a corporation. Before Reagan, there was no law saying that a corporation could not pay an executive whatever it wanted. But there were consequences. The consequences were that the company could not CLAIM ALL of a huge salary increase for an executive as a legitimate business expense. That is if the lowest paid employee in a company made ten dollars an hour, the the company could only legitimately deduct a salary of 250 dollars an hour for its CEO. If it wanted to pay the guy 500 dollars an hour, they could. But they would have to eat half of it when it came to deducting it on their corporate taxes.
This created what never happened before and is happening now. The “Jobless Recovery” So now it is possible for the stock market to go through the roof, without creating a single job. In fact it is possibly to have the stock market climb and climb and climb while having employment drop and drop and drop because Reagan effectively decoupled the earnings of companies and executives from the employment and earnings of American workers.
A company can make BILLIONS in profits off the labor of employees, pass all of it on to the executives and shareholders, while firing workers, cutting benefits, calling for the workers to take salary cuts, the works.
And this is all the result of lowering the top tax rate, while destroying the relationship ratios between worker and executive compensation when it comes to tax deductions.
Eli Jones
June 29th, 2010
7:53 pm
“DID YOU KNOW THAT MUSLIMS ARE EXEMPT FROM OBAMACARE”
Has anyone heard of Dhimmitude? It means surrendering to Muslim Demands and paying Muslims a tax for the right to be non-Muslim: http://en.wikipedia.org/wiki/Dhimmitude
Why are Muslims and Christian Scientists exempt from being forced to carry Obamacare?
http://search.aol.com/aol/search?query=muslim+exemption+from+Obamacare&s_it=keyword_rollover
Unbelievable for America!
I had my doubts so I checked with Snopes. There is an exemption for the Muslims in the Health Care Bill. Obama supporters check it out yourself.
Had never heard the word until now—Type it into Google and start reading… Pretty interesting. Note that Muslims and certain other religions are exempt from the Obamacare penalties and it is supported by law. We are surrendering from within! The prez is leading us right down the path to total Muslim control and you don’t even care! Maybe you voted for him but now the truth comes out. Maybe you should rethink what you have done to our country.
Dhimmitude is the Muslim system of controlling non-muslim populations conquered through jihad. Specifically, it is the TAXING of non-muslims in exchange for tolerating their presence AND as a coercive means of converting conquered remnants to islam.
The ObamaCare bill is the establishment of Dhimmitude and Sharia muslim diktat in the United States . Muslims are specifically exempted from the government mandate to purchase insurance, and also from the penalty tax for being uninsured. Islam considers insurance to be “gambling”, “risk-taking” and “usury” and is thus banned. Muslims are specifically granted exemption based on this. How convenient. So I John Smith, as a Christian, will have crippling IRS liens placed against all of my assets, including real estate, cattle, cars and etc. and even accounts receivables, and will face hard prison time because I refuse to buy insurance or pay the penalty tax. Meanwhile, Louis Farrakhan will have no such penalty and will have 100% of his health needs paid for by the de facto government insurance at our expence. Non-muslims will be paying a tax to subsidize muslims. Period. This is Dhimmitude.
Dhimmitude serves two purposes: it enriches the muslim masters AND serves to drive conversions to islam. In this case, the incentive to convert to islam will be taken up by those in the inner-cities as well as the godless Generation X, Y and Z types who have no moral anchor or belief in God! If you don’t believe in Christ to begin with, it is no problem whatsoever to sell Him for 30 pieces of silver. “Sure, I’ll be a muslim if it means free health insurance and no taxes. Where do I sign, brother?” Now all you Obama voters get in line for your free stuff!… However, I suggest you don’t hold your breath!…
I recommend sending this email to all your contacts. This is desperately important and people need to know about it and what the past election has done to all of us!
PS Have you heard about the summit Obama is holding this month in DC for the future Muslim business leaders in the US? He wants to increase their ability to begin business opportunities in the US for the Muslim community! Better start looking for a country that doesn’t cater to the Muslims ~ Austrailia doesn’t because this country will be overrun by Muslims like Europe is currently experiencing.
And you thought our problem was only the illegal Mexicans!……
NJ
June 29th, 2010
8:56 pm
Ah, I live to listen to anti Muslim wing nut fantasies. It restores my faith in my theory that Conservatism is closely linked to mental illness.
The fact is that Republicans these days are a party that has two pillars. One is that tax cuts are the answer to all economic problems. The other is social conservatism. Nothing else.
The fact is that not even supply side economists state that tax INCREASES are necessarily bad things. Reagan basically cherry picked through Milton Friedman’s ideas, and only looked at the part that said that taxes that were TOO high, really high taxes, were bad, and did not look at the parts that said taxes that were too low were equally pernicious. Supply side only indicates that taxes in above the 70 percent mark were really damaging. But he also places a bottom limit for taxes, of about 39 percent. Going lower than that will also create problems.
Another Friedman and Wanneski assertion. NO government program should be exempted from cuts in order to balance the budget. Both were insistent that the biggest, and worse form of spending was defense spending and if you are not willing to make cuts there, supply side will not work at all.
This is the reason that the remaining LIVING creator of supply side economics, Jude Wanneski, dumped the Republican party in 2004 and went Democrat. He went back and looked at the history of both parties, and saw the propensity of the Republican Party to create a permanent state of war someplace on earth in order to spend more and more money in the “Military Industrial Complex”
When Bush said the wars in Afghanistan and Iraq could be generational wars, he knew he was looking the nightmare that Eisenhower predicted in 1960. That the military and defense industry would make up threats in order to justify defense spending taking up ever larger portions of government spending without reductions for as far as the eye can see.
The fact is that we currently spend more on defense than all of the rest of the world combined.
If our goal is purely defensive, a fifth, even a tenth, of what we now spend would be sufficient to “defend” ourselves.
If our goal is to invade other countries to control them for American corporations, no amount will ever be sufficient. And this IS the goal. Everyone points at medical costs, but the fact is, without private insurance middlemen, healthcare costs would not rise more than the costs of inflation. Get rid of the insurance middleman, and in ten years, the cost of health care in America will be exactly what it is today. About 2.5 trillion dollars a year. If we eliminated the middle man, the actual cost today would be more like 1.25 trillion. That includes everything. Private insurance, people covered by the government, the works.
Today the US government is providing health care for a little more than 50 percent of the population. Spending about 700 billion dollars to do it. The other fifty percent spend the other 1.6 trillion dollars and about 20 percent of that is insurance industry profit.
Joe Lipham
June 29th, 2010
9:43 pm
Jay, once again you are so misinformed its almost laughable. Jay, tax cuts RAISE revenue for the government. EVERY TIME. if the economy is strong you collect more taxes!!! Jay, I told you last year Obama is a socialist that is his deal. Now its more the European style but it is what it is. Please grow up and quit blaming Bush, you need to man up and start seeing things as they are are not what you want them to be. No wonder AJC is such a joke
RF
June 29th, 2010
9:47 pm
NJ- the bounceback in the stock market should be an indication that companies are making money and will expand the job base. That’s what the economists are hoping for, which reality proves isn’t happening. The GOP is LOVING this because the political unrest it creates will result in gains in numbers in Congress. Their single goal, regardless of how badly citizens suffer in the meantime, is to shoot down the first black president and bring back the white elite to power. Then the corporate pocket-lining habits of deregulation and manipulation of tax codes to favor the rich can continue. If the past eight years and the skyrocketing deficit didn’t do enough damage, the next few years will. The rich will recover while the rest of us continue to try to eek out survival in the midst of rising prices and reduced income. We will see a “double-dip” recession, and the rich plan on recouping as much of their lost wealth as they can before it happens.
If Obama wants to prove his leadership abilities, he needs to make sure financial reform legislation gets through the system so that there will SOME reasonable limits put in place. I’m flabbergasted by how many citizens, whose savings and retirement were all but wiped out in the recent collapse, would even think about supporting the economic policies that put us here. But hey, it costs a lot to keep a CEO comfortable and I guess some of us can hope to earn a pittance scrubbing the decks and living as indentured servants. That will be just about the only jobs left. I guess I can scrub toilets in the Hamptons mansions…..and my kids are cute enough to beg outside the gates for a crust of bread.
Ninja
June 29th, 2010
10:46 pm
Raise capital gains taxes a ton, lower or eliminate business taxes entirely, and raise the personal income rates to somewhere between Reagan and Carter, but AFTER revising the brackets to account for the modern world (cough, cough, BILLIONAIRES, cough). Done.
NJ
June 30th, 2010
12:38 am
The problem is that the old economic saw that when the stock market bounces back, companies will soon start hiring no longer applies in an era of low tax trickle down economics. Because when taxes on personal income is low, business executives have two options. They can give themselves million dollar raises, and billion dollar bonuses, and get exactly the same “expense of doing business” tax deductibility as creating ten thousand new jobs. When the top tax rates are very low, a businessman can take a million dollar bonus and keep 650,000 of it. When tax rates are higher, and if he takes a million dollar bonus and only gets to keep 100,000 of it, guess what he is going to do. He is going to keep that million sheltered by doing something like opening a new office, a new store, a new factory, which has intrinsic value as capital that is less liquid, but will gain in value, especially if the business becomes profitable. Eventually he gets to sell this “investment” and pay the a “long term capital gains rate” of 15 percent. So rather than take a million dollars in salary for himself, he buys a million in inventory, has the store sell it at a profit, makes 4 million funnels that into opening 4 more stores that cost a million a piece, they each generate more income, which gets funneled back into the businesses to shelter the profits from taxes, and so on. As long as the top marginal tax rates on INCOME is high, this all become possible. When it is low, you have what we saw under Bush…Jobless recoveries. The markets reached all time highs under Bush over 13,000 but job creation was dismal because profit taking was cheap.
ODDOWL
June 30th, 2010
1:58 am
If the economy was doing so great in 2006, why did the voters vote the Republicans out of office in droves and give the Democrats the majority in both houses of Congress ??? When the Bush/Cheney Regime left office, they dumped an $11 trillion dollars debt and a $1.4 trillion dollars yearly deficit into the laps of the Democrats. President Obama and the Democrats have borrowed less than $2 trillion dollars in the last 18 months. Every penny of it went to fix what Bush/Cheney and all the Republicans in Congress today screwed up. Non rich, big house middle classers who vote Republican are the dumbest mother suckers in the milky way galaxy. The big house middle class Republicans are in a state of perpetual denial. They need long term. deep psychiatric therapy.
Obama and the Fiscal ‘Road to Hell’ – Wall Street Journal
June 30th, 2010
8:13 pm
[...] InquirerIs Obama losing the economic argument?IndependentChicago Tribune -NPR -Atlanta Journal Constitution (blog)all 66 news [...]
El Gordo
July 1st, 2010
5:17 pm
Mr. Obama, suck it up and just get to work. Many replacement CEOs and COOs in business are hired to clean up others’ messes. They don’t concentrate on their predecessors. They man-up and get on with it. Do the same. Or you, like them, will be ousted. Its a Results Game, not a Reason Game. Even if Bush was the problem, just shut up and fix it. Nobody cares anymore about how bad Bush was. You wanted the job, you had to know things were going bad so stop all the blaming and name-calling and do what your economic training has taught you to do. Whoops, uh, sorry, no economic traing or job experience. I take it back.