He doesn’t have one:
The president keeps promoting an “adult conversation” about the budget, but that can’t happen if the First Adult doesn’t play his part. Obama is eager to be all things to all people. He’s against the debt and its adverse consequences, but he’s for preserving Social Security and Medicare without major changes. He’s for “tough cuts,” but he’s against saying what they are and defending them. He pronounces ambitious goals without saying how they’d be reached. Mainly, he’s for scoring political points against Republicans.
And doesn’t really want one.
That’s been obvious for a long time. Reducing the deficit will require cutting non-defense spending and entitlements, and Democrats can’t bring themselves to do it. People forget, but Bill Clinton never had a plan to balance the budget, either. He was forced to do it by a Republican congress.
[Mid-morning update]
He may not have a plan to eliminate the deficit, but he sure had one to jack up gas prices, and it’s working pretty damned well.
[Update a couple minutes later]
Jim Manzi has some thoughts on demand elasticity of fuel, and why forcing the prices higher is not a good way to wean ourselves off fossil fuels.
[Another update a couple minutes more later]
Why have taxes at all? Why even have a debt limit? Keynesianism has failed, and the “liberals” remain economically incoherent.
[Update a while later]
Because most Americans aren’t as stupid as the Democrats want us to be, they think that the problem is too much spending, not taxes too low.
Obama will probably create another commission that wont have to report until 2013.
Obama realizes that simply letting the Bush tax cuts (all of them) expire in 2013 cuts the deficit in half. He’s also proposed 1.1 trillion in spending cuts over 10 years.
he has a plan. Your not liking the plan is not the same as not having a plan.
No one knows what the effect of letting tax rates go up will have on the deficit. Least of all Barack Obama.
No one knows what the effect of letting tax rates go up will have on the deficit. On what planet? In any business I’ve ever been involved in, a 3% price increase usually results in a 3% increase in revenue.
Taxes are not like consumer goods, where I can easily change to a cheaper brand. )This assumes that a 3% price increase is worth the effort.) Even in consumer goods, increased prices bring in more revenue. Are you buying less gas because the price went up?
Remember, letting the Bush tax cuts expire increases revenues to the level seen under Bill Clinton. Give credit to whomever you want to, but Clinton had (by your own admission) a balanced budget.
Are you buying less gas because the price went up?
Yes.
From Gerrib’s first link, a little about the author:
Prior to founding the Center, Greenstein was Administrator of the Food and Nutrition Service at the U.S. Department of Agriculture under President Carter, where he directed the agency that operates the federal food assistance programs, such as the food stamp and school lunch programs, and helped design the landmark Food Stamp Act of 1977, generally regarded as the Carter Administration’s principal anti-poverty achievement. He was appointed by President Clinton in 1994 to serve on the Bipartisan Commission on Entitlement and Tax Reform and headed the federal budget policy component of the transition team for President Obama.
The only thing even remotely appealing is his work on the Tax Reform commission. So what does the Social Security Administration have to say about that work:
The Commission made little progress on its task, and was only able to release an “Interim Report” in August 1994, a report which merely defined the size of the problem, without containing any suggested policies to address it. Even without any policy recommendations, unanimous agreement could not be reached as only 30 of the 32 members signed off on the Interim Report.
…
Ultimately, the Commission failed to achieve consensus and went out of business without issuing any recommendations.
With a resume like that, I’ll skip his advice. Advice such as this:
The expansion of the Food Stamp program during recessions both alleviates hardships and pumps more purchasing power into the economy, helping the economy from sinking further.
That thinking took a pounding in the 1994 Congressional elections. The new Congress actually reduced such entitlements and the economy took off.
As for Obama’s claimed savings, Rand has already pointed to various studies that show those numbers to be questionable at best. Most of the savings occur well past 8 years, which simply means he can claim victory, while never having to worry about dealing with the problems during his own Presidency. Again, that’s not an adult way of handling the situation.
Must be nice to work at home. Those of us who don’t are still paying.
Gas is an example of a product with inelastic demand. People own the cars they own, work and live where they live, so demand doesn’t change much based on price.
Taxes are inelastic for the same reasons – people (in general) get paid what they get paid. Even if they don’t want to pay taxes, they (usually) need / want a certain lifestyle that’s supported by income. So, especially for small changes (3%) revenue goes up by the rate of change.
So it’ll bring back the .com and real esate bubbles, too? Holy crap! Is there nothing tax rate hikes can’t do? Healing the blind and the lepers on the table as well?
Gas is an example of a product with inelastic demand. People own the cars they own, work and live where they live, so demand doesn’t change much based on price.
Yes, that’s why increasing gas prices never slows the economy, or causes a recession…
It’s an interesting fantasy world you inhabit, Chris.
Chris – “…but Bill Clinton had (by you own admission) a balanced budget.”
What Rand said was that Bill Clinton was forced to have a plan.
There has not been a balanced budget since the fifties. No amount of pretending will change the fact that the USA has owed more money at the end of each year than they did the year before since the fifties.
Leland – are you saying that because of Greenstein’s politics he’s unable to do simple math? Because your post says nothing about the math.
Titus – looking at raw or even inflation-adjusted numbers is stupid. The economy grows every year. Government spending and tax revenue will grow with the economy. But if there is a gap between income and outgo, that gap will remain the same.
Rand – the dose is the poison. You can die from drinking too much water. The issue here is that, for small changes in price, (and 3% is small), behaviors don’t radically change.
Chris had the courage to write:
“In any business I’ve ever been involved in, a 3% price increase usually results in a 3% increase in revenue. ”
HAHAHAHAHAHAHHAA what business were you involved in? Is that why business after business has closed their doors?
“Gas is an example of a product with inelastic demand.”
HAHAHAHAHA more jocularity. I now see more people at the bus stops as I gun my gaia-ravager past them on my way to work.
If a company ships things on trucks and gas prices go up, you are saying it’s impossible for them to be driven out of business? Or do you figure that your most amusing point #1 comes into play – they simply raise the cost to cover the gas increase?
Well tell me, if they do that, can everyone who used to hire them afford the new prices? If they can’t……
then what?
They just raise the prices more to cover the lost revenue (Glorious #1 again)?
Have you checked into the price of an airline ticket lately?
As Rand wrote..that *is* an interesting little fantasy world you live in….
Obama realizes that simply letting the Bush tax cuts (all of them) expire in 2013 cuts the deficit in half.
Given how recent deficits have turned out to be much greater than predicted, I’d say it’s probably going to be considerably less than half.
In any business I’ve ever been involved in, a 3% price increase usually results in a 3% increase in revenue.
Two things, first, we’re speaking of a 15% increase in overall taxation not a 3% increase. Large changes result in nonlinear effects. Second, it’s not an even across-the-board increase in taxes, but focused on a few groups (who are known for their ability to protect assets from taxation, I might add) and niches. For example, capital gains taxes would jump 30-60% (estimating from Wikipedia numbers). Such large changes will result in changes in behavior.
Gas is an example of a product with inelastic demand. People own the cars they own, work and live where they live, so demand doesn’t change much based on price.
Whatever, Chris. Even you have to grant that gas doesn’t have perfect inelasticity.
Taxes are inelastic for the same reasons – people (in general) get paid what they get paid.
Why would you even think that? I would argue more the reverse, that tax avoidance is rather effective. For example, I can hide income by receiving it as employer-paid health insurance. If I were rich, there would be a wide variety of tools for hiding income, gains, and other taxable parameters. Instead, I’d say that taxes are rather elastic.
So look at them in percentage GDP or through a set of 3D glasses for all I care. Just answer the question.
“Taxes are inelastic for the same reasons – people (in general) get paid what they get paid.”
Until, of course, they don’t get paid because they lost their job because gas prices went up and airline ticket sales are down and layoffs have occurred which means fewer groceries and fun items are bought which results in layoffs……
Leland – are you saying that because of Greenstein’s politics he’s unable to do simple math?
No, I have no idea why you would make such a leap. I pointed out what Greenstein claims as past accomplishments and then showed how others view those accomplishments. I then read one his proposals and found it to be a bad idea. Indeed, the exact opposite of his idea was done and was successful in creating an economic boom.
Because your post says nothing about the math.
Indeed, so why did you ask such a ridiculous question before noting the obvious.
Gregg – IT consulting and banking. In the IT consulting business, I had some control over hours. I did not work less hours to avoid taxes, largely because I wanted the extra money to buy other things. Regarding elasticity – nothing is perfectly elastic or inelastic.
Karl Hallowell – deficits have been higher than predicted because we fought two wars off-budget. Ending that practice led to more accurate deficit predictions. The rate of taxation, or the price increase, is 3%. Do you really think your employer will increase your health benefits to reduce your taxes?
Titus – no, increasing taxes will not bring back the dot-com bubble. I thought that (per this site) CRA caused the real-estate bubble, not tax rates. (Do I need a sarcasm tag for that?)
The issue here is that, for small changes in price, (and 3% is small), behaviors don’t radically change.
In Wisconsin, the new Legislature and Governor asked that government employees simply take on a 5% share of the burden for their own benefits. In response, the employees immediately left their jobs to protest the government. And you want us to believe that 3% is significantly smaller that when leveraged across all taxpayers, none will care? Please, keep that thought, and we will see you in 2012.
“In any business I’ve ever been involved in, a 3% price increase usually results in a 3% increase in revenue. ”
I have to agree with Gregg, Chris. That’s pretty stupid even for you. The only thing I gather from the above statement, is that you, Chris, have never priced goods or services for a functioning business.
It reminds me of an example from my days as an undergraduate. Our college had a poorly run bookstore which was run by one of the dumbest and most maliciously apathetic bureaucrats I have ever known. At one point near the end of my stay, the prices on every jumped by a considerable amount at the beginning of the semester. So a group of friends and I waltzed over to complain. We eventually got directed to the bureaucrat in question who explained to us that the bookstore was loosing money. So they had to increase the markup a little from 0.7 to 0.6. What that means is that for every $0.60 of cost the bookstore paid for anything, the customer would pay $1.00. They also admitted (in hindsight, “feigned” is probably more accurate) surprise that such a little change resulted in a 16% increase in prices across the board.
Needless to say, said bureaucrat easily brushed off our complaints being immune to both reason and whiny, powerless students (yet another RL lesson). I don’t know if the campus bookstore ever balanced its budget for that year or not. They did have a mostly captive customer base for textbooks which was their bread and butter. So it might have worked even though they probably lost money on everything else they sold. Even then, they probably lost textbook revenue to people who ordered books in the mail or bought from bookstores in other parts of the state.
Enshrine this thread.
Even Keynes was smarter.
A few points.
“Letting the Bush tax cut expires cuts the deficit in half.”
Yet the other have of the deficit remains and has interest payment constantly increasing.
“1.1 trillion in spending cuts over 10 year. “
However congress is supposed to approves a budget for only one year. It didn’t bother to make a budget last year. It will not make a budget effective for the next 10 years. In any event congress has repeatedly shown that they are under no obligation to honor budget commitments ratified by the previous congress. (See the debt ceiling and various other future budget cut promises and cut offs.)
My Question is:
How much to pay off the deficit and get a balanced budget?
Currently there is a 14 Trillion debit.
There are about 350 million people in the USA.
25 % are children or about 87.5 Million
Approximately 47% or 123.375 million pays no income taxes
350 million – 123.375 million – 87.5 million = 139.125 million paying taxes
Each tax payer now owes about $100,628 dollars
Using the 10 year plan guideline, each tax payer must pay 10,062.80 per year for 10 years. (except that the interest still accrues so it will be more than that.
The next argument is to raise taxes on the rich and have a progressive tax rate. I refer you to http://iowahawk.typepad.com/iowahawk/2011/03/feed-your-family-on-10-billion-a-day.html
Then the next argument is that we will have to tax the poor. But they don’t have any money. That’s why they’re poor.
The next argument is to raise taxes on corporations but they pass those tax rates along to consumer which increases prices which increases inflation and so on and so forth.
Then the next argument is that inflation will reduce the debit quicker.
Then congress will increase spending again to get the debit level up to a sustainable level again then we need to increase taxes to pay off the debt, then we will need inflation to reduce the debit quicker.
Lather, Rinse, Repeat
Leland – no, the Wisconsin governor demanded that the unions forgo collective bargaining on all but wages, not ask for wage increases above a certain limit, certify their unions annually and not withhold dues from paychecks. That was what the people were protesting.
Karl Hallowell – you’re talking to a guy who boosted his top billable rate from $100/hour to $125/hour and didn’t loose a customer.
Rand – what Goldberg doesn’t understand is that the debt ceiling is for money we already spent. The more correct analogy is to refuse to pay your credit card bill when it’s due.
MattM – why do we have to pay off the debt in 10 years? What’s magical about 10? Why not 30?
I pick 30 because a lot of “ordinary people” have 30 year mortgages that they could no more pay off today then they could fly to the Moon.
“Rand – what Goldberg doesn’t understand is that the debt ceiling is for money we already spent. The more correct analogy is to refuse to pay your credit card bill when it’s due.”
You can’t possibly believe this.
There’s a difference between “unable to keep spending under your credit limit” and “unable to make the minimum payment.”
We’re making the minimum payment fine. We’re just asking for an (insane) credit extension.
I pick 30 because a lot of “ordinary people” have 30 year mortgages that they could no more pay off today then they could fly to the Moon.
I suspect you pick 30 years, because it is easier for you to push responsibility on to another generation rather than take on the responsbility yourself. I suspect Matt picked 10 years, because that’s a time frame that he, as an adult, can fathom tackling his responsibility.
Al – it isn’t belief, it’s a fact. Look what doesn’t happen if we don’t raise the limit. Things like not paying social security, or interest payments to bond-holders. Those are exactly the kind of things that happen when you don’t pay for what you’ve already spent the money on.
Leland – my point was that debt per say isn’t bad. We take on debt all the time, and have had a national debt for the vast majority of the past 2 centuries. The (as-still-unanswered) question is why do we have to pay off all of the debt in 10 years?
I picked 10 years because the article you referenced said “He’s also proposed 1.1 trillion in spending cuts over 10 years.” and I wanted to use that as a point of compairison.
Assuming that he is correct and that the deficit is cut in half by going to the Pre-Bush tax rate and congress actually does cut spending by 1.1 trillion. (Something I really don’t believe), that still leaves a substantial deficit that will continue to increase, that will require more tax increase assuming other spending doesn’t change.
I was trying to keep this simple because the numbers are so large as to be meaningless when compaired to every day life
my point was that debt per say isn’t bad.
Yeah, we understand that’s what you think. Our point is that we don’t agree with you.
The (as-still-unanswered) question is why do we have to pay off all of the debt in 10 years?
Not answered, because no one is arguing that it should be paid off in 10 years. The point is understanding the liabilities in that time frame, so as to take it seriously. Obama’s not even talking about taking the deficit to zero in 10 years. He just plans to reduce the deficit by an amount in that time frame. Further, the amount of reduction is roughly equal to the amount he increased the deficit in just 1 year. Why not bring the deficit below zero before 10 years? Why not bring the deficit below zero as fast as it was raised a $1 Trillion?
Those are all ‘money that hasn’t been spent yet‘ though.
We have obligations – “Promises to pay in the future” – but it isn’t spent yet.
I have a gas bill coming due, and I’m at my credit limit. I was planning on paying with my credit card (because I’m a deadbeat moron), and so I go to the credit company and ask for a credit increase. China has already started making noises abut saying “no” anyway.
I do have income. I can choose what, exactly, to cut NOW to make it through the month. I cancel the two kids cell phones, sell the car, fix the neighbor’s car for cash, and push off things I just don’t need to blow money on this month. (Not the week to check my house for asbestos, an undiscovered oil tank or mold. Hey, give the entire EPA the month off. Any company that changes their patterns to attempt to exploit this can be slapped with a nice fat fine when they get back.)
A sane credit card company might offer a tiny credit increase – and a budget balancing consultant. “Here, this will get you through this month, because defaulting on things where you’ve actually already promised to pay is indeed a spiral path of doom. But. Next month your expenses much balance. Stop buying gas, for one. I don’t care if there’s global warming all over your front lawn – burn a tree if you need to. But thou shalt stop spending.”
Taxes are confiscatory Gerrib. They aren’t anything but a drain on the economy. It’s MY money. I EARNED it. The government isn’t entitled to any of it. I allow them to have some by letting my representatives write laws to take some. If the government wants more of it and I have a vehicle to prevent that, I’ll use it. Why do you think tax increases rarely if ever have brought in the projected revenue? Here’s a primer for you. If my taxes are going to go up, I’ll increase my 401K. I’d rather keep it than let the government have it. That’s one way less than “rich” people can keep their money from a rapacious, demagogic administration.
Even people who don’t use less gas when prices go up, have huge negative impact on the economy because of all the other things they DO stop spending money on.
Like vacations.
Also going by your 30 year plan. Payments to pay off the debit will be at least $3354 per year per tax payer for 30 years. But that does not include the accumulating compound interest that will need to be paid. It also doesn’t include whatever amount of spending congress will increase over the next 30 years. Which given base line budgeting will be impressive.
Rand – from the USA Today poll your latest update cites:
“Some 37% support an equal mix of spending cuts and tax increases; 11% prefer mostly tax hikes.”
My math is 37+11=47% of Americans support tax hikes. Looks pretty even to me.
Taxes are inelastic for the same reasons – people (in general) get paid what they get paid. Even if they don’t want to pay taxes, they (usually) need / want a certain lifestyle that’s supported by income. So, especially for small changes (3%) revenue goes up by the rate of change.
Perpetual motion! As others have stated, we obey the laws of thermodynamics on this forum.
The economy can only be grown by adding productivity. Shifting money around for the sake of shifting money around generally does not add economic efficiency and therefore only hurts the economy. It is worth increasing tax revenues if the return on investment for doing so is greater than what the private sector can manage. The opportunity cost of spending a dollar on government has to exceed the average opportunity cost of spending it in the private sector for that expenditure to be justified. For many basic government services this is the case. But for the rest the government has become very inefficient (as indicated by poor economic growth) – less efficient than the private sector.
The size of government has to be reduced (first step in limiting the economic inefficiency it inflicts upon the economy). If, after serious reform (yet to happen), the government demonstrates higher efficiency, then perhaps it might be considered worth increasing tax revenues again, but not until then.
The demands of the tax payers on the government are simple, reform and stop being an economic drag upon the economy, or have your tax revenues reduced.
However the the people of the US are liable for the debts of the US government. And so the US government has fought back by borrowing excessively. It is now saying that if the people of the US do not bail it out via higher taxes, government debt will be increased yet further, making the people of the US liable for an even larger debt in the future. A lot of tax payers have become very unhappy about this.
I am not sure who will win this fight, but I do know that if the government wins, the US will go into decline, like so many empires before it. The future is built upon economic efficiency in both the private and public sectors. If the US government does not regain competitiveness, the US will fail.
Chris, you wrote:
Things like not paying social security, or interest payments to bond-holders.
I consider Social Security fall down on the scale of obligations from bond-holders. The latter was a serious business transaction. The former is a nebulous promise from a known bunch of highly delusional liars who got rewarded by gullible voters for their behavior. The fact that you equate the two indicates deep problems with your understanding of US government finances.
you’re talking to a guy who boosted his top billable rate from $100/hour to $125/hour and didn’t loose a customer.
Uh huh, so you don’t have any real experience with pricing.
Let’s consider your first statement again:
Obama realizes that simply letting the Bush tax cuts (all of them) expire in 2013 cuts the deficit in half. He’s also proposed 1.1 trillion in spending cuts over 10 years.
That’s why he didn’t let them expire in 2011 right? His “plan”. I notice that Obama isn’t proposing any cuts over any time frame at the moment, despite having his non-binding proposal a few months ago. Why didn’t he stick to the “plan”? My view is that the original proposal was a gambit (which would have cost the Republicans should they have accepted it) not a serious proposal.
Pete – I’m not going to argue with the “all taxes are theft” crowd. I will say that 60 years of economic growth since WWII, most of it at massively higher top rates than proposed, doesn’t speak well to your economic theories.
Karl Hallowell – Social Security is in fact a legal obligation of the government. You may be willing to throw Grandma under the bus, however until we change the law we can’t.
Regarding pricing – how is successfully pushing through a price increase not “real experience with pricing?”
Regarding 2011 – I seem to recall the Republicans taking some hostages on that deal.
And yet there were nuggets like this in the same poll:
“By more than 3-to-1, those surveyed say the deficit stems from too much spending, rather than too little tax revenue.”
“62% fear they[Democrats] might use the deficit as an excuse to raise taxes.”
I find it hard to reconcile the numbers. Since they don’t give the breakout or the questions, I think the 47% is too high. They also don’t ask if those tax hike should be on the person answering this poll.
Pete is all kinds of correct, but I just want to add one thing to this:
Marginal dollars spent by government become decreasingly efficient. To wit: the first dollar is spent on necessities like courts of law or national defense. The last dollar is spent on Cowboy Poetry.
There does exist a slice of ‘the right’ that feels the entire ‘negative tax territory’ needs a “hike” Bill.
Its all in how the question is worded… exactly.
Just a small point, regarding Keynesian economics: I suspect that this theory might actually work – but only in the right circumstances. Or to put it another way, it matters a great deal what the tax money is spent on.
Concrete examples: the TVA of the 1930s and the interstate system in the USA – and for my own country (UK) the motorway system. All of which were paid for out of taxes. Infrastructure spending is often worth doing. Extra spending on the salaries of chair-warmers never is.
Marginal dollars spent by government become decreasingly efficient. To wit: the first dollar is spent on necessities like courts of law or national defense. The last dollar is spent on Cowboy Poetry.
There are both high and low tax countries with per capita incomes exceeding the US, high tax countries can work. However, successful high tax countries also tend to have high efficiency governments – something the US no longer has.
The level of taxation does not actually much matter, what matters is government inefficiency. There is little hope of the US government reforming and becoming more efficient, there is some hope of the US government being reduced in size, thereby reducing the consequences of that inefficiency.
Generally it is better to err on the side of small government, it being much easier to increase the size of government than reduce it. However size of government should be a state level not federal level decision, that means federal tax revenues need to be low. States can not compete on level of taxation and services provided (can not individually choose to be high or low tax), if the federal government has already taxed everyone at a high level.
Pete – I’m not going to argue with the “all taxes are theft” crowd. I will say that 60 years of economic growth since WWII, most of it at massively higher top rates than proposed, doesn’t speak well to your economic theories.
I thought they explained it reasonably well – government efficiency enables high taxes, government inefficiency does not. Degree of government efficiency being the variable that has deteriorated over the last few decades in the US. I am not sure what you are responding to here but it does not seem to be what I wrote.
Like the international market place, I do not much care whether a country or state is high or low tax, I care how competitive it is.
Just a small point, regarding Keynesian economics: I suspect that this theory might actually work – but only in the right circumstances.
Yes it can work, but only if the Keynesian economist picks the market better than the market does. Given the nature of such gambles, the Keynesian economist does sometimes pick it right, but most of the time they do not.
People tend to forget that the private sector is quite capable of borrowing money and stimulating its own businesses, and that they tend to do so if the economics warrant it. There is an argument that governments could perhaps add to such market led stimulation. However, governments definitely need to not stimulate if companies are not self stimulating. Governments can perhaps bet with the market, but they should not bet against it.
Fletcher:
The recent spending has the motto ‘All government spending is good spending.’
True Keynesian stuff, as you allude, needs an actual rate-of-return. You’re aiming for the multiplication factor of both paying laborers to do the work – and – get the benefit of some piece of infrastructure that would provide a positive effect greater than its cost as well.
This is more typical of the recent plan:
Washington State gets $60 million for “road improvements”. No red flags so far. Quite plausible that road improvements could have a positive RoR. And hiring local construction folk should also be excellent.
But. They spent $55 million of the money on Chinese-constructed ‘safety & reader boards’ and the computers to run them. And $5 million was spent paying the state workers (who already had jobs, and weren’t in danger of losing them!). That is, the payment was a bookkeeping entry that let them spend the five million elsewhere.
There’s no plausible way to make the case that this was “Smart Keynesian Spending”. The majority of the money flew away so fast you can’t even make the argument that “The laborers have more cash, so they spend more and boost the economy”. Nor can the argument be made about the raw materials, or upstream suppliers.
The WA pols are -still- patting themselves on the back for their quick thinking – because they had zero “shovel ready” plans when it was time to loot the feds.
Chris Gerrib Says:
“Karl Hallowell – Social Security is in fact a legal obligation of the government. You may be willing to throw Grandma under the bus, however until we change the law we can’t.”
Not raising the debt limit shouldn’t have any effect on SS. Don’t the SS payroll taxes go into a separate account where they sit untouched only to be paid out to retirees?
Fletcher Christian Says:
“Just a small point, regarding Keynesian economics: I suspect that this theory might actually work – but only in the right circumstances. Or to put it another way, it matters a great deal what the tax money is spent on.”
That is true. You can’t just spend $1t and expect the money multiplier to kick in. The money spent has to be highly targeted.
Take sport fishing for example. Farming and releasing fish has a positive money multiplier effect on the entire industry.
Al Says:
“The WA pols are -still- patting themselves on the back for their quick thinking – because they had zero “shovel ready” plans when it was time to loot the feds.”
http://www.wsdot.wa.gov/Projects/US395/NorthSpokaneCorridor/NSCHistory.htm
Shovel ready ^^
Why do you hate the poor Chris? Because when it comes to elasticity, it is the poor that live in the most inelastic world, the rich have all sorts of options.
There is no such thing as tax the rich. Tax rates effect the entire economy.
Social Security is in fact a legal obligation of the government. You may be willing to throw Grandma under the bus, however until we change the law we can’t.
Whatever, Chris. I’ve heard this song and dance before. It remains a legal obligation that Congress can change. Just remember cutting seniors off just means a few more mad seniors and a boatload of funds to pay debt with. Defaulting on debt means you pay more forever.
Frankly, I see the need for at least 35% cuts at the least in every bit of spending the US does, including military or entitlements.
Another comment from Chris:
I pick 30 because a lot of “ordinary people” have 30 year mortgages that they could no more pay off today then they could fly to the Moon.
30 years is at least four president regime changes. It’s not viable especially if we get another Obama in that time frame. My view is that the US will always have debt. But if we get it under a modest percentage of GDP, say 30% (which incidentally is less than a third of the current debt) and deficits under say 3% of GDP, then that should be viable in the long run.
Currently about 2% of tax payers make over $250000 a year. This 2% is generally known as THE RICH.
They pay approximately 45% of all federal income taxes collected.
The Federal Government collects about $2.5 trillion in income taxes.
So The Rich currently pay about 1.12 Trillion dollars in income taxes each year.
For the Rich to pay off the federal debt of 14 trillion dollars right now, each one of them must pay 5.31 Million dollars in federal income tax at a 2012% income tax rate.
To pay off the federal debit in 10 years, the Rich must pay 503,144 dollars in income tax each year for 10 years at a 201.2% income tax rate.
To pay off the Federal debit in 30 years, the Rich must pay 167,714.88 dollars in income tax each year for 30 years at a 67% income tax rate.
This then is the Rich’s Fair Share that they need to pay in order to eliminate the federal debit or at least reduce it to a more sustainable level.
However the to do this, 45% of the federal budget that the rich currently pay for will not be available. Only the 55% of income taxes that the other 98% of tax payers pay will be available for federal spending.
So to solve the debt problem we will have to tax the rich at 67% for 30 years and cut federal spending by 45% while freezing federal spending for 30 years.
I eagerly await the wailing and gnashing of teeth