Sadly for the “progressives,” the numbers just don’t work out.
<VOICE=”‘Progressive’ whine”>But I was told there would be no math!</VOICE>
35 thoughts on “Solving The Deficit By “Taxing The Rich””
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Sadly for the “progressives,” the numbers just don’t work out.
<VOICE=”‘Progressive’ whine”>But I was told there would be no math!</VOICE>
Comments are closed.
Only the strawman in the linked article thinks that we can solve the deficit by only taxing the rich. We will need to cut spending as well as revisit our corporate tax structure.
But the extension of the Bush tax cuts added billions to the deficit, making it a step in the wrong direction.
We will need to cut spending as well as revisit our corporate tax structure.
If by that you mean “eliminate corporate income tax,” I agree.
But the extension of the Bush tax cuts added billions to the deficit
There were no Bush tax cuts, only tax-rate cuts. And there is no way for you to know their effect on the deficit, but my bet would be that the extension will reduce it, and that raising them would have increased it.
It takes a statist to regard the government’s fiscal health as a driver of overall economic health, rather than vice versa. The recent cry that we can’t “grow” away the deficit is codswallop.
No government has ever spent its people into prosperity, with deficits or without.
It doesn’t work any way you slice it. Money is merely a medium.
Here is an example I came up with. Suppose there is a river, and on that river are Port A and Port B. Port A is an agricultural center. Every year, they send their grain up the river to Port B.
One year, there is a severe drought at Port A, and there is less grain to ship. In Port B, they note that fewer barges are coming up the river with grain. They blame their barge owners, and seize their vessels and send them down the river to get more grain. But, there is only so much grain, so the greater number of barges are laden with less grain per barge.
The upshot: they get the same amount of grain as before, but they are overall losers because they have to pay for all the extra fuel and labor to send the extra barges.
The barges are merely the MEDIUM for shipping the grain. The thing of value is the GRAIN. Building more barges or seizing them from their original owners doesn’t change the supply of grain.
I was recently wondering about progressive corporate tax (or scaling income taxes to that effect). It might be a relatively clean way to discourage to big to fail businesses and encourage more smaller startups. A way of compensating smaller businesses for the proportionately greater bureaucratic burdens they are generally faced with.
Mary Katharine Ham already performed this exercise, http://dailycaller.com/2011/03/11/hammertime-moores-national-resources/
Read about it so many places that I don’t remember if it was already linked here.
At least Chris agrees for the need to cut spending. Now only if the Democrats in the white house and congress would listen.
Wodun – they are listening. The problem is that one side won’t even consider cutting military spending, and that’s one of the places that the real money’s at.
Wrongo, Chris. The entire military budget is a mere $600B, and that includes all the housing, medical, pension, and other benefits. It is a long, long time since Defense was the biggest item in the budget.
The budget deficit this year is $1.6T. Cut defense completely, and you’ve still got a $1T spread to cover, at least until the barbarians smash the gates.
Bart – there’s also $200 billion in Homeland Security to include in defense. Non-defense discressionary spending is 18% of the total budget. The extension of the Bush tax-rate cuts added $400 billion to the deficit this year. (Source for all of the above here.)
If you’re serious about reducing the deficit, cuts in every area and tax rate increases are needed. That’s the way the math works.
Chris – next time, look for a credible news source.
Preventing the Obama tax increase cost nothing. Had it been allowed to go forward, the resulting decline in economic activity would have triggered a real decline in revenue.
Notwithstanding your legerdemain, Homeland Security is not Defense. Is it your belief that we do not need Homeland Security?
The things you wall off as “non-discretionary” are the items which are not sustainable. They are the gaping wound which will continue to bleed in increasing volume no matter what band-aid you propose by gutting other necessary spending.
You and those with whom you agree ideologically may succeed in refocusing the debate on red herrings, but it will not even do you any good in the long term.
Bart – so the Congressional Budget Office isn’t a credible news source?
The issue is not whether or not we need Homeland Security, Defense, Social Security or the National Weather Service (discretionary spending). We need all of them. The question is at what level are we going to fund them and how.
Your argument about tax rate cuts, real revenue and economic growth is defeated by history. If tax rate cuts paid for themselves, we wouldn’t be in this deficit in the first place. If tax rate cuts were as stimulative as you claim, the economy wouldn’t be in the dumps. After all, we’ve had these tax rates for years.
And there’s the problem.
Of all the things you named, Chris, only defense is required by the Constitution. So maybe we don’t “need all of them.”
(Disclaimer: my wife works for the National Weather Service. Even she understands we don’t need that agency the way we need Defense.)
McGehee – we don’t need to know a hurricane or tornado is coming?
I’m not going to argue with you on this, Chris. The real history says nothing of the sort. And, any idiot should be able to comprehend that there is a point at which increasing taxation becomes counterproductive. Consider the topic “non-discretionary.”
Are you going to continue to juggle red herrings? Or, are you going to come to your senses and realize you have nothing to gain by the participating in the charade?
real history says nothing of the sort So the economy is booming? I mean, we had two tax rate cuts in the early 2000s, so that should by your theory lead to economic growth.
And, any idiot should be able to comprehend that there is a point at which increasing taxation becomes counterproductive. Yes – except it’s a point we’re nowhere near hitting.
“So the economy is booming?”
It did pretty darn well, before the Democrats’ mortgage stink bomb went off, and a decidedly business unfriendly administration road into town. Markets anticipate trends, and react accordingly.
“…except it’s a point we’re nowhere near hitting.
Riiiiigghhht… because things are going so well now.
er… rode into town.
Bart – so the credit collapse that happened BEFORE the 2008 election, the one that caused Bush to scream for TARP money, was somehow the Democrat’s fault? The market was using their psychic abilities to predict who would win the election?
At what point do things become the fault of the party in power? Republicans control Congress from 1994 to 2006, yet have no blame in the mortgage crisis? Or the deregulation that allowed a mortgage crisis to spread everywhere?
I’m not the person who needs to come to his senses.
Forget it, Chris. People at this site are too familiar with the CRA, and the “heroic” actions of Barney, Chris, Maxine, et al. to keep the bubble growing. And, people here also know that the Republicans tried on several occasions to rein in the excesses, and were rebuffed each time.
Deregulation is another red herring, particularly when the deregulating was eagerly signed into law by a Democrat: Bill Clinton.
All that stimulus money now has to be taxed back – with considerable interest. Realistically tax rates will be increased, and some wealth from the private sector transfered to the government. Yes this will have a long term destimulating effect on the economy, however, it is more important that the debt gets paid back before the interest (and other unintended effects) become crippling. For the good of the country it needs to be paid back very quickly, even if that means pillaging the private sector (which is mostly the middle class) to do so.
The stimulus money was like borrowing from a loan shark at absorbanent rates in order to overcome an immediate crisis. Economic growth now gets diminished a couple times over to pay for it. Unfortunately this means that the hope of growing the economy (and thereby the tax take) in order to fix the deficit will not be possible. That means tax increases (taking money from private sector investments, mostly from the middle class) and spending cuts. It is critical that the loan shark gets paid back quickly – at almost any cost.
Medicare, Medicaid and social security will all have to be reformed and cut to make enough of a difference. Sadly few politicians have been preparing the public for this. The republican party had the opportunity for honesty with regard to this before the last election, but chose ongoing corruption instead.
While I think circumstance are dire enough that increasing taxes will be a necessary part of the short term solution, this will further impoverish the country and hurt growth rates. Somehow the government will need to be held accountable (punished) for its excessive spending in times of hardship – exactly when the country could least afford it.
Chris Gerrib Says:
“Wodun – they are listening. The problem is that one side won’t even consider cutting military spending, and that’s one of the places that the real money’s at.”
I would hardly consider the $6b in cuts out of a $1.4-1.6t deficit as listening.
I think the Republicans are willing to make some cuts to defense but not to gut it in the middle of two wars and threats of chaos on all fronts. The alternate engine for the joint strike fighter was cut.
The real money is in SS, Medicare, and Medicaid. Those three make up about 60% of the budget. While the Republicans don’t want to gut those institutions, modest changes like raising the retirement age to 67 are met with mass hysteria from the left.
Also, I think the term you are looking for is opportunity cost when talking about whether or not to increase the tax burden on the rich.
And, a point of historical fact: Republicans controlled Congress by filibuster-constraining margins for only 4 years out of those 12 with a like-minded President.
Pete Says:
March 14th, 2011 at 1:06 pm
“Economic growth now gets diminished a couple times over to pay for it.”
Penny-wise and Pound-foolish. It’s like tying a carrot on a stick. There is no way to “pay down” the debt without increasing production. Read my post at 9:39 am.
wodun Says:
March 14th, 2011 at 1:08 pm
“The alternate engine for the joint strike fighter was cut.”
That’s nothing. The entire F-22 program was cut! It’s never enough. And, it’s never going to be enough, in the face of burgeoning entitlements.
Bart, that is not what I said. I am one of the first to apply the second law of thermodynamics to economics. The productivity cost of the deficit is becoming greater than productivity gains in the private sector – whether the private sector likes it or not it is liable for government debt.
Maybe I can put it this way; the government is currently living off of its credit card and the bill is getting away on it. It is in the best interests of the private sector to increase its overdraft in order to pay off the government’s excessive and unsustainable credit card debt. Somehow the private sector needs to then take the government’s credit card away.
A depressing thought, war is somewhat inversely proportional to economic growth. in times of slow economic growth the need for military generally increases. Cutting defense spending is probably not that sensible at the current time.
Chris Gerrib said: ” …they are listening. The problem is that one side won’t even consider cutting military spending, and that’s one of the places that the real money’s at.”
Rand Paul (R – Kentucky) proposed $500 billion in cuts, including a $47 billion cut to the military, without touching Medicare, Medicaid, or Social Security.
It should be obvious to all by now that the New Deal programs must be rolled back – a raise in the retirement age, booting second- and third-generation welfare recipients off the dole, getting the federal government out of the business of insurance and medical care altogether – these are all going to have to be done at one point in the not too distant future. The longer the change is delayed, the more severe the change will have to be.
If the US waits until the interest payments on the national debt exceed GDP, then the whole world is in big big trouble.
“The productivity cost of the deficit is becoming greater than productivity gains in the private sector…”
Assuming that were the case, we would, quite simply, be doomed, and we might as well start repudiating the debt now while we still have the shirts on our backs.
But, it is not the case. The debt is not beyond anything we have ever seen in terms of GDP (yet), and we are a nation of vast natural and human resources, should we decide to employ them.
Republicans control Congress from 1994 to 2006, yet have no blame in the mortgage crisis?
Yes Chris, they are to blame, for going along with the Democrats. This is why the tea party exists; to get rid of the RINOs (or even those that smell just the tiniest bit like a pachyderm.)
Bart, you’ll never convince them that money is not the grain.
Medicare, Medicaid and social security have to disappear from the budget along with about 10% of everything else remaining. Recent articles have pointed out that the government doesn’t owe us anything for the money they forced us to give it. It’s going to happen, like it or not. A lot of people are going to be hurt (I’m frantic to find a way not to be one of the casualties.)
We should be increasing the military, but we can’t afford it now. When we get hit by nukes (not if, when) the vultures will come. We need to be ready with enough conventional forces to hold them off. Ignoring the reality of this dangerous world is an American tradition (of the left.)
The Obama admin does have a plan. Make our money worthless so we can pay off the debt. This is why others want to stop trading in dollars. But wrecking our economy, while it may better allow them to demagogue, is not in the interest of our long term future.
The debt is not beyond anything we have ever seen in terms of GDP (yet), and we are a nation of vast natural and human resources, should we decide to employ them.
Indeed, but the minimum opportunity cost for the economy is a path that involves some increase in taxation (wealth transfer from the public sector) – conditional on dramatic spending cuts that enable the deficit to be balanced. Without this I doubt the government will be able to reduce the deficit in a timely manner. Practically speaking, the government will not be able to reduce spending quick enough (especially considering long term obligations). The government seems able to increase taxation far more quickly than it can reduce spending.
“If the US waits until the interest payments on the national debt exceed GDP, then the whole world is in big big trouble.”
The creditors will revolt well before then.
Bart – so the Congressional Budget Office isn’t a credible news source?
Chris, you ought to know by now that the CBO is not a credible news source. I just did a google on this matter, and you’ve posted in many threads where this error was corrected. So why do you keep making this mistake over and over again? Can’t you find a credible news source to back the claims you want to make?
What percentage of bad loans us the CRA again?
Look it up and explain how that number compared to the unregulated loans market caused the problem for me.
Nice to see nothing changes in the level of denial here.
Karl – It’s “not credible squared.” It’s the CBO as reported by MSNBC.
Daveon Says:
“Look it up and explain how that number compared to the unregulated loans market caused the problem for me. ”
How about a link?