'Revenue problem' the cause of nation's budget deficit, not over spending

Posted on Sun, May 15, 2011 : 7 a.m.

'Revenue problem' the cause of nation's budget deficit, not over spending

By Guest Column

We are not broke, as the Republican Party would have us believe. There are two sides to any budget - the income side (revenues) and the spending side. Much of the current deficit created under President Obama is the result of government revenue being substantially reduced due to the unregulated excesses of Wall Street that led to the housing bubble, and because of spending to create jobs. In fact, one-third of the Obama stimulus package went to tax cuts. But the biggest part of today’s deficit is a direct result of what happened between 2001 and 2008.

Tom Burroughs

George W. Bush came into office with a budget surplus because in the last four years of Clinton’s presidency, the government took in more money than it spent. It took us from 1789 to 1980 to reach a trillion-dollar budget deficit. Reagan doubled that to three trillion and George W. Bush nearly doubled it again as the deficit rose from 5.7 to 10.7 trillion. Bush took us into Iraq and Afghanistan and signed a costly Medicare Prescription drug bill, yet did not account for any of this spending in the budget. It was all borrowed. Then, astonishingly, he signed the largest tax cut in American history, most of which went to America’s wealthiest people. He is the first president to declare war and cut taxes.

Now, Paul Ryan and the GOP want to discontinue Medicare by 2022 and replace it with a voucher system and leave private insurance companies in charge - with their high overhead costs and astronomical profits. The top five health insurance companies in America earned profits of $12.2 billion in 2008. Ryan also proposes reducing the tax rate on America’s wealthiest people from 35 percent to 25 percent. The Republicans are telling us that we can no longer afford to support public safety, educate our children, protect women’s health , repair roads, bridges, airports, protect our air and water supply, or support medical research. And the list of cuts goes on, impacting our quality of life, eliminating ever more jobs, and jeopardizing our collective future. These same Republicans who quietly went along with the Bush policies now suddenly see deficits as a serious threat to our economy.

Government tax revenues today are at their lowest level since 1950. Where is the prosperity that the Bush tax cuts for the wealthy was supposed to create? Where are the jobs? The rich are much richer than they have ever been, and corporate profits are back to pre-recession levels. Large bonuses are being paid to corporate executives while one-fourth of our children are on food stamps and people are dying because they can’t afford health care or health insurance. In addition, more than 20 million people are either unemployed, under-employed, or completely out of the job market.

In 2008, the richest 1 percent of Americans (adjusted gross income over $380,354) made 20 percent of all the income reported to the IRS. That’s almost twice the 12.75 percent of total income earned by the lowest 50 percent of workers. That translates to 1.4 million people earning 20 percent of all income reported while 70 million people share just 12.75 percent. Yet the tax rates for the wealthy remain the lowest since World War II.

Government by the few and the wealthy is not compatible with democracy. We are seeing evidence of this across the Middle East, as well as in Tunisia and Libya. We are also seeing that reality being played out here at home in state capitals across the country - in Madison, Columbus, Lansing, et al.

MIchigan Congressman Dave Camp, chairman of the House Ways and Means Committee, tells us that the budget crisis is not a “revenue problem.” He says we must revise the way our economy functions and that Medicare and Medicaid are “false promises,” programs that are unsustainable. He further says that Obama’s plan to end the Bush tax cuts for those earning over $250,000 a year would hurt small business. How many small business owners are earning that amount of money? And even if a few might be earning that amount, why not end the cuts just for those making over a million a year? But Republicans even oppose that idea. Warren Buffet has disclosed that he paid just 17 percent in taxes last year, while his secretary paid substantially more. He has said, “I should pay more taxes.”

Returning the top marginal tax rate to 39 percent, what it was under Bill Clinton, during a decade of prosperity and budget surpluses, would take care of about three-quarters of the current budget deficit in 3 to 5 years. That is just one of the reasons why it is wrong to say we are broke. We have a tax structure that enabled the wealthiest 10 percent of Americans to receive 100 percent of the average income growth in the years 2000 to 2007 while enjoying the benefits of lower taxes. It is a "revenue problem", and it’s time to look at the revenue side of the budget and decide whether all the public service cuts are a justifiable trade off for giving millionaires and billionaires even more tax cuts.

Health care reform combined with a more progressive tax system will enable us to maintain a decent standard of living while continuing to provide for education, public safety, infrastructure maintenence, protection of air and water, defense, and all the services most of us would agree are essential to our quality of life. To accept the notion that the United States of America is broke and that we can no longer provide basic services to our citizens is not who we are as a nation.

Tom Burroughs is a retired history teacher and guidance counselor in the Ann Arbor Public Schools.

Comments

SEC Fan

Tue, Jun 12, 2012 : 5:37 p.m.

The budget surpluses under Clinton were $1.9 Billion in 1999 up to $86.4 Billion in 2000. These are the actual surpluses if he had not taken the excess social security taxes (as every president/Congress does). Mr. Burrough's statement regarding eliminating 3/4 of the current deficit in 3-5 years (by returning the top tax rate to 39%) is not accurate. The Bush era tax cuts, in their entirety, are estimated to cost $3.7 Trillion over 10 years. Of that, "only" $700 Billion is attributable to the high income earners. That's $70 Billion a year and the projected deficit for 2012 is $1.3 Trillion. So in 5 years, we would recoup some $350 Billion or about 26% of the "current deficit". All of the Bush era tax cuts have "cost" the federal government (up to 2011) a total of $2.8 Trillion. That's over the past 10 years; so we're talking about $280 Billion a year in lost revenue. Federal Surplus/Deficit by year: Bush Years 2001: + $128 Billion (surplus) 2002: - $158 Billion 2003: - $378 Billion 2004: - $413 Billion 2005: - $318 Billion 2006: - $248 Billion 2007: - $161 Billion 2008: - $459 Billion 2009: - $1.412 Trillion Obama Years 2010: - $1.293 Trillion 2011: - $1.299 Trillion 2012: - $1.327 Trillion (estimated) I put the above deficits (from the White House website) there by year to show you that the "enormous" deficit increases - where they increased 3 to 4 fold) did not occur until the world got hit with the Global Recession at the end of 2008. Receipts (i.e., taxes) were: 2007: $2.568 Trillion 2008: $2.524 Trillion 2009: $2.105 Trillion 2010: $2.163 Trillion 2011: $2.303 Trillion 2012: $2.469 Trillion (estimated). What this shows is that the bulk of the deficit issues is, indeed, Revenue as the author states in the headline. However, it has nothing to do with tax cuts.

SEC Fan

Tue, Jun 12, 2012 : 5:53 p.m.

ugh...need more characters :-) but, to continue: One could easily argue that had it not been for the Global recession's effect (cost of TARP and lost revenue) on the 2008 budget, we potentially could have had a surplus that year. We most definitely would have had one in 2009.

Mike K

Mon, May 30, 2011 : 12:35 p.m.

Here are some facts to ponder. In 8 years, Bush collected significantly more income tax than Clinton did in his 8 years. It's right here. The Hidden Truth About the Bush Tax Increases <a href="http://www.realclearmarkets.com/articles/2010/08/16/the_hidden_truth_about_the_bush_tax_increases_98625.html" rel='nofollow'>http://www.realclearmarkets.com/articles/2010/08/16/the_hidden_truth_about_the_bush_tax_increases_98625.html</a> I use this one when the "tax and spend" crowd starts about taxing the rich along with the laundry list of talking points (invest in "infrastructure...". This is a fact. It's simple addition. Enjoy.

pidi

Wed, May 18, 2011 : 4:11 a.m.

Well written, Mr. Burroughs, and thanks for credible, verifiable facts. As a former Ann Arborite who got a public education from the Ann Arbor Public Schools and the University of Michigan, I applaud your career as a public school teacher and am appalled at the popularity of the oppositional responses you got, especially coming from my old progressive town. There is nothing valuable about criticizing your viewpoint based on your public service and those many who did here should be ashamed. The assumptions that one should compare how to properly manage one's personal budget to the operations of the federal government are equally naive, misguided and foolish. Again, sad to see the applause. What, find your own way to navigate an unregulated health care system without a safety net, in your infirmity, or care not about your loved ones much less anyone in need? What is this, dog eat dog regression? Did we learn nothing about deregulation and the devastating effects of the private market gone wild on the economy? How about checking out the cost of American wars and ending them as a means of reducing the deficit: <a href="http://costofwar.com/en/" rel='nofollow'>http://costofwar.com/en/</a>. How about checking out the falling away soldiers who see through it all: <a href="http://www.ivaw.org/" rel='nofollow'>http://www.ivaw.org/</a>. How about telling Boehner and his cronies to cut big oil subsidies: <a href="http://www.couragecampaign.org/page/s/oilsubsidies" rel='nofollow'>http://www.couragecampaign.org/page/s/oilsubsidies</a>. How about getting clear that Medicare and Social Security are viable and must be strengthened and preserved for the security of our elders and dependents, no matter what: <a href="http://vtdigger.org/2011/05/13/aarp-report-shows-social-security-is-viable-for-another-25-years/" rel='nofollow'>http://vtdigger.org/2011/05/13/aarp-report-shows-social-security-is-viable-for-another-25-years/</a>. How about more about the income disparities that have widened alarmingly in this country: <a href="http://thinkprogress.org/2011/05/04/us-unequal-uganda-pakistan/" rel='nofollow'>http://thinkprogress.org/2011/05/04/us-unequal-uganda-pakistan/</a>. Again, thanks Mr. Burroughs, for all of your contributions to society as a public employee and a thoughtful, caring person.

Mike K

Mon, May 30, 2011 : 12:45 p.m.

Correction Pidi - there is no such thing as "big oil subisidies". This is a myth planted from the left to anger people. "Big Oil" enjoys 3 tax write offs that EVERY corporation in America can enjoy. These write offs (deductions) were put into law by our government for specific reasons (e.g. American jobs....). The 4th deduction is specific to the oil industry, but it is very small compared to the rest (maybe 10 or 15%). Now that we have that cleared up, the second point about the deductions "Big Oil" takes are actually quite small in the grand scheme of things. We are talking about $4B total when the debt is $14T. Peanuts, really. It's liberal grandstanding about nothing. Lastly, we need more oil companies! Why would I say that? Well here is Exxon Mobils income statement <a href="http://www.google.com/finance?q=NYSE:XOM&fstype=ii" rel='nofollow'>http://www.google.com/finance?q=NYSE:XOM&fstype=ii</a>. they paid $8B in income taxes in ONE quarter. They are a GREAT taxpayer!! Much better than GE under the liberal leadership of Jeffery Immelt. These are facts, verifiable facts. I agree with you that we need to get of these wars.

jcj

Wed, May 18, 2011 : 12:48 p.m.

Spoken like one that made their own living OFF the public!

mojo

Tue, May 17, 2011 : 5:48 p.m.

Contrary to what you may have heard, you are not owed anything! .

maallen

Mon, May 16, 2011 : 1:29 p.m.

Of course it's a "revenue problem." It became a revenue problem when we started SPENDING more than we take in. When that happens in my household, it means that we need to start cutting back on our spending so that it is less than what is currently coming in. For some reason people think that if spending is more than the revenue we take in then we need to start taxing the "rich" in order to cover our spending habits. But what amazes me is no one can define rich, Who is rich? Is it the person who drives a nice brand new cadillac? Are they the rich people? Is it the family that lives in a 4,000 sqft house? Are they the rich people? Is it the mom and pop business owners? Are they the rich people? Sure, we can tax the rich people, whoever they are, but once they are taxed so much that they earn less than what is defined as being rich, then who do we go after? Out of control spending needs to stop and we need to prioritize our spending. Think about it, is it really necessary to spend $200 million NOW for trains? Is now the time to really be doing that?

Edward R Murrow's Ghost

Tue, May 17, 2011 : 1:20 a.m.

Rich = top 2% of income earners. How's that for a definition? Good Night and Good Luck

maallen

Mon, May 16, 2011 : 9:22 p.m.

Gee Townie, does it matter if I supported the two wars or not? Once again another one has failed to define "rich". It's a great word for the liberals to throw around, but please define it.

Townie

Mon, May 16, 2011 : 6:17 p.m.

How about looking at the causes of the 'spending' -- two unfunded wars (did you support them?), a huge tax cut for the rich just about covers our present deficit.

eric

Mon, May 16, 2011 : 3:27 a.m.

If Democrats and Republicans are against deficits, why do we have deficits? Democrats had two years to fix the problem and proceeded to creat the two largest deficits in our nation's history. Hmmmm.

C. S. Gass

Mon, May 16, 2011 : 2:13 a.m.

Tom, I'm not going to argue each and every point you make that is wrong, I'm 42 and don't have that much time left on this planet. I will say that 'the rich', that you want to 'get', like most ex union employees, pay most of the taxes and use few if any of the services. I don't really mind poor people being taxed more. Who uses more police? The man in the mansion or the man in the trailer? My bet is on the denizen of the trailerpark. Most mobile home parks are havens for lawbreaking cretins. It's rare that the police deal with the above $250k a year crowd. Why then should they pay more for police? The same is true for fire departments. Rarely do mansions burn because the crackpipe fell on the shag carpet. And the above $250k/yr. people more often than not send their kids to private schools, so they're paying for their own kids and your's too! How about counting yourself lucky that the rich pay for you to have these things??? I, by the way make much, nuch less than $250k/yr, yet I am not infested with jealousy, which is the driving force behind socialism, like the rest of the 'working class'. I'd be more than happy with a flat tax. Everyone pays the same, and even then the rich, based on their consumption of public services, still pay too much. Spending most certainly IS the problem Tom. We don't need our government to do half of the things it is doing today. I have NO confidence that Medicare, Medicaid or Social Security will be there when I am old and frail. None. And I'm ok with that. I never asked our government to do these things for me, and I don't want them. Why they are considered mandatory and our military discretionary is beyond me. It does say that we will have a military in the Constitution. It makes no mention of Medicare, Medicaid or Social Security. Nor should it. Stand on your own two feet, or fall, but don't step on other peoples shoes.

mun

Mon, May 16, 2011 : 1:35 a.m.

For those who claim that tax cuts create jobs, check out the unemployment rates of Florida and Nevada. Both have no state income taxes and are right to work states, yet their unemployment rates are higher than Michigan's. Vermont, which is on the verge of passing single payer health care, has 5.4%. <a href="http://www.bls.gov/lau/" rel='nofollow'>http://www.bls.gov/lau/</a>

Edward R Murrow's Ghost

Tue, May 17, 2011 : 1:19 a.m.

"Both economies are heavily driven by specific industries that are highly susceptible to the economy in the rest of the US." You mean like Michigan? Good Night and Good Luck

DonBee

Mon, May 16, 2011 : 1:15 p.m.

Florida is dependent on retirees for much of the state economy, when they found their 401Ks short of funds, they did not buy new houses and did not retire to Florida. Nevada is focused on entertainment, when the funds for entertainment (including refinancing houses to go play in Las Vegas) disappear, so does employment in Nevada. Both economies are heavily driven by specific industries that are highly susceptible to the economy in the rest of the US.

Motor On

Mon, May 16, 2011 : 12:38 a.m.

How wonderful to watch everyone bash each other and Mr. Burroughs. It is all very exciting and utterly useless. Those siding with the author, trampling each other to get to the moral high ground and sounding very incredulous as to why the 'obvious' can't be seen by everyone else. The regressives are happy to throw the author under the bus (because he had the gall to be a teacher AND have an opinion) and fire their their snarky retorts while trying not to spill kool-aid on themselves. Like it or not, there IS a revenue problem. We don't tax corporations. Not in a way that is fair or equitable. The actual tax burden on corporate America is way out of balance. The actual tax burden on the middle class is way out of balance. Spending is also out of control. We are spending on all those unfunded pet projects passed by those fiscal conservatives like Medicare prescription drug coverage, Iraq, Afghanistan to name a few. The answer is not to tax the rich, or 'confiscate the wealth' as the wing-nuts would like to frame it, nor is it to burn all the 'entitlements' at the Altar of St. Rand. There used to be a middle ground. There just aren't many people like Mr. Burroughs brave enough to venture out to find the solution there.

Macabre Sunset

Sun, May 15, 2011 : 11:28 p.m.

I would expect no less from a retired teacher who no longer has to pay taxes. He gets a cushy public-funded retirement and doesn't mind spending his grandchildren's future. Not in the slightest.

Townie

Mon, May 16, 2011 : 6:16 p.m.

What about Wall Street? They were the criminals who destroyed the economy with their fraudulent 'financial products' that created the Great Recession. Not teachers, public sector workers, etc. At least get your facts straight.

debling

Sun, May 15, 2011 : 10:09 p.m.

How do we increase revenues? These can be increased by a) making sure that those that pay taxes, pay the appropriate amount, b) eliminating grants, subsidies, write offs and other tax breaks to individuals and companies. For every $ tax break that is given, the public picks up the tab. The solution to fair taxation is a flat tax. Take all of your income (salary, dividends, pension, capital gains, business income, etc), subtract a deduction for you and your dependents (say $7500 each) and pay a flat tax on everything above this. Simple. The IRS can also be slimmed down as well and save more money. On a national level, every city, county, state and federal agency must stop providing subsidies for private business. This is an example of socializing the costs and privatizing profits. We will free up a tremendous amount of revenue if we stop giving our tax money away to those that don't need it. This includes churches. There is no reason that churches should be given tax free status and avoid paying taxes on real estate or income.

debling

Sun, May 15, 2011 : 9:59 p.m.

Ahh that simple equation, "Revenues - Expenses = Surplus/Deficit". The accounting is pretty straight forward but the politics complicated. Few want to pay the "revenues" but many wish to share in the "expenses". But we do spend more than we bring in. Is it a spending problem or revenue issue? All depends on whos Ox is to be gored. The truth is, it is both. On the spending side, the first step is to separate Social Security from the general revenues and insist it is self funding. Either social security revenues increase or the payouts decrease and any surplus should be invested to generate revenue. For medicaid and medicare the problem is that Washington is focused on who should pay for the bill but not on how to drive medical costs down. Reducing patents from 20 to 7 years for drugs and speeding the importation of generics will put price pressure on pharma products. Allowing consumers to order their own medications online without a prescription of a costly doctor is another important step. Doctors make too much money currently. Another important step to reduce costs is to double or triple the number of practicing doctors in the country to increase competition for business and put wage pressure on them. Dramatically increasing the number of foreign doctors in the country or the number of students in US medical colleges will help. As far as hospitals are concerned, why is it that your mechanic has to give you a written estimate of the charges for services but your hospital does not? Mandating that prices are posted online and an estimates are given before service will help consumers save money. Finally, lets deal with defense. You either want a global empire or low taxes. there is no in between. Why do we still have bases in Korea, Japan, Iraq, Germany, etc. etc. etc. Time to cut defense by 1/2. We can't afford the level of spending. Next, let's talk revenues ...

grye

Sun, May 15, 2011 : 8:17 p.m.

Control spending, allow businesses to flourish, and if necessary, a graduated income tax. If it worked during Clinton, I suggest trying it again. It is odd that the far right revered Reagan, however he increased our national debt all the while espousing smaller govt and spending controls.

Jeffersonian

Sun, May 15, 2011 : 7:26 p.m.

I read Paul Krugman in the New York Times and play a game. How soon in his writing will he begin the Republican bashing. Well Tom Burroughs would make Krugman blush. The political hatchet is wielded in the first sentence. Not that I'm a republican but the democrats are laughable.

John B.

Tue, May 17, 2011 : 8:21 p.m.

T: You misinterpreted my comment. We most definitely have a serious revenue problem. Taxes, adjusted for inflation, are the lowest they have been since the 1950s. We are spending waaay to much on defense. I would be happy to pay more in income taxes than I pay right now, if it were part of a sensible plan to raise taxes and reduce many areas of spending, in order to create a balanced budget.

Townie

Mon, May 16, 2011 : 6:14 p.m.

And your point was? You don't like Krugman (Nobel Prize envy I guess). How about contributing some facts rather than just a one person opinion. I hate Fox News but it doesn't contribute much to this thread does it?

John B.

Sun, May 15, 2011 : 8:44 p.m.

The truth is difficult to take, eh?

Jeffersonian

Sun, May 15, 2011 : 7:16 p.m.

The big picture is this- what the government has been doing can not be sustained and the originators of the government Ponzi scheme never had to bear responsibility for their actions. The very idea of building trust funds on loans made to yourself is outrageous. The "investment" has been made in supporting old people, fighting wars and paying interest- guess what, there is no return on any of this! It's a case of generational banditry.

A2K

Sun, May 15, 2011 : 4:14 p.m.

We need to both cut spending AND increase taxes. Increase taxes on everyone except the poorest citizens to Clinton-era levels, phased in over a 5-year period, and increase capital-gains tax to 30%. Close loopholes in the tax code, eliminate tax-incentives for overseas job relocation, harsh penalties for utilizing tax-havens, audit of US-to-overseas bank transactions, and investigation of ALL wallstreet entities responsible for the financial crisis/mess we are in - with serious jail-time...perhaps that would discourage the worst of the greed and excess. While I'm at it: - Debench/Impeach Scalia and Thomas for Citizens United decision and for lessening the stature of the entire SCOTUS to a corporate-purchased joke. - No more Diebold voting, need another company with strict bypartisan oversight, and standardized, federal voting form used in ALL states. - Single-Payer healthcare on the table again...with teeth!

jcj

Sun, May 15, 2011 : 3:53 p.m.

Hey Tom Since you say it is a revenue problem. I am sure you are in favor of giving up more of YOUR public retirement income to taxes, right?

Adam Jaskiewicz

Sun, May 15, 2011 : 3:20 p.m.

It's *BOTH*. We're spending too much, and not bringing in enough to cover it. We need to cut spending drastically, and raise taxes on all but the poorest of the poor. Once the government stops taking out payday loans to cover credit card bills, and has a reasonable reserve built up, we can use surplus in the fat years to pay down the debt, and reserve funds in the lean years to cover the deficit. Politicians need to stop bickering like little kids and start solving problems.

hroark

Sun, May 15, 2011 : 3:08 p.m.

The current deficit/debt problem began with mindless tax cuts that began in 1981, with the result that revenues to the federal government dropped as a percent of GDP. The current dollar arguments offered by tax cut advocates are seriously flawed. We have a serious revenue problem. According to CBO, revenues to the federal government were 14.9% of GDP in FY 2009 and 15.1% in FY 2010, with the post WWII average of 18.1%. In FY2000 revenues were about 20% of GDP. Then the Bush-43 2001 and 2003 tax cuts. For those who suggest that the wealthy create the jobs and given the wealthy got much wealthier via Bush tax policies, where was the job creation of the past ten years? Answer: Job creation was nonexistent during the Bush-43 years. According to the Bureau of Economic Analysis, the average total tax burden (local, state, and federal) has fallen to 23.6% of income, its lowest level since 1958. The US had been gradually paying down the post WWII debt which was 121% of GDP in 1946 to 32% of GDP at the end of the Carter administration, 1980. Then the destructive tax cuts started by Reagan began and ushered in over the past 30 years the massive deficits/debt we currently experience.

SEC Fan

Tue, Jun 12, 2012 : 10:12 p.m.

@hroark. Your hypothisis is false. Revenues dropped in 2009 due to the global recession...there were no new tax cuts that year. Check your facts. If you do your comparison using revenues from 2006, 7, 8...you'll see how wrong you are.

hroark

Sun, May 15, 2011 : 10:16 p.m.

Many of the "hidden taxes" listed are included in the realm of federal, state, and local taxes. Property taxes are included in local taxes. The total of "stealth" taxes paid is probably exceedingly minor when compared to the 23.6% number from the Bureau of Economic Analysis. Definitive numbers for "stealth" taxes from an authoratative source would be helpful.

DonBee

Sun, May 15, 2011 : 9:28 p.m.

While the Federal Tax burden has been falling, the total tax burden has not. State and Local governments have found lots of way to raise taxes without raising taxes. Franchise fees on cable, telephone, electricity, natural gas, and trash have more than doubled in the last decade - an average Michigan family currently pays approximately $200 a year for franchise fees. Since they don't take income into account, they are regressive. Most people don't even realize they exist. Property taxes for special education, police, fire, protection from development, greenbelts, parks, etc all have been passed. The number of cities with local income taxes have increase. Taxes on hotel rooms, rental cars, airline taxes, landing fees, sporting tickets, liquor licenses, etc have all increased too. Cigarette taxes, fuel taxes, etc all up in most of the US. In short there are probably more than 100 taxes you pay every year and most you don't notice - stealth taxes you pay every day.

jcj

Sun, May 15, 2011 : 3:03 p.m.

The reason a great number of people (but not all) have lost their homes in the last 5 years is because they spent more than they had. They had 2 ways to save their homes. Increase their revenue or reduce their spending. Like our government they had no inclination to reduce their spending. So even if they were able to increase their revenue they would just increase their spending. Government is in the same mode! All the you self proclaimed intellectual snobs can double talk all you want but this is simple economics!

Edward R Murrow's Ghost

Sun, May 15, 2011 : 2:44 p.m.

I see the usual suspects are out in force this morning, either with ad hominem, bogus numbers, or historical illiteracy. The national debt is currently somewhere north of $14 Trillion. Roughly $10 Trillion of that was accumulated during the Reagan, Bush I, and Bush II administrations. Source: <a href="http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt.htm" rel='nofollow'>http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt.htm</a> And, as David Stockman, the head of Reagan's OMB, makes clear, the Reagan and Bush I administrations deliberately ran up (then) unprecedented deficits. Source: <a href="http://www.nytimes.com/2010/08/01/opinion/01stockman.html?ref=opinion" rel='nofollow'>http://www.nytimes.com/2010/08/01/opinion/01stockman.html?ref=opinion</a> Under Bush II, the de facto president, Vice President Cheney famously said that "Reagan proved that deficits don't matter." And the Bush II administration drastically cut taxes while increasing spending. The result was that the national debt went from $5.8 Trillion to nearly $12 Trillion during Bush II's administration. And, as a side note, the Bush administration had the worst yearly average job creation record of any president since the end of the Second World War. Source: <a href="http://blogs.wsj.com/economics/2009/01/09/bush-on-jobs-the-worst-track-record-on-record/" rel='nofollow'>http://blogs.wsj.com/economics/2009/01/09/bush-on-jobs-the-worst-track-record-on-record/</a> So much for tax cuts creating jobs. But I digress. The nation's debt crisis was a willful effort to starve the beast through tax cuts. The problem, therefore, is not "spending". Our current debt crisis is a willful effort on the part of Republicans to "starve the beast" by restricting the flow of revenue. That is the very definition of a revenue problem. Good Night and Good Luck

Edward R Murrow's Ghost

Mon, May 16, 2011 : 3:04 a.m.

It's actually better than that, mun (or worse depending on your point of view). 22 states are right to work states. 10 of the 14 states with the highest unemployment rates are RTW states. Yeah. RTW bring jobs! Good Night and Good Luck

mun

Mon, May 16, 2011 : 1:58 a.m.

"So much for tax cuts creating jobs. But I digress" I agree! Check out the unemployment rates for Florida and Nevada. Both have no state income taxes and are right to work states, yet Florida as 11% unemployment, while Nevada is over 13%. <a href="http://www.bls.gov/lau/" rel='nofollow'>http://www.bls.gov/lau/</a>

Edward R Murrow's Ghost

Sun, May 15, 2011 : 6:43 p.m.

@Steve H: I want to thank you for you logical, fact-filled, and thoughtful contribution to this thread. Good Night and Good Luck

steve h

Sun, May 15, 2011 : 6:39 p.m.

You are one of the usual subjects. Thanks for checking in.

Dirtgrain

Sun, May 15, 2011 : 3:49 p.m.

Politicians of both political parties have played their role in increasing debt. Key with this discussion is debunking the Republican-created myth that Republicans are somehow the fiscally responsible ones in comparison with Democrats. That's just not the case.

hroark

Sun, May 15, 2011 : 3:29 p.m.

The budget process begins with the President's budget request. Then Congress tweaks the request and initiates the appropriation bill(s). Congress appropriated about the same amount Reagan requested in his eight budgets. The data can be found online. Conress controls the purse strings is a nice simple slogan, but Presidents have much influence on the budget outcome. Did Reagan ever veto any appropriation bill? I don't think so.

Edward R Murrow's Ghost

Sun, May 15, 2011 : 3:09 p.m.

"That Congress (who hold the power of the purse strings), of course, was controlled by Democrats" Then you didn't see clearly, and you didn't read Stockman's article, either. 1) Republicans controlled the US Senate for Reagan's first six years, and they controlled both houses of Congress in Bush II's first six years. 2) As Stockman makes clear, Reagan and Bush purposely underestimated in their budgets the cost of entitlement programs, spending on which is mandatory. This is also what drove up the deficit in Bush II's last two years in office from $500 billion to $1 Trillion to $1.9 Trillion. As the recession hit, tax revenue, which were already too low due to the Bush tax cuts, fell off the cliff while entitlement spending skyrocketed. And clearly you have no idea who ERM was, else you'd understand the last line. As I said in my original: "usual suspects . . . historical illiteracy" Kinda shot yourself in the foot with that one. Good Night and Good Luck

Bill Wilson

Sun, May 15, 2011 : 3 p.m.

"And, as David Stockman, the head of Reagan's OMB, makes clear, the Reagan and Bush I administrations deliberately ran up (then) unprecedented deficits." Gotta agree. That Congress (who hold the power of the purse strings), of course, was controlled by Democrats. "Good Night and Good Luck" Last time I looked, it was daytime, guy. Kinda shot yourself in the foot with that one.

Will Warner

Sun, May 15, 2011 : 2:20 p.m.

My understanding is that the surpluses of the 1990s resulted from two factors: A president and congress working together to control the growth of government spending, combined with a huge increase in revenue resulting, not from higher taxes rates, but from higher taxable income created by the robust economic growth of the tech boom. So, let's try that again. We can't call into being another tech boom, but we can control government spending while fostering growth in taxable income by producing the conditions for economic growth.

Edward R Murrow's Ghost

Tue, May 17, 2011 : 2:44 p.m.

By definition things were different in 1944 than they are today. And NO ONE is suggesting returning to a top marginal rate of 94%. But to suggest, as you do and as RepubliKan talking points insist, that returning the top marginal rate to where it was during the Clinton administration (a period when the economy crew and the deficit decreased) would cause some sort of economic disaster is an opinion born either of ignorance or of fear-mongering. There is no other possibility. Yes, things were different in 1944. There was broad based bi-partisan agreement that high taxes, historically high deficits and debts, and unprecedented government involvement in the economy were good things. These brought an end to the depression and resulted in the lowest unemployment rate in the nation's history. Today we have one of the nation's political parties playing politics with the deficit and the debt, not offering any real solutions (the Ryan plan actually makes the debt worse. But, hey, it cuts taxes, so all is good, right??), seeing political gain in doing so. So, yes, things were different in 1944. And still you offer no evidence that tax cuts = job growth. And I can only conclude that it is religious mantra--like so many Buddhist monks going HMMMMMMMMMMMMMMMMMMMMMMMMMMM. And with that I am done with this so-called conversation. It is apparent you have not facts for a discussion that began two days ago, just opinions. Opinions lacking supporting facts are vacuous. You, apparently, have no facts. Good Night and Good Luck

Will Warner

Tue, May 17, 2011 : 2:35 a.m.

Ghost, I suggested that for low unemployment to coexist with confiscatory tax rates there must be other factors in play. Then you listed them. Are we agreeing?

Edward R Murrow's Ghost

Tue, May 17, 2011 : 1:07 a.m.

"A more interesting period is 1977 to 1980 where the tax rates were some of the lowest and unemployment kept dropping until the rates were raised again." It must have been *very interesting* since tax rates were unchanged in that period. Source: <a href="http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=213" rel='nofollow'>http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=213</a> And the rest of DonBee's post proves my point very nicely. Matters not that soldiers were in the military. It matters that government spending put them there. Reductions in gov't spending meant reducing the size of the military and of the number of factories producing military goods. And what happened as a result? Unemployment went up!! Not terribly shocking to those of us with a grasp of macroeconomic principles. And, yes, government spending on the Korean War (and increased gov't debt) reduced the unemployment rate. All this proves is that we as a nation are fine with putting people to work if they are killing other people. Putting people to work on projects that will improve our nation? Not so much. Good Night and Good Luck

DonBee

Mon, May 16, 2011 : 11:23 p.m.

11,410,000 people in the military 138,397,345 people in the US 66,320,000 total workforce of the US Percentage of the workforce that was female 29.2 In 1946 - unemployment rose to 3.9 percent and female engagement in the workforce dropped to 27 percent In 1949 it was back to 8 percent and rising. The Korean war pushed the unemployment rate down again. Tax rates dropped at the end of WWII and were raised again for Korea. A more interesting period is 1977 to 1980 where the tax rates were some of the lowest and unemployment kept dropping until the rates were raised again. I cannot find a causation for either more jobs or less jobs in looking at marginal tax rates. Nor even a rational correlation. To many outside factors play into taxes vs unemployment.

Edward R Murrow's Ghost

Mon, May 16, 2011 : 9:56 p.m.

"Also note that the year cited is 1944. Note that this is not a representative year in our history" Why? Probably NOT for any reasons you'd recognze. That we were at war makes no difference to the economy. The war was the reason for much that happened economically, but the government could have spent that same sum of money on other "projects" and had the same impact. So what made 1944 ECONOMICALLY unique?: Highest marginal tax rate in history. Corporate tax rates that were significantly higher than they are today. The budget deficit amounted to 22% of the GDP (as opposed to barely 10% today) The national debt was nearly 130% of GDP (as opposed to less than 100% today) The federal spending accounted for 43% of the GDP (as opposed to 30% today) And all of this led to . . . 1.9% unemployment—the lowest in history. It's not the war that makes this unique other than the fact that the war provided the excuse for this to happen. It is that the above happened that makes 1944 unique. And despite all of these bad stats and a president who was a Democrat, the nation managed to emerge from this enormously prosperous. Amazing . . . that is, unless one never heard of John Maynard Keynes. Good Night and Good Luck

Will Warner

Mon, May 16, 2011 : 5:32 p.m.

@northside: "Will you've provided a fantastic example of Stephen Colbert's concept of truthiness, a 'truth that a person claims to know intuitively from the gut without regard to evidence, logic, intellectual examination, or facts...You can't site a single, factually-based example to support your position?'" What is my position, northside? An earlier poster observed that in a certain year our nation imposed the highest marginal tax rate in our history (94%) and simultaneously experienced the lowest unemployment (1.9%). From that, one might be able to entertain the thought that a 100% rate is not incompatible with zero unemployment. If true, wouldn't that be surprising? Surely you must know things that you can't Google up, so just ask yourself: Do these findings accord with your knowledge of how people behave? Could still be true, but isn't it surprising that the prospect of a greater return on their effort does not spur people to greater effort? Also note that the year cited is 1944. Note that this is not a representative year in our history. Note that perhaps it is not useful in any demonstration of general principles because other factors in play at that time (factors arising from the fact that we were engaged in total war) could easily swamp the effect of tax rates on employment. Now generalize this skepticism of "facts" that tumble out of Google, and you come to my position.

northside

Mon, May 16, 2011 : 2:07 p.m.

Will you've provided a fantastic example of Stephen Colbert's concept of truthiness, a "truth that a person claims to know intuitively from the gut without regard to evidence, logic, intellectual examination, or facts." You can't site a single, factually-based example to support your position.? Wow.

Edward R Murrow's Ghost

Mon, May 16, 2011 : 1:09 p.m.

@WW, You apparently lack any facts whatsoever to support your religious-like faith in tax cuts. And there were people who had such faith in the gods of Greece and Rome, as well. Good Night and Good Luck

Will Warner

Mon, May 16, 2011 : 10:57 a.m.

@Ghost: "Here, I'll help ya with one of ten examples: JFK's tax cuts (enacted during the LBJ admin) appear to have led to increased employment." Thanks, Ghost, but I can't cite that example because all it shows is a period of job growth following a tax cut. I don't know that the later caused the former because I can't control for all the other variables (or even know what all the other variables are). Given what I know about what makes people tick, though, it does sound plausible.

Edward R Murrow's Ghost

Mon, May 16, 2011 : 2:57 a.m.

"How do you know that that would not have been what happened without the Bush tax cuts?" Except, in the modern economy, the reverse seems to be the case. Tax cuts = job loss Tax increases = increased employment. Source: <a href="http://www.nytimes.com/2011/04/16/opinion/16blow.html?_r=1&scp=6&sq=charles%20blow&st=cse" rel='nofollow'>http://www.nytimes.com/2011/04/16/opinion/16blow.html?_r=1&scp=6&sq=charles%20blow&st=cse</a> Here, I'll help ya with one of ten examples: JFK's tax cuts (enacted during the LBJ admin) appear to have led to increased employment. I'm certain you can find nine more examples, right? What I find surprising is that people believe something with religious-like fervent but cannot cite one piece of factual evidence to support that belief and instead have to resort to asking rhetorical questions about hypothetical situations. Good Night and Good Luck

Will Warner

Mon, May 16, 2011 : 2:50 a.m.

@Ghost: "Having provided FACTS that show that high tax rates do not harm economic growth" But, given what we all know about what motivates people to economic exertion, isn't it odd that offering people the prospect of a greater return for their efforts doesn't move them to greater exertion, and even, according to your examples, sometimes has the opposite effect? I'm not saying you're wrong, only that is surprising. Isn't it? @hroark: "It would have been difficult for fewer than 1.1 million jobs (in 8 years) to be created under Bush policies" We'll we could have LOST jobs for 8 years; that would have been worse. How do you know that that would not have been what happened without the Bush tax cuts?

Edward R Murrow's Ghost

Mon, May 16, 2011 : 12:24 a.m.

Having provided FACTS that show that high tax rates do not harm economic growth, I see nothing but a response about a counterintuitive hypothetical. I can only conclude that there is ZERO actual FACTUAL evidence that cutting taxes encourages economic growth. But I already knew that. Good Night and Good Luck

hroark

Sun, May 15, 2011 : 11:56 p.m.

It would have been difficult for fewer than 1.1 million jobs (in 8 years) to be created under Bush policies, while 22.7 million jobs (in 8 years) were created during Clinton policies. It would have been difficult to have job creation that was worse than that which we actually experienced during Bush policies.

Will Warner

Sun, May 15, 2011 : 11:46 p.m.

@Ghost: "So it would appear high taxes did not have the deliterious effects claimed." Does this not seem counter-intuitive to you? @hroark: "" If tax increases curb economic activity and tax decreases spur economic activity, then why was the economic growth and job creation after the Bush-43 tax cuts meager while the economic growth and job creation after the Clinton tax increases much more robust?"" How do you know that the job situation would not have been worse without the Bush taxes cuts and how do you know the job creation would not have been better without the Clinton tax increases?

hroark

Sun, May 15, 2011 : 11:38 p.m.

WW should answer my question " If tax increases curb economic activity and tax decreases spur economic activity, then why was the economic growth and job creation after the Bush-43 tax cuts meager while the economic growth and job creation after the Clinton tax increases much more robust?"

Edward R Murrow's Ghost

Sun, May 15, 2011 : 11:37 p.m.

1944--highest marginal tax rate in US history--94% 1944--lowest unemployment in US history--1.9% And marginal rates were no lower than 82% between 1944 and 1964, when they were cut to 70%, where they remained until 1980 (four years in that 16 year period had rates higher than 70%) Thirty six-years and the top marginal rate never fell below 70%. Some very prosperous years for our nation in those 36. So it would appear high taxes did not have the deliterious effects claimed. So, TEN examples of tax cuts creating jobs? Surely it must be EASY!! Good Night and Good Luck

Will Warner

Sun, May 15, 2011 : 11:24 p.m.

Ah, Ghost, you have to answer my question first: If what you say is true -- tax increases do not harm the economy – doesn't that strike you as counter-intuitive? Yes, some true things are counter-intuitive. Is this one?

Edward R Murrow's Ghost

Sun, May 15, 2011 : 10:13 p.m.

WW wrote: "How can that not strike you as implausible?" Given the degree to which this myth has become fact, surely you can cite ten instances where across-the-board tax cuts have created jobs. Not a tax abatement meant to lure or to keep a single business into a location. Not subsidies given to very specific types of businesses (e.g., the oil depletion allowance). No. There MUST be, given the fervent nature of the belief, AT LEAST ten examples of broad based tax cuts that created job growth. Come on, Will. It must be easy to find some actual real examples, right? So lets get out of absurd hypotheticals and present some concrete facts. I'm certain you can do it. Good Night and Good Luck

hroark

Sun, May 15, 2011 : 7:45 p.m.

No one advocates a 100% tax rate, nor a 0% tax rate. Depending on economic and budget circumstances, progressive tax rates yielding optimal economic activity which yields optimal revenues to the treasury should be implemented. If tax increases curb economic activity and tax decreases spur economic activity, then why was the economic growth and job creation after the Bush-43 tax cuts meager while the economic growth and job creation after the Clinton tax increases much more robust?

Will Warner

Sun, May 15, 2011 : 6:51 p.m.

@Ghost: "So much for the mythology that tax increases are harmful to the economy" How can that not strike you as implausible? To take an extreme and unreasonable example, would not a 100% tax rate completely eliminate all economic activity, and hence all job creation and tax revenue? Metaphorically, would not commercial airlines keep their fleets in the hanger rather than fly into 500 mph headwinds? How much flying would they do into 490 mph headwinds. Or 480? Surely there is some level of taxation that will act as a disincentive to economic striving. Conversely, it seems eminently plausible to me that permitting people to keep the fruits of their economic labor and risk-taking (hiring people entails risk) will lead to more of it. As you say "there are other factors" -- many other factors; so many, in fact, that I have to start with what my gut tells me is plausible.

Edward R Murrow's Ghost

Sun, May 15, 2011 : 3:19 p.m.

Will, You are correct except, the increased revenue was also the result of higher taxes enacted by Bush I and by Clinton. Regarding the former, remember the flak he caught from the right in 1992 for reneging on his "read my lips" promise in 1988. It led to a challenge for the nomination from Pat Buchanan in 1992 and many commentators believe that those tax increases let to 1) Perot's candidacy and, 2) to many conservatives staying home in 1992 in what turned out to be a fairly close election. As for Clinton raising taxes, see: <a href="http://en.wikipedia.org/wiki/Omnibus_Budget_Reconciliation_Act_of_1993" rel='nofollow'>http://en.wikipedia.org/wiki/Omnibus_Budget_Reconciliation_Act_of_1993</a> More than a few economists give the Bush I and Clinton tax increases credit for stabilizing the deficit, thereby increasing investor confidence, thereby encouraging economic growth. There were other factors, too, but these were important. See: <a href="http://www.factcheck.org/askfactcheck/were_clintons_policies_responsible_for_the_1990s.html" rel='nofollow'>http://www.factcheck.org/askfactcheck/were_clintons_policies_responsible_for_the_1990s.html</a> So much for the mythology that tax increases are harmful to the economy. Good Night and Good Luck

Bill Wilson

Sun, May 15, 2011 : 2:49 p.m.

David Breigel wrote: "We just aren't allowed to tax that growth as the productivity gains of the workers gushes upwards into the hands of the few. Somehow that would be un-American? The downward spiral of the middle class and the increase in poverty will be the downfall of our nation." This has to be one of the funniest posts I've ever read here. The opening and closing sentences are completely at odds.

David Briegel

Sun, May 15, 2011 : 2:32 p.m.

We just aren't allowed to tax that growth as the productivity gains of the workers gushes upwards into the hands of the few. Somehow that would be un-American? The downward spiral of the middle class and the increase in poverty will be the downfall of our nation.

Ignatz

Sun, May 15, 2011 : 2:16 p.m.

I'm sure if we keep on buying that cheap Made in China junk we'll get more jobs and revenue.

Wolf's Bane

Sun, May 15, 2011 : 2:02 p.m.

Tax the top 1% and we all win. Thanks and god bless America.

AMOC

Tue, May 17, 2011 : 8:34 p.m.

Bill - Even if we took 95% of the earnings (all sources, not just wages) of that top 1% of US citizens, it would not bridge the gap. We HAVE to stop spending as if there was no limit. There is a limit. The Feds reached it today.

stunhsif

Sun, May 15, 2011 : 1:43 p.m.

Hey Tom, you need to go back to college and take Econ 101 my friend. Government is a "taker", not a "maker". For the most part, it is the "rich" that create jobs through investment in current and new business. Raise the taxes on them and they simply do not hire or they cut costs. Rahter than piss and moan about how much money the other guy has, how about using that negative energy to be more productive yourself. Oh I forgot, you are a "taker", not a "maker". We need to change the tax code, get rid of the IRS and all the loopholes that the Democrat and Republican (Republicrats as I call them) parties have put in place. Go to a flat national sales tax based on consumption. As DonBee pointed out, you could steal the entire net worth of the top 400 richest people in the USA and for one year reduce the budget deficit, then what ?

DonBee

Mon, May 16, 2011 : 11:22 p.m.

Dirtgrain

Sun, May 15, 2011 : 2:18 p.m.

"We need to change the tax code, get rid of the IRS and all the loopholes that the Democrat and Republican (Republicrats as I call them) parties have put in place. Go to a flat national sales tax based on consumption." Yah, that sounds just like Econ 101--not.

Olan Owen Barnes

Sun, May 15, 2011 : 1:30 p.m.

This is like saying that it is not that I spend too much it is that I just do not earn enough money. When you have to borrow forty percent of what you spend there is a problem beyond increased taxes. This is just more tax and spend nonsense.

SonnyDog09

Sun, May 15, 2011 : 1:29 p.m.

When you feed at the public trough, there is never enough feed in it.

Dirtgrain

Sun, May 15, 2011 : 1:24 p.m.

Republicans in the know call this tactic "starving the beast." Strangely, there are many Republicans, and others, who buy into the notion that excessive government programs and spending are the cause of our problems. "Tough choices," "tough decisions," my foot--our politicians, both right and left, have manufactured this debt crisis, apart from the recent financial crash. I echo Mr. Burroughs: where are all the jobs that tax cuts on the rich were to have provided? Someone answer this question. The only thing "tough" thing is the deceiving of Americans, of selling them out, but our politicians are making it look easy.

DwightSchrute

Sun, May 15, 2011 : 10:44 p.m.

exactly. on top of our tax cuts and extra credits/deductions signed in under Bush, we received $600 and sometimes $1,200 rebate checks. ... that was a long time ago. the tax cuts did not work. That current Republicans continue to blather on about cutting taxes AND cutting spending at the same time is quite comical to me. Does anyone else not see the ridiculously stunted absent-mindedness of such a plan?

snoopdog

Sun, May 15, 2011 : 1:17 p.m.

" To accept the notion that the United States of America is broke and that we can no longer provide basic services to our citizens is not who we are as a nation. " "notion" Tom ? No, it is a fact this country is broke ! This is in my opinion the most ridiculous opinion piece I have yet read on A2.com since it came into existance several years ago. Good Day

Dirtgrain

Sun, May 15, 2011 : 1:27 p.m.

You must have missed the fact that the rich are still getting richer, with a growing gap between the poor and the rich that outpaces inflation at an alarming rate. We are not broke, We have plenty of resources to cover our costs. We aren't using them, as the rich pull political strings to sate their greed.

belboz

Sun, May 15, 2011 : 1:06 p.m.

That's an interesting take.... But, spending more than the revenue stream, and justifying it by saying the revenue stream is broken, is a path to economic failure. Fix the revenue problem - as you call it- and then spend accordingly. If the problem doesn't get "fixed", then maybe there really isn't one, or the majority of people don't agree. As in people like me. The government gets too much money already and new sources of revenue let's the reckless spending continue.

Lamont Cranston

Sun, May 15, 2011 : 1:02 p.m.

This is a pretty amazing opinion piece. It is amazing in how disconnected from reality it is. I know in my household when my income was reduced over the last few years, i had to cut back on the things that I wanted. You see that this is true at state government levels where they have to balance their budget. The federal government is no different, except that they do not have to balance their budget. Without that responsibility, legislators are free to spend away. Bring back the bacon to the district. With railway traffic in a steady decline, do we really need to spend 200 million to improve railway travel? Ann Arbor will get a nifty new train depot, but with 1.5 Trillion dollar deficit and a 14 Trillion dollar national debt, is that the best way to spend our money? When legislators cant agree on a bill, they just buy off the other legislator and include it in the bill. Do you remember the $300 Million "Louisiana Purchase" to get Mary Landrieu's vote for Obama Care? I think it really shows a difference in viewpoint. The author of the article (a life long public employee) thinks that you should take more away from people since the government can spend it better than I can. Well I know i don't buy $640 toilet seats like the government does and I don't buy $436 hammers like the government does. I would much prefer to have the money in my pocket, so I can decide how to spend the money that I earn. Frankly I find it pretty offensive when someone says that I am being greedy by keeping the money that I work hard to earn and hand it off to an irresponsible legislature to dole it out to their political constituents. Not to improve the country, but to keep their political base happy.

Dirtgrain

Sun, May 15, 2011 : 1:11 p.m.

"Bring back the bacon to the district. With railway traffic in a steady decline, do we really need to spend 200 million to improve railway travel?" This claim of decline is counter to what this website's article on high speed rail indicated, for the lines in consideration.

tdw

Sun, May 15, 2011 : 12:53 p.m.

I feel much better.I don't have a drinking problem I'm just not bringing in enough money to cover it

DonBee

Sun, May 15, 2011 : 12:48 p.m.

Total tax burden (State, local and Federal), less payroll taxes (e.g. Social Security and Medicaid) is pushing 26 percent of all income. At all levels the governments in the US collectively spend $6,160,000,000,000 a year (YES that is a correct number of zeroes). The governments take in $4,460,000,000,000 a year. So our total gap between revenue and spending is $1.7 Trillion dollars a year. Medicaid before the "Health Care Affordability Act" was growing at just short of 8 percent a year and 10 percent of total government spending (all levels by 2017) [<a href="https://www.cms.gov/ActuarialStudies/downloads/MedicaidReport2008.pdf" rel='nofollow'>https://www.cms.gov/ActuarialStudies/downloads/MedicaidReport2008.pdf</a>] Medicare is larger than Medicaid and because of the baby boomer retirement, it will grow to be more than 13 percent of total government spending by 2017. It is growing at closer to 10 percent a year, much of this growth due to increasing numbers of people who can join the program. Social Security will top $1 trillion dollars in pay out in 2017. [<a href="http://www.cbo.gov/ftpdocs/101xx/doc10100/SSABPresentation.pdf" rel='nofollow'>http://www.cbo.gov/ftpdocs/101xx/doc10100/SSABPresentation.pdf</a>] So in Six years the total of these 3 programs will be more than $2.5 trillion a year. Then you can add this the Pew Center Calculated underfunding of state and local pensions of more than $3 Trillion dollars. So while we might be able to raise taxes $1.7 Trillion dollars a year to cover the current gap. Are you ready to more than DOUBLE ALL TAXES over the next six years? Sales taxes - 13 percent Gas taxes - 60 cents a gallon Income Taxes - starting at 15 percent and running to 50 percent - loss of most deductions including mortgage? Franchise Fees on Cable, Telephone, Internet, Gas and Electricity of $6 a month each Property taxes doubled at all levels? This is where we are headed if we don't get spending under control. Tax the rich? If we were to confiscate all the wealth from the people on the Forbes 400 list - We would close the budget gap for THIS YEAR and they would then be BROKE.

DonBee

Mon, May 16, 2011 : 1:09 p.m.

AR99 - I agree the rich should pay more, but they don't have the money to dig us out of the hole if we keep digging it deeper. As to the middle class - Tom Walsh's column in yesterday's Detroit Free Press is telling. In 1960 66 percent of the US's income was wages and benefits, in Michigan it was 67 percent. So two thirds of the money people had to spend was wages. Government programs - unemployment, welfare, food stamps, etc was 6 percent of total income in Michigan and less than 7 in the US. Today Government programs provide 23.2 percent of total income in Michigan, wages and benefits Just 49.5 percent. You have to wonder, with the average income in Michigan falling from 18th in 2000 to 36th in 2010, what needs to happen to reverse the long term decline? Just taxing the rich does not do it. In my example (and it was only an example) the total wealth (not just income) of the top 400 people in the US for wealth would only fill this year's hole in the Federal budget. So beyond taking money from some one else, how do you fix this? How much more are you willing to pay in taxes? The author of the article is in a unique position, he pays NO state income taxes, and is guaranteed income and medical care for the rest of his life. From that secure position, he can advocate what he likes, short of bankruptcy, he will never have to contribute to fixing the problem. In 2010

alternativeview99

Mon, May 16, 2011 : 1:55 a.m.

Oh....I forgot to share that the wealthy actually pay on an average only 17% in tax because of all the deductions and credits. At least that is what I heard and feel free to share data to show me this is not the case. Some, like GE, get a refund and pay no taxes. So, when we talk about increasing rates, on the average, the wealthy don't pay those marginal rates. If they invest in ways the government encourages them to invest, they get deductions and credits that reduce their rates. And, they have a lot of money to invest and have been very successful at hiring attorneys and accountants to help them do this. Personally, I think this is free enterprise at it's best. We need to solve a problem, so we turn to the entrepreneurs and wealthy and say if they choose to spend money to solve our problem, we will give them a great tax cut. Yes, we tax them at higher rates. But, if they are good at what they do and help solve the problems of our society, (some of which they created....like pollution), we let them keep more of the money they control. And, let's be honest. People only own the assets they do because a nation of people stands ready to defend that ownership right. The wealthy only enjoy title to these assets because there are government employees, soldiers, firemen, and police who will fight to protect that title. Gosh, could an argument be made that the wealthy should pay more because they require more of a nation in protecting their capital assets both on the domestic front and globally? I don't know if this is true or not. But, examining this issue seems to be left out of the conversation. We seem to constantly point to various groups of the middle class and complain that some of them are not doing their "fair share" of suffering. Why, does it have to start with suffering? And, where is the suffering on the part of the wealthy?

alternativeview99

Mon, May 16, 2011 : 1:38 a.m.

I don't consider taxing the wealthy "confiscating" their property. We fight wars overseas to protect their assets, (the oil industry), which they profit from handsomely. I tend to look at this as paying their "fair share". GE makes most all its money overseas, pays no taxes, and yet our soldiers (paid for by the tax dollars of the middle class) stand ready to protect those interests overseas to assure their "capital" that provides them with their income is protected. There is no such protection for the income from the jobs of the middle class unless you want to consider unemployment benefits which you seemt o feel is a handout.. So, it really gets down to whether or not you like this country with an empowered middle class. I do. And, I still have my vote.

DonBee

Sun, May 15, 2011 : 6:27 p.m.

David - I have heard people talk about taking away wealth, there was a piece on MSNBC radio on Thursday where a guest suggested it. I have not heard it here. I am not against increased taxes, but we need to get the growth in spending under control. If we don't doubling taxes will not be enough in 7 years. By 11 years from now we will have to triple them. I am all for cutting defense, there is a lot there that can go. I am for consolidating the 280+ programs for the poor in Washington under 1 department (right now 11 departments have programs for the poor). I am all for cutting administrative overhead with the consolidation of government units. I am for cutting retirement for elected officials. I am for not promoting children to the next grade if they can't do the work. I am for rounding up drop outs and putting them in an intense program to teach them the minimum skills for life. Call me a radical. I am for good, honest government that works for the good of the people who are being served, not the people being employed.

David Briegel

Sun, May 15, 2011 : 2:34 p.m.

Don, have you ever heard anyone propose to confiscate all the wealth? Anyone? Anywhere? All we ask is that revenue be increased along with the spending cuts. We need to maintain the safety net for those who are left behind as is always the case in a capitalist society.

David Briegel

Sun, May 15, 2011 : 12:22 p.m.

With the lowest tax rates in the modern era and the highest corporate profits and huge cash reserves on hand we are being told that the only thing that matters is assuring that the haves get even more and the middle class unions and pensions are too extravagant. The vision of the haves is for America to become Haiti with the wealthy in their gated communities and the starving masses huddled in their ghettos. Not a very noble vision. And to denegrate those who are less fortunate and left behind as merely takers is an insult to our intelligence and our American ideals. The America I learned about as a young person and served as a young man is so much better than this TeaPublican vision!

alternativeview99

Mon, May 16, 2011 : 1:27 a.m.

I think it is important to keep in mind why the wealthiest seem more bent on destroying hte middle class than acquiring more wealth. It isn't about greed. If it was about greed, they would see that by empowering the middle class there would be much more wealth to distribute so in absolute terms, their wealth would be more. I think it is because an empowered middle class would challenge them. They would once again have to compete for their share of the wealth and I think they are scared that they would not be up to the task. It is much easier to bleed the middle class and pretend this is right because you are more talented and deserve more when you just play a game stacked in your favor. And David....the American you remember is still in our vision. There are many people, including wealthy individuals who favor living in a society with a strong and empowered middle class..

Townie

Sun, May 15, 2011 : 12:12 p.m.

Tom - Sadly by bringing facts to a partisan knife fight you're not going to be able to convince the rightwing hardliners. They don't pay any attention to facts, just ideology so your facts will be ignored.

braggslaw

Sun, May 15, 2011 : 12:08 p.m.

Everybody has a different perspective based on their position as a maker or a taker It is not surprising that a retired public employe has this perspective.

EyeHeartA2

Mon, May 16, 2011 : 2:12 a.m.

"I would really like someone to explain why allocating 90% the income in our country to just 10% of the wealthiest in our country has been good" No explaining required, since it isn't that way at all. The wealthy people were not allocated their money - they earned it, like Tom Monaghan, or inherited it like the Fords - or got lucky with a lottery ticket. None is an allocation. Your attitude that that government bestows wealth on people is the issue here, and it is quite telling, I might add. I do need to at least give you kudo's for writing it down. Most people would not have had the guts to do it. The co

alternativeview99

Sun, May 15, 2011 : 1:17 p.m.

And, it is not surprising that when presented with facts that aren't all that easy to dispute and that might not support a perspective you would like them to, you attack the messenger. Instead of dismissing what is said because it is said by a retired public employee, how about giving us some facts to dismiss what he presented as an argument? I would really like someone to explain why allocating 90% the income in our country to just 10% of the wealthiest in our country has been good (if you aren't one of the 10%)? You can talk all you want about how you feel the rules we play by are fair. But, bottom line, I think the wealthiest get that kind of allocation because of the political power they possess to write laws, (including tax laws), that favor this kind of allocation. Basically, I think it boils down to a belief that some people are born to be served and others to serve. And, that happens to be a belief I don't share.