Democrats Are About to Raise Your Taxes
By Bluey Posted in Congress | Spotlight Blogs — Comments (93) / Email this page » / Leave a comment »
The U.S. House hasn't voted to raise taxes for 13 years, but that streak is about to come to an end -- less than three weeks after Democrats took control of Congress.
Read on . . .
Dan Clifton of the American Shareholders Association reports that Democrats will bring an end to the "golden era" of taxpayer-friendly policies this Thursday.
It took just 15 days of new found power for the Democrats to raise taxes. The first vote of the 110th Congress removed the 3/5 supermajority to raise taxes. The following day was a vote to enact a new rule requiring offsetting tax increases for every tax cut.So it was only a matter of time before the first actual vote to raise taxes came up. The significance of this should not be underestimated as Thursday's vote is the first step in reversing what could be considered the best run for American taxpayers since the creation of the income tax.
In the short term, President Bush can simply veto the Democrats' tax hikes. But, Clifton reports, it won't be long before the next President -- Republican or Democrat -- is left no choice but to enact tax increases.
Just how disastrous would the Democrats' plan be for our country? A new report from the Heritage Foundation reveals the threat to America's prosperity.
Any tax increase on top of this rising burden would put America well on the way to European-level taxes, causing European-style economic stagnation, slow income growth, and unemployment. Even France has begun to recognize how damaging such levels are, and French President Jacques Chirac has proposed to cut France’s corporate income tax rate from 33 percent to 20 percent. Congress must ensure that the U.S. does not take even one step down the road to higher taxes and a slower economy.
Fortunately, Americans for Tax Reform is vowing to enforce its National Taxpayer Protection Pledge -- and it could be a rude awakening to Democrats who must choose between honoring the pledge or following Speaker Nancy Pelosi's orders.
The idea of a tax increase makes me nervous, but knowing that the House voted to decrease interest rates in student loans makes me breathe easier. I am a college student.
http://www.redstate.com/blogs/cni_redrum/2007/jan/17/how_to_make_financi...
John
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Why would God create something like whiskey? To keep the Irish from ruling the world of course.
The House voting to decrease interest rates on student loans will mean less availability of those loans. I hope your credit, or your parents' credit, is outstanding.
What's that you say? The House will mandate that the lower your means, the lower the interest rate? Lower availability again.
Unless the feds are going to start making the loans directly, an activity on which the Constitution is fairly silent, mandating interest rates is counterproductive.
Perhaps I'm just ignorant, and there's a way it makes sense to lower the rates. Someone should whap me with a clue stick, if that's the case.
The most ironic thing is, by the time anybody cares what their interest rate is, they're already out of college. Interest is deferred while you're in school, of course. And they pay the loans off in a few years.
But tax increases are forever.
The Academy: researching the Illiberal Arts
In other news, Democrat funded academic researchers determined today that Water is indeed Wet, that Men and Women do have some actual physical differences, and that the sun is expect to rise in the eastern sky at a predictable time tomorrow morning.
The New York Times editorial board is said to be shocked by these developments. Al Gore is demanding an apology from George Bush. Keith Olberloon will have these and other captivating stories on MSNBC tonight for his mom and a few close friends.
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"I don't know." -- Helen Thomas, in response to the question, "Are we at war, Helen?" - posed by then-White House spokesman Scott McClellan.
"The person who has nothing for which he is willing to fight, nothing which is more important than his own personal comfort... has no chance of being free unless made and kept so by the exertions of better men than himself."
--John Stuart Mill
How much we are taxed is all about the spending. Once the money is spent, all the tax rates decide is whether the spending will be paid for now or later and by whom. It is self-evident that the best way to restrain spending is to actually have to pay for it. There is no chance whatsoever that Republicans would have increased spending so much in the last 6 years if they had to raise taxes to pay for it all. Pay-as-you-go is a very good thing if you don't like taxes - by forcing Congress to raise taxes along with spending, they are less likely to increase spending!
The new rule isn't that increased spending must be met by increased taxes, but that new Tax Cuts must be matched by equal tax Increases.
So cutting taxes won't be possible until that rule is eliminated.
"The person who has nothing for which he is willing to fight, nothing which is more important than his own personal comfort... has no chance of being free unless made and kept so by the exertions of better men than himself."
--John Stuart Mill
the same tax cut that Clinton promised when he ran.
Well there's something to be said for consistency I suppose.
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Bipartisanship = give + take. Republicans give. Democrats take.
All the rule says is that the deficit can not be increased. Tax cuts are possible if they are offset by spending cuts.
If you are looking for a means to control spending, then support a means to control spending. Like something that actually constrains the growth of spending... which this does not do.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
Is that growth in government spending (new programs like NCLB, Mediscare Part D, etc.) increases the overall size of government, which eventually results in taxes that are higher than they should be.
Democrats think government is too small, so raising taxes is a way to allow it to grow, which will lead to more tax increases, ad infinitum.
The Academy: researching the Illiberal Arts
If Pay-As-You-Go were in effect the last six years, Medicare Part D could never have passed, since Republicans would not have voted to (directly) raise taxes. As you point out, Republican rule proved that cutting taxes is horribly ineffective at reducing the size of government. If you have to raise taxes to make government bigger, that gives you a reason not to do so.
I was always astonished that more Fi-Cons didn't ascribe to your view on PayGo. If I were in the Republican leadership I would turn this around on the Democrats in an instant.
"There are those who look at things the way they are, and ask why... I dream of things that never were and ask why not." George Bernard Shaw
There are huge loopholes in this PayGo stuff. If you are increasing funding for an existing item, that doesn't count. This only applies if you call something a brand new program. I don't see how it would've prevented Medicare Part D or NCLB from being implemented.
Tax increases will get easier and easier with PayGo, anyway. They will become an automatic event, like congressional payraises, at some point. Now they have an excuse.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
By your logic, tax rates at 100% would produce the greatest revenue streams for long term government spending.
Do you really believe that?
is that baseline spending increases for many social programs do not have to be approved they are on 'auto-pilot' and are automatically increased based on COLA, inflation etc. The legislators then 'justify' tax increases - saying their hands are tied and they're just trying to 'balance' the budget.
The paygo theory would be better if it capped spending increases on social programs until the money was collected to pay for them.
That is true paygo.
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"Enlightened statesmen will not always be at the helm." -- James Madison
Tax revenues to the U.S. Treasury are at a record high. It's actual money at the treasury that pays the bills, not the rate that brought the money in.
Increasing rates doesn't always mean more money, nor does decreasing them always mean less. If increasing rates tanks the economy and reduces revenue, how does that pay for increased spending? Rates went up didn't they?
A company can lower prices, but increase revenue through increased volume. This provides more capital to plow back into the company or return to the shareholders, leaving the company spending more than ever at lower rates. By lowering the price on labor (tax rates) the government can increase revenue through increased labor.
Not complicated, it's the money that pays the bills, not the rate.
If the economy grows, tax receipts will grow even if you do nothing to the tax rates. In 1993, Republicans complained that raising taxes would damage the economy, but the opposite happened. The economy grew robustly and tax receipts increased. When George W. Bush cut taxes, receipts decreased in 2001, in 2002, and again in 2003. The data clearly shows that we are clearly on the left side of the Laffer Curve. Cutting taxes decreases revenue and raising taxes increases revenue. Both CBO and White House budget analysis agrees with this principle.
If you ignore the impact of the economy on tax collections... which you already admitted have a massive impact on receipts. Remember, there was a recession in the years you quoted. Tax receipts would've dropped anyway. Conversely, in 1993 we were just coming out of a recession. Tax receipts would've increased anyway.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
The recession of 2001 ended in 2001, yet tax receipts kept falling in 2002 and in 2003, so your thesis doesn't hold up. The simple answer is that the math isn't complicated. If you cut taxes, you get less revenue; if you increase taxes you get more.
Certainly continued for a couple years past 2001. It didn't even start in earnest until 2001 (remember Bush trying to "talk down the wonderful economy" during the campaign?). To claim that we were in the same economic environment in 2002 as we were in 1993 is ridiculous.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
1. S/he continues to ignore the gains fueled by the tax cuts in 1997 also.
2. The 2001 cuts were NOT supply side cuts, the ONLY thing we got were those STUPID $300 per person rebates. The 2003 cuts were supply side cuts (marginal rate reductions).
Note the difference, 2001 "cuts" = not much help, 2003 cuts = economy en feugo.
Two thirds of the world is covered by water, the other third is covered by Champ Bailey
The 2001 recession was relatively mild, and the economy grew throughout 2002 and 2003. Leaving alone tax code, that should be enough to increase tax receipts. With tax cuts, we saw revenues drop. It's rare to have tax receipts decrease: it's only happened 5 years since 1962 including 2001-2003, during which time there have been many recessions. The 2001 recession can not explain reducing tax receipts that year AND the two following.
Increased revenue always comes from more tax receipts not higher rates. And you say you are from California? Just look at California tax revenues over the last 20 years.
PS. 2001? Yep, that 9/11 thing had no economic effect, did it?
Envisioning when all that is Left is the Right.
Tbone,
You are a riot.
Increased revenue always comes from more tax receipts not higher rates.
Thank you Captain Obvious.
"There are those who look at things the way they are, and ask why... I dream of things that never were and ask why not." George Bernard Shaw
Professor Tbone at the rostrum for your enlightened enjoyment.
Envisioning when all that is Left is the Right.
By our logic, tax rates of 100% would produce the largest revenue streams to the treasury for long term federal spending.
Do you really believe that?
It's pretty clear this is about income taxes judging from the text and the links. That's where the whole removal of the 3/5 super majority and PayGo thing comes in.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
The diarist's title is "Democrats Are About to Raise Your Taxes," referring to a vote that's coming on Thursday. Thursday's vote has nothing to do with your taxes, unless you are an oil company, and I've never pumped gas at a Zuiko.
Just a partial owner of each though, through my (modest) investments.
Two thirds of the world is covered by water, the other third is covered by Champ Bailey
nor do you intend to. My company deals with dozens of local taxing authorities. When they raise their tax rates, my customers pay every frickin penny of the increase in higher prices.
Envisioning when all that is Left is the Right.
We're congenitally incapable of understanding pass-through costs. He's no different.
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A tribute to CO
through costs otherwise these 25 cents a copy charges on my legal bills means you guys need cheaper copiers! Unless that old story about the lawyer who was found passed out naked on the copier and the firm had to fire both of them, is true.
Envisioning when all that is Left is the Right.
I charge my clients $.10 per black and white copy page, and eat $.15 per page in costs as overhead. I'm ethically forbidden from charging you more than the nice extortionists who own my copiers charge me. I suspect your poor, overworked lawyers suffer similarly.
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A tribute to CO
One that you've never heard of.
Most of America's wells are drilled by "independents", that class of mostly small and/or privately held, non-integrated (meaning no refineries, no tankers, no gasoline stations).
Independents, by and large, have little in common, and often antipathy toward, the larger companies that are household names, and sell your gasoline. Since they own the refineries, they are the main customers for our product.
My little company is to ExxonMobil as a 40-acre farmer is to Archer-Daniels-Midland.
Unfortunately, few people understand this, including most of the nitwits now running the Congress. Gasoline price up? Punish "Big Oil", which often means that it makes it tough on all producers, regardless of size.
My good friend zuiko is smart enough to understand that 1) America is terribly dependent on hydrocarbon energy, and that isn't going to change overnight, and 2) in the meantime, we're awfully dependent on some pretty hostile totalitarian "friends" to supply our collective energy habit.
Oil and gas can be a very p****table business at times (the excised word is a homonym for prophet). There are few businesses where the day to day risks come even close to what an oil and gas company faces routinely. FYI, returns in energy have lagged the rest of the economy for a generation.
It would be smart for the Feds (and the States) to realize that they are in partnership with oil companies, and encourage development. Capital will find a home, and if it finds a more hospitable and less risky home overseas, that's exactly where it will go. I think that would be a bad thing, don't you?
...the first crack out of the box for the new & improved rules.
To clarify the oil and gas issue, the Minerals Management Service made an administrative error in certain offshore leases granted in 1998 and 1999. At the time, development of deepwater oil and gas fields was largely uneconomic at the then-prevailing prices for oil and gas. The leases exempted the leases from royalty payments (not taxes). Similar leases had been granted before and since that removed the royalty relief if prices went up. That language was left out of the 1998-99 leases.
You can say royalty relief was a sop to Big Oil if you want to. You can also say that the landowner had a strategic resource that he (Uncle Sam) wanted evaluated, and granting royalty relief was a cheap way to do it. Either way, many of the wells that led to recent discoveries would not have been drilled without the reduced royalty.
Some companies have voluntarily renegotiated their leases. Others have not. The original mistake was pointed out to MMS by a lessee who asked for clarification.
Guess what happens when Uncle Sam makes and error in your favor? You pay thru the nose, or else.
Guess what happens when Uncle Sam makes and error in his favor? You pay thru the nose, or else.
Democrats aren't the only ones to blame for these potential tax increases. Republicans in Congress will have to take their fair share of blame considering they spent us into a hole. Our representatives basically handed the Dems a bat to bash us over the head with.
We're going to have:
- closing of loopholes
- letting temporary tax cuts expire
- raising limits (but not rates)
- any other wordplay they can think of
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Bipartisanship = give + take. Republicans give. Democrats take.
The entire GOP needs to come out roaring about tax hikes and how the Democrats want to take your money, and then - how about this as a novel idea - propose SPENDING CUTS to pay for TAX CUTS.
WOW! I know that's all outside the box and everything, but it just might work! What do you think?
Yes...this is a time of sacrifice, and we appreciate the arts community's sacrifice by forgoing any and all funding to the National Endowment for the Arts for the foreseeable future. We appreciate public broadcasting's sacrifice - going without funding for the forseeable future. Etc., etc., etc.
the GOP would be derelict if they didn't scream often and loudly about these rule changes.
Although this one "The following day was a vote to enact a new rule requiring offsetting tax increases for every tax cut." doesn't make a lick of fiscal sense, no matter how much the democrats want it to be so.
And how do they figure out how much to increase a tax by if the increase isn't the same type of a tax?
I did notice that neither of my states new democratic congressmembers took the tax pledge. Both of my state's GOP senators did take it.
The pay-as-you-go rule does not require a tax increase for every tax cut. It merely states that you can not make the deficit worse. Tax cuts are possible with offsetting spending cuts. Increasing spending in one area can be done without changing taxes if the increase is offset with a cut elsewhere.
You really need to stop this and just be honest. Democrats have never, ever proposed spending cuts. So all that leaves us is with more spending (and more spending and more spending) and with this rule, higher taxes.
Two thirds of the world is covered by water, the other third is covered by Champ Bailey
And the Republicans have never cut spending either. What's your point? That we should simply continue to have spending out pace tax receipts until the US economy defaults?
"There are those who look at things the way they are, and ask why... I dream of things that never were and ask why not." George Bernard Shaw
expenses anywhere in the budget, it is really about deciding which taxes to increase in order to pay for more entitlement programs and government spending.
I won't disagree that the GOP were out there acting like budget or deficit hawks, but do you really think the democrats are going to start proposing spending decreases anywhere other than defense and a few earmarks?
You know the ones that weren't actually cuts, but the Democrats and their MSM allies called them cuts day and night and ran ads about how the Republicans were trying to starve poor kids and force little old ladies to eat dog food without any heat with a broken hip she couldn't get fixed because of the evil Republican cuts? So either the Republicans have cut spending or those were just more Democrat lies. Which is it?
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
- I used to drink a six-pack of beer a week.
- I planned to start drinking a 12-pack a week.
- Instead I'm only drinking 10 beers a week.
- Therefore I've cut my beer drinking by two cans a week.
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Bipartisanship = give + take. Republicans give. Democrats take.
but they won't even think about touching various entitlement programs, at least not with regards to cuts.
Considering somewhere in there is the idea of fixing the medicare drug bill (which will involve an increase in spending) what are they proposing to cut? My guess is they won't mention the word "cut" but will head right on into "whose taxes are we going to raise?"
Democrats proposed and passed spending cuts (relative to the baseline, anyway) when they had complete control in 1993. They are certain to propose cuts now, though perhaps not where you would like (Iraq). According to CATO, Republicans increased non-defense discretionary spending faster than anyone since the Johnson administration. The political math is very simple: Republicans would have spent less if they had to pay for their spending; Democrats will spend less now if it means raising taxes than they would have otherwise.
of the biggest spending new entitlement programs (or almsot entitlement, since it is part of education and isn't going away) in years.
The medicare drug benefit, which the dems are going to make more expensive (what are they cutting to offset that?).
And NCLB which the dems say they intend to fully fund (what are they proposing to cut to offset that).
Iraq and defense are the only two places where the dems can cut and not get hammered by their base.
Will they be more careful? Maybe, but I suspect tax increases are right around the corner, because they won't be able to cut enough.
Politicians like to spend money. Republicans used to say that Democratic politicians like to spend money, but recent history has proved that Republicans can spend like nobody's business. At least if politicians have to actually pay for their spending, they will spend more slowly. Wouldn't we all spend more if we never had to pay our credit card bill?
Politicians like to spend money. Amen.
At least if politicians have to actually pay for their spending, they will spend more slowly. Uh, certainly a nice theory - though not particularly well supported by recent history (Gramm-Rudman, or Gramm-Rudman-Hollings anyone?)
I would place the over/under on Democrats "actually pay(ing) for their spending" at about 2-weeks - perhaps a week less than than GOP - and there you have it.
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"I don't know." -- Helen Thomas, in response to the question, "Are we at war, Helen?" - posed by then-White House spokesman Scott McClellan.
That statistic only works if you include all the Republican spending Republican Majority Leader Tom Daschle allowed through. The worst years (2001 was far and away the worst) were under Democrat control of the Senate. So it's pretty bogus to pin that all on Republicans, as if Democrats would've done better or as if divided government is the answer.
If you want to control spending, how about something that actually controls spending? Rather than something that forces tax increases and enshrines static scoring into the law even more than it already is, even though it has proved itself to be less reliable than a magic 8 ball.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
I see the tax hyperbole is in full effect already.
Let's start off with the Heritage quote.
Any tax increase on top of this rising burden would put America well on the way to European-level taxes, causing European-style economic stagnation, slow income growth, and unemployment
Interesting. I hadn't realized we were already in such a precarious situation. So any tax increase would lead to the US being no different than Europe. Well ok then. Sure, why not? Let's ignore that Europe's problem is huge entitlement issues, not tax rates. Then again let's ignore the non-stop increase in spending that this government continues to do and focus on ANY tax increases.
Tax policy is like a weight loss diet. The diet plan can tell you about how you need to eat this or not eat that but it all boils down to calories in and calories out.
Same with tax policy. While there are some who think that the Laffer Curve is actually more of inversely proportional linear growth, it isn't. Tax cuts will only increase revenues in certain situations and only if tax rates are, in fact, higher than optimal. The truth is that we need X number of dollars to pay for government services and Y tax receipts to cover them. And the difference between X and Y is getting bigger and bigger.
While there are some who wish to advocate that federal debt is no big deal, it most certainly is. Federal total debt is already approaching 100% of GDP. And, the truth is, we are ignoring the fact that Congress is deceiving us as to what our actual deficit currently us. Our true annual deficit is somewhere around 600 billion dollars. At this pace our debt to GDP ratio will exceed 1. Not good. Even more troubling is that this will occur right as SS surplus funds will disappear and the SS fund will come a callin' on their T-bill loans.
Yet no one seems to show a whit of concern about this on EITHER side of theaisle. Republicans want to bury their head in the sand and defy any tax increases of any kind. Democrats want tax increases to pay for popular programs such as expanded health care. And no one wants to even worry, in any way, about our ever growing federal debt.
And I haven't even brought up the train wreck that is Medicare that is coming down the pike.
"There are those who look at things the way they are, and ask why... I dream of things that never were and ask why not." George Bernard Shaw
Ignoring the rest for the time being, you should be aware that this:
Federal total debt is already approaching 100% of GDP.
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"I don't know." -- Helen Thomas, in response to the question, "Are we at war, Helen?" - posed by then-White House spokesman Scott McClellan.
He is probably factoring in the combination of Democrat control of the House and Senate with a President that doesn't seem to think there is such a thing as a veto-worthy bill (fingers and toes crossed that that changes).
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
I did a mental calculation and was thinking it was at around 80%. Mea Culpa on that one.
But my point wasn't really about where the actual number is. It is about the trend it is heading towards.
While your cheery economist blogging friend there seems to think that there is nothing to worry about there are certainly others who are more concerned.
As this chart better shows, federal debt in relation to GDP is growing. It may be at 66% now but unless we resolve looming budgetary crises we WILL reach 100% within a relatively short period.
In 10 years the SS will no longer be giving the general fund a few hundred billion dollars a year. What then? More tax cuts?
"There are those who look at things the way they are, and ask why... I dream of things that never were and ask why not." George Bernard Shaw
I'm sure you will join me in opposing the Democrats plan to virtually eliminate the AMT. This is no time to be cutting taxes.
Certainly don't want to see the AMT eliminated. There was a reason it was enacted and eliminating it would simply force us to bring it back in 5-10 years.
I would like to see it cleaned up as it has gotten messy over the years.
"There are those who look at things the way they are, and ask why... I dream of things that never were and ask why not." George Bernard Shaw
The Democratic plan is to eliminate it for people making up to $500,000/yr. That certainly cleans it up. Sounds like a tax cut for the rich though.
In 10 years the SS will no longer be giving the general fund a few hundred billion dollars a year. What then? More tax cuts?
I'm ready to start eliminating departments and meanstesting SS. In other words, I'm willing to deal with the real problem... increased spending. Not the non-problem that is increased tax collections. Are you willing to deal with the actual problem? Or does this deficit and debt talk only matter if it's a pretext to increase taxes?
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
I'm fine with cutting spending. I can think of all sorts of places.
But of course we all know the reality is that Congress isn't going to start slashing departements anytime soon.
I have no desire to see taxes increased. I suspect that I will get hit harder on any income tax increase than most people here, being a single white male making a good New York salary.
But I don't view our tax policy as some quest to reach zero in which rising taxes are always evil.
Are you willing to see things cut that you may not want to see cut? You willing to see cuts in DoD spending? You willing to see cuts in law enforcement spending?
I'm willing to see cuts in Dept of Ed or HHS even provided they make sense.
"There are those who look at things the way they are, and ask why... I dream of things that never were and ask why not." George Bernard Shaw
I don't see how it makes sense to cut DoD spending at a time of war. It is also one of the very few functions the federal government performs that is properly performed at the federal level. It's also a constitutional obligation of the federal government, unlike say, the Dept of Education... which shouldn't even exist, and didn't until Carter created it.
DHS certainly has some fat that could be trimmed, but DHS and DoD and even Dept of Education aren't the real problem (though Ed takes the award for one of the fastest growing segments of the budget, thanks to NCLB).
The real problem is entitlement spending. We need to make a major change: means testing. Tweaking eligibility ages isn't going to do the trick.
Of course means testing would interfere with the Democrat "get as many people dependent on government checks as possible" plan to electoral victory, however.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
Well good luck getting a means test on SS and Medicare. Heck good luck getting a politician to publicly advocate that. The AARP Ninjas will take him down so fast he won't even know what hit him.
You want to pretend that it is just the Democrats that are deathly afraid of REAL change to SS? Fine by me. Keep living in a fantasy world.
"There are those who look at things the way they are, and ask why... I dream of things that never were and ask why not." George Bernard Shaw
They got no problem raising the retirement age, modifying the formulas, or raising taxes on SS benefits. They've done it all before. That kind of stuff simply makes them every senior's best friend. The problem is that the Democrats have no interest in change SS into a sensible means tested program. IIRC you are a big defender of confiscating a hefty chunk of every Taco Bell employee's wages to put towards Warren Buffet's monthly checks. I've never been able to understand that, but hey, I'm not looking to maximize the number of people depending on government checks, either.
I'd love to change it, but the Republicans can't even think about making changes to SS that affect exactly zero retires without getting savaged for it. You just have to look at his timid (and failed) SS reform plan for evidence of that.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
on SS. I was listening to the radio the other day with a democrat congress member's POV and this is exactly what he suggested.
The idea of means testing has been around a while, and is promoted by some congress members.
I do think you are correct that nobody will do it, because the AARP will throw a hissy fit.
Of course the problem is the AARP's constituents aren't looking for solutions, because they get their checks now, it is those of us who are 20 or more years out from retirement that are going to get slammed with the "quickie" fix that isn't going to be much of a fix, but the only option available.
But the majority do not support it, for political reasons. They see means testing as an attack on SS itself. We need to send checks to people who don't need them for SS for the same reason Amtrak needs to keep its worthless cross country routes... to buy votes for it and maintain it as a viable political entity.
Democrats can and have messed with SS without getting into trouble with the Seniors. Bill Clinton was the last to do it. SS is only the 3rd rail for Republicans, not Democrats. Just as the Democrats won't take any flak for their proposed AMT changes as "tax cuts for the rich." Any chance the Republicans would get the same treatment?
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
Sorry this had to wait until morning - my bed was calling me.
OK, here goes the completely plausible hypothetical...
I earn $100K per year (I know - filthy stinking rich by Democrat standards, but bear with me). That is my total income, from which I pay $20K in federal and state income taxes and $7K in SS and Medicare taxes (I'm rounding) leaving me with $73K in take-home pay.
Yet, I have a $200K mortgage (small by Massachusetts standards, I assure you) and $20K in car loans - leaving me with a debt to income ratio of somewhere north of the neighborhood of 300%.
By your logic I should be in "deep trouble".
Simple question: Why am I not?
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"I don't know." -- Helen Thomas, in response to the question, "Are we at war, Helen?" - posed by then-White House spokesman Scott McClellan.
Your example is flawed for three reasons:
1) The federal government only "gets" (currently) 18% of GDP to spend. Which means that federal government's debt-to-income ratio is currently 3.61. Your debt-to-income ratio is 3.01.
2) You probably use a significant portion of your income to service your debt. For the federal government to do this would require dramatic spending cuts or dramatic tax increases.
3) The government's debt ratio is getting bigger. Yours is (hopefully) getting smaller.
I would start by putting the word "only" in quotes.
Second, you're equating "the Nation" with "The Federal Government".
Third, the Federal Government seems to have little trouble servicing the debt - care to argue otherwise?
Finally the government's debt ratio is NOT getting bigger (check the link above) - it's been a roughly flat 65% for the length of the Bush Administration.
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"I don't know." -- Helen Thomas, in response to the question, "Are we at war, Helen?" - posed by then-White House spokesman Scott McClellan.
I never said the analogy was perfect.
A more perfect analogy would be to extend the analysis to my family and my in-laws, but Steve already does that at SO and you can read it yourself (link on the Front Page).
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"I don't know." -- Helen Thomas, in response to the question, "Are we at war, Helen?" - posed by then-White House spokesman Scott McClellan.
Third, the Federal Government seems to have little trouble servicing the debt - care to argue otherwise?
You said that you have no trouble servicing your debt either. Time to buy a few new cars!
Finally the government's debt ratio is NOT getting bigger (check the link above) - it's been a roughly flat 65% for the length of the Bush Administration.
This is completely untrue. The debt ratio was under 60% in 2001.
I think that zuico raises a very good point downthread, though, that the federal government owns a seriously huge amount of assets, and that this is something that should be taken into consideration in these types of discussions.
You pay almost $15k in SS... on top of all the taxes collected by the state... taxes probably eat up over half your income by the time you count them all. I know about 50 cents of every dollar I make goes to the government.
Another factor to consider here is the Federal government's overall balance sheet. The government has an insane amount of assets. I can't even begin to put a dollar figure on it, but it is certainly some high multiple of the total debt. The Federal government owns most of the state of Alaska, for instance. If we really want to pay off the debt, maybe we should sell some of that to the people?
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
At current rates the budget deficit will disappear entirely July of next year.
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Internet member since 1987
Member of the Surreality-Based Community
Repeat after me: Tax. Cuts. Don't. Work.
I mean, everyone knows that. After all, I read it in the NY Times, so it must be true. Right?
< /snark >
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"I don't know." -- Helen Thomas, in response to the question, "Are we at war, Helen?" - posed by then-White House spokesman Scott McClellan.
So what's really happening is that we have this seriously regressive tax called FICA whose proceeds are going to fund current spending. To make everyone think that there is something called a "Social Security surplus," the Treasury issues debt which the Fed monetizes at market rates. This is neither inflationary nor particularly depressive of long-term bond prices. Want proof? Look at the yield curve. Long-dated govies finished up slightly today.
We all know that Republicans won't control spending and Democrats will spend their new tax revenues like drunken sailors. What's going to happen when the chickens come home to roost? One or more of several things. Regarding SS, continuing increases in both population and productivity will combine to make the problem considerably less nasty than it appears to be on static analysis. Regarding Medicare, we'll end up with some kind of health care rationing (either single-payer, or a two-tier system with different offerings for the superrich and for the rest of us). It's an open question that no one seems willing to ask, whether the enormous investment we're making in healthcare for the elderly is going to pay out. I think it won't, which is why rationing is in the future.
Do us all a favor and check your facts once in a while, Flyerhawk. The SS trust fund is in bonds, not T-bills- that alone suggests to me that you're replaying things you've read, that you may not completely understand. Someone else already pointed out the total Federal debt is nowhere near 100% of GDP. (Japan's government debt is well over 100% of GDP.) The SS "surplus" is in the neighborhood of $160 billion, give or take. You'd need a current "official" deficit of $440 billion to get to your $600 billion. The real number is closer to $250 billion. You're not close.
I certainly will concede if I am wrong on certain matters..
So what's really happening is that we have this seriously regressive tax called FICA whose proceeds are going to fund current spending. To make everyone think that there is something called a "Social Security surplus," the Treasury issues debt which the Fed monetizes at market rates. This is neither inflationary nor particularly depressive of long-term rates. Want proof? Look at the yield curve. Long-dated govies finished up slightly today.
It's late so I don't have to look things up. Surplus SS funds are put into special treasury bonds that have a legally defined rate of return based on inflation. These treasury bonds are not available to the general public so do not affect market rates.
I don't really disagree with your second paragraph but then again I don't know how it is pertinent. I never really addressed SS shortfalls. I was speaking specifically of general budget shortfalls. SS shortfalls will simply exacerbate this problem.
The SS trust fund is in bonds, not T-bills- that alone suggests to me that you're replaying things you've read, that you may not completely understand. Someone else already pointed out the total Federal debt is nowhere near 100% of GDP. (Japan's government debt is well over 100% of GDP.) The SS "surplus" is in the neighborhood of $160 billion, give or take. You'd need a current "official" deficit of $440 billion to get to your $600 billion. You're not close.
Ah yes the patented blackhedd condescension. There isn't a great deal of difference between a T-Bill and T-Bond in this context since the instrument that SS uses is a specially designed construct. If it makes you feel better to be pedantic then, fine, T-Bonds is fine. Congratulations on that victory.
The last official expected debt from the White House was $350 Billion. I realize the number is lower in actuality but that was the number I was thinking of. Additionally I can't seem to get a clear answer as to whether our current debt numbers are including Iraq War costs or not.
You guys really crack me up. When a Conservative says "we should cut spending" that's great. When a Liberal says "we should keep our debt numbers in check" that is ridiculous. And to prove it you look to chop up some obviously loose numbers to ridicule my general point without actually addressing it.
Let me ask you this. If federal debt isn't such a big deal why should we worry about cutting spending? Perhaps we should just keep things as status quo since the economy is humming along.
"There are those who look at things the way they are, and ask why... I dream of things that never were and ask why not." George Bernard Shaw
Because we're obviously able to afford it. Why should we cut spending? Because government spending displaces economically more-efficient private spending. I know you and other Lefties believe that we're actually getting something worth having as a result. Social cohesion, or a reduction of the risk of a new French Revolution, or all the other stuff you guys like to talk about.
For better or worse, the country agrees with you, not with me. We're going to get more Federal spending whether it's a good idea or not. There's no point in arguing it, and I don't intend to argue it.
However, the markets aren't going to ever let the Treasury borrow more money than we can afford to pay the interest on (and they're pretty darned smart about knowing where that line is). That's why I don't worry about the Federal debt. And I don't worry about an overlarge tax bite, either, because that will cause the people to rebel, as capital flees the US and people start remembering what real poverty feels like, with hungry nights and cold winters.
The government doesn't run the economy. The reverse is true. If the government steps out of line, it will automatically start doing uncomfortable things like raising taxes and cutting benefits. At that point we can have the political discussion.
I generally agree with your points here. I don't necessarily agree with your blind faith in the markets because they have been proven to fail in the past. But other than that you aren't far from the mark.
I don't think the sky is falling. But I do think that there are two ways to go through economic upheaval, gradually or catastrophically(well I guess a 3rd is somewhere in between but you catch my drift). I prefer the gradual method. Causes far less hardship on people.
If we simply wait for the markets to correct the situation we will experience some serious pain because, while the markets are very good at setting prices, they are very bad at minimizing economic pain, particularly for the lower and middle classes.
"There are those who look at things the way they are, and ask why... I dream of things that never were and ask why not." George Bernard Shaw
It comes from watching the world. I've been trading a variety of financial instruments for many years and one thing I've learned is that markets will always find a way to prove one's very best theories wrong. What does that mean? It means markets know more than I do. By extension, they also know more than you do.
But here's where you and every other Lefty is dead wrong: markets don't exist in order to produce certain outcomes. Markets just exist. They exist because people act economically on a daily basis, and dimly-understandable macro-behaviors sometimes become apparent. But if you think markets "fail" on occasion, it's because you thought you understood them better than you do.
When you talk about producing certain outcomes (whether fast or slow), you're talking about politics, not about economics. And in case you hadn't noticed, we now have a participatory democracy in this country. (Once upon a time we had a representative democracy, but this is the age of instant polling, and of the Fourth Estate as a coeval branch of government.) We don't have a political system that's conducive to pursuing long-term objectives. And even if we did, the markets will always outsmart your best thinkers.
Re: But here's where you and every other Lefty is dead wrong: markets don't exist in order to produce certain outcomes. Markets just exist.
No, markets exist to distribute goods and services throughout the population. If everyone were self-sufficient, or if humans were not social animals, there would be no markets.
But here's where you and every other Lefty is dead wrong: markets don't exist in order to produce certain outcomes. Markets just exist. They exist because people act economically on a daily basis, and dimly-understandable macro-behaviors sometimes become apparent. But if you think markets "fail" on occasion, it's because you thought you understood them better than you do.
I'm not really sure where you are going with this.
Perhaps are, in themselves, politically indifferent. That's why we put all sorts of controls on markets otherwise they would create politically unpalatable climates for even the most strident paleo-conservative.
Markets are amoral. They don't care if millions, or billions even, are greatly harmed. They only care about controlling pricing, and by extension, controlling economic behavior. As a person who wishes to avoid seeing calamitous events hit our economy, I prefer that we do those things that mitigate against extreme change. And if you think that there is no way to do that well then you haven't been paying attention to our economic policy of the past 70 years.
You sure do love to assign all sorts of strawman lefty views to me.
"There are those who look at things the way they are, and ask why... I dream of things that never were and ask why not." George Bernard Shaw
The public is focused on one increase only: 21,500 troops to Baghdad.
Democrats will likely claim any increase in taxes is directly-indirectly(doesn't matter) related to our war expenses.
The way I look at tax cuts is a way to raise revenue. If you lower the rate that a person or a business pays on their income the more likely they are to pay it. If you had a choice of paying 40% tax on something or use a way not to pay it- most people will take the not pay it route. If that same tax rate was 25% more people would pay that tax and not risk or tie up their money for a period of time. When they calculate the amount of money lowering tax rates bring in I am not sure if the additional people paying are figured into the amount of revenue lost/gained. I think some Democrats think if say 1 trillion dollars was brought in at 35% if you lowered it to 25% you would get only 30% of that Trillion dollar revenue. No regards for the additional revenue from more people paying and less people sheltering. I believe that there are stats that prove that lower rates bring more revenue.Damn this was a long comment.
You're Exactly Right.
We need a flat national income tax set to 15% for every marginal dollar over $30,000.
Why created an entitlement for the poor? Income earned should be income taxed. The tax rate should be progressive. The poor should pay a higher rate. This will encouraging the poor to make more money. The government could supplement job training to the poor to make them a more productive citizen. The progress tax would encourage the poor to make more money and not being a burden to US tax payers.
that is, of plans to raise taxes for middle or low class families. The only thing I heard lately was this story that the Democrats would repeal billions of dollars in oil industry tax breaks passed by the last congress:
Much of the billions you refer to has to do with the oil leases and the errors made not by the LAST congress but by Clinton's administration during the late 90's, somehow his name was ommited by the reporter. Hard to believe the LATimes would try to mislead people and you fell into it.
While yes the oil companies made lots of money the last few years, sadly as a percentage of sales it's pretty pathetic.
It's easy to fact check, but not if you are trying to make a point to the contrary.
In 2005 when the newspapers were flipping out over 75% increases in profits for the oil companies they neglected to point out a lot of stuff... Like if a company made $3, one quarter and $4.50 the next it doesn't sound so great, but if you exclaim that profits rose 50% it sounds pretty good. Some facts, in OCT 05 Exxon reported a 75% increase in profits, sounds good right? But in fact they only made $9.92 billion on sales of $100.72 billion. Not even 10% profit, pretty pathetic if you consider that at the same time, McDonald's Corp made a 13.8% profit and Coca-Cola Co. earned 21.2%.
Exxon makes almost 40% less than McD's and less than 50% of Coca-Cola per dollar of sales. Mind you this was in the BEST of times for the oil companies, pretty sad.
Well done is better than well said. —Benjamin Franklin
The trick will be to lay the tax increase firmly on their shoulders and flog them with it every chance we get. The draft thing too.
"Nothing works like freedom, Nothing succeeds like liberty"
Kyle