Hards facts and Simple Math Equal Tough Choices and Small Government

[ProfJohn]

The part that nobody, particularly not Repubs, want to admit is that revenues and expenditures have been out of whack since Reagan, and that Republican Admins have increased debt far more than Dems, even counting the results of the Obama admin so far.

Actually they have been out of whack since 1950!

Since 1950 we have only had 9 years with a balanced budget. 4 of them occurred in the 50s, 2 in the 60s and 4 in the 90/00s.

Which is because of serial tax cuts. We all pay much lower federal income taxes than pre-Reagan wrt our rank on the income ladder. Those at the tippytop have been, by far, the greatest beneficiaries of govt largesse. And that's not just because their tax rates are lower, but because their share of income has grown enormously at the same time. They also reap profits from investing in US govt securities.

Revenue to the government in GDP
1950 14.4%
1960 17.8%
1970 19%
1975 17.9%
1980 19%
1985 17.7%
1990 18%
1995 18.4%
2000 20.6% <-- highest point in post WW 2 history and it occurred 12 years after Reagan left office and 17 years after his tax cut that you bitch about
2007 18.5% <-- pre-recession
2010 14.9% <-- unusually low due to recession

So when you look at the data you see that the amount of money going to government post Reagan is very similar to the amount that went to the government pre-Reagan.

In fact! Prior to Reagan taking office revenue had NEVER exceeded 19% of GDP (excluding WW 2)

In the years AFTER Reagan took office and AFTER his 1983 tax cuts revenue exceeded 19% five times.

Fools like you forget that Clinton raised taxes to the highest level in the HISTORY of our country. Bitch about the Bush tax cuts if you want, but even without his tax cuts we'd still be posting $800+ billion deficits and Obama would still own the highest deficit totals in our countries history.

Source of all the FACTS I used:
http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/hist.pdf

 

[ProfJohn]

That's one of the most convoluted bits of obfuscation & denial I've read in a major newspaper.

The projections aren't accurate because the recession cut federal revenues, making the actual dollar figure lost to tax cuts smaller...

Well, duh, of course. What the author tries to hide is that the projections would be accurate other than that...

So, uhh, why are we having this recession, anyway? Maybe it was because the Bush era economy was false prosperity, fueled by tax cuts, wars, accompanying deficits and regulators cutting red tape in support of the self regulated banking ownership society flimflam?

Righties memories are... convenient, at best...

Repubs should just come out & say it, be proud-

"We crashed the economy & got richer doing it! So now it's time for all the little people to bend over & take it some more for being so stupid as to let us do that!"

Can you please point to a scholarly article that suggests that lowering our tax rate caused the current recession.

Good luck.

 

[monovillage]

Thanks for the post Fern and the informative links.

 

[JSt0rm]

It's all Bush's fault. Just tax the rich, they can afford it. Stupid teabaggers.

Now with that out of the way...

Edit: I see I was too late. Nonsenseamp and Chimpy McGee beat me to it.

whos more stupid?

1. the unemployed veteran of a foreign war who defends the top 1%'s 15% tax rate

2. The city dwelling liberal who is probably in the top 85% incoming earner and supports tax increases on the wealthy?

 

[ProfJohn]

whos more stupid?

1. the unemployed veteran of a foreign war who defends the top 1&#37;'s 15% tax rate

2. The city dwelling liberal who is probably in the top 85% incoming earner and supports tax increases on the wealthy?

It is actually the top .1%

It is literally around 140,000 out of 140 million house holds who make more money via capital gains that income and thus have a lower tax rate than those below them. It is actually the .01%, but it is hard to find date on them since that bracket is so new.

And keep in mind that while these people are insanely rich compare to you and me, when compared to the size of government spending they are a drop in the bucket.

As a group they are only paying a 1% lower tax rate than the 1% earners. So let's say that we can get another 3% more out of them that would net us perhaps $25 billion more per year.

Ending the hedge fund manager loophole would net about $4 billion per year.

So we are looking at maybe $30 billion more a year. That would fund the federal government for a whole 3 days and still leave us with $1 trillion deficit.

 

[mchammer187]

It is actually the top .1%

It is literally around 140,000 out of 140 million house holds who make more money via capital gains that income and thus have a lower tax rate than those below them. It is actually the .01%, but it is hard to find date on them since that bracket is so new.

And keep in mind that while these people are insanely rich compare to you and me, when compared to the size of government spending they are a drop in the bucket.

As a group they are only paying a 1% lower tax rate than the 1% earners. So let's say that we can get another 3% more out of them that would net us perhaps $25 billion more per year.

Ending the hedge fund manager loophole would net about $4 billion per year.

So we are looking at maybe $30 billion more a year. That would fund the federal government for a whole 3 days and still leave us with $1 trillion deficit.

So lets do that and worry about making up the rest of the deficit instead. Or are want this kind of debate over every 30 Billion dollars of cutting too.

Your point it only raises X amount of money.

My point if it takes 2 months to reduce the deficit by 30 billion than how are we going to get the rest.

Your point is its a drop in the bucket.

So is NPR, so is planned parenthood, so is welfare, so is NASA so is the Bush Tax cuts, so is Iraq and Afghanistan but I guess we shouldn't do anything about any of them because it is only a drop in the bucket.

 

[JSt0rm]

So we are looking at maybe $30 billion more a year. That would fund the federal government for a whole 3 days and still leave us with $1 trillion deficit.

So then why are you spending your entire life fighting it on these forums?

 

[Generator]

Shill tripe.

You're an absurd clown with this Dick Cheney rag to riches story.

 

[ProfJohn]

So then why are you spending your entire life fighting it on these forums?

Because tax increases have never been followed by spending cuts.

Cut spending and THEN come back and ask me for more revenue.

 

[JSt0rm]

Because tax increases have never been followed by spending cuts.

Cut spending and THEN come back and ask me for more revenue.

I want to increase taxes to increase money velocity there by increasing economic activity.

Instead we get job killing tax cuts from republicans.

 

[OneOfTheseDays]

You keep repeating this false mantra that somehow tax increases would be the end of our economy.

It seems to me we had plenty of wealthy folks under Reagan tax rates AND under Clinton as well. It seems our economy was just fine.

You're gonna have to do better than that Republicans. The facts aren't on your side.

 

[ProfJohn]

You keep repeating this false mantra that somehow tax increases would be the end of our economy.

http://www.youtube.com/watch?v=8glbYVk3WSo&feature=youtu.be
"The LAST THING We Want to Do Is Raise Taxes During a Recession"

 

[Double Trouble]

It's somewhat ironic that most posts in this thread show exactly the problem we face. In the face of hard facts and numbers, some resort to ideological driven answers that don't get us anywhere closer to a solution ("raise taxes on the rich!"). Others resort to the blame game ("it's Bush's fault, we would never be in this position if it wasn't for him!"), ignoring the fact that blaming someone for where we are does nothing to fix the situation.

Excellent post Fern, nice concrete (and very sobering) overview of where we stand. Those are the facts. If someone disputes the validity of the numbers, that's great, they can be updated to reflect better data. Don't jump in just spouting ideological bullshit though. For example, "raise taxes on the rich!" might be justified and valid, but in reality isn't really a drop in the bucket in the grand scheme. At the same time, saying "cut government spending and waste!" is fine, but where do you actually cut? Forget ideology, lets talk about solutions.

 

[Exterous]

It's somewhat ironic that most posts in this thread show exactly the problem we face. In the face of hard facts and numbers, some resort to ideological driven answers that don't get us anywhere closer to a solution

Pretty much. And of course - no one is willing to compromise

 

[werepossum]

Because tax increases have never been followed by spending cuts.

Cut spending and THEN come back and ask me for more revenue.

This. THISTHISTHISTHISTHISTHISTHISTHISTHISTHISTHISTHISTHISTHIS!

I want to increase taxes to increase money velocity there by increasing economic activity.

Instead we get job killing tax cuts from republicans.

Job killing tax cuts? Is there a contest going for most stupid thing said on the Internet? If so, I certainly can't top that!

By your "logic", North Korea should certainly be the most prosperous country in the nation. Hell, money must be a real hazard there, moving so fast it'll take your freakin' arm off if you aren't careful.

 

[momeNt]

I want to increase taxes to increase money velocity there by increasing economic activity.

Instead we get job killing tax cuts from republicans.

Wow, someone is a good little sheep, just what the federal reserve and the whole central planning no clear distinction between banks/government wants....

You're like one tiny tiny step from full on communism the way you're thinking.

 

[piasabird]

This is an interesting chart, you do not know how to interpret it. The projected losses from the Bush Tax Cuts, indicate a significant growth in the economy due to the tax cuts, that would not have been achieved without them. It shows a growth in earnings from the stock market. The Bush tax cuts also saved money for the lower middle class.

It is convenient that you did not split out the surge of troops that President O'Bamma put into place and his private war with Libya, that we did not need. Also the cost of all the weapons that the Russians destroyed that was Hilary Clintons War in Georgia.

So if we raise taxes on the rich will our economy start shrinking again?

One problem is that other countries have also lowered their tax rate on corporations. So if we raise our corporate tax rate, then we will have to compete with them. Ask the people in California how raising taxes is working for them and just apply that to a global scale.

 

[CycloWizard]

Simplify the tax code. Wipe it out and start over completely from scratch. No one pays anything on the $X required to reach the poverty level. Above that, government takes 20&#37; of each dollar (or whatever it happens to be). Automatically deduct this. Fire 90% of the IRS.

Close the entire VA system. Give veterans lifetime insurance benefits (or benefits proportional to their time in uniform) and let them go to whatever hospital they want. The current annual budget for the VA is over $130 billion, and simply insuring all ~26 million vets would cost ~$30 billion. This releases many doctors and nurses to the private sector as well, helping with cost increases due to medical personnel supply.

Cut 50% off the top of the budget for all remaining executive branch agencies. These agencies are bloated to a ridiculous degree. The executive branch exists to enforce laws and provide for defence, so that is ALL these agencies should be doing. Yes, sorry DoD, you're on this list as well. The list of executive agencies includes:

Executive Departments
Department of Agriculture (USDA)
Department of Commerce (DOC)
Department of Defense (DOD)
Department of Education (ED)
Department of Energy (DOE)
Department of Health and Human Services (HHS)
Department of Homeland Security (DHS)
Department of Housing and Urban Development (HUD)
Department of Justice (DOJ)
Department of Labor (DOL)
Department of State (DOS)
Department of the Interior (DOI)
Department of the Treasury
Department of Transportation (DOT)
Department of Veterans Affairs (VA)

Quasi-Official Agencies
Legal Services Corporation
Smithsonian Institution
State Justice Institute
United States Institute of Peace

That takes care of the entire deficit with some change left over. This would be very hard for most people to swallow, but it is the most straightforward way to do what is needed. Cutting back bloat in these agencies can be managed within each agency and there is easily enough bloat to cut and still achieve the goal(s) of the agency.

 

[Fern]

It's somewhat ironic that most posts in this thread show exactly the problem we face. In the face of hard facts and numbers, some resort to ideological driven answers that don't get us anywhere closer to a solution ("raise taxes on the rich!"). Others resort to the blame game ("it's Bush's fault, we would never be in this position if it wasn't for him!"), ignoring the fact that blaming someone for where we are does nothing to fix the situation.
-snip-

Yes, I noticed to same thing. And it's disappointing to see.

After thinking about it a bit, it seems to me too many in Congress behave the same way, spouting ideological BS that plain facts prove to be wholly insufficient to solve our fiscal problem. No matter which side you're on, those facts present a very scary reality. I guess they'd prefer to leave their heads in the sand than face them.

We're in for a world of hurt. I don't see any way around it. The longer we wait, and it looks like that's exactly what we're going to do given the current proposals, the worse it's going to be.

Fern

 

[Fern]

-snip-

Thanks.

A serious, non-ideology type response.

Would be curious to see how you managed to estimate revenues under your income tax scheme. That would have to be quantified to know the effect on the annual deficit.

Fern

 

[CycloWizard]

Thanks.

A serious, non-ideology type response.

Would be curious to see how you managed to estimate revenues under your income tax scheme. That would have to be quantified to know the effect on the annual deficit.

Fern

Since most people currently pay less than 20&#37;, taking 20% without deductions should probably make up the difference. I looked at the math a couple years back and came up with a number that was around 20%, but I don't recall exactly what was needed to get the same revenue as we have today.

edit: Went to actually calculate the numbers using updated data (all from 2010). Here we are:
Total Personal Income $12,935,100,000,000.00
#households 112,611,029
# People/household 3.14
Poverty Threshold (weighted) $18,077

Income per household (I/h) $114,865.30
I/h-Poverty threshold $96,788.46
20% Tax on I/h-Poverty $19,357.69

Total Tax $2,179,889,672,091.90
2010 Tax Receipts $2,160,000,000,000.00

 

[Jhhnn]

Can you please point to a scholarly article that suggests that lowering our tax rate caused the current recession.

Good luck.

Recessions don't just fall out of the sky- they always follow a period of false prosperity created by speculation & over extension of credit. Cutting taxes at the top encourages that. They have more hot money, more money to play with. Taking the leash off the wolves of Wall St just makes that more intense.

Your taxes as a &#37; of GDP is the usual misleading metric. Income has shifted radically to the top during the last 30 years, so revenues should have increased substantially, given that more income would fall into higher tax brackets had tax rates been the same. When over 10% of taxable income shifts from the bottom 75% to the top 1%, then revenues as a % of GDP should go way up under a progressive tax system. That's a no-brainer, but that's not what happened, due to top tier tax cuts.

http://www.taxfoundation.org/news/show/250.html

It's the same link to the same anti-tax site you've tried to ignore for years...

 

[CycloWizard]

Recessions don't just fall out of the sky- they always follow a period of false prosperity created by speculation & over extension of credit. Cutting taxes at the top encourages that. They have more hot money, more money to play with. Taking the leash off the wolves of Wall St just makes that more intense.

Your taxes as a % of GDP is the usual misleading metric. Income has shifted radically to the top during the last 30 years, so revenues should have increased substantially, given that more income would fall into higher tax brackets had tax rates been the same. When over 10% of taxable income shifts from the bottom 75% to the top 1%, then revenues as a % of GDP should go way up under a progressive tax system. That's a no-brainer, but that's not what happened, due to top tier tax cuts.

http://www.taxfoundation.org/news/show/250.html

It's the same link to the same anti-tax site you've tried to ignore for years...

As the train wreck approaches, you're looking behind us to see which switch in the track was thrown to put us here, ignoring the ones in front of us and might actually get us out of here. Tax laws changed now won't take effect until January 1, so how will that possibly help anyone?

 

[Matt1970]

So we should raise the taxes back up to 70&#37; on the Rich like we had in the 1970's we will have surpluses galore again.

Oh wait, we didn&#8217;t have surpluses back then&#8230;&#8230;..

Maybe taxing the Rich doesn&#8217;t really work.

 

[soundforbjt]

So we should raise the taxes back up to 70&#37; on the Rich like we had in the 1970's we will have surpluses galore again.

Oh wait, we didn&#8217;t have surpluses back then&#8230;&#8230;..

Maybe taxing the Rich doesn&#8217;t really work.

That's because they had so many loopholes back then nobody actually paid 70%. We had 90% under Ike and nobody paid that percentage either.

Gotta love the Reps tax ideology, We're (gov't) spending too much so let's take a pay cut (cut taxes). How many of you would do that in real life?