Out Of Their Anti Tax Minds

[Fern]

I'm no great fan of David Brooks, but even he gets it-

If the debt ceiling talks fail, independents voters will see that Democrats were willing to compromise but Republicans were not. If responsible Republicans don’t take control, independents will conclude that Republican fanaticism caused this default. They will conclude that Republicans are not fit to govern.

And they will be right.

I think both sides better be careful, it's not just the Repubs who could lose here.

For one thing, the Dems are spreading enormous amounts of F.U.D. No increase in the debt ceiling doesn't mean default, not by a long shot. As a CPA who has dealt many times with clients' cash flow problems (i.e., lack of additional borrowing ability) we're not close to it. We have more than enough revenue to meet our debt service and can just roll-over any treasury debt coming due.

Spending? OK, now that's a problem. Without new/additional debt we cannot maintain current spending levels. But who is gonna decide what gets cut, and then who is gonna take the blame? That's the only real issue here as far as politics go.

The Dems may be able to target the cuts at retirees (Social Security checks etc), but will they be successful at blaiming the Repubs?

I think it sufficiently unclear so that both sides must be fearful. After giving numerous unemployment and welfare increases (and surges in Afganistan and a new war in Libya) do the Dems really want to hold back retirees' SS checks and hope the blame is laid soley upon the Repubs? I think the last couple of years have well demonstrated that the "normal people" (i.e., non rabid political types unlike those of us who inhabit ATP&N) have been paying more attention to polical issues than, perhaps, ever before in recent times. For the Dems to think they can force the financial/spending choice to exert political leverage and escape blame strikes me as dubious and outright risky.

Washington DC is playing a game of "chicken" right now.

It may be the Repub feel they have no choice but to show some 'balls' because of the TEA Party's influence. If so, the Dems will be in a tough spot, and one I see no real affection to embarce.

Fern

 

[ProfJohn]

Brooks is a moderate conservative and it's no surprise the hardcore partisans on both sides are attacking him here.

Isn't that ironic...

Everyone: we need to be more moderate.

Moderate: here is an idea

Everyone: What are you? An idiot?

 

[Lithium381]

Dems 2008: Hey guys what's up? Budget? Nah, we'll take care of that later, lets redistribute wealth.
Rebubs 2011: Hey guys..... can we get around to one of our constitutional duties here and balance the budget and get out system into a sustainable cycle?
Dems 2011: YOU'RE TRYING TO KILL THE BABBIES!!!!!

 

[ProfJohn]

Is it the spending or the revenue...

Spending:
Right now we are spending 25% of GDP.
Our 30 year average on spending is around 19%.

Revenue.
Right now revenue is 14% of GDP.
Our 30 year average on revenue is around 18%.

So we are 6% above on spending and 4% below on revenue.

But here is the thing. Both of these numbers are greatly effected by the recession, revenue especially.

In 2006 and 2007 our revenue was above 18%. So restoring the economy to decent growth should get revenue back to 18% without doing anything to the rates which haven't been changed since 2001.

Spending though will only come down if we stop or slows its growth. Which is why I think our main focus has to be on controlling spending. If we can get the economy to 3% growth and keep spending at 2% growth (total spending) then in 4-5 years we may be able to balance the budget.

 

[HendrixFan]

Revenue means my money. Fuck democrats. You want to take away my deductions Obama. Well fuck you and fuck Obama.

This has been his plan all along. You must not have been paying attention to this fucker.

I have. Search my posts. This was his plan. He told you what he was going to do

Fuck Obama.

More money to pay your wife. Where do you think she gets her money from if not taxes?

 

[HendrixFan]

You want to put the screws to everybody's retirement funds too apparently. If you want to do something along those lines you are much better off to just roll out a straight wealth tax. It's much easier to exempt vehicles that you might want to exempt (like retirement accounts up to $x), and it could help transition investment/corporate taxes away from a structure that encourages retention of profits, which can exacerbate bubbles. (Not that that was a major part of the most recent one, but it's known to fuel speculation historically.)

Grinding fees from the companies that run retirement accounts kill everybody's retirement funds already. Put a small transaction tax of 1 cent per trade or so, and it will push more retirement funds into indexes, which is where they should be. Even a few cents or a dollar a month for a more aggressive and diversified retirement portfolio won't be too big of a hit.

What that will do, however, is kill the profit incentive that investment banks have with their churning of portfolios they hold, and more importantly with the high frequency trading. The high frequency trading basically skims money off the top from investors and their retirement accounts and puts it right in the pockets of the banks. It also seems to be quite influential in runups or rundowns in the market.

 

[nonlnear]

Grinding fees from the companies that run retirement accounts kill everybody's retirement funds already.

No, only people who don't understand what they are buying.

Put a small transaction tax of 1 cent per trade or so, and it will push more retirement funds into indexes, which is where they should be. Even a few cents or a dollar a month for a more aggressive and diversified retirement portfolio won't be too big of a hit.

So you want another grinding fee. Hmm...

What that will do, however, is kill the profit incentive that investment banks have with their churning of portfolios they hold, and more importantly with the high frequency trading. The high frequency trading basically skims money off the top from investors and their retirement accounts and puts it right in the pockets of the banks. It also seems to be quite influential in runups or rundowns in the market.

High frequency trading doesn't skim anything from value investors. All it does is skim from traders who are used to getting an extra windfall from executing orders more favorably than their requested prices. (Actually we'll have to split things out more carefully here. I'm talking about arbitrageurs, as it seemed to me that's what you were getting at. There are other kinds of HFT, but I don't see how a tax would do much to change those practices.)

Also, index funds trade too. Some need to trade a fair amount in order to replicate their target indices. Granted these are rarely huge moves, but if their selling point is narrower margins, then a small hit by a transaction tax would hurt that selling point of theirs disproportionately.

 

[Anarchist420]

They ought to repeal the corporate tax, phaseout out SS and MC, and reduce the top marginal rate to 23% for all income (except medical and charitable expenses) and remove certain loopholes.

They need to tax earned income less then tax capital gains and inherited income the same as that. If they did that and mtg. interest deduction, they'd bring in more revenue.

 

[Jhhnn]

For the Dems to think they can force the financial/spending choice to exert political leverage and escape blame strikes me as dubious and outright risky.

Nice spin. I think it's clear to anybody with half a brain that Repubs are taking an "all or nothing" attitude. Dems have been more than willing to compromise.

 

[HendrixFan]

No, only people who don't understand what they are buying.

How many people with 401ks and/or IRAs understand what they are buying. When you are talking about retirement accounts, many of whom have company sponsored companies and no real choice, you have very few who know what they are doing. That is why the industry churns retirement accounts, they can get away with it. And make quite a bit while they are at it.

So you want another grinding fee. Hmm...

A penny tax per transaction (not per share) would amount to pennies for most people, a dollar or so for those who are heavily active with their retirement accounts. The group it hits hard are the HFTers who make up to 70-75% of all trades by most estimates. At near a billion trades per week, HFTing would generate good revenues a penny at a time, effectively kililng it off.

High frequency trading doesn't skim anything from value investors. All it does is skim from traders who are used to getting an extra windfall from executing orders more favorably than their requested prices.

The big picture is that those who are actually buying and holding, as opposed to speculating, are paying a heavier price. HFT encourages speculating and dumping and discourages value investing. HFT increases price volatility which in turn encourages more trades. Since they are run by algorithms, the more the prices move, the more the computers skim, and the the cycle perpetuates itself.

 

[Darwin333]

Yes, they do. In fact, interest rates are so low now, that experts say that this is a great time to borrow MORE money for our infrastructure - not to mention employment.

Interest rates are, and this is especially true the larger the amount at risk (or loaned) gets, exactly the way the "lenders" feel about your ability to pay that loan off in whatever terms are set at that exact moment in time. It is a gauge on their confidence in your ability to pay in the future at the time that they loan you the money. If and when they start to lose confidence that will be immediately seen in higher interest rates.

The error in your comment is that you are not understanding when I say 'ask questions', I'm not talking about the stage yet where it has caused interest rates to rise.

Asks questions means to doubt or lose confidence, as I stated earlier that would immediately show up in the bond market. That is basically what the bond market does.

You're getting ahead of where we are. Greece is further along in that process.

Of course they are, my point wasn't that we are at the same stage as Greece it was how fast the bond market lost faith in their future ability to pay. That is what happens when your creditors "question" your ability to pay.

I was just watching yet more commentary on this that the impact on our interest rates if we default could last decades. And yes, IMO, just the bluffing causes risk.

I will take my proof over your commentary any day.

Let's talk again later in the year and see where we are. Of course if we actually default on things, all bets are off, I expect we'd agree that will cause big problems.

If the world economy does better our interest rates WILL go up regardless. It is a double edged sword, if the economy isn't doing better then its quite possible for bonds to remain at historical lows. If it is doing better our budget takes a bigger hit than the cuts they are currently talking about.

And yes, defaulting would be a horrendously bad thing. That is why we will not default on our debt. We might fuck a lot of other people but at the end of the day we will continue to service our debt because not doing so would be devastating

If we do increase the debt ceiling, perhaps that will cool things off on the risk, but I suspect a 'short-term' increase Republicans are suggesting might cause problems.

The game of chicken they are currently playing isn't causing serious problems because everyone that matters knows the same thing that I do, we will not default regardless if the debt ceiling is raised or not. The debt ceiling being raised is not required to service our actual public debt. It is required to pay all of our other promises. The bond market does not care about the latter.

There won't be any numbers showing that happened for months and even then there will be different opinions on the cause.

Like hell. People do not loan you a trillion bucks at potentially negative returns if they think, at the time of loaning it to you, that you might not be able to pay it back. The bond market reacts much quicker than you think.

What happens in a couple months will be more dependent on the global economy (as well as our own)and Europe in particular than any squabbling between our politicians.

Greece has nothing to do with the sort of 'questions' I'm talking about, they did a lot more than that.

They borrowed more than they could reasonably pay back and played accounting games to make their situation look better. The biggest difference between them and us is that we control our own money. They are further along than us but we are showing absolutely no signs of putting on the brakes.

There is a reason the bond market has been so willing to purchase our short term debt at no gain and even potentially negative gain but hasn't really been interested in our long term debt.

Fact: On average ALL of our existing debt must be rolled over ever 4 years and some change. We did that on purpose because it makes todays budget look better but as I said, they were more than happy to go along with it.

 

[Jhhnn]

Is it the spending or the revenue...

Spending:
Right now we are spending 25% of GDP.
Our 30 year average on spending is around 19%.

Revenue.
Right now revenue is 14% of GDP.
Our 30 year average on revenue is around 18%.

So we are 6% above on spending and 4% below on revenue.

But here is the thing. Both of these numbers are greatly effected by the recession, revenue especially.

In 2006 and 2007 our revenue was above 18%. So restoring the economy to decent growth should get revenue back to 18% without doing anything to the rates which haven't been changed since 2001.

Spending though will only come down if we stop or slows its growth. Which is why I think our main focus has to be on controlling spending. If we can get the economy to 3% growth and keep spending at 2% growth (total spending) then in 4-5 years we may be able to balance the budget.

Amazing bit of disinformation & fantasy.

Right now, the economy is in a liquidity trap verging on a debt/deflation scenario, the natural result of an enormous credit bubble in housing, false growth. That bubble was also exacerbated by tax cuts in 2001 and again in 2003, plus deficit spending on the military.

2006 & 2007 were the height of that deception, so of course federal revenues were artificially high as a result. Yet we still accumulated debt, over $500B each fiscal year. So tax collections were inadequate even when revenues were artificially inflated.

Restoring the economy to decent growth you say? What actual mechanism would you suggest to accomplish that?

Oh, wait- you don't. Which is the problem with current Repub rhetoric- they don't either. They offer only cuts that will further decrease employment. When the livestock is too skinny, feed 'em less, right?

 

[spidey07]

Nice spin. I think it's clear to anybody with half a brain that Repubs are taking an "all or nothing" attitude. Dems have been more than willing to compromise.

That's complete bullshit. Obama asked congress to "leave ultimatums at the door" and then turned around and gave them an ultimatum that the plan must include tax increases.

That's not compromise, that's a democrat raising taxes come hell or high water. You're not paying attention to this president.

 

[piasabird]

We need a "Kick them all Out" Campaign. The problem is under our form of government idiots running the government keep getting reelected. We need a "No Confidence Vote!"

 

[piasabird]

Cut the Fat!
Cut the Fat!
Cut the Fat!

 

[Atreus21]

Nice spin. I think it's clear to anybody with half a brain that Repubs are taking an "all or nothing" attitude. Dems have been more than willing to compromise.

Sometimes digging in and being uncompromising has its merits.

 

[Craig234]

Interest rates are, and this is especially true the larger the amount at risk (or loaned) gets, exactly the way the "lenders" feel about your ability to pay that loan off in whatever terms are set at that exact moment in time. It is a gauge on their confidence in your ability to pay in the future at the time that they loan you the money. If and when they start to lose confidence that will be immediately seen in higher interest rates.



Asks questions means to doubt or lose confidence, as I stated earlier that would immediately show up in the bond market. That is basically what the bond market does.

Darwin, you are making semantic points and it's a waste of our time.

My point, and you can take it or leave it, is that the Republicans' behavior are starting to risk the creditors having more doubt about the US, which can lead to their charing higher interest rates, lowering our credit rating. That fact is NOT necessarily reflected in the rates until later in the process - not when they're faced with things that raise issues, but if they react more strongly.

If a business asks for a loan, and then the CEO says he'll be on a long vacation while the loan is pending, it 'raises questions' the lender may react to one way or another.



Of course they are, my point wasn't that we are at the same stage as Greece it was how fast the bond market lost faith in their future ability to pay. That is what happens when your creditors "question" your ability to pay.

I will take my proof over your commentary any day.

You don't have any 'proof' and are just becoming obnoxious.

Fact: On average ALL of our existing debt must be rolled over ever 4 years and some change. We did that on purpose because it makes todays budget look better but as I said, they were more than happy to go along with it.

IIRC, Clinton increased that move to short term, which helped the budget - he got lucky - but with some risk.

I don't know the market that well, but people who do say now would be a good time for us to do what I said. Maybe the bond market prefers short term, doesn't mean we have to.

 

[Craig234]

Sometimes digging in and being uncompromising has its merits.

Yes it does.

Too bad when it's done by people to get bad things.

Democrats should not be giving one more thing to the Republicans on this. They've given too much already. Now the Republicans can pay the price if they choose to act badly.

 

[Craig234]

We need a "Kick them all Out" Campaign. The problem is under our form of government idiots running the government keep getting reelected. We need a "No Confidence Vote!"

We could call your party 'mob with pitchforks'. Good for you to speak up for the mob mentality just ranting wildly. Yes, new faces would do *so* much better.

 

[werepossum]

That Democrat 3:1 spending to "revenue increases" is pure FUD. Listen to Obama; the spending he wants to cut is "spending on tax cuts", "spending on loopholes for the richest among us." The Democrats will accept three dollars in tax increases on corporations and high earners for every dollar in tax increases on the rest of us, blame our tax increases on Republicans insisting on "giving money to the wealthiest Americans" (because all money belongs first to government and any money not seized by government is a gift), and raise dust clouds furiously patting themselves on the back for making the tough choices.

 

[Texashiker]

Neither Democrats or Republicans are fit to govern, we really need a third party in office to help balance things out.

The ideal government is not a 2 party system, but where multiple parties share the power and responsibility of passing laws.

Personally, I would like to see no party with more then 1/3 majority in congress.

 

[fskimospy]

Neither Democrats or Republicans are fit to govern, we really need a third party in office to help balance things out.

The ideal government is not a 2 party system, but where multiple parties share the power and responsibility of passing laws.

Personally, I would like to see no party with more then 1/3 majority in congress.

Not possible (or at least extremely unlikely) with our electoral system. The Constitution has basically guaranteed a two party system forever.

 

[fskimospy]

That Democrat 3:1 spending to "revenue increases" is pure FUD. Listen to Obama; the spending he wants to cut is "spending on tax cuts", "spending on loopholes for the richest among us." The Democrats will accept three dollars in tax increases on corporations and high earners for every dollar in tax increases on the rest of us, blame our tax increases on Republicans insisting on "giving money to the wealthiest Americans" (because all money belongs first to government and any money not seized by government is a gift), and raise dust clouds furiously patting themselves on the back for making the tough choices.

I am unaware of any credible source that believes the spending cuts to be as you describe. Please provide links.

 

[spidey07]

That Democrat 3:1 spending to "revenue increases" is pure FUD. Listen to Obama; the spending he wants to cut is "spending on tax cuts", "spending on loopholes for the richest among us." The Democrats will accept three dollars in tax increases on corporations and high earners for every dollar in tax increases on the rest of us, blame our tax increases on Republicans insisting on "giving money to the wealthiest Americans" (because all money belongs first to government and any money not seized by government is a gift), and raise dust clouds furiously patting themselves on the back for making the tough choices.

If we can just raise "revenue" big enough we'd be fine! Take everything Obama says and when he says "revenue" replace that with "citizens money" to get his true meaning.

 

[werepossum]

I am unaware of any credible source that believes the spending cuts to be as you describe. Please provide links.

Heard it from the President's own mouth yesterday while dressing, on Fox or CNN.