Democrats & Liberals Archives

The GOP's Fiscal Policy: Denial

By the Republican’s Logic, The Ministry of Magic must be doing the budgeting. They think that damage to the economy is arbitrary to where the budget ends up, so they’re willing to recklessly cut to the point where America may lose a million jobs and go into a recession so Right-leaning voters can feel good about GOP budget credentials. They also think that it won’t matter than there’s not enough budget left, once they’ve excluded the Sacred cows of the budget process. They won’t cut Medicare, won’t cut the Military, and won’t get rid of their Tax Cut.

Once you've decided not to cut the mandatory spending, any claim on major budget cuts go away, and its essentially just for show.

They talked big coming in, but they're simply exploiting the mood of their voters, trying to impress them that they're not liberals. State Governors are getting in the act, refusing rail projects and other capital improvements in an effort to look frugal, and engineering failures of fiscal responsibility so they can get to work slashing otherwise popular policies they don't like.

You want the reality of where Republicans are going? Look at Texas Governor Rick Perry. Draconian cuts to basic services in states that are already approaching or are dead last in the nation on helping their people. He claimed he was riding high, an economic and fiscal miracle. Now he's got a worse budget crisis to deal with than California, which he was laughing at.

Foggy-headed fiscal thinking is what got us into this, ignoring the fiscal and economic realities of this country for the sake of being doubly generous to the American people, providing programs and benefits without charging the taxes necessary to pay for them. They wiped out a surplus in good times, and now we have to suffer through the bad times with less ability to leverage ourselves out of it, without costing ourselves later down the line.

But not less need to do so. If the economy continues to needlessly suffer, the fiscal picture will remain bleak. We cannot forget that a big part of the resolution of the Bush/Reagan Deficits were the tax dollars that came in from booming businesses. We cannot forget that the essential part of any fiscal balance is cashflow from the economy. When the economy gets a cold, the fiscal picture gets pneumonia. Well, the economy got Pneumonia, and that's why the fiscal picture is wheezing like Doc Holliday.

The Republicans keep on saying we're broke. If you want to see the degree of truth in that claim, go and look at treasury bonds, and what they're trading at. Go look at our interest rates. America's full faith and credit, despite our record deficits, is not in tatters. Our debt levels are not anything to laugh at, but they aren't our worst problem. In fact, they're not really a problem we can solve if we don't solve the real problem: The inability of people to pay as much taxes as they were before.

"Oh!" Say the Republicans, "there we see your evil liberal inclinations-"

Can it. Can the political vitriol and vilification, and just listen for a second here. Taxes, even if they are evil in your world view, are what you pay for spending with, when you're not deficit spending. Revenues that are too low for spending people won't give up create deficits just the same as spending that is too high for the taxes people are willing to pay out of pocket. Our current deficit cannot be defined as an unforseen accident, something Republicans merely blundered into. They knew what they were voting for, when they voted for it. They just didn't think the fiscal rules applied to them.

The real world doesn't care why you run a deficit, the deficit simply gets run if there's a negative imbalance between revenues and spending! Republicans want to claim that paying too little in today's revenues for today's spending is not going to cause a deficit, even while they criticize others for what is admittedly a deliberate strategy of spending more than is at hand. But really, they're just two different routes to the same imbalance which has the same consequence. Does it matter whether you're endebted because you bought too much or paid too little up front? No.

The details of how you got further into debt might be different, but just because you did your duty as a Republican and cut taxes, doesn't mean your taxes will magically contribute nothing to the deficit.

Another real world fact that Republicans are unwilling to face: Jobs are jobs, are jobs, are jobs, are jobs. Kick that government worker out of his job, and it may be supremely satisfying to one's ideology, but ideology doesn't decide economic consequences, money does. That person is now a burden on the system, where before they were productive, doing something for people.

And to do what? The deficits that we're resolving have three major causes.

The first was massive new Medicare costs that a Republican congressional majority and a Republican President created. For better or worse, I don't think anybody wants the benefits to go anywhere. You go out there and tell the Seniors they'll have to bankrupt themselves on drugs, starve, or die. You go out there and tell the medical industry that they won't be getting all that money from Uncle Sam. Hell, Republicans found it so politically radioactive, they even used the specter of lost benefits to gin up the ire of the supposedly free-market loving Tea Partiers!

The second major cause was the Republican Fiscal Policy. If the Republicans were truly honest with themselves, they would admit that their giveaways over the past decade are no different in practical fiscal terms, as far as deficits go, than the Democrat's stimulus package. They would admit that trillions of dollars of debt have been heaped on the backs of the American people, and trillions more will be heaped on their backs in the future, for the sake of repeating the failed fiscal experiment of the Eighties.

No, the deficits did not get small when you raised less money in revenues. Cutting corporate taxes, the taxes of the wealthy, the Inheritance taxes or all that other stuff did not give the economy a kick in the seat of the pants. They did run us much deeper into debt as a nation.

Why don't we face that? Why do we keep on telling ourselves we just have a spending problem, when we had a decent, functional tax rate that wasn't making beggars of anybody?

The answer, I believe, lies in a certain level of cowardice on the part of Republican leaders. They want to say "We have no choice, we're broke!" But they had a choice. They could have let the rich see their tax cuts go, and by doing that save hundreds of billions of dollars in deficit spending without putting the benefits of a single woman, child or retiree at risk, without harming the economy by adding thousands of federal employees to the rolls of the unemployed.

If we are faced with this choice, we are faced with it because of the rigid-mindedness of the Republican Party and the right in America. They will not allow Americans to make other, healthier choices. They criticized Rahm Emmanuel for saying that one should not let a crisis go to waste in Government, but so far they've been more than busy doing just that, using the dire economic straits to put people out of work, to cut benefits, to put the disadvantaged at even more of a disadvantage. They've used the crisis to justify blocking an set of infrastructure projects that would have employed millions. They've used it to justify the continuation of their favorite tax cuts.

They went to bat for hundreds of billions of dollars in new revenue shortfalls. Deliberately. Having paid their friends, now the rest of us get to pay the piper again, just as we paid for the mistakes of their Wall Street and Oil company friends.

The last of the three major reason for the deficit is the vast increase in defense spending. Republicans went to not one, but two wars deliberately, with no intention of paying for it. Because nobody wants to be seen as weak on defense, of course, nobody's willing to get in there and ask the tough questions about what we really need, and what we don't. Al-Qaeda isn't fielding a large conventional army like the Soviets did, or running a big navy, or anything else like that. The defense spending seemed to be procurement for procurement's sake. We more than doubled the Defense Department's budget.

Now the question is whether we can end the two wars we're in. God knows most people want them ended. Sun Tzu warned about the costs and consequences of long wars, to give you an idea of how long extended campaigns have been considered problematic. If we resolve nothing, if all we end up doing is mixing around a smoking pile of debris a little more, then what have we bought for the cost? There are much cheaper ways to rent peace of mind, if that's one's goal.

The question of value is as old as trade itself. We've gotten foggy-headed about that question, as far as government goes. The Republicans have beaten it into everybody's head that Government is a debased product, a necessary evil that should be bought into minimally. But even as they've done a job of general propagandizing against Government, the intellectual discipline or political power of the right never was such that they convinced people about its evils as much as they thought they did. People still expect the government services. Maybe they hold them more cheaply (until they have to do without), or fight other people's interests while they seek out their own, but you'll see it time and again, that people are willing to go to bat for what benefits them, and damn the person who tries to take it from them.

I think such conditions are the worst conditions for people to properly evaluate government. Government is like a utility, a necessary utility we pay for. The question of value is one of cost versus benefit, and not strictly in financial terms. We're more than our bank accounts, and even in civil society, we are willing to pay premiums for non-economic benefits.

The key question in a good discussion of fiscal policy is value. If we could pay for whatever we want and never go broke or have to worry about deficits, why then, we'd get everything we possibly could from government. But we don't have all the money in the world. Now, if we were being simplistic, we'd say, we only pay for the things that are absolutely necessary- the Libertarian model. But the fatal flaw of the Libertarian model, in my view, is that not all benefits of government scale to cost. Financial regulations could have saved this nation trillions in lost wealth, or at least spared us the bubble that so crippled our economy.

Also, again, sometimes we got to be willing to pay something, without thought of return, to have a society just enough, clean enough, and honest enough to live in with peace of mind.

The debate the Republicans are trying to force on government is so flat, featureless, and abstract as to rob it of any use to the average person. They simply assume it will be better for the economy if we go back to the old, more lawless way of running things. They simply assume that attacking and destroying liberal programs will create their ideal, and people will turn around and thank them for their assault on liberalism.

Never mind whether they've actually set a balance, between what our government plans to spend and what people are willing to pay. Never mind if they've actually shaped the government to suit the priorities of the American people. They haven't to be sure, since the Speaker of the House is willing to tell the American people "So be it." when it comes to jobs and support for people in these tough time.

People, according to many surveys, are more concerned with resolving the job and economic problems than they are with dealing with the deficit. The Republicans not only have their priorities backwards, but upside-down. Maybe Republicans can fight the pull of that by attacking Democrats more as socialists, but sooner or later, people are going to ask the Republicans where the jobs are, and what the Governments doing for them to get it. It would be so much simpler if Republicans simply acknowledged that like any other good, Government and its subpriorities have their supply and demand. If Republicans don't fulfill the demand for good government with a good supply, their glorious return to the good graces of the voters is going to be short-lived indeed.

Posted by Stephen Daugherty at February 18, 2011 11:00 AM
Comments
Comment #318812

“People, according to many surveys, are more concerned with resolving the job and economic problems than they are with dealing with the deficit.”

This will be the hard reality that many of the “Tea Party” Republicans will soon come to face. Sure, people are concerned with the deficit, but they are more concerned with the causes of the deficit.

Posted by: Rich at February 18, 2011 8:10 PM
Comment #318816

SD

Why is it always those reps doing the evil? You are being less than honest with what you have said above. Democrats have done a fair share of putting the country in financial straights. You portrayal of Republicans putting us in the mess we are in and all by themselves, is not being truthful, and you know it. You have resorted to propaganda with your essay above.

Now, to get rid of the large debts we must change the way spending is done. We must reduce the size of government. The size of government has not allowed a better standard of living for Americans. All it has done is become more powerful and reduced what the average American can do legally. It has removed from the average American much more in $$$ than is ethically good for Americans.

As usual you are off center on this subject. But that is a typical liberal position. Spend ourselves out of any situation that pops up. Do you operate you own finances in the way you propose above? Of course not, and the government should not either.

Posted by: tom humes at February 18, 2011 9:09 PM
Comment #318818

I am continuing to watch the House proceedings on CSPAN. I love it. The democrats continue to cry gloom and doom if these budget cuts are inacted. Much like Stephen’s post. The republicans are punching through these ammendments at an astonishing rate. I believe the republicans are finally getting the message from the Tea Party; to do what we sent them to do. Forty cents of every dollar spent by the federal government is borrowed money, and it is unsustainable. The lost jobs spoken of by Stephen are state and federal jobs. I say cut them. Make them get out and actually work for a living. These federal workers are slugs on society…

Posted by: 1776 at February 18, 2011 9:51 PM
Comment #318826

tom humes-
Democrats took part in the deficits spending policies, no doubt. I wish they hadn’t. But were they leading policy at that point, when Bush and the Republicans in Congress decided to push tax cuts in a time of surplus? No.

They had a bare majority in the Senate at best, which they lost in 2002. Until 2006, Republicans write the policy unopposed. Even after 2006, Bush would have vetoed any policy that rescinded his tax cuts, so that wasn’t going anywhere.

So, what I said may have had more of an edge than a dry recitation of the facts, but it certainly wasn’t only propaganda.

And, not long after you accuse me of going Goebbelian on you, you just haul off and lay out the stereotypical, dogmatic Republican answer for what the problem is, and what the solution is. Governemnt’s too big! Shrink Government! More freedom, more money in your pocket!

Except each Congresscritter out there has an ox that might get gored if they get that enthusiastic, and the big entitlements are depended upon in such a way that anybody who caused mass disruption for it would never hear the end of it. So even now, especially now, the Representatives and Senators hold back, and only really cut into the small change discretionary spending.

More to the point, what you folks call big government, the regulatory agencies and all, are actually the cheaper parts of the government.

But before we even get to doing the actual cutting, we got to ask ourselves, is austerity something we can afford right now?

No. What the American people need is their neighbors to show up as customers at their businesses. They need businesses buying their equipment. They need people paying back business loans, student loans, whatever. They need folks walking in the door, paying for groceries, paying for electronics, paying for whatever moves business.

We’re almost a trillion dollars below the output we’re capable of. Your solution is to live with that idling of American workers and industry, as if its some natural part of the healing process, rather than the very artificial result of a burst bubble.

Where’s the endgame, tom? How is this supposed to help us?

Posted by: Stephen Daugherty at February 18, 2011 10:26 PM
Comment #318828

1776-
Look, sir or madam, Austerity is paying for endebtedness, preventing inflation, or otherwise cooling an overheated economy by sacrificing economic growth.

Understand that?

Now tell me, where’s this magic economic growth we’re supposed to sacrifice to soak up all the debt and deficit?

Ah, there you go. The catch. What your people haven’t thought out.

That, and the fact that a job’s a job. You may have decided already exactly how hard-working those folks you never met are, but the reality is, even if they don’t work hard for their living, plenty of the people they buy goods and services from do, and they will suffer for that loss, despite the magic shield of private enterprise you’ve whistled up around them to defend their incomes.

Sigh. When you’re done congratulating yourselves for once again shoving your politics down our throats, will you please go and do the actual math on your policies, rather than assume they’ll all come out right because of the Supply-Side Fairy?

Posted by: Stephen Daugherty at February 18, 2011 10:35 PM
Comment #318834

Stephen,

I heard a person ask the question a week ago, “why can’t the auto industry build a car that runs on batteries and has an alternator attached to the axle for the purpose of keeping the batteries charged?” and he went on to say, “if they (the auto industry) could do this, then we would have a car that never needed fuel, nor external charging”. In other words, a perpetual car; but we know this is scientifically impossible.

I would apply the same reasoning to your statement, “That, and the fact that a job’s a job. You may have decided already exactly how hard-working those folks you never met are, but the reality is, even if they don’t work hard for their living, plenty of the people they buy goods and services from do, and they will suffer for that loss, despite the magic shield of private enterprise you’ve whistled up around them to defend their incomes.”

It is impossible for everyone to be on a federal paycheck and have a growing economy, especially when the federal pay and benefits is almost twice what the private sector jobs earn. It takes a weak mind to believe creating federal jobs will cause the economy to become robust.

Stephen, rather than deal with the real issue of a nation that is broke, you focus on how hard working these people are. Hard working is not the issue; the issue is they are slugs on society. They are drones; they eat the honey and screw the queen. They gobble up tax payer’s money and provide nothing to the advancement of America’s finances. Liberals want everyone on a government check, which is what they do.

I believe Royal Flush already had the conversation with you about “magic”, so I won’t go there.

Posted by: 1776 at February 18, 2011 10:58 PM
Comment #318835

SD

“Your solution is to live with that idling of American workers and industry, as if its some natural part of the healing process, rather than the very artificial result of a burst bubble.”

Where did I say that? You do not know what my thoughts are. This has to be covered from time to time because you forget that I don’ think like you or anybody else. Forget trying to say that I think something I don’t. Get it!!

Your understanding of taxes and economics is not in tune with reality.

Case in point is your belief about Treasury Bonds as stated above. You need to study taxes and economics from a knowledgeable teacher.

Posted by: tom humes at February 18, 2011 10:58 PM
Comment #318841

1776-

I heard a person ask the question a week ago, “why can’t the auto industry build a car that runs on batteries and has an alternator attached to the axle for the purpose of keeping the batteries charged?”

I drive a hybrid, and what they’re talking about is called Regenerative Braking. It is in fact an efficient way to recover energy from a moving vehicle, rather than waste it all as heat from the friction of brake pads.

It is impossible for everyone to be on a federal paycheck and have a growing economy…

Really? Under some circumstances, putting many people on the federal payroll was the difference between an economy that remained in catastrophic ruin, and one that could actually function to pull itself up.

Not that I think our current situation is that bad.

But you know what? Jobs in this day and age are not disposable! Beggars can’t be choosers, and creating more beggars won’t improve the choices.

You’re the one who feels the need to go on about how hard-working or lazy people are, to justify what is otherwise an objectively foolish policy.

I am not as concerned with getting people on Government Checks as you are with taking them away from people. You say they provide nothing to advance America’s finances. They don’t pay for groceries? They don’t invest? They don’t pay for consumer goods?

What crap. If you live in this country and draw a paycheck and pay your taxes, you’re part of America’s finances. Your conception of the economy and the market are shaped more by partisan sentiment, than any clear thought about where the money actually goes.

Quite advising liberals like me about what you believe. I know damn well what I believe, and you haven’t got the foggiest notion of what that is, from the looks of your claims.

tom humes-
I don’t need to read your mind. I just need to follow the natural consequences of a policy that says government can’t invest deficit dollars in reviving the economy through direct spending and stimulus.

If you can’t square that leaving the economy to fend for itself with the philosophy of simply leaving the market to heal its own wounds naturally, then I am left to wonder whether your philosophy has any coherent center at all.

Posted by: Stephen Daugherty at February 18, 2011 11:26 PM
Comment #318842

If the Republicans were really worried about the budget than they would start by eliminating the Bush Tax Cuts, Payments to all projects over budget, and stop contracts on such rhings as the M-1 Tank, F-18, and Naval Ships since they have nothing to do with winning the War on Terror.

Instead, they watch as Egypt and the Middle East face protest over the high cost of food and living expenses than decide to cut our domestic spending so our citizens start taking to the streets. Real smart IMHO since the War of Terror was started by our enemy due to the unfair poverty placed on the world by Western Civilization.

1776,
You say cut State and Federal Jobs. OK, lets eliminate all Law Enforcement and Firefighters since those jobs was not around in 1776. Let’s eliminate all, but one person to issue hunting permits, insure your food is safe, and that you have electricity that won’t kill you the next time you turn on the light. However, better yet let us eliminate the entire Congress Staff so the Members of Congress can’t meet with corporate leaders.

In fact, how many state and federal jobs should be eliminated so elected officials can keep their benefits, pay, and expenses while giving their friends billions?

Tom Humes,
With a projected surplus in 2000 after years of dealing with a 1980 debt, if the Republicans wouldn’t have voted to pay for two wars and a trillion dollar pill program on credit would America now be faced with a financial problem? For aware that the Democrats did object at the time, remind me who it was that signed the bills into law?

In fact, if I remember right it wasn’t until President Bush had to pay the piper before the first republican spoke out against running a debt. Before that it was ok under Trickledown Economics for the government to be in debt. What changed? Doesn’t if have more to do with the Free Market deciding and not the Debt? Yet, that point of view is unsaleable so why not blame it on government spending?

Posted by: Henry Schlatman at February 18, 2011 11:35 PM
Comment #318843

Stephen, the car you have does not create perpetual fuel. If it does, then why don’t you share it with the rest of the world?

Posted by: 1776 at February 18, 2011 11:47 PM
Comment #318845

1776-
?
I don’t know what you’re going on about. What that guy describes actually exists. It’s not a perpetual motion machine (nothing is), but the cars built with that in them go much further on much less energy.

I can fill up my car and go well over four hundred miles, probably for about thirty dollars at today’s gas prices. I’m moving a lot of places I need to go for much cheaper than if I used the car I was driving before last year.

If you want to act like that’s not good enough? Sorry. It isn’t perpetual motion, but it sure as hell will get a lot more done for the same fuel as another car might.

Posted by: Stephen Daugherty at February 19, 2011 12:24 AM
Comment #318852

The constant theme of conservatives is that it is the government that is the problem. When they say that “we are broke”, they seem to mean the government. They entirely ignore the fact that it was the private sector economy that went bust in 2008, requiring trillions in federal assistance to survive. They ignore the fact that the US consumer cannot purchase the potential output of US industry and commerce resulting in high unemployment. In essence, they ignore the basic structural problems in the US economy leading to inadeqate federal revenues and deficits.

Posted by: Rich at February 19, 2011 7:12 AM
Comment #318854

I can’t wait to see a Wisconsin firefighter kick a Teabagger’s ass today! It’s go time!

Posted by: Jack at February 19, 2011 9:27 AM
Comment #318857

Jack

By using the phrase “Teabagger” you are refering to a queer are you not?

SD, Rich, Henry

You three are making it a Republican issue. What folly!!
It is a decision made by Republican and Democrat, big government fools. There are many areas of cutting the size of government without touching law enforcement or firefighters.

By cutting the size of government you automatically cut spending.

The three of you make up arguments just to argue. The reality of what you are saying does not past the truth test.

Posted by: tom humes at February 19, 2011 10:59 AM
Comment #318860

1776,
Why Stephen may not be able to offere you a car to end Americas’ Energy Problem I can through a Zero Weight 100% Traction Electric Vehicle powered by man-made wind; however, why should I? For I can’t think of a better unbreakable argument to hold against My Community Elders and Peers of the 50’s, 60’s, and 70’s than to prove to their Children and Grandchildren that you can get paid to drive up and down Main Street. And considering my price includes “All the Toys in the World” so I can win the Race to the Bottom. I don’t think we woll be seeing the cars any time soon.

Tom Humes,
Why the Debt is a Democrat and Republican problem, it was the Republican Leadership which caused the problem we now face. In fact, by pushing through the Bush Tax Cuts in 2001 and 2003 as well as holding up things in the Lame Duck of the 111th Congress unless the tax cuts were extended. Accompanied by putting two wars and a brand new medicare program on the credit card the problem we have today wouldn’t exist.

Now given the opportunity to fix the problem all we hear from the Republicans is cut spending and offer more tax cuts to the Wealthy. When in reality, purchasing electric cars and making government buildings energy independent would actually save money and put poeople back to work building a better future.

So yes, the Republicans are to blame for the debt and the inability to think futher than their next pay check. For other than Drill Baby Drill what is the Conservative and Republican plan to save billions of Americas’ Wealth and stop funding our enemy through the purchase of oil. What is their plan to eliminate and reduce healthcare costs in America while still keeping Americas’ Health and Medical Industry one of the Leaders in the World. And most important, where is the Conservative and Republican plan on how to fix Entitlement Programs broken by a Generation who still does not want to blame for the mess they have made.

Yes, the Wealthy and Want-to-Be Rich in America can no longer claim the high moral ground once held by their parents and grandparents. And that is not a Democratic problem, but one pushed by Conservatives and Republicans alike today. For how does one justify the Wall Street Worker getting to keep their large bonuses and pay while demanding the Main Street Worker take benefit and pay cuts in order to balancing a budget screwed up by the Wealthy and Want-to-Be Rich through the Government Thinking they could act like Adults.

So please, prove where I am wrong. For the Housing Bubble was not created by the Main Street Worker, but when Wall Street Workers were clearly warned about it. They still insisted on selling loans to people they knew cold never pay them back. And it wasn’t the Main Street Worker who insisted on driving up the Dow to over 14,000 points when all on Wall Street was told higher fuel prices would lead to less demand. Yet, the Conservative Media and Republicans kept insisting nothing could go wrong and thus blocked any measure by Democrats to regulate Americas’ Corporations between 2006 and 2008.

Shall I continue? For why the Budget and Debt is a Democrat and Republican problem, I don’t see the Republican Leadership in Washington wanting to take a serious look at how to solve the problem as proven by the 2011 Budget just passed by the House. For I wonder how many planes, tanks, and parts America will need between now and Oct. or how many more millions the oil companies must have. And what about Wall Street needing government funding, shouldn’t we allow Congress to put off payments to Big Business for 60-120 days since that seems to be the way Big Business is practicing their 30 day invoices today.

So yes, let us have a conversation about reducing the size of government as Adults. For I do believe the Democrats and Republicans today are being children by not demanding from those citizens who created the problems Americas’ face and dealing with the Issues of the 20th Century. For in Reality there are solutions; however, the first problem we face as a nation is geeting the Conservatives and Republicans to admit that Trickledown Economics is no way to win the Race to the Top.

Posted by: Henry Schlatman at February 19, 2011 12:17 PM
Comment #318862

tom humes-
We didn’t make it a Republican issue, the Republicans did, with their policies.

I mean, you’re supposed to be associated somewhat with the Tea Partiers. So answer me this, what was the Tea Party a reaction too among the Republicans?

Well, they’ll claim that this is all about redeeming the GOP from becoming too much like the Liberals and overspending. That’ll be what they say.

It’s amazing just how little some people are willing to admit the size and the scale of the screw ups the GOP made. Yes, Democrats were involved in many cases. The point is not that one party is pure, and one is not. Heck, the Democrats aren’t pure right now, in many cases.

But here’s what I’d say: they can be lead to a different policy. They’re tractable. Republicans, however, have doubled down on their policy. Witness last year’s tax deal. More and more tax cuts. They’re not reconsidering their revenue problem, they’re making it worse, and regardless of what dogmas you might subscribe to, that contributes to the deficits.

Posted by: Stephen Daugherty at February 19, 2011 12:34 PM
Comment #318867

SD & Henry

Rhetoric is all I see from you two.

Henry

“So please, prove where I am wrong.”

That has been done many times over in the past. You have just repeated what you have written many times before. You forget about Frank & Dobbs. No, they are not a comedy team, nor a law firm. They are the ones who said Fannie and Freddie were perfectly ok. Then someone put a dart in the bubble and it broke. They proceeded to say not my fault, I didn’t do anything wrong. And you believe that.

You can give an opinion, but your opinion may not be factually correct, still you are entitled to it. When it comes to facts they must be in reality, facts.

Gotta go talk to some of my friends around the world on the radio. What a pleasure!!

Posted by: tom humes at February 19, 2011 1:36 PM
Comment #318869

Tom, I am not trying to put words into Jack’s mouth, but the definition you are referring to is the other use of the word teabagger. Here is some info on that usage. Beware it is a bit graphic in its explanation so the answer is no it does not necessarily refer to “queers”.

http://en.wikipedia.org/wiki/Tea_bag_%28sexual_act%29

Some in the tea party began referring to themselves as tea baggers, obviously unaware of the sexual connotation, and that is where it caught on in the political sense. Here is more on that
http://boardreader.com/thread/Origin_of_the_phrase_teabaggers_for_the_2k01X3i2p.html

To me this is much like using the word “Dick” when referring to a “Richard” although some use it to identify a penis.

Here is a test for tea baggers, in case you are interested.

http://www.voiceofarizona.com/Teabaggers_Pledge_to_end_Social-5031-2-42524.htm

BTW I use the term because it is easy and identifies a group of people I am talking about in the political not sexual connotation kind of way. I use it in reference to self proclaimed members of the tea party.

Posted by: j2t2 at February 19, 2011 2:38 PM
Comment #318881

The clear message from the Wall Street Journal chart is (tax revenues) has been pretty steady at about 18-20% of GDP for 60 years even though (tax rates) fluctuated from a high rate of 91% to a low of just under 30%. Despite changing tax rates, the actual tax revenues as a percentage of GDP really have not changed much.

Even though the percentage of tax revenues compared to GDP has not changed much since 1965, the actual revenues in dollars have tripled.

Why did revenues triple despite lower tax rates? I think it is fair to say that economic growth resulted in higher tax revenues. While tax rates were falling over this period, 1965 — 2010, tax revenues tripled. Do you think there is a correlation between higher levels of economic growth and lower levels of taxation?

What’s the best tax rate?

We really don’t know what the optimum tax rate would be that maintains revenues at 18-20% of GDP while allowing for maximum GDP growth, but we do know that economic growth is good for everyone and as the economy grows, tax revenues grow automatically. Ideally, our leaders in Washington would try to figure out the optimum tax structure to generate revenues at 18-20% of GDP while stimulating economic growth. Once that level is determined, I believe they should set the rate and forget it.

http://blogs.marketwatch.com/fundmastery/2010/07/02/does-hiking-tax-rates-raise-more-revenue/

Posted by: Royal Flush at February 19, 2011 5:14 PM
Comment #318883

tom humes-
Fannie and Freddie were losing market share as the bubble grew, not gaining it. They were being outcompeted by the far less regulated non-bank lenders.

Why are you blaming the people who were losing ground for the bubble?

Also, though, the Housing bubble would have been one sector’s economic problem for a while, if it weren’t for the derivatives market. Heck, the bubble itself wouldn’t have inflated so greatly, if there had been more regulations on that market, because they used those derivatives to sell off the bad mortgages to the banks and other owners.

But we’re going to ignore that, because Republicans don’t want to blame Wall Street, or acknowledge anything that would force them to crackdown on big businesses’s bad behavior.

You have no room to criticize Henry. You’re wrong on the basic causes of the economic downturn. If not, then why was the collapse of Lehman Brothers so important? The were an investment bank, not a housing lender. And why were the other banks threatened?

You’re not thinking this through. You’re repeating what you were told, what allows you to keep thinking about things the same way.

Posted by: Stephen Daugherty at February 19, 2011 6:03 PM
Comment #318885

Royal Flush-
Clinton hiked taxes at the beginning of his term. by the end, the deficits was all but gone. Bush I, Bush II and Reagan all reduced taxes. All left office with deficits at extraordinarily high deficits. That includes for Bush the first one that topped a trillion.

You ask abstract questions about whether higher taxes could really create more revenues. You ignore plenty of evidence, including the Clinton years, that says that up to a certain point, yes, it does.

It’s time to stop pulling rabbits out of your hat everytime somebody wants a serious budget. It’s time to realize two things: that no budget deficit’s going to be resolved without dealing with the slack in our economy, which keeps the handouts high and the earnings low, and that no budget deficit is going to go away until we can ask Americans for the higher revenues necessary to soak up the debt and deficit.

The Republicans don’t want to believe that the world moved on from their austerity tactics, or that it never got on board with the supply side theory of taxation. However, in both cases, that is how things are. This is not the early eighties or late seventies, where the interest rates are too high, and inflation is double digit. This is another kind of period, where interest rates are zero, but growth and inflation are anemic. Apply austerity to that economy, and you knock it on its ass.

And no, your theory of taxation never worked. Taxes simply aren’t the most problematic thing about today’s economy.

Posted by: Stephen Daugherty at February 19, 2011 6:11 PM
Comment #318887

Poor Mr. Daugherty, he throws 60 years of historical averages relating to the correlation between taxation and revenue on the garbage pile as being meaningless. We have nothing to learn from history do we?

His cherished belief that higher taxes and spending are always the answer to every human problem outweighs historical evidence and by God, he must be right, and history is wrong. For Mr. Daugherty, history just isn’t factual enough to suit his purpose…lol.

Problem: We don’t have enough jobs.
Solution: Have government buy jobs.
Problem: Our schools are failing.
Solution: Spend more money to buy better education.
Problem: The poor don’t have any money.
Solution: Send them a government check to end poverty.
Problem: We have illegal immigration the Feds can’t control.
Solution: Make them citizens and legally put them on the entitlement payroll.
Problem: We have spent ourselves nearly into the poorhouse.
Solution: Increase spending and taxes.
Problem: Energy and other commodity prices are skyrocketing.
Solution: Great, let’s cause them to increase some more.

Using his brand of magic, he pulls out one period of time to prove one thing and another period of time to prove something else. Mr. Daugherty is a fiscal time-traveler and picks a figure here and there from the past to prove the future.

It is so sad when I read liberals writing that it is revenue rather than spending that is the problem when all the evidence of the opposite is there for the reading. I guess it just proves, once again, that being able to read is not necessarily the same as being able to comprehend.

Posted by: Royal Flush at February 19, 2011 6:50 PM
Comment #318891


Stephen, a large percentage of the blame goes to Democrats for passing GBL, you know, the bill written by and named for three Republicans.

The right wingers aren’t interested in hearing about Fannie and Freddy loosing market share or why they were loosing market share. They don’t want to hear about the big banks demands for mortgages being so great it created a new business opportunity, the mortgage sales industry, with a one page mortgage and a nobody,s watching wink and nod. They don’t want to hear about how the banks continued to promote the housing derivatives to their customers after they knew there were bad mortgages bundled in with good ones. And why shouldn’t those banks have done that with a corrupted Congress, FED, FTC, and a corrupt AAA rating covering for them.

To admit those facts is to admit that, although the Democrats were responsible, it was Republican/corporate ideology and policy.

I say the Democrats are responsible because they could have and should have not supported and protected the policies.

The Democrats sowed the policies and they reaped Fox News and the liberal socialists, Fannie and Freddie did this to us.

J2t2, the tea party people aren’t going to sign that petition because they are socialists as well, just more selective socialists.

Back in the good old days of anti-socialist, anti-tax America, our military was a puny little thing. A big military meant foreign entanglements and large expenses.

Things are a lot different today, we have more than just a country to defend. It seems that 911, an invasion across our southern border, and Iraq suggests that corporate multi-nationalism has bumped the country and it’s people out of the top spot.

Posted by: jlw at February 19, 2011 7:39 PM
Comment #318901

Tom Humes,
Frank, Dobbs, and the rest of Congress may have gave the banks exactly what they wanted (deregulation); however, they did not hold a gun to the banks head or tell them to sell loans that has no way of being paid back. In fact, if the banks wouldn’t have packaged the loans in a manner that they couldn’t tell us who owned the loan than Frank, Dobbs, and Congress might have been able to fix the problem.

Personally, I thought Congress should have told the Fed to buy all of the claims (loans) that the banks couldn’t back for $.15 cents on the dollar. And considering AIG was only able to pay about $.03 cents on the dolar for the insurance they sold I would say that is a fair deal. Granted Wall Street would not be happy since they would have lost trillions overnight; nevertheless, the problem would have been solved quickly.

However, President Bush would have never gone for the idea and the Republicans would have took to the streets considering they objected when the Democrats offered to pay $.60-.70 cents on the dollar at the time. So why you might want to think Frank and Dobbs was the problem, the housing bubble started in 2001-2005 when Republicans was in charge of both the House and the Senate. And even after the Conservative Media was warned about the problen they continued to tell people to keep buying homes they couldn’t afford.

See, Frank, Dobbs, and the rest of Congress might have gave the banks a free hand at making loans for homeownership; nonetheless, Congress did not tell them to sell to people they knew couldn’t repay the loans or enter into ARM contracts after 2005 when the banks knowingly sold loans that could not meet the increase of the Prime Rate. Seems they acted like children in a candy store instead of acting like Adults who should know better than shooting themselve in the foot. And that is not My Opinion, but the opinion of experts.

Posted by: Henry Schlatman at February 19, 2011 10:27 PM
Comment #318902

jlw-
Look, I know my people got involved doing that. Why did they think that was a good idea? Because Republican ideas were fashionable. I could just as well say that I bought into those ideas somewhat myself, didn’t raise my voice all too much against them.

I changed my mind. A lot of other Democrats changed their mind, too. Enron and other scandals, including the most recent ones, have exposed a lot of weaknesses in the ideas the Republicans push forward.

The strength of my opposition to the Republicans on these matters isn’t so much about the ideology, as the strength of that ideology’s resistance to the admission of even the most obvious and and terrible of errors. If I treat questions of Democrat’s collaboration as a distraction, that’s why. I know I can scare and push the politicians in my party the other way. They aren’t as ideologically committed to the bad policies as the Republicans were, and still are.

I know my efforts are confounded by what those cowards do, but the way I see it, better confounded improvement than an ideologically pure status quo. I want better policies manifested, not just promised.

Royal Flush-
When one examines a relationship in experimental science, you look for the details that are different between your control and your experimental group.

If I have your author right, he’s talking about the percentage of GDP to revenues as being pretty much constant. Not sure I buy that, but let’s grant him that for the sake of argument.

Well, if we do, then here’s what he’s saying: that proportion, of GDP to revenue, is pretty much the same whether you run huge deficits or not, whether you tax the rich more, or put more of the burden on the lower class. It’s pretty much the same whether we’re in a terrible recession, or a collosal bull market.

So, it’s a proportion that pretty much seems irrelevant to the policy at hand, good or bad, deficit or surplus.

And really, deficits don’t get created by the percentage of the revenue to GDP. They get created by there being a negative difference between spending and the intake of revenue. You get them from the absolute numbers, the absolute measure of spending subtracted from the absolute measure of the revenue.

Why one end or another is out of whack isn’t as relevant as the fact they just are. The problem is not spending. If we were taking in enough, it would be paid for without a deficit. The problem is not revenue. If spending were matched to the level of the revenue, or was lower, our government would be paid for, or more than paid for.

No, the problem is the mismatch. It’s the same deficit whether it’s the spending side of the equation or the taxation side you screw up.

You refuse to acknowledge that cutting taxes can create a deficit. Well, if we had what we were paying covered, and you cut taxes, then the cause of our mismatch was your tax cut. If you both cut taxes and raised spending, then to the extent neither were offset, they’re both part of the problem.

It really isn’t that difficult.

As for your problems?

If the problem is that we had a slight recession, and the banks were still working well, then I’d say, make the reforms that would restore confidence to the capital markets, and get out of private industry’s way.

That’s not our problem. We have persistent slack in the labor markets, causing persistent unemployment. If you think firing more people will solve that problem, well you’re going to have to show me what the calculus of that is. If you think the problem is that businesses don’t have enough excess cash, sorry to tell you, but they do have the cash, but they don’t have the customers to get a return on investing that money.

There, I think government can help. Get customers coming in, and then private enterprise can justify expanding its production, taking up the slack in employment and finance.

See there? I know it might be kind of futile to point this out, but my point of view is much more varied and nuanced than you give me credit for.

I’m not sure I can say the same about your views, given the policies you push. I mean, you would, in this environment, kick people out of their jobs. Sorry, but when the unemployment numbers come in, they’re not going to edit out the public sector laid-off folks for your benefit.

And the economy won’t see that distinction in terms of cashflow. All it will see from your austerity measures will be less money flowing around the economy.

On the subject of schools, the how, the where, and the why of public school performance is as important as anything else. If you buy a luxury car that’s shoddily constructed, the price won’t keep it from falling apart. But the cheapness of the economy car won’t help you any, if it’s just as crappily made.

I would say that we should find the most efficient way to run our schools in the real world, and then make sure that it’s paid for as much as it needs to be. Bang for the buck, not simply relentless cheapness without regard for quality.

Or, as we call it in politics, the Republicans attitude towards public education. Just because it’s been made cheaper, doesn’t mean it’s made better.

Oh, and competition? Competition is a virtue when it discourages people from screwing things up. When it becomes the reason to screw things up, say, teaching kids to the test to keep the schools averages high, well then competition selects for a worse objective result. Competition doesn’t shape towards ideals, it shapes towards whatever it takes to win. Without sensible rules, without safeguards against cheating and deception, competition makes beasts rather than angels out of men.

When it comes to poverty? I’d say you create a safety net, but you don’t let people stay indefinitely. There’s room to improve those things, to actually ease poverty, rather than make it worse by making the poor unacknowledged burdens on the rest of us, tucked away at relatives, idled without a job.

When it comes to illegal immigration? Your policy was to beef up a presence at the border and make a big show of it, while your folks looked the other way for the sake of business leaders who didn’t want to pay minimum wage.

That’s what we’re having to clear the decks of. What I want is documented folks, working for a living if they choose to stay, or serving their country. And you know what? Most of the country wants the same thing. Your crack about putting them on the entitlement payroll is just more of your bull**** rhetoric.

You want the world problems to fit your solutions. Sorry, fellow, it’s your solutions you have to fight to the real world. Otherwise? Otherwise surpluses become deficits, economic prosperity becomes poverty, full employment becomes chronic unemployment.

The warning signs for Bush and the Republicans were there. They chose to ignore that, and instead pump sunshine up each other’s backsides about their policies.

Posted by: Stephen Daugherty at February 19, 2011 10:50 PM
Comment #318904

Royal Flush,
Why you claim the Democrats offer only higher taxes and spending to solve problems. What are the Republicans and Tea Party solutions for;

Problem: We don’t have enough jobs.
Solution: Cut State and Federal jobs.
Problem: Our schools are failing.
Solution: Reduce teacher pay and increae class rooms size.
Problem: The poor don’t have any money.
Solution: Cut funding to programs which help the poor.
Problem: We have illegal immigration the Feds can’t control.
Solution: Refuse to talk about problem and insist everyone prove they are American which cannot be done.
Problem: We have spent ourselves nearly into the poorhouse.
Solution: Cut spending and taxes so a larger burden is placed on the Private Sector.
Problem: Energy and other commodity prices are skyrocketing.
Solution: Kill any plan to make America Energy Independent and don’t put regulations in place to stop speculators from betting against the people.

Now, I’m not saying the Democrats and Republicans are not doing exactly what they were taught in school to do when they took Political Science; nevertheless, I can state for a fact that both political parties are clueless when it comes to solving the Issues of the 20th Century by design.

For ecample;

Problem: We don’t have enough jobs.
Solution: Since corporations by design cannot guarantee 100% employment, but governments can I suggest that we create Community Work Centers to work on Community Projects designed to help better the lifes of all citizens. In this manner, in good times corporations can have 95% of the Workforce, but in bad times the Community Work Centers can take up the slack with projects such as making Local, State, and Federal buildings and facilities energy independent.

Problrm: Our schools are failing.
Solution: Do away with the old system and install an education system which takes full advantage of the internet. This would include allowing students to select their own teachers, expanding subjects, and engaging the students into learning what will be expected of them when they enter the private sector for employment and enjoyment.

Problem: The poor don’t have any money.
Solution: Create programs designed to help the poor learn how to use credit and finance while promoting the ideas people living through the Great Depression and WWII. In fact, with a two teir Standard of Living now in America, Congress should look at creating a Two Teir Economy which would allow corporations to better serve the Poor.

Problem: We have illegal immigration the Feds can’t control.
Solution: Secure the Borders by creating Non-Profits Organizations to assist those corporations needing labor to hire people from other countries. Thus, a window could be open for 90-120 days for corporations and illegal imigrants to get the proper paper work. After that time any corporation or person caught could be fined up to $1,000,000.00 and jailed up to 50 years.

Problem: We have spent ourselves nearly into the poorhouse. Solution: Seeing the need of a new Energy System and Infrastructure, Congress can take a lesson from our ancestors and invest in building what needs to be built now and charging corporations and private citizens willing to manage the projects until they are paid for in full. Additionally, Congress can order all federal buildings, facilities, and fleets be 100% energy independent by 2020. And while not popular Congress should require the Baby Boomers repay the American Taxpayer in full since it is their fault for noy wanting to do what was right. By cutting their Social Security and Medicare by 50% and placing a tax on all property presently in their name would be a good down payment.

Problem: Energy and other commodity prices are skyrocketing.
Solution: Demand a 50% reduction in electricity produced by oil and insist that Americans start growing their own food. Additionally, increase the use of biomss material and cystrals to stop the runaway cost and surge on natural resources. As well as add a 30% tax on all commodity trading and a 75% tax on commodity stock bought and sold within a year.

Now, granted the Baby Boomers will cry that these solutions are unfair since it will put a halt to their shopping; nevertheless, these are solutions that would work. So why the Democrats are busy blaming the Republicans and the Republicans are busy blaming the Democrats, more and more Americans are looking for solutions. Even though I doubt if they are willing to go as far as this Unlearned Unbridled Anti-Authoritarian Child of the 70’s by Freewill and Self-Nature.

Posted by: Henry Schlatman at February 19, 2011 11:41 PM
Comment #318909

Henry,

I realize that some of your solutions are tongue-in-cheek. However, they at least address the structural problems in our economy. Conservatives seem to think that simply cutting taxes and government expenditures will solve our problems. That is a fantasy on a number of levels.

The deficit problems we face are, in reality, the consequence of a faltering economic model for the US. Unless we address the primary causes of our deficits (energy dependence, out of control health care cost escalation, global wage arbitrage, debt based consumer economy, etc.) the only thing we will accomplish with draconian cost cutting is to cut off our nose to spite our face. It would be refreshing to hear some realistic solutions for our economy.

Posted by: Rich at February 20, 2011 9:47 AM
Comment #318920

RF said,

“Poor Mr. Daugherty, he throws 60 years of historical averages relating to the correlation between taxation and revenue on the garbage pile as being meaningless. We have nothing to learn from history do we?”

It’s also sad that he continues to defend Freddie and Fannie, Dodd and Frank, isn’t it? I guess SD has never gotten the memo.

Posted by: Conservativethinker at February 20, 2011 1:54 PM
Comment #318933

Mr. Daugherty writes; “No, the problem is the mismatch. It’s the same deficit whether it’s the spending side of the equation or the taxation side you screw up.

You refuse to acknowledge that cutting taxes can create a deficit. Well, if we had what we were paying covered, and you cut taxes, then the cause of our mismatch was your tax cut. If you both cut taxes and raised spending, then to the extent neither were offset, they’re both part of the problem.

It really isn’t that difficult.

Apparently it is that difficult for some. Sixty years of historical records showing a relationship between GDP and Tax Revenue is important. If an average of 18% to 20% of GDP in revenue has been correct and has worked for 60 years why is it difficult for any to understand that deficits are not caused by too little revenue, but rather, too much spending.

Posted by: Royal Flush at February 20, 2011 6:07 PM
Comment #318934

Conservativethinker:
Honestly, I think Freddie and Fannie were poorly run, and that made them vulnerable to the housing collapse.

But when did they collapse? Sept. 2008. See, that’s way too late to have caused the housing crunch, which was starting back in 2006 and early 2007. That, by the way, was the same period during which many of the non-bank originators and secondary sellers went belly-up or bankrupt.

It’s also important to point out that their rates of default and delinquency were less than the average, far less than that of the non-bank lenders and the subprime market in general.

It’s simple logic, really. If we’re looking for the companies that cause a bubble, we look for the larger of the increases in assets. If we’re looking for the companies that took excessive risks, we look for the consequences of the excessive risk: greater numbers of defaults and delinquencies.

We also look for the real triggering event. Markets weren’t doing too well when Fannie and Freddie bit it, but they only went into a panic when Lehman Brothers bit it.

If it was simply about mortgage holdings, why did all the banks take such a hit? The answer is, all the Derivatives positions those banks had, based on the Housing market, and then all the derivatives they stacked on top of that.

No, I haven’t gotten the memo that tells me it’s all the fault of your favorite scapegoat. I’ve got an actual informed opinion that’s based on knowledge of how the markets were actually working.

Posted by: Stephen Daugherty at February 20, 2011 6:21 PM
Comment #318935

Rich writes; “Conservatives seem to think that simply cutting taxes and government expenditures will solve our problems.”

This conservative has never written that and my posts above do not recommend that. I advocate keeping our taxes at historical levels which has served us well for 60 years. It is the spending that needs to be budgeted according to revenues. Sadly, the libs and dems want to adjust taxes to match spending. I have evidence that our way works. What is Rich offering that his way will work?

I read Henry’s comments and at first laughed thinking it was all just a joke. Now I wonder…is it all just a joke Henry?

Posted by: Royal Flush at February 20, 2011 6:23 PM
Comment #318936

Royal Flush-
Okay, if our economy is a fifteen trillion dollar economy, just for the sake of argument, 20% of that will be $3 trillion dollars. 15% will be 2.25 trillion.

A difference of 750 billion dollars. Of course, if you lose a trillion off of that GDP, even the twenty percent number drops by 200 Billion dollars, and the 15% number loses you about 900 billion dollars from our best example, with the highest percentage and the highest GDP.

I want you to think about that for a moment, before you talk to me about the insignificance of both economic problems and your tax cut policies.

We have an output gap of 900 billion dollars a year. We have quite a few people getting tax cuts who don’t need them. Look at the numbers I just figured. If we resolve our economic problems, get America back productive again, that takes care of a HUGE proportion of our deficit problem, right off the bat. If we get the right level of revenues, we can vastly improve our fiscal outlook.

If we do things your way, though, we cause more economic damage, and for what? To deal with greater debt? We need a mature economic and fiscal plan, not more wishful thinking and kicking poor and middle class Americans when they’re down.

Posted by: Stephen Daugherty at February 20, 2011 6:40 PM
Comment #318938

Mr. Daugherty writes; “If we get the right level of revenues, we can vastly improve our fiscal outlook.

If we do things your way, though, we cause more economic damage, and for what?”

Apparently Mr. Daugherty disagrees that what has served the country well for 60 years in terms of taxes as a percent of GDP is wrong. OK, I’ll bite, if 20% or so of GDP in tax revenue is not enough, what should the revenue percent be changed to? And, please explain why the formula needs to be changed if it wasn’t caused by out of control spending?

The liberal scheme of things always involves increased spending. When revenues don’t match spending they spend anyhow. And thus, they believe they can cause an increase in taxes to balance things out. Spend first…then tax is the liberal motto.

Can Mr. Daugherty point to a time in the last 60 or so years, in which the country was running a surplus budget, that dems and libs championed tax reductions? When did any prominent Democrat last announce…”I think we have spent enough”?

Posted by: Royal Flush at February 20, 2011 7:34 PM
Comment #318939

Royal Flush said: “I advocate keeping our taxes at historical levels which has served us well for 60 years.”

Federal personal income taxes happen to be at almost historical lows as a percentage of GDP. Overall, federal tax receipts as a percentage of GDP is the lowest since 1950. http://www.usnews.com/opinion/blogs/robert-schlesinger/2011/02/08/under-obama-taxes-reach-lowest-level-since-truman.

So, do you advocate raising taxes to bring tax revenues as a percentage of GDP into historical levels? According to your link, an ideal tax as percentage of GDP would be about 18-20% of GDP. It is currently at approximately 14.8%. Do the math, a 3.2-5.0% increase in tax revenue on a 14.5 trillion dollar GDP sure would make a dent in our deficit problem.

Posted by: Rich at February 20, 2011 8:18 PM
Comment #318949

The following link is a good summary of the trends in tax revenue by source as a percent of GDP over the past few decades. What stands out is the decline in corporate tax revenue during that period and the striking increase in social security taxes as a source of revenue. http://www.ritholtz.com/blog/2010/08/tax-base-as-of-gdp/

Posted by: Rich at February 21, 2011 6:46 AM
Comment #318950

“When did any prominent Democrat last announce…”I think we have spent enough.”

How about Clinton? The Clinton administration balanced the budget on tax increases and reductions in spending. The Deficit Reduction Act of 1993, passed without a single Republican vote, raised taxes and initiated a five year plan of across the board government spending reductions. It achieved its goals even resulting in a surplus of revenues during the last few years of his administration. If limiting government growth and balanced budgets are conservative ideals, then Clinton ought to be a hero to conservatives.

Oh, I forgot, Clinton did not cut taxes. He proposed using the surplus to fund infra-structure development and paying down the national debt. So, yes, he wanted to continue spending. He wanted to invest in our common future. What an idiot.

Posted by: Rich at February 21, 2011 7:22 AM
Comment #318953

Rich, your link to US News doesn’t work. Clinton did experience a surplus, and as I have pointed out so many times, the dems and libs can’t stand the thought of not spending every penny they can even in times of surplus.

In times of surplus the answer is to spend it with no thought to the future. In times of deficit, the answer is to spend more.

Thanks Rich for proving my point. It is not a lack of revenue, but spending that creates deficits. The dems spendthrift ways never cease.

Posted by: Royal Flush at February 21, 2011 11:12 AM
Comment #318955

Royal Flush-

Apparently Mr. Daugherty disagrees that what has served the country well for 60 years in terms of taxes as a percent of GDP is wrong. OK, I’ll bite, if 20% or so of GDP in tax revenue is not enough, what should the revenue percent be changed to? And, please explain why the formula needs to be changed if it wasn’t caused by out of control spending?

The Republicans created the deficit from both ends. That’s what you don’t want to admit. You don’t want to admit that your tax policies are a lousy idea. You don’t want to admit that your people started a lot of difficult to stop spending, or that there will be consquences or tradeoffs for cutting it back.

The additional spending didn’t have to be a problem. It could have been paid for with new taxes, and that would have been the last we heard of it, whether we cut the spending later or not. Unfortunately, your people insisted on not paying for what you decided to spend anyways. Your people insisted on tax cuts, and now that the economy’s tanked so badly, rolling back those cuts in order to raise revenues isn’t going to work so well. Neither, though, will spending cuts help things, as folks get kicked out of work or lose benefits they were depending upon.

The economic conditions are making it difficult for us to pay our debts. Like a person whose income has taken a hit, but who still has the same debt obligations, we’re being squeezed from both sides. You would tell us that we need to neglect our needs, but also not increase our earnings.

Your plan of attack’s been tried with our kind of economy. It backfired. I mean, why don’t you increase interest rates if you’re so convinced that debt is the main problem, and our economy can take austerity? Then you could do everything that Hoover did to screw up the economy. Hell, why don’t you put us back on the gold standard, and land America right back where it started, financially?

The Republicans are too busy trying to vindicate their policies to recognize their failures. Your people tried austerity in a time like this before, and it was a disaster. Same thing with your tax cuts, not once, but three times.

Whether you agree with our approaches or not, under these circumstances, they did work, and they are working.

You, in the interest of pushing emotional buttons in the Argument, allege that I want to spend endlessly. The reality is, I want to get us to the point where we can afford to pay for austerity before we enact it. I want us to be able to afford the consequences of higher taxes and lower government spending. You’re unwilling to wait for that point, and so your policies will be destructive to the economy, and that destructive influence will undermine your attempts to balance the budget.

Posted by: Stephen Daugherty at February 21, 2011 11:48 AM
Comment #318956

Royal Flush-
In times of surplus, we mostly advocated maintaining the surplus. Quit projecting your spendthrift Republican policies onto us.

Deficits come from a mismatch of spending and revenue. It comes from tax cuts that are not offset with spending cuts, it comes from spending increases that are not offset with new taxes. Only the math of ideologues says that only spending creates deficits. Anything that creates a mismatch of negative value, creates a deficit.

Just what is it that keeps you from admitting that? Maybe it’s the fact that if you admitted that tax cuts could cause deficit, then you’d have trillions of dollars in debt to answer for. I guess revisionist history is easier for ideologues than taking responsibility for the consequences of your reckless fiscal policy.

Posted by: Stephen Daugherty at February 21, 2011 11:57 AM
Comment #318971

Mr. Daugherty writes; “The reality is, I want to get us to the point where we can afford to pay for austerity before we enact it.” and, “I want us to be able to afford the consequences of higher taxes and lower government spending.”

These are the best one-liner jokes I’ve heard from Mr. Daugherty since his comment to me that “we just disagree on the facts.”

What in the hell does he mean in this comment? Let me paraphrase…we must spend more to reach a point where we will have a surplus so we can spend less. It’s just a damn shame he doesn’t apply the same logic to drilling for oil and gas.

So, more spending is the path to surplus, and when reached, we will reduce spending to keep the budget balanced and raise taxes.

Mr. Daugherty and the Scarecrow continue on their journey to OZ both looking for the same thing.

Posted by: Royal Flush at February 21, 2011 2:38 PM
Comment #318986

Royal Flush-
Remind me never to let you run a business.

I want us to get to a point where this nation’s economy is healthy enough to handle the strain of austerity.

And yes, austerity is painful, undermines economic growth. When Reagan and Volcker kept interest rates sky-high to absorb inflation, it was one of the causative factors of the recession that sent unemployment as high as 10.8% during his first years in office.

And you’re telling us that you want to do this now, with us barely crawling out of the last recession, and its shadow on productivity.

Again, Remind me not to let you ever run a business of mine. If you don’t ensure enough cashflow, trying to induce austerity will only put you in a worse condition all over. Even Reagan wasn’t brave enough to go whole-hog. He increased government spending overall, and cut, rather than raised taxes.

What I suggest is get America strong enough to bear the burden, and then strike the necessary compromise between less spending, and more revenue. The Republicans won’t acknowledge it, but there’s a floor to what they can get away with cutting, and their failure to write up a budget that truly takes on the major costs centers of the budget is indicative of that.

You boast of all the cutting you would do, but you understand that if you really engaged things with the strength of your conventions, your people would get kicked out the door so fast it would make their head spin.

That’s why Republicans always run deficits. The nation isn’t nearly as conservative as it would have to be for them to actually match the depths of their cuts in taxes with the necessary cuts in spending to pay for them.

Posted by: Stephen Daugherty at February 21, 2011 4:10 PM
Comment #318998

Royal Flush,
What is a joke is the fact the Democrats and Republicans haven’t been able to solve the Issues of the 20th Century dor the last 30 years. What is sad is the fact today we have Democrats amd Republicans holging the technology which can make their children and grandchildren economically viable and financially independent by building a Green Sustainable Government and Society for future generations and they are allowing fear to stand in their way.

Now, you might want to disagree with the way I would fix the problems America and Humanity faces; however, at least this Unlearned Unbridled Anti-Authoritarian Child of the 70’s by Freewill and Self-Nature has stood up and proved there are political viable solutions which is more than I can say about My Community Elders and Peers.

So Royal how would you solve the Issues of the 20th Century and prepare the Children of the 21st Century for the Events they will face in the next 100 years?

Posted by: Henry Schlatman at February 21, 2011 5:40 PM
Comment #319000

Mr. Daugherty writes; “Again, Remind me not to let you ever run a business of mine. If you don’t ensure enough cashflow, trying to induce austerity will only put you in a worse condition all over.”

OK…I will remind you. It’s obvious you have never run a business or you would know that businesses all over the nation have induced austerity. Cash flow is something else entirely. Stay on that road to OZ.

Mr. Daugherty writes; “What I suggest is get America strong enough to bear the burden, and then strike the necessary compromise between less spending, and more revenue.”

I believe I will submit this to “The stupidest comment I have heard today” website.

Again, let me paraphrase. When America has spent enough the economy will improve. Since spending caused the improvement, Mr. Daugherty would stop spending and increase taxes. OH MY! Even Toto knows that’s crazy.

Posted by: Royal Flush at February 21, 2011 6:09 PM
Comment #319002

So Royal how would you solve the Issues of the 20th Century and prepare the Children of the 21st Century for the Events they will face in the next 100 years?

Posted by: Henry Schlatman at February 21, 2011 05:40

Henry, describe the events of the next 100 years.

Posted by: Royal Flush at February 21, 2011 6:14 PM
Comment #319030

Royal Flush,
Would you not agree that America and Humanity will see Fires, Stroms, Draught, Civil Unrest, Wars, Economic Woes, and the list goes on and on. In fact, if we are to listen to the Learned of Society in the next 100 years we stand a chance of having the entire East Coast hit by a Tidal Wave, Mississippi river flooding, and the West Coast sliding into the ocean after an earthquake.

For with Katrina, the Gulf Spill, and the Wall Street making the Federal and States broke I can say the first ten years of the 21st Century is a prime example that the Youth of Today needs to learn how to do a better job. For unless you are going to believe the Conservatives and Republicans did a great job in dealing with these events. Americans needs to prepare their children because it is clear their Political Leadership as is can’t do the job.

So what is your idea, hide your head in the sand while your political leaders work to take more and more money away from you? Since I am still waiting for a Conservative and Republican Plan to deal with creating Livable Wage Jobs, solving the Debt and Deficit, making America Energy Independent, and fixing Americas’ Infrastructure. In fact, given the Civil Unrest the Republicans are creating today because of their ignorance, maybe the first thing Americans need to do is to teach the Children of the 21st Century the Big Business works at their pleasure since without a dime of profit even the “To Big to Fail” dies on the vine.

Posted by: Henry Schlayman at February 21, 2011 11:36 PM
Comment #319039

“Since I am still waiting for a Conservative and Republican Plan to deal with creating Livable Wage Jobs, solving the Debt and Deficit, making America Energy Independent, and fixing Americas’ Infrastructure.”

Don’t hold your breath, Henry.

Posted by: Rich at February 22, 2011 7:07 AM
Comment #319047

Royal Flush-
Your rhetoric attempts to be smarter than the ideas behind it, and fails.

The trouble for most Americans right now is that business sucks, and unemployment is too high to allow people the disposeable income to make that better. We have an output gap, idled production capacity.

There’s not enough economic activity going on, not enough money out there pursuing the goods and services we as a country could be capable of producing.

Your solution is to sharply reduce the money that the government’s contributing to the economy. To put people out of work in an economic crisis that is in part due to how people are out of work. To reduce the money rolling around in the economy, in an economy where too little of it runs around.

Tell me, if the problem is inflation, what are the inflation numbers like? Where’s the CPI? How does the rate compare to times of real inflation?

If I could sum it up in one sentence, the folly of your economic approach is that you would solve the problem of our economy’s austerity by adding more austerity on top of it.

Let me say exactly what my policy would be: Spend what was need to spend to get ourselves moving towards quick growth, get us out of our output gap, and then apply the brakes to keep the resulting potential from high inflation from causing the opposite problem.

That’s not crazy. That’s what you should do, when you have an economy that’s underperforming what it’s capable of, and the current economic conditions have it stuck in that shape, not correcting itself.

The irony is, if Republicans weren’t so busy congratulating themselves for what responsible citizens they are, they would realize that their own policies amount to the same thing. Their cuts, though austerity in economic terms, do not resolve the deficit. They can’t. Heck, I think the tax cuts you supported the continuation of are more or less going to swallow up the deficit reductions you pushed.

You might be spending less, inflicting that on the economy, but you also chose to lose much more revenue, deliberately. So, whether you like it or not, your policies will likely increase the deficit, even if we’re just talking the primary effects of spending numbers vs. revenue numbers. The secondary effects will make it worse. For all your rhetoric, Republican policies will get the country closer to bankruptcy.

Republicans are pros at talking the talk of deficits, of getting people scared of spendthrift liberals. But their policies are much more irresponsible, and words can’t keep the realities of revenue and spending from intruding on the fantasy.

Posted by: Stephen Daugherty at February 22, 2011 1:41 PM
Comment #319060

Rich,
I’m not holding my breath, but waiting for a Thrid Political Party Leader in 2012 who understands America must invest and save its way out of the mess. For even if we could by off the debt and deficit today, we would stil have the same problems. Something the Youth of the 60’s and Silver Spoons of the 70’s still can’t grasp.

Posted by: Henry Schlatman at February 22, 2011 8:55 PM
Comment #319089

I’ve figured out what the Republican­s’ budget game plan is!

http://garystlawrence.files.wordpress.com/2011/02/congressional-jenga.jpg?w=594&h=504

Posted by: Gary St. Lawrence at February 23, 2011 9:51 AM
Comment #319093

Gary St. Lawrence-
You’d better add border patrols, oddly enough, to that list of cuts. The Republicans are more interested in making a political statement than policy that makes sense.

Posted by: Stephen Daugherty at February 23, 2011 11:31 AM
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