Third Party & Independents Archives

No to Pay-Go

Yesterday Congress split 50-50 on an agreement to return to a pay-go system in an effort to hinder the rising US debt. Another measure was defeated yesterday by a 50-50 vote, this one would crack down on corporate taxes and use the $6.3 billion of additional revenue for student aid. Neither vote required Dick Cheney to break the tie since the measures died when the vote was split, and that was evidentally how the administration wanted it.

Traditionally, the pay-go system is a Republican backed initiative to slow excessive spending. The pay-go system adds the provision that 60 votes are needed to pass proposals for tax cuts or new spending that don't have provisions for budget savings or revenue increases. However, this recent attempt to enforce fiscal responsibility was backed by the 44 Democrats, 1 Independent and 5 Republicans. All 50 senators opposed to the pay-go provision were Republican. Rather strange that the party that usually stands for fiscal responsibility and smaller government is so strongly opposed to this attempt. Their reason?

"The practical effect of this is to raise taxes," -Senator Judd Gregg (R-NH)

Republicans are concerned that this is an attempt to stop Bush's tax cuts from becoming permanent. Evidentally, they are more wrapped up in seeing the tax cuts happen that they don't mind that those tax cuts are contributing to our skyrocketing debt which will be an almost eternal burden for us and our children. More importantly, this vote is right on the heels of a senate vote to extend the US debt ceiling so that we don't default on our loans.

So, as we linger on the precipice of bankruptcy, half the Senate has dug in its heels in opposition to fiscal responsibility. And surprisingly, its the half that usually fights for this sort of thing.

Posted by Andrew Parker at March 15, 2006 10:30 AM
Comments
Comment #133553

There are no more Conservatives when it comes to spending, taxes, finance, etc anymore. Spending is out of control and this administration does not seem to care one bit. It’s unbelieveable. I really don’t care about any other issues or party line BS, in the next election my votes will go to whoever I think work the hardest to get government spending down and balance the budget. Period.

Posted by: BradM at March 15, 2006 11:54 AM
Comment #133554

Republicans have done a poor job of holding down spending after the initial success following the “Contract with America” in the late 1990s. Dems can say they are against spending, but ask them which programs they would plan to cut and you don’t get a list.

This is an interesting proposal for some cuts. We cannot solve the problem until we talk about entitlements. We should also be prepared to talk about some tax increases. Maybe the President should listen to Robert Rubin. Pragmatism would be useful right about now.

Posted by: Jack at March 15, 2006 12:02 PM
Comment #133555

Didn’t Gore propose doing something like this voluntarily? Lockbox, pay as you go… Yeah, he would have made a terrible president.

Posted by: Max at March 15, 2006 12:07 PM
Comment #133568

Gotta love those heritage people Jack links. Go down one more level and you’ll see that the main causes of all this bruhaha is Bushie’s medicare drug reform and his tax cuts.

Posted by: Dave at March 15, 2006 1:05 PM
Comment #133595

Lockbox is a metaphor, a ploy, a slogan, a trick term a scam. The U.S. Government cannot save money since it produces the money. It can only write checks to itself and promise to pay later with money it will take from taxpayers at a future date. Gore must have known this, but he managed to bamboozle the less economically literate.

Pay as you go is a good idea. I regret the Republicans are not supporting it. You will note, however, that it was a Republican led Congress the balanced the budget last time around. I give credit to Bill Clinton too, but you recall that the budget process was a very bruising affair and the Republicans even closed down the government to make the point.

Dave

So you advocate less of a Medicare drug benefit? I know you want to raise taxes. But we still have the entitlement problem.

You have to admit that Heritage gives you the information you need to make up your own mind. I suggest everyone do so.

Posted by: Jack at March 15, 2006 2:13 PM
Comment #133596

Excellent article.
Let’s forget partisanship for a moment, and use nothing but pure, unadulterated common sense for a change, shall we folks?

Isn’t Andrew 100% correct when he says that America headed toward bankruptcy?
To me, this seems to be a glaringly obvious fact.

Posted by: Adrienne at March 15, 2006 2:14 PM
Comment #133599

Thanks Adrienne, for actually getting the point. We stand at the brink of bankruptcy, and the Senate can’t even manage to agree to take measures to slow our spending. Instead, let’s step on the gas and blow through another $91 billion and in the meantime, we’ll keep threatening Iran, Syria and the Palestinians (just to name a few).

Posted by: AParker at March 15, 2006 2:26 PM
Comment #133604

Jack:

Excellent articles! Thanks!

Posted by: womanmarine at March 15, 2006 2:36 PM
Comment #133608

Since there are no congressmen from either party willing to cut the budget, pay-go wouldn’t have done much good anyway.

Pay-go alone does not help bring our nation out of bankruptcy.

Posted by: TheTraveler at March 15, 2006 2:54 PM
Comment #133610

Jack,

Heritage spins like a tornado and often excludes, ignores, or buries data negative to their conclusions. I don’t subscribe to many of those conclusions but I’m not willing to say they lie in their publications like Hannity, O’Reilly et. al.

As for the recent medicare reforms, it’s a total screw up beyond even my “pessimistic” imagination. It’s unfunded and will grow exponentially.

First, yes, taxes must be increased. There’s no getting around that given the massive debt and continuing deficts. My favorites are a wealth tax and elimination of Bush’s cuts. Pay-as-you-go is a good add-in.

Second, get rid of the incompetent boobs that put us here. That focuses on Bush and the GOP leadership. Specifically, the senior congressmen and senators who were supposed to have stopped Bush from his abuse of power and profligate spending and instead porked up to unprecedented proportions.

Third, slowly roll back the Medicare changes. Focus on increasing competition in providing the services and calculate the savings there first. Then see where the biggest savings could come from the least impacts. Require more payment from higher income beneficiaries. Establish what minimum level of care we can provide.

Fourth, Get out of Iraq ASAP. We’re spending $1.2B a week and that’s not even listed in the budget.

Fifth, Campaign reform. Keep the slimeboaters out of our lives and prevent the slimebuyers from getting into office. Hold advertisers to real levels of truth by civil levels of liability and special courts during election periods. Limit political advertising to periods significantly before and after election dates. I’ve listed my other ideas on other threads.

Posted by: Dave at March 15, 2006 3:03 PM
Comment #133615

Yep both parties are parties of Big Government now. The both came out of the same party originally (the Democratic-Republican party) so it makes sense that they really arent all that different.

Dems are the party of restrained Socialism.
Repubs are the party of military and legislated “values”

It’s time for the Libertarians to offer a real choice to Americans. A consistent government that lets individuals make their own choices and limits the scope of what goverment does (as the constitution demands).

There are libertarian elements in both parties, I wish they would have the courage to vote for a party that lines up with their values instead of voting for the least offenseive of the two “choices”.

Libertarian Dems don’t like the government using the military to bully other countries, they also don’t like the government expanding its role over individual social choices. Big brother is a real and dangerous threat.

Libertarian Repubs don’t like the government trying to “take care of people” by continually growing the government and raising taxes (i.e. no socialism).

Niether party is consistent, both believe that big government is necessary to “help” people.

Libertarians are consistent in that they believe individuals should be responsible for taking care of themselves, as well as making choices over their own lives without government interference. Not no government, but limited government.

Ben Franklin recognized this priciple and had an instrumental role in bringing the extremes together through compromise to form the foundations of this country.

Thomas Jefferson recognized this principle too and sums it up well in the statement “The Government that governs best … governs least.”

Posted by: JT at March 15, 2006 3:13 PM
Comment #133646

“The Government that governs best … governs least.”

In keeping with that noble sentiment, perhaps it really is time for the two parties to work together.

The Dems could demonstrate their weakness on terrorism and military issues by insisting on cutting the bloated annual Defense budget in half. There’s 300 billion dollars right there. And since the government is working up to it anyway, why don’t they just go ahead and suspend federal elections in ‘06, and 08,in fact, say, for the next 10 years. Temporarily, you understand, until the country gets back on it’s feet. Voting essentially being a states-rights issue, it would be up to the states whether they
would suspend theirs. Think of the hundreds of
millions of dollars saved! And best of all, no more problems with Diebold and the rest—besides, elections just hurt people’s feelings, anyway. The only people who would crab about that would be the TV networks. Perhaps we could come up with some subsidy or something to shut them up. Whiners.

Sure, we could save alot of money getting out of Iraq. But then, who would watch over all that oil, so that the oligarchy can continue to nuture the global consumer? That’s a tough one; why don’t we let that one ride for awhile, and see if something comes up?

As Jack and others quite rightfully said, entitlements need to be dealt with. And I agree. Well, George doesn’t believe in setting deadlines, but how ‘bout this one? Announce to Americans that starting Jan. 1st, 2008 Social Security will be phased out. Starting with the folks who have the most assets and working your way down, until, in say, five years noone is drawing Social Security. As someone upthread said, it’s only a modest program meant to help people get by—and besides, if you haven’t planned for your retirement why should it be the government’s problem?

The same can be said for folks on Medicare. It’s obvious these people haven’t thought ahead. The government and the top five per cent of folks with most of the wealth cannot be asked to coddle these people anymore. Now we’re talking 10’s of billions of dollars we can apply to the nation’s debt.

Well, I think you get the idea—if it hadn’t been for Keynes and FDR and all those other bastards that were staring at the Depression in the ’30s, this country would be alot better off. There are ways around this debt thing—let’s all work together and be creative, okay?

“Thomas Jefferson recognized this principle too and sums it up well in the statement “The Government that governs best … governs least.”

I think I have a better quote than Tom’s, and I think it mirrors the feelings of most of the American people:

“I don’t give a damn if the government is big or small. I want one that works, for all the people.”
Timothy Crow

Posted by: Tim Crow at March 15, 2006 5:07 PM
Comment #133650

Yes, Adrienne, the U.S. is headed for economic difficulties as a result. The Debt is now on track with current laws and passed legislation to reach 11.8 Trillion dollars, in the next few years, 2009 I believe it was. I have been predicting this for this years, and now it is a matter of record.

This means Republicans will have sunk us 5 Trillion dollars further into debt, and the Iraq war will only cost just under 1 Trillion by then, and Katrina/Rita only 800 billion. That leaves 3.2 Trillion dollars of increased growth in government and deficits which Republicans have no excuse for.

In addition, though Republican are correct when they say if you look ONLY at capital gains, cutting capital gains taxes increased capital gains revenues. But, when you look at the overall revenue picture, total revenues have dropped every year since 2001. This means the very cornerstone of their economic philosophy is erroneous and now a lie proven by the record. Cutting taxes, even in a growing economy, DOES NOT increase tax revenues.

We can finally put that one to rest.

In addition, the Comptroller of the U.S., a Bush appointee, has recently said the the national debt and trade deficits combined can and likely will create immense hardship for the U.S. economically, socially, and politically in the not too distant future. I figure he will be the next Bush appointee to be relieved of duty before too long. Speaking truth to power is not an activity tolerated well by this administration or the GOP.

Even the Fed Chair, Bernanke is picking up where Greenspan left off by alluding to the problems of current fiscal policy that lie ahead by pointing to inflationary pressures appearing on the horizon.

Posted by: David R. Remer at March 15, 2006 5:22 PM
Comment #133653

Hey, Guys (and gals)!!

I just had another brainstorm. If the government that governs least is the best, why not close down Congress and the courts? This whole checks-and-balances boondoggle is kind of a farce anyway. Think of the money saved there, eh? No limos motoring government officials around, don’t have to heat and air-condition all those government buildings—it boggles the mind.

I know what you’re thinking—who’s going to be President? Well, my feeling is , the only reason why George wants to go back to Texas in ‘09 is to rest up at his ranch (after eight years of some really stellar work) and ride his bike and clear brush. (maybe we should change his name to Brush?)
I think, that if we put in some good spots to ride a bike in back of the White House and airlift in some really good Texas brush for him to clear, I really think that if we asked real nice, he’d stay—temporarily of course, just until the country got back on it’s feet. Whatta think?

Posted by: Tim Crow at March 15, 2006 5:32 PM
Comment #133681

Of course they did, know why? padding the budget with programs gets the reelected. They bring home money and jobs and the people vote them back into office. Imagine being the guy to go back to your district and have to say, sorry, those kushy dollars are all going away, we have to make sacrifices in order to protect the longevity of america….he’d be voted out of office in a second.

On the issue of entitlements, at the moment, they pay for themselves, not a big deal, what is a big deal is that the point of the Laffer curve is that by cutting taxes tax revenues go up, that hasnt happened, the productivity increases havent been substantial, meaning that the massive losses in revenue arent producing more revenue. Supply side economics only work to a certain extent, and the level of cuts that Bush instituted was far too steepe. Look at the charts on tax revenue, it went up in a similar slope to spending every year, until Bush came into office, when the revenue from taxes plummeted and the spending continued at the same rate.

I heard someone suggest that what the current administration is working on is bloating the budget so much that social programs have to be cut. This is hopefully not true, but considering everything cut out of the current budget, i dont doubt it. If you want to go after spending, do it directly, don’t claim to care about fiscal responsibility, then hand over a bs budget that doesnt even fund the border patrol fully.

Another thing, defense spending keeps going up, but we don’t really see where that money is going. I’d bet dollars to doughnuts theres some serious waste in that department.

www.iandanger.com/blog

Posted by: iandanger at March 15, 2006 6:58 PM
Comment #133721

Andrew:
“Thanks Adrienne, for actually getting the point.”

I find it interesting that our resident Republicans went suddenly silent after you and I tried to clarify that very important point.

“We stand at the brink of bankruptcy, and the Senate can’t even manage to agree to take measures to slow our spending.”

Yes. And you’d think that Left, Right and Center we could all agree that those measures are desperately needed — and need to implemented as soon as possible.

David, I enjoyed reading your post.

Cutting taxes, even in a growing economy, DOES NOT increase tax revenues.

We can finally put that one to rest.

Can we? At long last?
Do you think that even some of the righties might now agree with the assertion that Trickle-Down simply doesn’t flush?

Posted by: Adrienne at March 15, 2006 8:42 PM
Comment #133741

I agree that spending is out of control and I’m ashamed of my party for becoming the party of expanding government. It went from “tax and spend” to “borrow and spend”. I would actually consider tax increases if there would be just one liberal on here who would admit that entitlements have got to be cut, and fast. All the libs want to cut is defense spending. While I agree there’s gotta be some wasting going on there, I believe that every member of our military that has gone into combat should be paid more than the highest paid Senator and even the President. We need term limits on the House and the Senate. If our elected Forrest Gumps would fight the debt as hard as they fight term limits, we’d be paid off tomorrow.

Posted by: Duano at March 15, 2006 9:51 PM
Comment #133743

David and Adrienne

It looks like the second round of cuts (those of 2003) DID increase tax revenue. What is a problem is that the taxes considered most unfair by some folks are those that increase investment. A general tax break just puts more money into the system.

While it is generally true that a tax cut of $1 will not produce enough growth to produce an extra $1 of revenue, it is also true that $1 increase in tax will not produce a $1 in revenue collected. We do have to take both these things into account. The trade off is how much economic growth do you want to sacrifice for additional revenue.

You have to have a balance between taxing and spending. Our tax revenues were at a record level last year. If spending had not increased, we would have a surplus again last year. I think of the government like a teenager with an allowance. He is overspending. We can increase his allowance or make him spend less money.

As I wrote above, both taxes and spending should be on the table and we should use dynamic scoring to figure out what we gain and what we lose by each cut and each tax.

Posted by: Jack at March 15, 2006 10:08 PM
Comment #133785

Jack, your arguments only have merit during times when we are not running threatening debt and deficits. Given our current context and the growing number of warnings from conservatives the likes of the U.S. Comptroller, Greenspan, and conservative think tanks, your argument has no merit on balance.

Posted by: David R. Remer at March 16, 2006 12:10 AM
Comment #133889

David

The argument is valid no matter the times. If you raise taxes, you will not achieve the revenue gains you anticipate if you don’t take into account the slowdown. At some point, there is an optimal tax rate. We don’t know what it is. Liberals and conservatives agree on the concept, however. Liberals used to like the Phillips Curve and some conservatives believe in a variation of the Laffer Curve, but everyone knows that it is a curve and not a straight line.

Posted by: Jack at March 16, 2006 12:14 PM
Comment #133891

BradM
There are no more Conservatives when it comes to spending, taxes, finance, etc anymore. Spending is out of control and this administration does not seem to care one bit.

Sorry buddy your wrong. This administration doesn’t care a bit. Not does not seem to care.
Your right though that there are no more fiscal conservatives in DC anymore.

Posted by: Ron Brown at March 16, 2006 12:16 PM
Comment #133903

Laffer curve? The grossly simplistic mantra of anti-tax people? Everybody knows returns of any process are optimized at some point. The real issue is that the neocons think we’re on the right side of the curve, while anyone with real knowledge knows we’re on the left.

Philips curve? The relation between inflation and unemployment? Why choose it towards “liberals” when inflation targeting was Greenspans prime driver?

Posted by: Dave at March 16, 2006 1:07 PM
Comment #134074

Dave

My point is not to defend either curve or any particular theory. But the fact is that if you raise taxes you will not achieve all the revenue because of the effects you will have on the economy and on behavior of taxpayers. There is a trade off between economic growth and tax rates. It also matters the type of taxes. The capital gains tax cuts have been very successful. The general tax breaks less so.

When contemplating tax increases, we have to think of the dynamics of the systems and we can’t assume a billion dollars in taxes will actually achieve a billion dollars in revenue.

Posted by: Jack at March 17, 2006 9:18 AM
Comment #134082

Jack,

Do you understand what the Laffer curve is? Your response doesn’t give any indication that you do. I’ll be more than happy to explain for you if you are interested.

Posted by: Dave at March 17, 2006 9:49 AM
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