Historical Tables can be found at www.whitehouse.gov/omb/budget/fy2009/pdf/hist.pdfand a article in the Economist sent by Kevin here.
“…policymakers must learn from the errors that prolonged the Depression…”. Admin
by Gendarme
I will stick with my statement:
“Republicans support rampant spending, expansion of entitlement programs, and reduction of taxes on the wealthy, leaving an even greater burden on the backs of the truly hardworking taxpayers. Tax collections as a proportion of total from corporations have steadily declined for several decades, as have tax rates for the wealthy.”
Some facts:
1. Entitlement programs have grown steadily under both Republican and Democratic administrations for fifty years (Source U.S. Budget Historical Tables).
2. CBO 10-year budget projections always miss the mark broadly because they do not predict economic recessions/expansions; wars; or legislative changes to tax rates and entitlements. This is well understood by economists.
3. Corporate tax collections as % of total FEDERAL tax collections have steadily fallen for fifty years (Source is U.S. Budget Historical Tables).
4. Top marginal personal income tax rates have declined steadily for fifty years (Source U.S. Budget Historical Tables).
5. Corporate tax rates are just the starting point - your friends at the right wing Tax Foundation forgot to tell you that deductions reduce corporate tax rates to the lowest in the world (Source U.S. Budget Historical Tables).
6. The Obama deficit in response to the economic crisis is not a basis for criticism - it is the correct fiscal policy, despite Taxpayer’s lack of understanding of basic macroeconomic management. I bet before the election on a re-up of stimulus by YE 2010, coming under discussion now.
I have had reason to watch the California economy closely for twenty years and it has boomed/busted four times - 1983, 1991, 2001, 2008. California is the 10th largest, most entrepreneurial, highest technology, most diverse and best financed economy in the world. Taxpayer is clueless - don’t anyone panic.
That dispenses with that empty rhetorical broadside. Taxpayer really should get some handle on this information before he attempts to drown everyone out with his “Limbaugh schtick”.
Gendarme,
Your facts neither support your hypothesis nor dispute my comments.
1) I never claimed that Republicans haven’t expanded entitlements, only not as much as the Democrats (The New Deal, The Great Society, ect.).
2) I never disagreed with the need for a stimulus. It was very clear to all that a stimulus was needed to break the cycle of unemployment, forclosure, bank defaults. My issue (along with the Senate Republicans) was with the Obama stimulus. I thought it loaded with pork, was ill-conceived, and its distribution inappropriate. I sided with Morton Feldstein’s perspective which i posted here sometime back.
3) I am glad that you are hopeful about California. Prehaps you have insight into the state which I do not. However, I do not think it unrealistic to be alarmed about a $26 Billion dollar budget short fall and nor do I think it inapproriate to question why and how it got so bad. I am not recommending panic, I am prompting concern.
4) Thank you for the perspectives on corporate taxation. I think that despite this, the majority of taxes are still being paid by the top wage earners. If you believe that they should be taxed more I would only question the possible impact this could have on the economy and jobs. Is that unreaasonable to ask.
5) Lastly, please don’t make this about me. The issues are too important to merely try and win rhetorical battles for the sake of your ego.
The dream…..
Oh to bring back the heady Carter years!
The prosperity!
Low interest rates!
Low unemployment!
Americas’ standing in the world was never higher!
If those nasty republicans would just go away….
Db
More on California…
http://reason.com/news/show/134445.html
Why is California important to Woodstock?
Well not only is it home to Becki, but what has happened there exemplifies what can and is happening throughout the country because of irresponsible liberalism. How they handle this mess will set a premise for how its handled elsewhere.
“Faced with a political class that ignored bureaucratic inefficiency, that demanded higher taxes, that filled the newspapers with scare stories about people who will literally die as a result of budget cuts, the citizens of one of the bluest states in the nation collectively said we just don’t believe you anymore.”
….but here in Woodstock we’re supposed to take Gendarme’s word for it that California is in good shape and that it is “the most entrepreneurial, highest technology, most diverse and best financed economy in the world.”
Oh its financed alright…with the interest being paid on the back of taxpayers and their great-grandchildren. Thanks California Democrats!
db,
…..California Dreamin’
Sorry Tax:
I don’t buy the argument that Democrats are to blame for the country’s ills. I’d prefer to spread the blame among all the irresponsible politicians. Just as one example, it is common practice for a single bill to comtain multiple, unrelated issues and spending proposal. The result is votes based on pure politics. Republicans and Democrats create and vote on all the bills that are passed.
As long as there are enough members of either party who will tirelessly support their party, this practice will continue.
JK;
That is exactly the problem. Too much porky b.s.
I know he wasn’t the first to say it but didn’t Obama say he was
going to go “line by line” through the bills to wipe out waste?
Also we were going to get to view them online?
If the criminals in DC start the taxation of our healthcare
benefits we will all pay dearly.
Republicans AND Democrats are to blame, It looks like more of the same to me.
So much for Change……
Db
JK,
I was not discussing the countries ills, but rather, California’s. The Democratic Party, which is fully in hock to unions, has controlled the legislature and most statewide posts in California, with the notable exception of the governor’s mansion, for more than a decade.
Taxpayer obviously just parrots the nuts on right wing blogs, so again, I am sure this is a waste of time. Nevertheless:
1. Top marginal tax rates have steadily declined for 50 years. Taxpayer does not seem to know how high they were, what they are now, or what benchmark they should be compared to. But, through osmosis, Taxpayer is certain they are still too high. How does he do it?!
2. Entitlements have grown steadily since the New Deal, and the Republicans have made the same arguments against them throughout. The U.S. economy has had major, sustained growth spurts in the 1950’s; the 1960’s; the 1980’s, the 1990’s, and the 2000’s. The country’s overall wealth has doubled every +/- 15 years since the New Deal. So it doesn’t make sense to blame the growth in entitlements for our current economic problems. Economists know that income transfers have very little negative impact on overall growth.
3. I’ll stick to my statement on California- it is the 10th largest, most entrepeneurial, most diverse, highest technology and best financed economy in the world. California’s deficit per capita is actually similar to CT’s - its just a much bigger state.
Tax:
I think you’re missing my point. Both political parties seems to be capable of making decisions based on what can get them more votes and more political power. I am not supporting what Democratic leaders have been doing, nor do I support what the Republican politicians do.
A truly “Conservative” policy would have put a stop to the mortgage and financial policies that led to our current recession. Alan Greenspan said in an interview that I watched that he was concerned about the banking policies that led to the financial disaster we’ve recently seen, but that if something had been done, the economy would have slowed significantly.
It is safe to assume that there was nothing done because the people getting really rich were significant supporters of the Republican party, and there would have been political fallout from reigning in out-of-control financial institutions.
If you want to argue for a truly conservative approach, that’s one thing. If you want to point a finger at the Democrats, then prehaps you’re not looking at the real issues that control our government.
JK,
I have always argued for a truly conservative approach. To that, cheers JK, and have a wonderful weekend, we can agree on something! It wasn’t conservative values which got Californai and Connecticut into their fiscal crisis. It was reckless tax and spend policies. Thanks.
Former Republican Congressman Christopher Cox, coming in as head of Bush’s SEC, said “Wall Street really needs to regulate itself” meaning there was no proper role for government regulation. Former Republican, long term Federal Reserve head Alan Greenspan, a self-professed Libertarian, in testimony about the recent economic collapse, said “the entire intellectual facade of free market economics collapsed”, meaning his longstanding belief that the credit markets were self regulating, was wrong.
The whole world has woken up to this plain reality at this point. I would not get caught in a “conservative” or “liberal” dichotomy here. “Responsible” or “prudent” regulation are better terms.
No one is speaking of regulation in terms of liberal or conservative.
So Taxpayer believes that the laisse faire policies of Greenspan/Cox were wrong, is that what I am hearing? Or will we get another weasel-worded response?
Gendarme,
Ronald Reagan ran up huge deficits that alarmed Martin Feldstein, Bush Sr. signed the Community Reinvestment Act in 1977 (thought to be largely responsible for the buildup to the present housing crisis), Bill Clinton balanced the budget, George W. ran the deficits back up, and Mr. Obama is W. on steroids.
Its never been argued, at least by me, that Democrats are alone in heaving fiscal irresponsiblity upon the taxpayers of this country. What I have argued for, however, is the need to return to fiscally conservative values and have blamed liberalism, whether by Republicans or Democrats, for the woes this country faces. Here JK and I seem to agree, along with most Americans.
I do believe that the Republican party base stands more firmly planted in upholding these values than the liberal wing of the Democratic party, however, what the American people want and what they get are seemingly two different things. George Bush exemplified this dichotomy and this is why he became widely unpopular. Mr. Obama too is on the same path. His campaign convinced the the public that he championed fiscally conservative value, no pork spending, “line by line item” vetoing, ect, but what we are finding out is that what he says and what he does are two totally different things.
Both recent presidents stand as proof to my statements and as a result my anger and frustration has motivated me. I philosophically believe in small government as my trust in politicians has been greatly reduced. Likewise, I support a laissez-faire economy but admittedly my trust in the corporate world has also been diminished by their evident greed and their irresponsiblity on behalf of their employees, stockholders, and taxpayers who, thanks to big government, are now bailing them out.
So Gendarme, I’ve learned not to take sides with politicians or big business. Instead what I have taken side with is my own personal values and my own personal self interests because it has become quite apparent to me that no one looks out for the individual except for himself.
A Taxpayer-
You’ll like this
http://www.slate.com/blogs/blogs/kausfiles/archive/2009/07/10/everybody-hates-the-teachers-unions-now.aspx
Strong language coming from influential people. It’s about time. Thanks Dubious.
So where is Taxpayer’s answer to the above question? He is usually so talkative - cat got his tongue?
My apologies, Taxpayer did respond, but, as usual, ignored the substance of the points that were made, as follows:
1. The U.S. budget was last balanced by a Democratic administration (Clinton); almost balanced by another (Carter); and before that by another (Kennedy). Of course Republicans talk about fiscal conservatism, but do not practice what they preach.
2. The Obama deficit is a function of the Great Recession - we have been all through this but I do not think the broadly agreed principles of macro-economics have penetrated with Taxpayer.
3. The Greenspan/Cox regimes believed Wall Street needed no regulation by the Federal government; Greenspan has acknowledged this laissez faire approach has failed. Does Taxpayer agree or disagree?
G.
Did you not read my comments or is it easier just to make things up as you go along in order to support your self-congratulatory arguments?
Taxpayer, you are full of hops.
You say “Its never been argued, at least by me, that Democrats are alone in heaving fiscal irresponsiblity upon the taxpayers of this country”. You have done nothing BUT argue this for tha past two years. This kind of reversal shows your lack of integrity.
And I have not heard you directly address the specific points made:
1. The laissez faire policies, i.e., lack of regulation, in the financial markets was a disaster.
2. Corporate tax collections have declined steadily for fifty years.
3. Top marginal tax rates have declined steadily for fifty years.
4. The Obama deficit is a function of the Bush deficit plus the anti-recession effort.
How about some straight answers?
Does Ms. Sotomayor’s reversal demonstrate a lack of integrity or is it merely a case of perjury??
Gendarme (love the new name btw. Its so liberal fascist). I can’t decide if you are being disingenuous or if you simply lack critical thinking skills so I’ll assume a little of both but argue the latter.
I think that this present economic crisis has become an overblown excuse to over-regulate and to over spend. Laissez-fair and lack of regulation were not to blame, but rather, greed and stupidity were. Regulation and self-restraint need to come from the corporate and at the individual level through hard lessons learned and not through bailout. With bailout, the lessons will not be learned and conservative values will be lost for good. History will be destined to repeat itself and our nation will continue on its ugly course.
Taxpayer, you brought all these issues up; I am merely pointing out a few facts, and asking a few simple questions. As usual, you have ignored the points made; changed the subject; responded with a personal insult; and made a silly generalization. So again, a straight answer - do you agree or disagree:
1. The laissez faire policies, i.e., lack of regulation, in the financial markets was a disaster.
2. Corporate tax collections have declined steadily for fifty years.
3. Top marginal tax rates have declined steadily for fifty years.
4. The Obama deficit is a function of the Bush deficit plus the anti-recession effort.
I don’t know why you can’t answer these questions; I mean is it a lack of integrity or are you just a liar?
Admin may defend your delivery of ignorant right wing rhetoric - ad nauseum - and chime in on your personal attacks on anyone who questions you, but that just lowers the Cafe’s credibility even more than it is now. But hey, its his blog.
G.
You substantiate none of your facts and expect me to reply with an honest sincerity that you never afford me.
As for the credibility of the Cafe, I’ve never seen it higher and am impressed by the number and diversity of people that openly claim to read it. In fact, the tone of the Cafe has become much more civil and the balance of opinion represented is testimony to the administrator’s fairness.
Wake up. Get off your high horse. Enter the path of redemption and renewal. Your valuable input, your expert knowledge, and talented communication skills must not be wasted behind ego, anger, and bumps in the political road.
Taxpayer, all I am asking is that you address the substantive points:
1. You said, just above, that laissez faire policies are not the cause of the failure of the financial markets and current recession; Alan Greenspan testified under oath that “the entire intellectual facade of free market economics has collapsed”. This shocking statement from a self-professed libertarian was on the front page of every major newspaper in the country. Do you believe Rush Limbaugh’s view is intellectually superior to Greenspan’s?
2. You said U.S. corporate tax rates were the highest in the world; but U.S. corporate tax collections have declined steadily for fifty years. Is your empty rhetoric, borrowed from blogs and talk radio, intellectually superior to the Historical Tax Tables of the U.S. Budget?
3. You say the wealthy are paying too much/increasing taxes, yet top marginal tax rates have declined steadily for fifty years. Are the Historical Tax Tables of the U.S. Budget in error?
4. The Obama deficit is a function of the Bush deficit plus the anti-recession effort. You supported Bush policies and then supported a major stimulus albeit with different spending priorities. Please explain how you can now criticize the Obama deficit.
So, of course, I did substantiate my facts - it is you who refuse to do so. And, like a child, you have again substituted personal attacks (”liberal fascist”) for a substantive response. As for the personal advice, thanks; now why don’t you follow it yourself?
As an aside, don’t look to Admin for support; stand on your own two feet. Running a blog doesn’t qualify Admin’s knowledge of the subject; and even he gets tired of your personal attacks. He just seems to recognize them more clearly when they are directed at him, as when he recently referred to “your nonsense”. Precisely.
Gendarme, Your bullying and snide remarks will end you up in Siberia at best. I’m not even sure that we should glorify your remarks with Siberia.
G.-
1. No one has ever denied that recessions can and will occur under a laissez-faire stle system. In fact, its proabably a good thing.
2. My information was from the CBO,but you refute them as well.
3. I am not concerned about rate of taxation, but rather, over taxation.
4. As a Senator, Mr. Obama did not offer or support legislation to help prevent or attenuate the recession. In fact, he got kickbacks from Fannie and Freddie.
Regardless, I recognized the need for a stimulus, but am concerned about the one finally passed under the Obama administration and its evidential failure to achieve its desired effect. I am concerned about ballooning deficits undr the Obama administration, as is the CBO. Finally, I am also concerned about Mr. Obama’s proposed expansion of healthcare entitlements when the current ones (medicare, medicaid, social security) are on the edge of a cliff waiting to fall off.
The economy belongs to Mr. Obama now, not George Bush. Can you offer me recourse as to why I should not be concerned about the path that lies ahead of us a result of the policies and spending initiatives under President Obama and the Democratic legislature?
This link and the comment below was moved from “Randy’s Earth” because this related to this post not “Randy’s Earth”. Admin
http://cboblog.cbo.gov/?p=328
Here is the Congressional Budget Offices most recent analysis of the long-term budget outlook:
Under current law, the federal budget is on an unsustainable path, because federal debt will continue to grow much faster than the economy over the long run. Although great uncertainty surrounds long-term fiscal projections, rising costs for health care and the aging of the population will cause federal spending to increase rapidly under any plausible scenario for current law. Unless revenues increase just as rapidly, the rise in spending will produce growing budget deficits. Large budget deficits would reduce national saving, leading to more borrowing from abroad and less domestic investment, which in turn would depress economic growth in the United States. Over time, accumulating debt would cause substantial harm to the economy.
Keeping deficits and debt from reaching these levels would require increasing revenues significantly as a share of GDP, decreasing projected spending sharply, or some combination of the two.
Measured relative to GDP, almost all of the projected growth in federal spending other than interest payments on the debt stems from the three largest entitlement programs—Medicare, Medicaid, and Social Security. For decades, spending on Medicare and Medicaid has been growing faster than the economy. CBO projects that if current laws do not change, federal spending on Medicare and Medicaid combined will grow from roughly 5 percent of GDP today to almost 10 percent by 2035. By 2080, the government would be spending almost as much, as a share of the economy, on just its two major health care programs as it has spent on all of its programs and services in recent years.
In CBO’s estimates, the increase in spending for Medicare and Medicaid will account for 80 percent of spending increases for the three entitlement programs between now and 2035 and 90 percent of spending growth between now and 2080. Thus, reducing overall government spending relative to what would occur under current fiscal policy would require fundamental changes in the trajectory of federal health spending. Slowing the growth rate of outlays for Medicare and Medicaid is the central long-term challenge for fiscal policy.
Under current law, spending on Social Security is also projected to rise over time as a share of GDP, but much less sharply. CBO projects that Social Security spending will increase from less than 5 percent of GDP today to about 6 percent in 2035 and then roughly stabilize at that level. Meanwhile, as depicted below, government spending on all activities other than Medicare, Medicaid, Social Security, and interest on federal debt—a broad category that includes national defense and a wide variety of domestic programs—is projected to decline or stay roughly stable as a share of GDP in future decades.
Federal spending on Medicare, Medicaid, and Social Security will grow relative to the economy both because health care spending per beneficiary is projected to increase and because the population is aging. As shown in the figure below, between now and 2035, aging is projected to make the larger contribution to the growth of spending for those three programs as a share of GDP. After 2035, continued increases in health care spending per beneficiary are projected to dominate the growth in spending for the three programs.
The current recession and policy responses have little effect on long-term projections of noninterest spending and revenues. But CBO estimates that in fiscal years 2009 and 2010, the federal government will record its largest budget deficits as a share of GDP since shortly after World War II. As a result of those deficits, federal debt held by the public will soar from 41 percent of GDP at the end of fiscal year 2008 to 60 percent at the end of fiscal year 2010. This higher debt results in permanently higher spending to pay interest on that debt. Federal interest payments already amount to more than 1 percent of GDP; unless current law changes, that share would rise to 2.5 percent by 2020.
This entry was posted on Thursday, July 16th, 2009 at 4:43 pm and is filed under Budget Projections, Long-Term Budgetary Issues.
John,
I am having trouble understanding why Gendarme’s posts would put him on the train to Siberia, but A Taxpayer’s comments would not. Please expound and enlighten me. It appears you are exerting bias in an inconsistent way.
Admin, your comment perfectly demonstrates the point I just made about your interventions.
It is not “bullying” - it is “debating”, hopefully toward a more sound idea - I thought this was the entire purpose of your blog. Taxpayer made initial comments, I responded, now he has (finally) countered my points, and I will next respond to his. But the debate can only proceed if two conditions exist.
First, Taxpayer must address the points, rather than evading them, repeating empty rhetoric, or insulting his opponent. I am hardly the first to object to his proclivity to do so, as plainly evidenced above.
Second, any fair debate requires you, as the effective moderator, to avoid repeatedly intervening, sanctioning and threatening one side in defense of the other. So you cannot criticize “snide remarks” from one debate participant while ignoring their delivery by the other, at least not with any credibility.
But hey. like you said, its your blog, and you can run it as you see fit.
Gendarme (and Quid), A continuous theme since your return under your new name has been that ’so an so’ should not be able to post at the Cafe. Now Quid is parroting you. You are partly debating but the snide comments to Admin are unnecessary because we are not in this debate. Frankly I find your obsessive repetitious remarks tiresome and unpersuasive.
Taxpayer, that is all correct; I actually read CBO summaries with some frequency. CBO has been a superb nonpoliticized organization since it was created in 1974 as part of the Budget Reform Act. Alice Rivlin, its legendary head for 20 years, is one of my personal heroes.
Unfortunately, none of this information addresses the points I made:
1. Business cycles and recessions are normal, necessary “shakeouts”- Schumpeter’s “process of creative destruction” - a reorganization of the ECONOMY toward more efficient production. But a collapse of the FINANCIAL SYSTEM THROUGHOUT THE INDUSTRIALIZED WORLD due to a failure to properly regulate and thus prevent a titanic global fraud through sale of derivatives is not in any way “normal”. Greenspan has publicly acknowledged his massive error - of philosophy really - in believing the FINANCIAL MARKETS would regulate themselves.
2. You claimed that U.S. corporate tax rates were the highest in the world; but relative U.S. corporate tax COLLECTIONS have declined steadily for a half century. Nothing in your CBO summary even addresses this issue.
3. You specifically complained of overtaxation of the WEALTHY, yet top marginal tax rates have declined steadily for fifty years. Your CBO summary does not address this issue at all.
4. The Obama deficit is a function of the Bush policies, which you defend, and the the anti-recession stimulus, which you also supported, subject to different spending priorities. How can you defend the Bush administration fiscal policies then blame 1 of 100 Senators for the result?
So, I don’t really see you addressing the issues that were raised - not one bit. I mean, you raised issues, and I addressed them. Can’t you do the same?
John, let me ask you to consider a few things, as I think you have gotten yourself in a bit of a tangle.
First, you cannot repeatedly insert yourself into a debate and then claim you are not a part of it. And you cannot make snide remarks and then criticize them.
Second, one of the dangers of your interventions is that you may misunderstand and then re-characterize others comments, conveying a different meaning than intended by the author. So for example, when I questioned your defense and promotion of Taxpayer’s positions, I am not saying he should not be allowed to speak; I am questioning why you are pro-actively insulating his views from examination.
Third, with this clarification, continuing to repeat your assertion that I requested Taxpayer’s banishment cannot be justified. Your statement also seems inconsistent with your simultaneous threat to banish my own comments.
Fourth, this started with your re-interpretation of Taxpayers opinion, line-by-line, so as to re-state and moderate his extreme right wing views. You then followed by re-interpreting and re-stating my response to make my comments seem more extreme, even ridiculing them and me. Since you profess to “let the readers decide”, then why won’t you do so?
Fifth, I repeat my questions to Taxpayer for the simple reason that he never answers them, preferring to simply repeat his empty, right wing rhetoric ad nauseum, evading and insulting those who question him. Several here - including Kevin, Con, yourself and others - have expressed their frustration with Taxpayers diatribes, evasive antics, and personalized comments. In your words, they are anti-intellectual, tiresome, or as you put it yourself “nonsense”. My questions are not “esoteric” - I mean its not molecular biology - I just read the newspapers like everyone else.
Sixth, Taxpayer is a self-professed “libertarian”, meaning he believes in minimal government intervention in the economy or society; thus his view that the public education system should be eliminated. This belief system is at the extreme right edge of the entire spectrum of political philosophy. While you may believe only homicidal maniacs like the KKK or Weathermen are right wing extremists, I beg to differ.
Finally, your continual defense and promotion of Taxpayers Libertarian views can be compared to insulating him from the “marketplace of ideas”, something as a free-market afficionade I know he would detest. Taxpayer is a smart guy, he just needs to upgrade his reading list. So let him stand on his own two feet - you are just preventing him from learning anything.
You said you accepted criticism - I guess we’ll see.
As I said before “Frankly I find your obsessive repetitious remarks tiresome and unpersuasive.”
G.-
1. I still believe that in the end, financial markets would regulate themselves, and let’s not forget that there were responsible company’s. The global effect was a result of greed at all levels and not necessarily from lack of regulation, but from bad regulation. I will concede that the events rocked my little world in terms of core beliefs. I never came closer in my life for voting for a Democratic President because I recognized that big business is ever much an evil as big government. The need for regulation is apparent, but my trust in the government to do it with efficiency is weak. I don’t know what the answer is. The other night I listened to a prominent Republican senatorial candidate speak in defense of corporations and it didn;t sit right with me. Goldman Sachs just reported record quarterly profits — and it’s preparing to hand out huge bonuses, comparable to what it was paying before the crisis. What about handing some of those bonuses back to taxpayers who bailed them out? In a recent Paul Krugman article he notes that “by rescuing the financial system without reforming it, Washington has done nothing to protect us from a new crisis, and, in fact, has made another crisis more likely.” I tend to agree. Surprised?
2/3. Including capital gains I cannot believe that your statement is true, regardless, that is set to change isn’t it, so the arguement is really moot. What we need to discuss is whether or not increased corporate taxation is a healthy thing for this economy. Top tax rates in the United States may edge into the mid-50 percent range. Compare that to the Organization for Economic Cooperation and Development (OECD) average of only 42 percent. When those tax hikes kick in, the top U.S. tax rate will rank above that of France, Germany and Italy. Incidentally, our 40 percent corporate tax rate is already almost 15 percentage points higher than the corporate rates in most of Europe.
4. Obama’s first budget will consume 28 percent of the entire GDP; state and local governments another 15 percent. While there is some overlap, in 2009, government will consume 40 percent of GDP, approaching the peak of World War II. The deficit for 2009 is $1.8 trillion, 13 percent of the whole economy.
In addition to spending, Obama is pushing a cap-and-trade bill to cut carbon emissions that will impose huge costs on energy production, spike consumer prices and drive production offshore to China, which is opting out of Kyoto II. He plans to repeal the Bush tax cuts and take the income tax rate to near 40 percent. Combined state and local income tax rates can run to 10 percent. For the self-employed, payroll taxes add up to 15.2 percent on the first $106,800 for all wages of all workers. Medicare takes 2.9 percent of all wages above that. Then there are the state sales taxes that can run to 8 percent, property taxes, gas taxes, excise taxes and “sin taxes” on booze, cigarettes and, soon, hot dogs and soft drinks. Further, a liberal national health insurance reform calls for a surtax that runs to 5.4 percent of all earnings of the top 1 percent of Americans, who already pay 40 percent of all federal income taxes, has been sent to the Senate. Included also is an 8 percent tax on the entire payroll of small businesses that fail to provide health insurance for employees.
If this isn’t tax and spend I don’t know what is. While stimulus spending may have been necessary, I am fearful, in light of its apparent ineffectiveness, that the deficits created and the spending initiative further proposed, will, in the long run, be unsustainable. The reason for posting the CBO report was to substantiate my belief and make the realization that this economy is no longer George Bush’s.
G.-
The irony of your argument with admin. is that the line-by-line reinterpretation of my comments by John were in fact statements I made that were not only congruent but also supportive of many of your beliefs. So to berate John for doing so on the premise of perpetuating my radicalism is, in fact, not only surprisingly “nonsensical” but wrought with false indignation and self-incrimination. But whatever, this is a blog where people are free to write pretty much what they want.
Tax,
I thought the stimulus spending was supposed to be on projects that would create jobs and get people back to work. Where are all of these “shovel-ready” projects we’ve been told about and have they all been fully funded? Or has the stimulus money gone to wasteful foolishness added to the bill for studying how much odor is generated from a pig farm and other such Washington nonsense?
I was hopeful that carefully and deliberately targeted spending would actually do some good. That went out the window though. The economy was a mess under Bush and it’s a mess under Obama. I see no difference. Snuffy/Drippy/Gendarme’s right. The economy will spin out from time to time in order to self-correct. I just don’t trust a town full of politicians to get it back on track. How are they going to go after greed and poor/no regulation when they’re in bed with the people who need to be regulated? That Henry Paulson guy used to run Goldman-Sachs, right? Then as Treasury Secretary, he decides that the competitors of Goldman like Lehman Brothers and Bear-Stearns are NOT too big to fail and he lets them go down. But not Goldman - Goldman’s WAY too big to fail, along with AIG. If Goldman was in such dire circumstances only a few months ago, can you please explain to me how and why they were just able to post an enormous profit? And how much did Goldman contribute to Obama’s campaign? How much did they contribute to the campaign’s of other currently elected Senators and Representatives? And then Goldman had to ask permission and be “allowed” to pay back the governnment for the money they borrowed? All of this may be perfectly legal, but something about it just doesn’t seem right.
Newcomer,
This past Thursday Henry Paulson … (see Taxpayer’s new article. Admin).
Taxpayer:
1. Financial markets clearly did not regulate themselves; they failed and were bailed out by the governments of every single industrialized country worldwide. How can you say they would regulate themselves after this - even Greenspan has said this was an error. You say the problem is “not lack of regulation, but bad regulation”. I am not sure what the distinction is, but the derivative financial instruments at the center of the problem were not regulated, and that’s bad regulation.
If allowed to fail, the financial markets ultimately would recreate themselves, but not until after a devestating depression, and not at the same scale and capacity to grow the economy over the long term. So either the taxpayers bail the system out, or suffer the cataclysimic consequences for refusing to do so. And that is the purpose of the regulatory system we have - to prevent these events from occurring in the first place. Wall Street knocked a loophole in the system this time and drove a titanic global fraud right through it. And believe me, the writing was on the wall after Long Term Capital Management was bailed out 10 years ago after creating the same scenario - a pending financial industry-wide meltdown through sale of unregulated derivatives. So believe me, people knew this was coming. As far as taxing Goldman’s profits/bonuses, the Republicans already raised hell about it when the Democrats tried. Wall Street is certainly not going to pay back the taxpayers out of the goodness of their hearts.
2/3. If Admin can bear it, I am again forced to repeat myself. Corporate tax collections as % of total collections and top marginal tax rates have been dropping steadily for fifty years. My source is the official U.S. Budget Historical Tax Tables. Per the U.S. Tax Code, Capital Gains taxes are paid by investors, not by corporations. What source do you cite for disputing these facts?
4. The deficits are a serious problem for the reasons you cite. Hysteria based on misinformation is not the answer. Put it in perspective - deficits as %/GDP were 120% at the end of WWII when the economy was running virtually 100% capacity - we procceeded immediately from this to develop a global infrastructure to win the Cold War.
We grew our way out of these deficits - do not underestimate our potential to do so - the basics are all there. Our university system, our spirit of entrepreneurship are world class. Despite its recent problems, our capital formation system has evolved to a point where any almost any good idea can be financed and brought to market. The derivative products, once properly regulated, will follow the course of “junk bonds”, creating a scandal and then evolving into an important piece of the financial system.
We are in a similar situation now - not a full blown war but (i) battling a grave threat overseas on a couple of active and many less active fronts; (ii) overcoming the recent oil price shock; and (iii) a major anti-recession stimulus. We will re-organize politically and financially and move on.
The problem, of course, is the entitlements, which are unsupportable OVER THE LONG TERM and ASSUMING CURRENT LAW. And a new entitlement (health care) is about to be thrown on the pile. So you can assume that (i) either the country will bankrupt itself; or (ii) current law will change as a crisis comes closer. My example is the Social Security reform enacted by Reagan and a Democratic Congress in the 1980’s.
Cap and Trade is an effective large tax but done for good reason - it addresses reliance on foreign oil, environmental problems, and global warming. I think a Federal role here is long overdue but that’s another whole discussion.
Taxpayer,
My objection is to Admin creating and administering an on-line free-for-all; refusing any editorial policy; publishing 2-3 years of routine, trashy personalized commentary - all on the basis that he “will let the readers decide”. OK so that’s the nature of the venue and I am free to participate or not.
But if that’s the nature of the venue he created, he cannot jump in and defend, re-characterize or ridicule people’s comments one way or the other; publish and himself make and repeat snide remarks; all while simultaneously condemning this practice by others.
For example, Newcomer just above, refers to “Snuffy/Drippy/Gendarme”. Now I would bet if I responded by calling her “Newcomer/Nominder”, Admin would leap to her defense and banish me to the dark shadows of the blog he created and has kept so trashy that only a few people participate. So I won’t do that.
Admin, I just want to point that you appear to be obsessively repeating a snide remark while intervening in a debate, all things you have criticized as “anti-intellectual, tiresome and unpersuasive”. Might I add “hypocritical” to the list, just so I am not entirely, well, repetitious?
G.-
Well. I cannot refute you. Thank you for offering your estimations with depth and apparent honesty while tolerating my haranguements at the expense of your relationship with admin. Thank you, too, for instilling some hope in these very interesting times.
Gendarme, Your repeated comments about the Cafe’s editorial policy intrigue us. Since you are really talking about YOUR editorial policy, I have a job for you. Please write up what the editorial policy should be at the Cafe and we will publish your essay as an article. Then we can get a full airing of your issue at the Cafe. Is this fair?
Gendarme,
Just for the record, I was simply referring to your most recent monikers of “Snuffy”, Honeydripper (which both Taxpayer and I shortened to “Drip”/”Drippy”), and now your present. I suppose it would have been more sweetsy-sweetsy if I had chosen to call you “Hon” or “Honey” rather than Drip or Drippy, if you want to get technical. Either way, it wasn’t meant to be offensive to you. Just recounting how you’ve been referenced here in articles of the recent past.
You can call me nominder if you like. There are certain people here to whom I pay no mind at all.
Newcomer, well then we have both made the same erroneous assumption, as yours is the exact interpretation I intended in altering your moniker. Another lesson, perhaps, for Admin in being careful in interpreting others’ comments. No offense.
Gendarme’s comments will now be found in Siberia. Admin
John,
If I may be so bold as to pitch in my unsolicited 2 cents regarding suggestions to the editorial policy…
It seems for some commentors, myself included at times, we either can’t resist a personal dig or we allow ourselves to be drawn into personal battles from time to time. You’ve attempted to remedy this with the recent revisions to the policy, but as they have become an issue again with Gendarme, perhaps it wouldn’t hurt to take another stab at it? I think it would be a shame to lose Gendarme’s perspective completely from our discussions. I rarely agree 100% with him, but I almost always learn something and find his writing usually interesting regardless of my agreement/disagreement.
Is there a way to add another new area to the Cafe? Maybe not something so final a banishment as a Siberia. Siberia could be relegated to personal attacks and comments that have absolutely no point and serve as pure, unadulterated insult. But for those comments that are a dig, or “namecalling” or what have you, while simultaneously making a point worth discussing, could there be a place sort of akin to a blogger’s boxing ring? A place where commentors can be sent to “take it outside” and continue duking it out. A good example of a string of comments from an article that could have been removed and sent there had such a place existed at the time was “Dog Whistle”. Perhaps this would serve to allow free expression to continue while allowing Cafe readers who want no part of it to “opt out” and remain commenting on an insult-free discussion. For those Cafe readers who can’t resist the rubber-necking, they can still go to “the ring”, “the mat”, or “outside” (whatever name you choose for such a place) and follow along and even butt in if they want a piece of the action.
It may not be the ideal suggestion but it occurs to me that you’re struggling to make black and white editorial decisions over an area that inherently carries a bit of gray. Not to mention the fact that this seems to be an issue for the same handful of commentors repeatedly, not that I care to mention any names (ah-hem). So maybe some sort of compromise might help?
Thanks Newcomer, All I can say is that there is more than meets the eye here.