Get Ready for a Tax Hike!

Off Topic Politics & World Issues
61

[quote]666Rich wrote:
Brother Chris, deficits are when expenditures are greater than revenues. Ie government spending is greater than they take in. There is a multitude of types of government spending, and a multitude of ways revenue is taken in. So when people talk about budget defecits… they are referring to the government spends more than it is taking in.

With regards to cyclical deficits, they are as the name implies related to business cycles. Now what causes business cycles has vast interpretation. A simple example is the fed changing interest rates. Certain sectors are drastically affected by interest rates, financials for example. Things like homes, industry etc are very interest rate sensitive. And since these are industries that are heavily tied into other aspects of the economy, such as financials, light industry etc. An effect from interest rates in one area is similar to ripples in a pond. They affect outwards at a lessening, but signifigant rate. This is why companies hedge themselves so hopefuly they dont overextend.

So, the cyclical deficits are a result of decreasing tax receipts on the wavering industries. This assumes a constant government expenditure. Keyenesians would have this addressed by minor flucuations with fiscal policy, mostly to keep full employment. That is the keynesian goal. Thus they may say lower business taxes or put some liquidity into the market by purchasing securities. So it turns into a delicate balance of when to turn it on, and when to turn it off and keep it from overheating.

Structural deficits are those that are completley government related and due to policy. These include, well fighting wars in afghanistan and Iraq that cost billions and billions of dollars. There is no way you make up for that in taxes, so the structural deficit increases. Now if you couple that with Bush’s post 9/11 tax cuts, you are increasing expenditures and decreasing intake. Now, no offense to his first tax cut, it did the trick… but around 04-05 they were no longer necessary, yet they continued and the deficit soared. Entitlement program spending such as Medicare Medicaid, etc is all directly from the government and would affect the structural deficit as well. And once again, due to the nature of politicians they dont want to think of how its going to be paid for, and pass the problem on to future generations such as my own.

Having a budget deficit is not necessarily a bad thing, it just depends on the reasons for, and how big you allow it to get. Ours is a huge problem.[/quote]

Oh, okay. So spending more money than you have is bad. Good thing I don’t do that or I’d go bankrupt. I’m not sure how it is not necessarily a bad thing. I mean if for the past 10-14 years my company always had a deficit, it would probably go broke huh?

62

[quote]666Rich wrote:
Now, no offense to his first tax cut, it did the trick… but around 04-05 they were no longer necessary, yet they continued and the deficit soared.[/quote]

  1. Increase in spending fully accounted, more than accounted, for all the deficits up till this recession, which wasn’t caused by the tax cuts.

  2. You are aware that above you are saying that the Clinton top rate of 39% should have been re-instated. That being income tax alone, and not counting Social Security, Medicare, and other taxes people have to pay.

  3. In combination with our previous discussion I have to say you have talked out of both sides of your mouth on this point. Obviously you are NOT against tax rates as high as this, contrary to your previous protestations.

Or are you going to turn around now and claim that the above doesn’t mean that you believe the Clinton tax rates should have been restored?

You said before, where the discussion was on a proposed tax hike, that you have no problem with taxes, but for concern as to how the money is spent or the control over that.

I was correct to state that you are very generous with having no problem with other people’s money being taken at high rates, which I still venture to say I expect you don’t pay yourself.

It’s entirely your right to have that view, but it’s complete bullshit for you to try to have it both ways.

From your above statement, you believe in high taxation rates for people earning more than you do (else you would not have written that.) Including the Clinton rates, except that you’re so kind as to allow that brief relief can be a good decision, but should be ended when “no longer necessary.” Gee thanks. Glad you’re on our side. Uh wait a sec, you’re not. You’re on the tax hike side, back to the Clinton rates at least.

You know, I prefer an out-and-out tax and spend liberal to a pretender who says he’s for limited government and taxation but he really means only so long as he personally isn’t paying much taxes, but others who produce goods and services worth more than what he produces should be highly taxed: he not only has no problem with that, but thinks taxes should have been raised earlier, back in 2004-2005.

Yeah, I do expect a contortion from you where you will claim that the above doesn’t mean you think the rates should have been increased, but at this point I’m not going to buy the double-talk. There’s no communication problem: there’s a talking out of both sides of the mouth problem.

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[quote]Ryan P. McCarter wrote:
Good thing the citizens of the richest country on earth can simply survive.
[/quote]

Yes. A very good thing. It lets them have time to work very hard so they may one day thrive.

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The economic policies of the latest president George W. Bush most closely resemble that of Reagan, Supply Side tax cuts. Though originally a short-term motivation to the 2001 recession, tax cuts spiraled far past the recovery into 2004. This created huge structural deficits when combined with the massive increase in government spending exacerbated the deficit (Froyen, 421). The number of Social Security retirees is rising in tandem with wages and prices on which their benefits are based. Similarly Medicare spending is projected to rise by over 10% a year (Schultze, 319). According to the CBO, Medicare and Medicaid are expected to be anywhere from 6.4 to 21% of GDP by 2050 (Froyen, 423). These statistics show that federal outlays are most likely going to be much larger, and with the current deficits, will be extremely hard to finance. Not only that, the popularity of these programs would cause political suicide if spending cuts were to occur. This brings the arguments for a balanced budget into some perspective. Many schools of thought will agree that a balanced budget is a good thing in itself, but the motivations to obtain and regulate the budget vary greatly. Others do not feel the balancing of the budget is that great a concern.

Read the third sentance, Bill. I am speaking on the subject of structural deficits in my posts. This sort of spending which I did mention, two foreign wars, combined with decreased tax reciepts adds to the structural deficit. This is undebatable, and is not a political issue. This is economic fact. IF you want an OPINION of mine as to what the problem is, yes it is spending.

Youd make a great politician if you believe we can spend our way to oblivion AND cut taxes. Something needs a haircut bill, but you of course need a lobotomy.

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â??Maximum within 10 years time more than 35% of tax revenues will have to be used to pay the interest on the government debt and then you are in trouble â?? because then there will be not enough money out of the budget to pay for other stuff. Iâ??m convinced the US government will go bankrupt, but not tomorrow. And before they go bankrupt, theyâ??ll print money, and then you get high inflation rates, you have a depression and eventually theyâ??ll go to war.â??

— Mark Faber
http://rt.com/Business/2010-02-05/mark-faber-usa-default.html

When just the interest begins to be difficult to manage, that’s when the whole house of cards does its REAL death dance.

Welcome to National Socialist America. Ryan will be right at home.

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The person “needing a lobotomy” is you.

There is either a dysfunction going on or you simply don’t care to tell the truth when suggesting that I supposedly believe in spending our way to oblivion. Even if you pay no attention my posts in general, in this thread I stated plainly that the Bush deficits prior to the recession were due to excess spending.

You are incorrect that the lower rates yielded lesser receipts – in FY2000 constant dollars, annual revenues averaged 1.72 trillion from 1994 to 2001 versus 1.87 trillion for 2002 to 2009 – and you are incorrect if you believe that higher rates necessarily generate higher revenue. Why don’t you check a recent post by me showing total Federal receipts as percentage of GDP as a function over time and you can see for yourself, which your schoolwork apparently didn’t accomplish for you, that periods of higher tax rates, both moderately higher and drastically higher, failed to yield a higher percentage of GDP as revenue (and also failed to achieve higher revenue in constant dollars, but you would need different data for that or at least a realization that higher tax rates aren’t correlated with higher GDP.

You’ve made yourself plain: You believe an increase in taxes beyond the present level to the Clinton level or higher is called for, though of course conveniently you won’t be paying this.

There was absolutely no basis for your huffy response claiming I misinterpreted you and was putting words into your mouth. You ARE in favor of these rates – and try the math: add the Clinton 39% rate to Social Security (include the “employer’s contribution” as this is money the person earned) and Medicare and what rate do you get? Over 50%.

Maybe when you get out of school you’ll understand the real world better.

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[quote]666Rich wrote:
The economic policies of the latest president George W. Bush most closely resemble that of Reagan, Supply Side tax cuts.[/quote]

Bush relied on stimulus for his economy, their is a night and day difference between what Reagan did and Bush did. Reagan followed the Laffer curve, if it wasn’t for the cold war we would have saw the debt to GDP ratio stay the same or decline.

68

[quote]666Rich wrote:
The economic policies of the latest president George W. Bush most closely resemble that of Reagan, Supply Side tax cuts. Though originally a short-term motivation to the 2001 recession, tax cuts spiraled far past the recovery into 2004. This created huge structural deficits when combined with the massive increase in government spending exacerbated the deficit (Froyen, 421). The number of Social Security retirees is rising in tandem with wages and prices on which their benefits are based. Similarly Medicare spending is projected to rise by over 10% a year (Schultze, 319). According to the CBO, Medicare and Medicaid are expected to be anywhere from 6.4 to 21% of GDP by 2050 (Froyen, 423). These statistics show that federal outlays are most likely going to be much larger, and with the current deficits, will be extremely hard to finance. Not only that, the popularity of these programs would cause political suicide if spending cuts were to occur. This brings the arguments for a balanced budget into some perspective. Many schools of thought will agree that a balanced budget is a good thing in itself, but the motivations to obtain and regulate the budget vary greatly. Others do not feel the balancing of the budget is that great a concern.

Read the third sentance, Bill. I am speaking on the subject of structural deficits in my posts. This sort of spending which I did mention, two foreign wars, combined with decreased tax reciepts adds to the structural deficit. This is undebatable, and is not a political issue. This is economic fact. IF you want an OPINION of mine as to what the problem is, yes it is spending.

Youd make a great politician if you believe we can spend our way to oblivion AND cut taxes. Something needs a haircut bill, but you of course need a lobotomy.[/quote]

This is one of the hardest things for me to understand: why some people are unable to accept what has come before. This last week or two it’s been like posters on PWI want to completely close their eyes to 2008 and pretend like all that stuff didn’t happen.

It’s only until people can learn something about history that we can talk about moving forward. Good luck posting common sense… you’ll need it.

69

Structural deficit forms part of the public sector deficit. Structural deficit differs from cyclical deficit in that it exists even when the economy is at its potential.

Structural deficit issues can only be addressed by explicit and direct government policies: reducing spending (including entitlements), increasing the tax base, and/or increasing tax rates. It can be described as more “chronic” or long-term in nature hence needing government action to remove it.

The opposite of a structural deficit is a structural surplus. Likewise, the opposite of a cyclical deficit is a cyclical surplus.

Heres the financial times definition
structural deficit
A budget deficit that results from a fundamental imbalance in a government receipts and expenditures, as opposed to one based on one-off or short-term factors.

There is the definition of structural deficit. Thus by corollary that which affects it is spending and the tax base. That is all I said.

The Congressional Budget Office (CBO) has estimated that extending the Bush tax cuts of 2001-2003 beyond their 2010 expiration would increase deficits by $1.8 trillion dollars over the following decade.[40] The CBO also completed a study in 2005 analyzing a hypothetical 10% income tax cut and concluded that under various scenarios there would be minimal offsets to the loss of revenue. In other words, deficits would increase by nearly the same amount as the tax cut in the first five years, with limited feedback revenue thereafter.[41]

Sources
http://www.cbo.gov/ftpdocs/78xx/doc7878/03-21-PresidentsBudget.pdf
http://www.cbo.gov/ftpdocs/69xx/doc6908/12-01-10PercentTaxCut.pdf

If it were up to me id scrap medicare medicaid and most entitlement programs. However, as i mentioned before, politicians like to keep everyone happy. This is why you are faced with 50% taxes. Im sure if government spending was under control this would not be as realistic a scenario. I am not advocating a return to anything other than fixing the budget. Being as that spending is the biggest problem, spending is the thing that should be tackled the most. It is most likely though that it wont happen that way, AARP would be just too upset. There you have it. I guess thats a pretty socialistic thing for me to say, cut the spending? I dont really see what all the confusion was about. Though I can agree my first post was worded terribly.