# Budget Near Collapse as GOP Leader Quits!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! **URL:** \ **Category:** The BBQ Pit\ **Created:** [June 24, 2011, 9:08am UTC](https://boards.straightdope.com/t/budget-near-collapse-as-gop-leader-quits/586686 "2011-06-24T09:08:40Z")\ **Posts on this page:** 20\ **Page:** 9
**Author:** ![Happy\_Fun\_Ball](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/happy_fun_ball/32/17664_2.png) [@Happy\_Fun\_Ball](https://boards.straightdope.com/u/Happy_Fun_Ball)\ **Post date:** [June 30, 2011, 5:56pm UTC](https://boards.straightdope.com/t/budget-near-collapse-as-gop-leader-quits/586686/161 "2011-06-30T17:56:33Z")
Lot’s need to be done, but to take tax increases off the table is irresponsible in the extreme. We should have gotten rid of the tax cuts when we went to war! ---
**Author:** ![Penderel](https://avatars.discourse-cdn.com/v4/letter/p/e47c2d/32.png) [@Penderel](https://boards.straightdope.com/u/Penderel)\ **Post date:** [June 30, 2011, 6:00pm UTC](https://boards.straightdope.com/t/budget-near-collapse-as-gop-leader-quits/586686/162 "2011-06-30T18:00:47Z")
> [@L. G. Butts](#): > > Lot’s need to be done, but to take tax increases off the table is irresponsible in the extreme. We should have gotten rid of the tax cuts when we went to war! I don’t think that tax increases have been taken off the table. Republicans have simply demanded that corresponding cuts in spending also be made. ---
**Author:** ![regginbrow](https://avatars.discourse-cdn.com/v4/letter/r/ba9def/32.png) [@regginbrow](https://boards.straightdope.com/u/regginbrow)\ **Post date:** [June 30, 2011, 6:20pm UTC](https://boards.straightdope.com/t/budget-near-collapse-as-gop-leader-quits/586686/163 "2011-06-30T18:20:38Z")
> [@Penderel](#): > > So, to follow your logic, if “The Rich” pay less in taxes they will have more money to invest with, meaning that companies will have more money with which to hire employees. These employees will be taxed on their income and on their expenditures, which will increase tax revenue. Thanks. > > I used the household budget as an analogy. Since you feel that this is ignorant, perhaps you can explain how it is not ok for an individual to spend beyond his/her means, but it is acceptable for a government to do so. > > Again I’ll mention the obvious philosophical hurdles here. I work to get money to support myself. You apparently work to get money for the government (which can then dole it out as it sees fit). Yes, this is also true for taxes. The question is whether the reduction in direct taxation is offset by the increased stimulus of the economy. This is the whole point of the Laffer Curve (more macroeconomics, of course). If taxes are too low, decreasing them further will decrease net revenue. If taxes are too high, decreasing them will increase net revenue. Where we are on the curve is up to debate, but I doubt you will find much support outside of non-economists that we are on the latter portion. Re: your analogy, government spending beyond their means can increase revenue permanently in the long run. For a really simplistic example, say you spend $200 in one year but take in $100 in income. The next year, due to the spending, you may once again spend $200 but now take in $500. Say the project was bulding the interstate highway system. This was a huge initial outlay, but few will argue that it did not have a hugely positive net effect on the economy. The only analogous example for household budgeting would be some sort of investment that paid off in the future, which you have to borrow to invest in. It’s not the same as blowing $500 you don’t have on a TV, but more like investing $500 you don’t have in order to acheive a guaranteed payoff of $1000 a few years later. Nobody would argue that this would be a foolish investment if reasonable funding were available. Also, please don’t ascribe motives to what I write. I may no indication to whether or not I ‘work for the government’, or that I think we can continue spending at the same rate without consequence, or that we need to drastically raise the tax rate on the ‘rich’ (a word I never mentioned in my post), or whatever straw man you come up with. I’m merely explaining the economic underpinnings that the Tea Party and other Republicans seem to ignore or misunderstand while grandstanding on the national debt. Fighting ignorance is the name of the game, no? ---
**Author:** ![Penderel](https://avatars.discourse-cdn.com/v4/letter/p/e47c2d/32.png) [@Penderel](https://boards.straightdope.com/u/Penderel)\ **Post date:** [June 30, 2011, 6:42pm UTC](https://boards.straightdope.com/t/budget-near-collapse-as-gop-leader-quits/586686/164 "2011-06-30T18:42:29Z")
> [@regginbrow](#): > > The only analogous example for household budgeting would be some sort of investment that paid off in the future, which you have to borrow to invest in. It’s not the same as blowing $500 you don’t have on a TV, but more like investing $500 you don’t have in order to acheive a guaranteed payoff of $1000 a few years later. Nobody would argue that this would be a foolish investment if reasonable funding were available. > > Also, please don’t ascribe motives to what I write. Regginbrow - I apologize for any inaccurate ascriptions. You’ve done quite well explaining these economic theories (I will stay far away from the Laffer theory, if you don’t mind). To relate what I’ve been rambling about to your above post, it seems that many who are arguing that reform isn’t possible without tax increases seem to ignore the fact that, in a great many ways, Congress is “blowing $500 [they] don’t have on a TV.” I’m acutely aware of the exaggerations made on both sides, whether it’s arguing that without the Iraq war we’d have more to spend on education, or arguing that the President flying Air Force One to a fundraiser is bankrupting us. But the discussion here seems to get bogged down in “It’s Bush’s fault - raise taxes on the rich!” versus “Stop giving welfare payments!” Neither side can even see the middle ground from where they are. My contention has been with the idea that raising taxes will solve the problem. I don’t see what’s wrong with Republicans demanding corresponding cuts in spending. If Congress wants to allocate money to create a highway system that will increase commerce, so be it. But adding the expense on top of frivolous, unnecessary expenditures (shrimp on treadmills and the cowboy poetry festival have been popular examples lately) is simply foolish and irresponsible. ---
**Author:** ![Robot\_Arm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/robot_arm/32/18280_2.png) [@Robot\_Arm](https://boards.straightdope.com/u/Robot_Arm)\ **Post date:** [June 30, 2011, 6:44pm UTC](https://boards.straightdope.com/t/budget-near-collapse-as-gop-leader-quits/586686/165 "2011-06-30T18:44:44Z")
> [@Penderel](#): > > I don’t think that tax increases have been taken off the table. Republicans have simply demanded that corresponding cuts in spending also be made. [http://thehill.com/homenews/house/169087-boehner-obama-sorely-mistaken-about-house-passing-tax-increases](http://thehill.com/homenews/house/169087-boehner-obama-sorely-mistaken-about-house-passing-tax-increases) > [@](#): > > “The President is sorely mistaken if he believes a bill to raise the debt ceiling and raise taxes would pass the House. … A debt limit increase can only pass the House if it includes spending cuts larger than the debt limit increase; includes reforms to hold down spending in the future; **and is free from tax hikes** ," Boehner said in a written statement. And they’re not even talking about raising rates or letting the Bush cuts expire; this is about closing some loopholes in the current tax code. ---
**Author:** ![MovieMogul](https://avatars.discourse-cdn.com/v4/letter/m/f08c70/32.png) [@MovieMogul](https://boards.straightdope.com/u/MovieMogul)\ **Post date:** [June 30, 2011, 6:53pm UTC](https://boards.straightdope.com/t/budget-near-collapse-as-gop-leader-quits/586686/166 "2011-06-30T18:53:48Z")
From [Andrew Sullivan](http://andrewsullivan.thedailybeast.com/2011/06/boehners-economic-terrorism.html) > [@](#): > > Some sane Republicans (Coburn) are absolutely right in my view that spending needs to be cut deeply, broadly and permanently to get us back on track, that Medicare is at the center of the problem and that corporate welfare is at obscenely high levels. I favor a plan along Bowles-Simpson lines that would truly transform the long-term fiscal outlook, while treading a little gingerly in the next year or so. > > But I am also an adult and understand that in the American political system, this kind of package has to win support from House, Senate and president to pass. There will have to be compromise. At a time, moreover, of extreme economic pain in many parts of the country, after a period in which the successful have become relatively richer than everyone else than at any point in recent decades, the sacrifice should surely be shared. You can do this by emphasizing many more spending cuts than tax increases - something I’d favor and something that the British Tories have put into effect. But it is simply insane to believe that the deal can be _only_ tax hikes or _only_ spending cuts and make it through the political process. > > For the GOP to use the debt ceiling to put a gun to the head of the US and global economy until they get only massive spending cuts and no revenue enhancement is therefore the clearest sign yet of their abandonment of the last shreds of a conservative disposition. A conservative does not risk the entire economic system to score an ideological victory. That is what a fanatic does. And when that fanatical faction was responsible for huge spending binges in the recent past, for two off-budget wars costing $4.4 trillion, a new Medicare benefit, and tax revenues at a 50-year low relative to GDP and tax rates below the levels of Ronald Reagan, this insistence is lunacy, when it isn’t gob-smackingly hypocritical. I say this as someone who was railing against too much spending when these people were throwing money away like it was confetti. “Deficits don’t matter,” remember? ---
**Author:** ![Ludovic](https://avatars.discourse-cdn.com/v4/letter/l/7ab992/32.png) [@Ludovic](https://boards.straightdope.com/u/Ludovic)\ **Post date:** [June 30, 2011, 6:56pm UTC](https://boards.straightdope.com/t/budget-near-collapse-as-gop-leader-quits/586686/167 "2011-06-30T18:56:09Z")
> [@Robot\_Arm](#): > > [http://thehill.com/homenews/house/169087-boehner-obama-sorely-mistaken-about-house-passing-tax-increases](http://thehill.com/homenews/house/169087-boehner-obama-sorely-mistaken-about-house-passing-tax-increases) > And they’re not even talking about raising rates or letting the Bush cuts expire; this is about closing some loopholes in the current tax code. And they’re also not even tying it to spending cuts. They’re tying it to raising the debt limit. Taxes go up by a bit, Country gets destroyed, Uma, Oprah. What’s the difference, really? If you were a Congressman, wouldn’t _you_ threaten to default on the debt unless there weren’t tax increases, too? Who wouldn’t! ---
**Author:** ![CannyDan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cannydan/32/548_2.png) [@CannyDan](https://boards.straightdope.com/u/CannyDan)\ **Post date:** [June 30, 2011, 6:58pm UTC](https://boards.straightdope.com/t/budget-near-collapse-as-gop-leader-quits/586686/168 "2011-06-30T18:58:00Z")
[quote=“Penderel, post:158, topic:586686”] So, to follow your logic, if “The Rich” pay less in taxes they will have more money to invest with, meaning that companies will have more money with which to hire employees. These employees will be taxed on their income and on their expenditures, which will increase tax revenue. \/QUOTE] I believe this is the fallacy. It has been widely reported that corporations are sitting on huge piles of assets (anybody want to provide some figures?) but the employment situation remains in the crapper. Why? Because there isn’t any additional demand for goods/services. Companies are not going to hire those additional employees, no matter how much money accumulates whether from normal profits or from tax breaks, unless those employees will be servicing a demand. This is why tax breaks cannot reduce unemployment, nor increase government revenue. ---
**Author:** ![Sinaptics](https://avatars.discourse-cdn.com/v4/letter/s/278dde/32.png) [@Sinaptics](https://boards.straightdope.com/u/Sinaptics)\ **Post date:** [June 30, 2011, 7:04pm UTC](https://boards.straightdope.com/t/budget-near-collapse-as-gop-leader-quits/586686/169 "2011-06-30T19:04:04Z")
> [@Robot\_Arm](#): > > [http://thehill.com/homenews/house/169087-boehner-obama-sorely-mistaken-about-house-passing-tax-increases](http://thehill.com/homenews/house/169087-boehner-obama-sorely-mistaken-about-house-passing-tax-increases) > And they’re not even talking about raising rates or letting the Bush cuts expire; this is about closing some loopholes in the current tax code. Republicans aren’t even following their own advice. The March 11, Republican Joint Economics Report suggested 85% spending cuts and 15% tax increases. [http://www.speaker.gov/UploadedFiles/JEC\_Jobs\_Study.pdf](http://www.speaker.gov/UploadedFiles/JEC_Jobs_Study.pdf) Recent reports are stating, though I don’t know how accurate they are, that when the the Republicans walked out of negotiations, Democrats were offering 83% budget cuts and 17% revenue increases. [http://rortybomb.wordpress.com/2011/06/30/republicans-reject-the-republican-offer-on-deficit-cutting-mix-or-democrats-propose-the-aei-plan-on-tax-increases-vs-spending-cuts/](http://rortybomb.wordpress.com/2011/06/30/republicans-reject-the-republican-offer-on-deficit-cutting-mix-or-democrats-propose-the-aei-plan-on-tax-increases-vs-spending-cuts/) Apparently that was so unacceptable, they couldn’t even continue to negotiate. ---
**Author:** ![Ludovic](https://avatars.discourse-cdn.com/v4/letter/l/7ab992/32.png) [@Ludovic](https://boards.straightdope.com/u/Ludovic)\ **Post date:** [June 30, 2011, 7:12pm UTC](https://boards.straightdope.com/t/budget-near-collapse-as-gop-leader-quits/586686/170 "2011-06-30T19:12:58Z")
> [@CannyDan](#): > > This is why tax breaks cannot reduce unemployment, nor increase government revenue. Well, they sometimes could, at certian places in the Laffer curve, and in certain economic climates. Just not now (with no pent-up demand and huge monetary reservers) and at this tax rate (far from confiscatory.) ---
**Author:** ![Penderel](https://avatars.discourse-cdn.com/v4/letter/p/e47c2d/32.png) [@Penderel](https://boards.straightdope.com/u/Penderel)\ **Post date:** [June 30, 2011, 7:17pm UTC](https://boards.straightdope.com/t/budget-near-collapse-as-gop-leader-quits/586686/171 "2011-06-30T19:17:39Z")
Just to get all this straight: The surest way to get out of debt is to spend more and accrue more debt? Apparently I’ve been living my life entirely the wrong way. Since political pragmatism has been brought up, I’ll mention again that increased tax revenue won’t be seen by politicians as a way to pay down the debt, it will be seen as more money they can spend. I’ll also mention (once again) the stark philosophical difference running through these posts, this time the demonization of corporations and the wealthy. And while I’m at it, the idea that increasing taxes and entitlement payouts will help everyone (apparently because of a trickle-up effect) doesn’t seem to have worked out yet. Why would it suddenly work now? ---
**Author:** ![Ludovic](https://avatars.discourse-cdn.com/v4/letter/l/7ab992/32.png) [@Ludovic](https://boards.straightdope.com/u/Ludovic)\ **Post date:** [June 30, 2011, 7:27pm UTC](https://boards.straightdope.com/t/budget-near-collapse-as-gop-leader-quits/586686/172 "2011-06-30T19:27:23Z")
> [@Penderel](#): > > And while I’m at it, the idea that increasing taxes and entitlement payouts will help everyone (apparently because of a trickle-up effect) doesn’t seem to have worked out yet. Why would it suddenly work now? Seeme to work okay in the 90s. I’m unaware that we’ve tried it recently. ---
**Author:** ![Robot\_Arm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/robot_arm/32/18280_2.png) [@Robot\_Arm](https://boards.straightdope.com/u/Robot_Arm)\ **Post date:** [June 30, 2011, 7:33pm UTC](https://boards.straightdope.com/t/budget-near-collapse-as-gop-leader-quits/586686/173 "2011-06-30T19:33:23Z")
> [@Penderel](#): > > Since political pragmatism has been brought up, I’ll mention again that increased tax revenue won’t be seen by politicians as a way to pay down the debt, it will be seen as more money they can spend. > **[Pouty Republicans mad at partisan Obama - Salon.com](https://www.salon.com/2011/04/15/budget_showdown/?story=%2Fpolitics%2Fwar_room%2F2011%2F06%2F30%2Fus_debt_showdown_3)** > > Outplayed by the president, Boehner can't get GOP votes for the budget. Next up: Paul Ryan's plan to kill Medicare > [@](#): > > But neither Obama nor the divided Congress is making it easier. The White House has identified at least $1.3 trillion in spending cuts over 10 years and is proposing up to $400 billion in new tax revenue. Republicans want more spending cuts and no tax increases. Read that again if you have to. The democrats are proposing a mix of revenue increases and **spending cuts**. And not on a one-to-one basis either; but greater than three-to-one in favor of the cuts. It is Republicans who are digging in their heels and playing brinkmanship with the economy. ---
**Author:** ![Penderel](https://avatars.discourse-cdn.com/v4/letter/p/e47c2d/32.png) [@Penderel](https://boards.straightdope.com/u/Penderel)\ **Post date:** [June 30, 2011, 7:38pm UTC](https://boards.straightdope.com/t/budget-near-collapse-as-gop-leader-quits/586686/174 "2011-06-30T19:38:27Z")
> [@Ludovic](#): > > Seeme to work okay in the 90s. I’m unaware that we’ve tried it recently. Did it work well from the '30s through the '80s? And if it did work well in the '90s, why are there still people who need public assistance? And by the way, that’s rhetorical - I don’t really expect it to eliminate all poverty. What we seem to be arguing here is a system where one works for money, keeps it (except for taxes that must be paid for essential programs), and spends it as he/she sees fit versus a system in which those who work for money pay more to the government, which then parcels it out to the poor and claims that this will help those above the poverty line. Sounds an awful lot like wealth redistribution to me. We didn’t build this nation on the premise that if you work hard and try to be successful you can support everyone else, or on the premise that the government is the best arbiter of what is good and bad for each individual. ---
**Author:** ![Ludovic](https://avatars.discourse-cdn.com/v4/letter/l/7ab992/32.png) [@Ludovic](https://boards.straightdope.com/u/Ludovic)\ **Post date:** [June 30, 2011, 7:48pm UTC](https://boards.straightdope.com/t/budget-near-collapse-as-gop-leader-quits/586686/175 "2011-06-30T19:48:18Z")
> [@Penderel](#): > > Did it work well from the '30s through the '80s? And if it did work well in the '90s, why are there still people who need public assistance? And by the way, that’s rhetorical - I don’t really expect it to eliminate all poverty. Yes, it did work well from the 30s through the 80s relative to now. The budget deficit was much lower then except during WW2. > [@](#): > > What we seem to be arguing here is a system where one works for money, keeps it (except for taxes that must be paid for essential programs), and spends it as he/she sees fit versus a system in which those who work for money pay more to the government, which then parcels it out to the poor and claims that this will help those above the poverty line. Sounds an awful lot like wealth redistribution to me. Seem to, but are not. The vast majority of spending by the federal government in this country is far from means-tested in a way that removes all but the poor from receiving it.. The rest – at least 80% if not more – is either the government paying its employees, paying for goods and services, paying retirement or medical benefits to the aged regardless of income, or subsidizing corporations. ---
**Author:** ![Penderel](https://avatars.discourse-cdn.com/v4/letter/p/e47c2d/32.png) [@Penderel](https://boards.straightdope.com/u/Penderel)\ **Post date:** [June 30, 2011, 8:04pm UTC](https://boards.straightdope.com/t/budget-near-collapse-as-gop-leader-quits/586686/176 "2011-06-30T20:04:14Z")
Isn’t there any correlation between the lower budget deficits that you mentioned and the fact that fewer people were on welfare during that time period? ---
**Author:** ![Ludovic](https://avatars.discourse-cdn.com/v4/letter/l/7ab992/32.png) [@Ludovic](https://boards.straightdope.com/u/Ludovic)\ **Post date:** [June 30, 2011, 8:22pm UTC](https://boards.straightdope.com/t/budget-near-collapse-as-gop-leader-quits/586686/177 "2011-06-30T20:22:42Z")
I don’t even need to do the homework on that. As everyone has been trying to tell you, even if you eliminate all medicaid and welfare to the poor from the budget, we’d still be running a huge deficit. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [June 30, 2011, 8:50pm UTC](https://boards.straightdope.com/t/budget-near-collapse-as-gop-leader-quits/586686/178 "2011-06-30T20:50:01Z")
> [@kenetic](#): > > So, what’s the “correct” amount of tax revenues? They never answer this sort of question other than to say “its too high” ---
**Author:** ![CannyDan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cannydan/32/548_2.png) [@CannyDan](https://boards.straightdope.com/u/CannyDan)\ **Post date:** [June 30, 2011, 8:52pm UTC](https://boards.straightdope.com/t/budget-near-collapse-as-gop-leader-quits/586686/179 "2011-06-30T20:52:39Z")
> [@Ludovic](#): > > Well, they sometimes could, at certian places in the Laffer curve, and in certain economic climates. Just not now (with no pent-up demand and huge monetary reservers) and at this tax rate (far from confiscatory.) Yes. I was being brief rather than comprehensive. Your point(s) is/are quite correct. ---
**Author:** ![Penderel](https://avatars.discourse-cdn.com/v4/letter/p/e47c2d/32.png) [@Penderel](https://boards.straightdope.com/u/Penderel)\ **Post date:** [June 30, 2011, 8:56pm UTC](https://boards.straightdope.com/t/budget-near-collapse-as-gop-leader-quits/586686/180 "2011-06-30T20:56:07Z")
> [@Ludovic](#): > > I don’t even need to do the homework on that. As everyone has been trying to tell you, even if you eliminate all medicaid and welfare to the poor from the budget, we’d still be running a huge deficit. I know that we’d still have a huge deficit - as I’ve said, cutting medicaid and welfare can’t be the only solutions, but I was addressing something you wrote earlier in response to my saying that increased welfare output doesn’t help everyone. You said that we are running greater budget deficits now with lower taxes than in past decades, but declined to address the fact that the welfare rolls were smaller in those decades. You seem to be moving the goal line - rather than defending the proposition that budget deficits are higher because of lower taxes, you’re suddenly arguing that elimination of entitlement programs won’t cure the deficit. If I’m wrong about this, please let me know. [Previous page](https://boards.straightdope.com/t/budget-near-collapse-as-gop-leader-quits/586686.md?page=8) [Next page](https://boards.straightdope.com/t/budget-near-collapse-as-gop-leader-quits/586686.md?page=10)