How long will republicans play chicken with the economy?

[Hellestal]

This whole situation is the craziest fucking piece of politics I’ve ever seen. Just astoundingly crazy.

Mitch McConnell has advocated giving the president unilateral power to raise the budget, so that the whole onus is on Obama. That’s fine with me. It’s pure political theater, and so basically no different from previous votes. But the House won’t play along. Boehner says: “I don’t think such a proposal could pass the House in any way, shape or form. You have a number of members who will never vote to raise the debt ceiling and a large block of members who believe this really is the moment to put our fiscal house in order.” The leaders seem to have lost control of their coalition.

Meanwhile, some Republicans who aren’t completely crazy are starting to point out the obvious. Lindsay Graham – far from a wishy-washy liberal type – has already pointed out that “We’ve got nobody to blame but ourselves.” It took a while, but they finally figured out that a ticking bomb is not the best bargaining chip. Bob Corker, too, is now perhaps noticing, “Maybe the debt ceiling was the wrong place to pick a fight, as it related to trying to get our country’s house in order.” No shit, Bob.

@Bone

So when the right refuses to increase the debt ceiling to extract concessions and threatens catastrophic consequences they are considered to be sinister and likened to terrorists and hostage takers.

Obviously. They’re not even trying to hide it anymore.

@Bone

How is that different from when a union goes on strike and threatens to bring down a business in order to extract their concessions? Other than the obvious scale.

As it happens, some professionals do not actually have a right to strike. Think police and firefighters and other essential public employees. These sorts of employees have “no right to strike against the public interest”, as the Republicans are only too happy to point out. That quote originally comes from Calvin Coolidge, and his reaction to help crush the Boston police strike was one of the things that brought him enough national prominence to be elected to national office. The notion that there are some jobs so important that people should not strike against them is already well established.

The private sector is, just as obviously, quite different. Yes, sometimes a strike can threaten the existence of a business. So? Higher prices of raw inputs, like energy, can also potentially crush a business. But we don’t call acts of the market terrorism, because we are usually concerned not just with the short-term effect on a single business, but also the long-term effect on the overall efficiency of the economy. The market tends to be our most efficient tool in many situations. As long as the foundation of basic public services are in place – i.e. police, courts, the security of our public debt, etc. – the short-term damage of an adverse market can be made up for in long-term growth. As it happens, union agitation is one distinct market force, in principle no different from any other. If we were to prop up business by giving them the means to crush market negotiations, we would almost certainly be actively hurting ourselves on a longer time period. Sometimes an old building (or business) should be imploded and replaced with a newer structure, and it’s not terrorism to do so.

[ElvisL1ves]

@Omg_a_Black_Conservative

It’s too bad the Democrat plan also includes taxing the rich to bring in more than we spend. Which is impossible, mind you, on account of there not being nearly enough of them in them in the U.S. to sustain such a tax increase.

They do account for enough money. Over a third of the income and wealth is held by only 1% of the population. Should they be left alone because they’re only 1%? :dubious:

@Hellestal

It took a while, but they finally figured out that a ticking bomb is not the best bargaining chip.

Or, as Phil Gramm said (according to Jon Stewart), “Never take a hostage you’re not willing to shoot.”

[Sinaptics]

@Omg_a_Black_Conservative

It’s too bad the Democrat plan also includes taxing the rich to bring in more than we spend. Which is impossible, mind you, on account of there not being nearly enough of them in them in the U.S. to sustain such a tax increase.

That’s funny. I distinctly remember Obama offering a 3 to 1 mix of spending cuts to taxes. Why do you think Democrats don’t want to cut spending?

[Sam_Stone]

@Sinaptics

That’s funny. I distinctly remember Obama offering a 3 to 1 mix of spending cuts to taxes. Why do you think Democrats don’t want to cut spending?

Because what pissed off Republicans was that when he unveiled those ‘spending cuts’ they turned out to be mostly smoke and mirrors. Actual, identified cuts amounted to about $2 billion dollars.

[XT]

Sam, where are you getting that from? I thought Obama had put $4 trillion in cuts on the table.

-XT

[gonzomax]

@Omg_a_Black_Conservative

It’s too bad the Democrat plan also includes taxing the rich to bring in more than we spend. Which is impossible, mind you, on account of there not being nearly enough of them in them in the U.S. to sustain such a tax increase.

There is no such claim that merely taxing the rich will fix the deficits. You are making shit up. But the tax cuts that Bush gave twice to the rich went along with waging 2 wars off the books. Even a righty winger like you can do that math, and should be able to figure where the blame goes. Then of course the drug bill that he jammed through in the middle of the night that cost a fortune but was a big giveaway to the drug companies sucked a few billion more out of our pockets.
Do you rightys ever care about facts?

[Sam_Stone]

@xtisme

Sam, where are you getting that from? I thought Obama had put $4 trillion in cuts on the table.

-XT

I’m afraid this is going to be one of those “He said, he said” kind of things, because I don’t think the details have been given out to the press, have they? The Obama administration leaked that they were willing to put about 4 trillion in cuts on the table, but they didn’t say what they’d be or when. Later on, Republicans walked out of negotiations purportedly in a rage, because they felt that the cuts were simply games.

Here’s what Mitch McConnell said in a speech on the house floor (cite):

In a sharply worded speech on the Senate floor today, McConnell labeled the Obama cuts a sham. “We all saw how it worked,” he said. “The administration leaked to the media, without any details, the idea that it was willing to go along with trillions in spending cuts.”

But the cuts are largely illusory, McConnell indicated. Obama hoped “the budget gimmicks and deferred decision-making they actually supported would have the appearance of serious belt-tightening.”

In truth, the effect would be “at most about a couple billion dollars in cuts up front with empty promises of more to follow.” McConnell called it “sleight of hand governing.” And Republicans “will not be party to something that claims to save trillions but leaves it to future generations to pick up the tabs and to future Congress to reverse it with a simple vote.”

This sounds entirely likely to me, for the simple reason that this has been the game Democrats have always played when talking about spending cuts. Then it turns out that the ‘cut’ is simply a cut in the rate of increase of government, or it’s a vague promise to assemble a commission to determine what should be cut (which is then ignored), or it’s some other gimmickry. The Republicans were promised 3:1 spending cuts to tax increases in 1991, and the cuts never happened. They were offered cuts for tax increases in 1986, and the cuts never happened.

There are lots of ways to game the numbers this way. You can cut money from one agency, and count it as a ‘cut’ then give more money to another agency and have them pick up the same program. Total spending goes up, but there was a ‘cut’.

We’d have to see the exact details of Obama’s proposal to know for sure what he was offering, but I do know that the Republicans came out of that meeting livid because they believed they had been snookered.

[septimus]

@Omg_a_Black_Conservative

It’s too bad the Democrat plan also includes taxing the rich to bring in more than we spend. Which is impossible, mind you, on account of there not being nearly enough of them in them in the U.S. to sustain such a tax increase.

I’m so happy I’ve not had my breakfast yet, because this sort of gibberish always makes me want to vomit.

We’ve done the arithmetic before: even a rather modest tax hike on the rich will raise about 2 trillion dollars per decade!
If you want to argue this is “useless chump change” (:smack:) then please explain why the idiot’s side of the aisle insists on saving money by cutting IRS auditors, food inspectors, NPR funding etc. which actually are “chump change” in the context of the Federal budget.

(* - Yes, I follow the Republican practice of using per decade figures when I want to make them look big. Do they have a patent on this trick.)

[Omg_a_Black_Conservative]

@septimus

I’m so happy I’ve not had my breakfast yet, because this sort of gibberish always makes me want to vomit.

We’ve done the arithmetic before: even a rather modest tax hike on the rich will raise about 2 trillion dollars per decade!

I weep for America. A few months old, but helpful nonetheless with all the “tax the rich!” screams going around.

• Raise the top three tax rates proportionately. This alternative would protect the taxpayers in the lowest tax brackets and impose a tax increase on 6 percent of taxpayers, most of whom are in the top income quintile. To meet our “2 percent of GDP” deficit target, the top three tax rates would have to jump 30 percent, raising the top rate from 39.6 percent to 52.5 percent, assuming that the Bush tax cuts expire under current law. If those and other cuts are extended as called for in the administration baseline, the top three rates would have to more than double, with the top rate increasing from 35 percent to 76 percent.

Again, the necessary tax increases would be much smaller if we aim to reduce the 2015 - 2019 average budget deficit to 3 percent of GDP. Under current law, the top three tax rates would have to increase only 6 percent, taking the top 39.6 percent rate to 42.1 percent, for example. Under the administration baseline, the tax increase would have to be much larger—88 percent—jumping the top 35 percent tax rate to 65.7 percent.

• Raise tax rates proportionately on single taxpayers with income over $200,000 and married couples filing jointly with income over $250,000. This policy would impose tax increases only on those taxpayers targeted by President Obama during the 2008 presidential election for tax increases under the expiration of the 2001 and 2003 tax cuts. We model a proportional increase in tax rates for taxpayers for whom adjusted gross income minus the standard deduction and one personal exemption (two exemptions for married couples) exceeds the relevant threshold.

To meet our revenue target under current law, the top two tax rates would have to increase more than 40 percent, lifting the top rate to 56.4 percent. Under the administration baseline, the top rates would leap by 160 percent, lifting the top rate to nearly 91 percent.

We would need much smaller—but still substantial—tax increases to meet Orszag’s deficit target. For example, under the administration baseline, the top tax rates would have to more than double, pushing the top tax rate to almost 77 percent. Under current law, the top rate would have to increase to about 43 percent…

Our estimates ignore any behavioral response by taxpayers to higher rates. A long line of research, starting with Feldstein (1999), has shown that tax increases lead individuals—particularly those at the top of the income distribution—to decrease their taxable income either by cutting back on hours worked, by shifting income from taxable to non-taxable form, or by spending more on tax-deductible items. While analysts disagree on the magnitude of the taxable income elasticity, there is consensus that high-income taxpayers—precisely the ones that we target in most of our reforms—are more sensitive than other taxpayers to increases in marginal tax rates. Given the size of the tax increases we consider, behavioral responses would undoubtedly lead to substantial reductions in taxable income. Given that behavioral response, reaching either of our deficit reduction goals would require even higher tax rates and might even prove to be impossible.

…None of the options we have examined would provide a realistic approach to reducing the deficit over the coming decade, particularly if we impose our more stringent goal of cutting the deficit to just 2 percent of GDP. That goal would require tax increases that would cut after-tax income by an average of just over 2 percent, a politically difficult action. All of the changes we examine would be progressive, imposing greater costs on those higher up the income distribution; some of the options would be significantly more progressive than others. However, the most progressive—raising tax rates only for the wealthiest taxpayers—would require increasing the top tax rate to 56.4 percent under current law and to over 90 percent under the administration baseline. Because most of the additional tax burden would hit the top end of the income distribution, either situation would impose substantial efficiency costs on the economy, raise less revenue than generated in our simple simulations that ignore behavioral effects, and meet with great political opposition.

We recognize that raising the statutory corporate income tax rate could increase revenues but would be unlikely to contribute much to deficit reduction. Corporate income taxes make up only a small percentage of federal revenues—less than 9 percent of total revenue and less than one-fifth of individual income tax revenue over the ten year budget window, according to CBO projections. Whether reforming the corporate tax could do much to bring in needed funds is an open question. The U.S. statutory rate is high by international standards; Japan is the only OECD country with a higher combined federal-state statutory corporate tax rate. Raising the corporate rate significantly would likely have adverse effects on U.S. businesses and on foreign investment in the United States. We do not rule out corporate tax increases (through either statutory rate increases or base broadening), but we feel that raising significant revenues through the corporate tax is not a viable strategy. We need a different approach.

You can read the rest here. Someone should tell the Democrats and their mindless supporters. But hey-- they’re rich! So they can afford to pay an upwards of 80 - 90% of their income, right?

If you want to argue this is “useless chump change” (:smack:) then please explain why the idiot’s side of the aisle insists on saving money by cutting IRS auditors, food inspectors, NPR funding etc. which actually are “chump change” in the context of the Federal budget.

Because Democrats won’t budge on making any kind of meaningful cuts, so Republicans are taking what they can get.

[Fear_Itself]

@Omg_a_Black_Conservative

Because Democrats won’t budge on making any kind of meaningful cuts, so Republicans are taking what they can get.

So it is basically just spiteful jabs. You guys really don’t want to be re-elected, do you…

[Omg_a_Black_Conservative]

@Fear_Itself

So it is basically just spiteful jabs.

Spiteful jabs which result in spending cuts. That’s a win no matter how many ways you cut-- or don’t-- it.

You guys really don’t want to be re-elected, do you…

And the Democrats don’t?

[Fear_Itself]

@Omg_a_Black_Conservative

Spiteful jabs which result in spending cuts. That’s a win no matter how many ways you cut-- or don’t-- it.

That’s what I mean. Conservatives think all spending cuts are good, without regard to the consequences. I prefer a little more thoughtfulness from my lawmakers.

And the Democrats don’t?

Fortunately, the voters support a deficit reduction plan that includes tax increases, and by a wide margin. The “No Tax Increases!” mantra is a road to defeat I will not try to dissuade you from.

[Omg_a_Black_Conservative]

@Fear_Itself

That’s what I mean. Conservatives think all spending cuts are good, without regard to the consequences. I prefer a little more thoughtfulness from my lawmakers.

Yeah, I suppose it’s better for the country to go broke trying to pay for certain programs it can’t afford and not have them anyway then it is to stop paying for those programs which it can’t afford and to not go broke because of it. What was I thinking?

Fortunately, the voters support a deficit reduction plan that includes tax increases, and by a wide margin.

Who cares? You’ll find that they support a “deficit reduction plan” that includes tax increases on someone who is not themselves, i.e., the “rich”. Unfortunately, there is no “deficit reduction plan” which can work primarily off of tax increases on those who make over $250,000 a year and the reason is quite simple; there aren’t enough “rich” people in the U.S. Any deficit reduction plan which includes an increase in taxes is going to have to include increased taxes on everyone. Of course, that wouldn’t be too popular. Too many people want something for nothing.

The “No Tax Increases!” mantra is a road to defeat I will not try to dissuade you from.

Except it isn’t. When people find out that tax increases mean their own taxes go up, you’ll see just how quick people will jump back on ship.

[Whack-a-Mole]

@Omg_a_Black_Conservative

Because Democrats won’t budge on making any kind of meaningful cuts, so Republicans are taking what they can get.

You mean these meaningful cuts that republicans refused?

And the closer you look, the more unprincipled the Republicans look. Earlier this year House Republicans produced a report noting that an 85%-15% split between spending cuts and tax rises was the average for successful fiscal consolidations, according to historical evidence. The White House is offering an 83%-17% split (hardly a huge distance) and a promise that none of the revenue increase will come from higher marginal rates, only from eliminating loopholes. If the Republicans were real tax reformers, they would seize this offer.

SOURCE: Shame on them (FWIW The Economist is an economically conservative magazine)

Or the bipartisan agreement that republicans refuse to agree to?

GOP will nix bipartisan ‘Gang of Six’ debt proposal because Obama took credit for it, source says

<snip>

But a high-ranking Republican aide told Politico.com that Obama’s cheerleading would immediately turn off conservatives in the Republican-controlled House.

“Background guidance: The President killed any chance of its success by 1) Embracing it. 2) Hailing the fact that it increases taxes. 3) Saying it mirrors his own plan,” a GOP leadership aide e-mailed to Politico’s Playbook.

SOURCE: http://www.nydailynews.com/news/politics/2011/07/20/2011-07-20_gop_will_nix_bipartisan_gang_of_six_debt_proposal_because_obama_took_credit_for_.html

[Fear_Itself]

@Omg_a_Black_Conservative

Yeah, I suppose it’s better for the country to go broke trying to pay for certain programs it can’t afford and not have them anyway then it is to stop paying for those programs which it can’t afford and to not go broke because of it. What was I thinking?

You were thinking we could reduce the deficit without raising taxes. No basis in reality.

You’ll find that they support a “deficit reduction plan” that includes tax increases on someone who is not themselves, i.e., the “rich”.

Heh. Sucks to be rich in a democracy, donit?

Unfortunately, there is no “deficit reduction plan” which can work primarily off of tax increases on those who make over $250,000 a year and the reason is quite simple; there aren’t enough “rich” people in the U.S.

Strawman, since the current Senate proposal includes three times as much in spending cuts as revenue increases. So quit bleating that nonsense about “primarily tax increases”, because no one has ever proposed that.

Any deficit reduction plan which includes an increase in taxes is going to have to include increased taxes on everyone.

That is your personal fantasy.

[Omg_a_Black_Conservative]

@Whack-a-Mole

You mean these meaningful cuts that republicans refused?

I remember responding to this once before. The issue is how much you’re going to cut. That proposal was rejected because $2T in ten years isn’t a meaningful cut in the slightest as that’s only $200B a year (I believe the Federal government spends that much in a week or so), especially when you consider that between 2011 and 2016, the gross public debt will have ballooned from $15,476.2T to $20,825T, a difference of $5,349T (projected). And that’s just in five years. In ten years the difference will be more than double, probably even triple, that.

…Actually, I take the part about it not being a meaningful cut back. It’s not a cut at all. It’s basically saying that you’ll spend a little less than you otherwise would, but still spend more than you take in. Only a fool would take that deal. It does nothing to address the national debt.

[Bosstone]

That’s $5,349B, not T. It’s $5.349T.

That’s not intended to be a refutation, but orders of magnitude sort of need to be nitpicked.

[Whack-a-Mole]

@Omg_a_Black_Conservative

I remember responding to this once before. The issue is how much you’re going to cut. That proposal was rejected because $2T in ten years isn’t a meaningful cut in the slightest as that’s only $200B a year (I believe the Federal government spends that much in a week or so), especially when you consider that between 2011 and 2016, the gross public debt will have ballooned from $15,476.2T to $20,825T, a difference of $5,349T (projected). And that’s just in five years. In ten years the difference will be more than double, probably even triple, that.

…Actually, I take the part about it not being a meaningful cut back. It’s not a cut at all. It’s basically saying that you’ll spend a little less than you otherwise would, but still spend more than you take in. Only a fool would take that deal. It does nothing to address the national debt.

Then you do not understand your own party’s position.

The republicans did not reject the plan because the cuts were too small. They rejected it out of a knee-jerk refusal to have any revenue raising measures in there whatsoever (i.e. raise taxes).

Read my cite above again.

In March a republlican committee produced a report (PDF) that the ideal fiscal consolidations were 85% spending cuts and 15% raising revenue. Obama’s plan was 83-17 which is damn close. Further, the rise in revenue was to come not from raising any taxes whatsoever but rather to close some tax loopholes which are fiscally distorting anyway. This is not taking more from the rich. This is making them pay at rates similar to the rest of the country rather than less (as Warren Buffet noted he pays a lower percentage of his income in taxes than his secretary does).

The other part you may notice in the republican report is that you get out of the deficit by expanding the economy. The 85-15 split is ideal, in their view, for that. So, it is not just a matter of raw chopping spending but a resulting expanding economy also has the effect of reducing the deficit.

Now the republicans want a 100:0 ration of spending/revenue.

[Robot_Arm]

@Whack-a-Mole

Now the republicans want a 100:0 ration of spending/revenue.

Oh, I think there’s some flexibility in that. If Republicans could get a deal with a relative 110% decrease in spending with a 10% cut in taxes for the rich, I think they’d probably take it.

[gonzomax]

Grover Norquist: Ending Bush Tax Cuts Not A Tax Hike

Now even Grover Nordquist the crazy idea man of the deficits, has declared allowing the Bush cuts to end would not be a tax raise.