This Yahoo Finance article notes that the massive amount of stimulus spending during this coronavirus, combined with the fact that Medicare will run low on money by 2023, disability insurance by 2024, and Social Security by 2028, will require tax increases within the next five years. It also notes that although Biden was already planning to raise taxes anyway if he won, his proposals will come nowhere close to what is needed.
Of course, the same could be said of Trump, but if Trump is reelected, America has a lot more things to worry about than taxes.
Perhaps by the old way of thinking – that somehow deficits matter, politically speaking. But the last few decades have definitively demonstrated, IMO, that deficits don’t matter at all, politically speaking. Several presidents have already gotten this memo (most notably Reagan, Bush II, and Trump). Maybe Democrats should get it too.
I expect some modest tax increases after the recovery picks up steam. It’s the adult thing to do. The Bush tax cuts blew up the deficit and this administration’s tax cuts put the pedal to the metal on increasing the deficit. If Biden can get a tax hike through, great. But then I fully expect Republicans to throw themselves on the floor and stomp the floor with their hands and feet and cry “WAAAAAAAAAH!” at the top of their lungs. That’s what Republicans do. I also fully expect Republicans to return to their old habits of holding the president hostage over the debt ceiling. At some point we have to return to sanity, and we can only do so with a Democratic president.
Republicans winning is sinking the ship far, far more than the possibility that Democrats may not pay quite as much attention to the deficit. If paying less attention to the deficit will help Democrats beat Republicans, then that’s a tradeoff that helps the country.
The only way we’re going to end wealth inequality is to have high taxation of the wealthy. I admit that I don’t see Joe Biden being some savior in this sense. He exists to stop the oligarchs from running away with total control of the government. I’ll be happy if he can just stabilize the economy and build a normal cabinet.
But I suspect that whether it’s now or 10 years from now, the unfortunate fact is that things will have to get so bad for the average person that we demand a radical overhaul of the country.
Let’s hope he does. The problem is that he is probably going to propose massive spending increases as well. And Democrats will not push against spending, and will push against tax increases. See: Bush era tax cuts.
Both sides do, in fact, do this. Which is why we had a massive deficit during Obama, during Trump, and will under Biden (if he is elected).
This is a problem that can’t be spun away by blaming someone else. And that will be the only response. It’s like global warming - real solutions are too hard, and finger-pointing is too easy.
Money isn’t real. It’s a shared delusion that we all maintain because it helps society function better. Deficits are only a problem if people think they’re a problem. It’s like a run on toilet paper – it’s a problem because (and only because) people think it’s a problem, and they’re worried they might run out. The solution isn’t to make more toilet paper – it’s to educate people that there’s plenty of toilet paper and they don’t need to hoard it.
So maybe the solution for national deficits is to convince people that they’re really not that important, since money is fictional anyway.
Fuck that. Ever since Reagan (at least), Republicans have busted the budget with huge tax cuts, and Democrats have had to clean up their mess with unpopular tax increases, thereby giving Republicans talking points to win elections. Clinton and Obama both did the responsible thing and got the economy going in the right direction, and all it got us was Bush and Trump who not only took credit for the economy they inherited, but drove it off a cliff with huge budget deficits from tax cuts and corporate welfare, while excoriating Dems for having the temerity to want to spend money on health care.
No more. Biden should spend whatever it takes to get universal health care, infrastructure rebuilding, and green energy going, and to hell with the hypocritical hand-wringing from Pubs about deficits. By all means, raise taxes on the wealthy. For starters, remove the cap on Social Security taxes, which would instantly fix that program. Plug the loopholes that allow huge corporations and wealthy investors to pay little or no tax. Put real teeth into penalties for companies who are American in all but name, but avoid taxes by having a drop box in the Caymans. Restore the inheritance tax for multi-millionaires.
But there is no need to raise taxes on anyone making less than six figures.
Why will Biden have to do this? I don’t get it – we were running large deficits when Trump and McConnell pushed through a massive tax cut that did little for the economy, but did blow up the deficit.
Shodan, federal spending as a percent of GDP decreased under Obama and under Clinton (cite), so please stop already with the both sides must forever be equally bad, forever and ever, amen. GWB cut taxes and increased spending, as did Reagan and Trump. If Biden pushes tax and spending increases, you have to agree that’s better than spending increases and tax cuts, right?
Obama’s deficits came directly from the Great Recession inspired by GWB’s tax cuts and unfunded war. He inherited $1.6T and reduced the deficit every year down to $442B. That’s still not a good thing but it’s 65% or so less than what he inherited.
Ditto WJC who brought us to a surplus, for heaven’s sake.
Trump, meanwhile, has expanded the deficit every year he’s been in office. It’s climbed from $779B to $Some unknown T now.
I know, I know. Soi-disant ‘fiscal conservatives’ sometimes subscribe to the ‘Starve the Beast’ theory propounded by weird Grover Norquist - I’ve interviewed the man - but it’s nonsense. Deficits DO matter. Because the more you have, and the more debt you have, the harder it becomes to fund government. Great, say these people, we can shrink government. Except we WON’T because voters don’t WANT government to shrink. Instead, we’ll be stuck with rising interest rates, the dollar losing its reserve currency status and high inflation.
Cocksuckers. ‘Fiscal conservatives’ and neither fiscal nor conservative.
And that is absolutely untrue. I’m not saying you’re lying, get me. Just that you’re wrong.
Money isn’t wealth. You’re sort of right about that. Money is an accounting vehicle to help lubricate transactions and allow markets to set value. Fine.
But, as I said above, the only reason - I believe, please correct me - you believe deficits don’t matter is because they haven’t had a serious impact yet. Correct?
If so, that’s an illusion created by post-WWII economic prosperity in the United States combined with the lack of alternatives to house currency and markets. That era - a genuine era of American exceptionalism - is coming to an end. There are other currencies where capital can flow to that don’t include the dollar. The Euro, provided they get through their chaos and the Yuan are fine places to hide. And in terms of markets? I can now buy shares on the Hang Sen and Footsie and avoid New York completely.
So don’t be blithe about deficits not mattering. At some point - some tipping point that can’t quite be seen ahead of time - the Treasury will offer $100B worth of T-Bills and there’ll be no buyers and they’ll have to raise rates. Then they’ll have to do it further and higher and we’re all fucked.
No, it isn’t bullshit. The recession was not caused by tax cuts or war; it was caused by the housing market collapse. Obama did not inherit the $787B stimulus package and Clinton did not create a surplus - his budgets envisoned “$200B deficits as far as the eye could see” and he vetoed the balanced budget proposal more than once.
In my lay understanding, deficits and debt become a problem when “too much” money is printed in order to make up for the deficit/debt, and thus the users of this money start to believe that, because there is suddenly so much more of it available, it is suddenly less valuable, and thus everyone’s wealth is reduced because the currency they hold is seen as worth less. If this is accurate, this is just part of this shared illusion – there’s nothing special about a dollar now, except that everyone perceives it as having a certain value. There is something special about land, and cars, and machines, and food, etc. – this stuff has real use and thus real value. But money isn’t like that – it’s something we all agree to see as valuable, just because it’s good for society that we all see it as having value, since it makes it much easier to exchange goods and services than without it.
So, in my understanding, the only difference with a large national deficit and without it is perception. Perception is still real, and it may be just as hard to combat this perception as it is to combat the perception that we’re running of toilet paper, but fighting this perception might still be easier than actually reducing the deficit.
Yup, and it’ll suck but its necessary. Even during good times Obama was running 300-400 billion deficits. Trump ballooned that to a trillion with his supply side tax cuts and military spending, all before the virus hit.
But after we’re in a better place and deficits are back down to 2-3% of GDP, then higher taxes will be necessary and its fine. Especially if we increase spending on education and health care.