Were I to implement a poll test before allowing people to vote, one of the questions would be:
Government Spending is:
A. A waste.
B. A significant contributor to the economy.
Depending on the time period - in general the marketway out-performs the ROI on SS.
Cite. Something to keep in mind in light of the recent idea of “Medicare for all”.
Regards,
Shodan
I think that in the supply-demand equation, the US govt issuing another $10 trillion in bonds in less than a decade will drive up yields. What would it take for the Fed to stop raising rates under these circumstances? Look back to the Bush-Clinton surplus years. Getting the Fed to lower rates was the motivation for Bush’s electorally disastrous decision to raise taxes. Trump isn’t repeating that “mistake”.
And the way I am envisioning the uber-wealthy taking advantage of this is not in the mold of Van Hoisington, but by straight-up buying the bonds. “A 5% yield or just stay invested in a 10-year bear stock market?” they’ll ask themselves. “I’ll take the 5%.” That may be naiive, and maybe if I could think like a billionaire I would be one, but it still makes a big pile of obvious sense to me.
I’d have to see the details, but yeah, I think Jobs, Jobs, Jobs! is a good goal when it is sincere and not just a rhetorical device.
I want to treat SS in a sympathetic way that preserves the program. Some cuts may be required, especially in the context of a… grand bargain? big deal? that the Dems won’t just have to make with the Pubs, but also with themselves and the public.
I’d like to cut the military by 25%. It really seems like we can defend our borders, pick off terrorists and be prepared for a hypothetical war at that (still huge) level. Not sure what the full consequences of this are, though. Close a fighter factory and you have cut jobs. Less bombs = less demand for materials and labor. Where are these people going to go? Does this 25% cut help them somehow?
And, it’s not that I think 30% of GNP is an outrageously high level, but that a true revenue-sider will face an uphill battle selling $1 trillion/year in tax increases. Be my guest in patiently explaining to the FOX crowd how 35% is still way lower than in Germany or France. If we try to make a deal that the most people can believe is fair while still actually solving the problem, we oughta cut SS, Medicare on the cost/negotiation side, and the military. Do the rest with revenue, and then shamelessly trumpet the fact that you ‘cut government spending’ like you are some kind of orange carnival barker.
Did you have a cite that backed up your assertion, or are you moving your own goalposts?
Predicting interest rates, inflation rates and dollar strength ten years from now would be an interesting topic and I tried to start such a thread. I wouldn’t be expecting a crystal-ball seer, just for a knowledgeable economist to lay out the plausible scenarios. But all that would be off-topic in this thread.
FWIW, your argument makes little sense to me. If bonds are a good investment for billionaires then they are ALSO a good investment for
(a) little guys like you and me. (Obviously our 5% will end up much smaller in absolute terms than the billionaires’ 5% but that’s true for any investment.)
(b) big guys like foreign banks, who will then bid down the interest rate. (Your scenario seems to involve billionaires knowing bonds are better than stocks, but others not making the same deduction.)
Ignoring 1981-1990, when high interest rates were due to on-going inflation fears, there have been only seven Septembers since 1954 when the real rate (interest minus inflation) on ten-year Treasuries exceeded 3.5%. Four of these 7 came during the booming 1990’s: low demand for bonds was due to booming stocks. The other three Septembers with 10-year UST yielding more than 3.5% real:
[ul][li] 2009 — *DE-*flation was 1.3% and QE wasn’t yet in full swing.[/li][li] 1955, 1959 — isolated episodes. I’ll let experts comment.[/li][/ul]
TL;DR - Our corrupt government has far simpler ways to enrich billionaires than to badmouth its own debt!
If you ever came up with that economist I missed it. It’s been a week; do you need more time?
I have been trying to help. Here are some of the top Google hits; 3 or 4 of the economists have Nobel Prizes; one comes from FoxNews:
https://www.youtube.com/watch?v=k3sAfBNiGYohttps://www.youtube.com/watch?v=huilZjeSI9chttps://www.youtube.com/watch?v=_aHWz5DFpfMCan you find one you like here, or should I keep looking for you?
Well, my reasoning is pretty simple. It isn’t inflation fears particularly that I expect to drive up yields. I don’t think it will be people turning away from bonds either- I expect them to get more popular. It is the simple fact that the plan is to issue so damn many of them.
We’ve just cut taxes for the wealthy by about $200 billion a year. They did not live up to the moronic prediction that they would pay for themselves, they are being paid for with borrowing. And, spending has increased as well, also paid for with borrowing.
We’re on a track to issue about $10 trillion worth of bonds over the next decade, probably more. It is quite an acceleration. Even if people think they are a good investment, it seems like this massive supply will outstrip demand and drive up yields anyway.
My opposition to the tax cuts won’t change if I turn out to be wrong about future bond yields, but that aspect of things just bugs me every time I think about it, this massive publicly funded income stream for the super wealthy. I don’t think you’ve addressed this theory of bond yields directly- I’d be interested in why you (probably) think things won’t play out this way. Do you think the market can readily soak up another $10 trillion in bonds?
There is a threshold where money stops being for survival/comfort and starts being about power. Hence, shifting more of it to the already wealthy becomes not a question of making their lives better but of allowing them to accrue more power over others. This is problematic because it seems fairly common that a person who manipulates large amounts of money tends toward sociopathy. Hence, many of the very wealthy who have control of society are visiting their disease upon all of us. This is not a net positive, and reducing their social obligation just makes everything worse.
A cap on annual income might be helpful. Something like, “Nobody is allowed to earn more than $100 million a year, and if you do, the extra money must simply go to Uncle Sam.”
The only issue with that is that private entrepreneurs might not be able to start up ventures entirely out of their own pocket, if, say, they wanted to start up a billion-dollar venture.
This is an over-generalization. Many good performers enjoy performing well, and enjoy being compensated for it. This is true of performing artists like Beyoncé or Springsteen, and also of high-performing investment managers like Buffett or Soros. Although I picked these four examples for their fame, all four are noted for philanthropic giving.
But I do not want to over-generalize in the opposite direction! The super-rich also include Martin Shkreli, Charles Koch and David Koch. Many acquire their wealth through unproductive means or even fraud; some even sent to prison, e.g. Charles Kushner or Bernie Madoff. Simply put there are both good and bad people throughout the income spectrum. And obviously there’s some tendency for a businessman motivated by carnal greed to outperform a businessman with humane instincts.
Inequality of income and wealth is a major problem for several reasons — this has been discussed before. Rational thinkers do not seek sudden confiscation of wealth, but they want to see policies that point in the correct direction. An extra $100,000 is a big deal for a working man. An extra $1,000,000 is chump change for the super-rich. In 2017, the heirs of a married couple with a $22 million estate would have to pay a $4 million estate tax — is that so onerous? Remember that the estate may contain unrealized capital gains that were never taxed to begin with. In 2019 the estate tax on that same $22 million estate is … Zero.
The way Republican voters have been gulled to vote for increases in wealth and income inequality in the U.S. is without precedent. When I first visited Thailand in the 1980’s I was stunned by the income inequality. But I watched Thailand’s GINI coefficient decline over the next decades due to active government programs like rural electrification, road building, rising minimum wages, and public-financed hospitals. Over the same period, the U.S. GINI rose sharply and is now significantly higher than Thailand’s GINI! Among developed countries, only Israel and Saudi Arabia have GINIs as high as the U.S. Even Russia’s GINI is lower.
I’m not so concerned about other people having more money than me. I’m more concerned about other people not having enough. And various transfer programs do pull people out of poverty.* Those programs cost money, and we all know where the money is. If we borrow it now, that’s means more of it has to go to debt service tomorrow.
*https://doi.org/10.7916/D8RN3853
Yes, it’s in the middle class.
Regards,
Shodan
And I can certainly afford higher taxes. Although it depends how you cut “middle”. Median household income last year was about $59k. Twice that is $118k, just shy of the 80th percentile. And the top quintile pulls in 51% of household income. Doubtless you could fiddle with the numbers to push the line around. But if we use my arbitrary range, most of the money is not in the middle. And if we looked at money in excess of the poverty threshold, that just pushes more of it to the top.
Sure, you can swap the numbers around. My point was that the rich do not consist of this large, untapped source of money for new programs or expansion of old ones. There aren’t enough rich, they already pay the lion’s share of taxes.
I suppose, so could I, for various definitions of “higher”. But there is no realistic possibility that we could reduce the deficit without raising taxes on the non-rich, reducing spending on the non-rich, simply by raising taxes on the rich.
Regards,
Shodan
Two words: Death Tax.
Whatever GOP strategist came up with this phrase is a genius. GOP voters complain about “elites,” they complain about their wages stagnating while the rich get richer, and then they vote for people who abolish the estate tax so the elite rich can keep even more of their money.
Why? Because the phrase “death tax” makes it sound like Hillary and Obama are going to crash their funerals and extract money from their grieving families.
Fucking genius.
But I was told that these people were all poor family farmers who would have to sell their homestead to pay the tax (because the land they had farmed for generations just happened to be formally high in value)!
I’m sure that 99% of estate tax payers were like that, and wealthy scions of investment bankers are the exception. 
That was Frank Luntz, a pollster and focus grouper whose name comes up all the time in these things.
Did he come up with “pro-life” and “right to work” too? It’s depressing how the right seems to regularly come up with these 2-3-word terms that the left seems incapable of countering in less than a paragraph.
Just to make sure nobody gets the wrong impression, what I said was:
In case people want numbers, there’s a crude analysis here: Can We Fix the Debt Solely by Taxing the Top 1 Percent?-2015-08-06
It’s with old deficits and old brackets, it assumes no changes to corporate, inheritance, or capital gains taxes, and it assumes no behavioral changes. But it gets the point across.
I’ve learned over the past couple years that what I consider “realistic” doesn’t always match reality, but the third scenario in the table is closest to what I have in mind and I agree and wouldn’t call it realistic.
That’s if we keep the same bracket structure. The top quintile does pull in about $8 trillion per year and pays an effective tax rate (including payroll taxes) of about 25%. Increasing the effective rate to ~32% would balance the budget. But the devil is in how you do it. And the top 1% already pays that rate if internet randos are to be believed: https://www.taxpolicycenter.org/taxvox/federal-taxes-are-very-progressive