Ok, I have to concede the point and admit that I pulled 20 years out of my butt. Still, I don’t feel like a straight spending freeze would take effect fast enough. And consider the history of treasury bond yields- Septimus got me to understand the Real rate (yield minus inflation) is really where it’s at, but still, I am Extremely uneasy at the prospect of building up $30T+ in debts and then watching yields climb. That and the fact that the population keeps growing- small government is one thing, but it has to keep up with the country, too.
HUZZAH!! We AGREE!
Maybe you’re just being accommodating in naming the same deficit-reduction plan I outlined (the one that worked for Bush-Clinton), but compared to what goes on on this board sometimes, I am fine if you are somewhat humoring me. BUT- we’re on different sides of the political aisle, no? And we agree on a policy plan, at least in outline?
Everybody, e-mail your facebook friends! We’ve AGREED about something!!! Yee-haw
I like to think the Dems would put most anything on the table. The government has been so dysfunctional for so long that a real deal that really addressed our very real problems would be welcome. You’ll get resistance on freezing SS or Medicare (there is a grow SS caucus), but I think modest changes in exchange for military cuts and tax hikes could be advanced as a bargaining chip.
I mean, we are going to be up against a wall if nothing is done, see As Debt Rises, the Government Will Soon Spend More on Interest Than on the Military. We can adjust now, or watch interest gobble up the budget, or let the deficit spiral completely out of control. When none of the options are good, people will at least choose something. I hope.
They may not consider themselves to be, but the 80% of the population that makes less might feel differently.
Or, how about this. For any increase in spending, we have an increase in taxes?
People always try to talk about a balanced budget as in cutting of spending, but then they don’t want to cut spending. So, why not raise taxes to cover the spending?
If you need to repair your house, and you cannot afford to do so, then you can either not repair your house and have it fall into a further shambles, or, you can get a second job or a raise at your current to pay for it.
Spending increases are popular because the spending is not only necessary or guaranteed in many respects, but also contributes to the economy, meaning that it increases people’s wages, which increases tax revenue as well.
Tax cuts are popular because people don’t want to be responsible. And the least responsible are the ones that have the most to gain from tax cuts, as well as the most to gain from spending increases.
They’ve tried that. And you are right that it doesn’t work. Jimmy Carter said that we were going to need to tighten our belts, and he got blown out of the water by the president who promised to borrow from our grandchildren to give toys today. Mondale indicated that he didn’t think that the deficit was sustainable, and ran on the idea that taxes would need to increase, and reagan completely destroyed him, right before reagan ended up raising taxes because the deficit was not sustainable.
Both sides want to spend, no question there. But one side wants to get their grandchildren to pay for it, rather than allow the extremely wealthy among us to have to settle with a slightly smaller yacht this year.
I disagree with the idea that the rich benefit from rising interest rates paid by Treasury, but there is sense in which rising debt directly benefits the rich. (Note that it is low interest rates which can trigger rising debt.)
Here is an interview of Ray Dalio where he discusses that. Though not a household name like Warren Buffett, Dalio parlayed his investment savvy into an $18 billion fortune and is now a philanthropist. He sees wealth inequality as the big threat to America’s future, using words like ‘emergency.’ As examples of the symptoms of wealth inequality, he mentions public schools dysfunctional even in the richest states — students are sometimes forced to share pencils! This wealth inequality America’s top 0.1% own almost 25% of the wealth) is provoked in part by asset price inflation which in turn results from the easy-money response to the previous debt crisis.
(The interviewer keeps trying to get Dalio to tell him whether it’s time to sell stocks. Dalio is circumspect, saying only that we’re in the 7th inning of the cycle!)
It gets us from increasing that deficit. We have been at balanced budgets before. I am just saying that instead of looking at it from the perspective of “we have to cut”, we can look at it from the perspective of “we have to increase revenue”.
Why is that? Be specific.
We have balanced budgets before without onerous middle class taxes. In fact, the only meaningful tax cuts that have been made since then have had the vast majority of the benefit go to the wealthy. Why would reversing that be mostly on the middle class, when the benefits didn’t go to the middle class?
Because your strawman can’t math.
First, you be specific about the cuts that you have already proposed in this thread, then we can get specific about tax increases.
This touches on how the whole matter gets muddled and distorted by rhetoric. I have seen RWers use the argument that the top 1% reaches people who make only a few hundred thousand dollars. But income is a different thing from wealth. Realistically, we should have some sort of progressive federal property/asset tax; how that would impact the socioeconomic culture is an interesting avenue to explore.
IIUC, Roosevelt partially paid for his relief programs with a 0.5% tax on trading, which I think would be a benefit to market stability.
Just raising income tax is not always the answer, though some of the more practical options are not easy to reach in this top-down political climate.
The deficit is too high now. We need to do more than not increase it - we need to reduce it.
It’s not my strawman. You said
So do spending increases increase tax revenue, or not? If they do, then we wouldn’t have a deficit. (We do have a deficit, by the way.) If they don’t automatically increase tax revenue, then what you said must be wrong. Which is it?
Actually I proposed a freeze. Because Democrats (mostly) don’t want to talk about spending cuts, and Republicans don’t want to talk about tax increases. You won’t even talk about a freeze.
Okay, then lets do that. Unfortunately there seems to be a party that is cutting taxes. Lets try going back to the tax rates of the 90’s, and see where we need to go from there. Where were you when your party was doing all these tax cuts?
I apologize, I suppose it is just your misunderstanding of basic math. It does increase tax revenue, but not as much as spending.
I’ll make it very, very simple for you. Lets say that you have one govt employee who makes $100 a year. You take in a total tax receipt of $90 a year from income taxes, including $10 from that gov employee. You have a deficit of $10 a year.
Now, you hire another govt employee. Now you are paying $200 a year to employees, but you are receiving $20 a year from those employees, rather than only $10. Your cost has gone up to $200 a year, but your revenue has gone up to $100 a year. The deficit has gone up to $100 a year.
See how both things can be true without contradiction? It’s really not that difficult to understand, but if you are still having problems, go ahead and misunderstand what I have said again, and I will try to find time to correct your extremely poor understanding of these basic concepts for you, yet again.
Wouldn’t a freeze leave us with both a debt and a deficit? How does that help anything at all? Didn’t someone in this thread, even in this very post, say
Democrats are fine with cuts. We could cut 25% out of the military, and I think that most democrats would be just fine with that. We can cut agricultural subsidies to the bone, that doesn’t bother us in the least.
I think that there are many programs that could be done more efficiently, I think we could save quite a bit on our justice and prison systems, I even think that education could be done more effective and for less money than it currently is. We spend more than other countries do on medical coverage, to only cover a tiny fraction of the population.
There are plenty of things to be cut, that you refuse to cut any of them before gutting social programs that cost a fraction is not really a problem on the democrats part.
That cannot be answered yes-or-no. In general, increasing spending can increase revenue, but it depends on where an how you do it.
If you increase the money going to, say, education, how that money is targeted makes a big difference: if, for example, you increase funding for shop classes and Americans stop making stuff, you tend to come out behind, and if they use those skills to fix the stuff they have, you might see a decline in revenue from the people who specialize in fixing other people’s stuff.
And, of course, there is the instant gratification thing. If you spend more on roads, you might see revenue gains, but they will take years to be realized and may be negated by people abusing the roads.
In general, spending will have a positive effect, but it will tend to be a lot less than 1:1 and the gains will be realized over the very long term.
Tax cuts are equally non-simple. Which taxes you cut and by how much makes a big difference. In general, the economic return seems to decline as the cuts reach toward higher incomes.
Then, of course, if you pair tax cuts with paring spending and you spending reductions affect your broadest revenue base negatively, the entire budget package is going to trend toward deficits.
Laffer drew his curve on a cocktail napkin, with little consideration for the complexity of the situation, and it has been used as an excuse to nihilize the budget. Because, government bad.
Let’s not forget to credit Obama with large tax cuts comparable, if not greater than, the Trump tax cuts. Maybe those do not count as tax cuts, but without his signature the Bush tax cuts would have expired at the end of 2010.
This doesn’t even make enough sense to be wrong. You have one employee and a deficit of $10. You hire another and the deficit goes to $100. Was that a typo?
Did you read the cite that tax revenues have roughly doubled in the past twenty years? If we freeze spending, and tax revenues double, what effect do you think that would have on the deficit?
OK, let’s just start with your first two examples. How much can we cut from the justice and prison systems, and where should education spending be cut? Keep in mind that most education spending, and most prisons, are state-level spending, and we are talking about the federal budget deficit.
Wow, thanks for the background! Interesting that the first appearance of pro-life had nothing to do with abortion, but it was apparently adopted soon after Roe.
No, it was very, very basic math, I am so very sorry for you that you were unable to make sense of it.
I know it was a word problem, and those can be difficult, but I did simplify it as much as possible.
Can you agree that $90 (tax revenue)-$100(govt employee pay)=-$10(deficit)?
Can you also follow that $100(tax revenue, which includes the income taxes from the new govt employee)-$200(govt employee pay)=-$100(deficit)?
If you can’t keep up, I’m sorry, I cannot take the time to teach basic arithmetic to you.
Taxes and economics is complex, and does require some level of math skills in order to be able to contribute anything useful to a conversation. I’d like to hear your thoughts on what spending cuts you would like to make, but it may be best that you stay out of the more nitty gritty when numbers are involved until you have mastered these skills.
That’s because of inflation. Now, this is somewhat advanced economics again, but inflation increases the price of everything, including wages. If you were to freeze spending in dollars, then that is actually decreasing actual spending in purchasing power. Are you proposing here to cut 50% of the military purchasing power over the next 20 years here? If not, what cuts are you proposing?
Also, and this may be difficult to understand, but just because we freeze spending now, doesn’t mean that the deficit goes away. It will take quite a number of years for the deficit to shrink, all that time adding to the debt (which is confusing for some people who do not understand the difference between debt and deficit, try your best to not fall into that trap, please), which means that in all the years we are waiting for inflation to eat away at the deficit, the debt is still growing larger, and the interest payments on the debt are getting larger. I know you propose a spending freeze, but the holders of the debt may not allow you to do that. Do you have any solutions on how to freeze interest payments on a growing debt?
And finally, a large part of that is Social Security, which is something that will be increasing in cost as the baby boomers are all retiring. Do you prose freezing spending on social security as well, and dividing the current payout between the increasing number of people collecting it?
There are also second order effects. For instance, if you do cut education, then you have a less trained workforce with less skills and earning potential in the future, which could contribute to a decrease in tax revenue. Same with cuts in infrastructure, health, food safety, workplace safety, environmental protection, or any of the other services that the government provides to increase the productivity of the american people. You also have the effect that govt spending goes into the economy. If you have a person with no money, and you give him money, then he spends it in the economy, contributing to economic growth. Economic growth also helps to increase tax revenue, and slowing economic growth will cut into it.
I know that freezing seems like such a simple and easy solution, but if you can follow the math, you can see that it is actually more complex than that.
So, I ask you, if we freeze spending for the next 20 years, what effect do you actually think that that will have? What cuts will you be willing to make in order to freeze spending?
Please, be specific.
My first example was actually military, and even though you for some reason made the decision to not include that in your quote, it is still my first example. What you are calling my first two examples would actually be my third and fourth. So, do you want to start with my first example, or was that a typo?
You are correct that education and justice are small parts of the budget, and while I did say that there are reforms and savings that could be made to both, I did, before that, say that there were much larger parts of the budget that should be looked at first.
Tell you what, you tell me what specific parts of the bulk of the budget you want to cut, and I will talk about the little bits of savings we can make by reforming our education and prison systems.
No, I was agreeing with you on that, and was referring to the person you were talking about.
2 times 90 is 180. 200 - 180 is 20. "Buy at seven, sell at five, make up the difference in volume.’
If we freeze spending, and tax revenues go up, then the deficit will go down. I think I mentioned that.
What effect does inflation have on debt?
Are you willing to take the risk? How do you propose to cut spending on education, without affecting the earning potential of the students. Again, be specific.
