# Obama proposes "pay as you go" law to Congress **URL:** \ **Category:** Great Debates\ **Created:** [June 9, 2009, 8:06pm UTC](https://boards.straightdope.com/t/obama-proposes-pay-as-you-go-law-to-congress/499239 "2009-06-09T20:06:31Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![Caldazar](https://avatars.discourse-cdn.com/v4/letter/c/8e8cbc/32.png) [@Caldazar](https://boards.straightdope.com/u/Caldazar)\ **Post date:** [June 10, 2009, 7:21am UTC](https://boards.straightdope.com/t/obama-proposes-pay-as-you-go-law-to-congress/499239/41 "2009-06-10T07:21:26Z")
> [@Whack-a-Mole](#): > > If only Republicans were in control then we’d see fiscal restraint! With the exception of **athelas** , no one in this thread who has criticized the Obama pay-as-you-go proposal has mentioned either major political party. Certainly, no one has claimed that either a Republican President or a Republican-controlled Congress would necessarily have resulted in increased fiscal responsibility. On the contrary, it is some of the supporters of Obama’s plan that are characterizing this as a partisan issue. It is no such thing; it is fundamentally a fiscal and economic issue. > [@Whack-a-Mole](#): > > It has been pointed out before that it is the opinion of most\* economists that the government needs to spend its way out of the recession. Know who else wanted to spend his way out of the recession? President Bush. $700 billion went to Wall Street under Bush and approved by a Republican controlled Congress. No one can seem to account for what happened to the money after that yet you have the balls to call Obama to the mat for bullshitting people? How do the actions of the previous Administration in any way contribute to a possible justification/denunciation of the current Administration’s actions? You can debate whether or not prior Presidents acted in a fiscally responsible manner until the cows come home, but it has absolutely no bearing on whether or not Obama’s actions can be considered fiscally responsible. Obama has led an attempt to substantially increase government spending over the next decade. This proposed spending includes projections of substantial budget deficits during each of these next ten years. Now, only after he has already proposed his budget is he claiming a commitment to fiscal discipline. Further, he is proposing a pay-as-you-go (PAYGO) framework that is arguably not in the spirit of statutory PAYGO. The proposal contains multiple loopholes that can be used to circumvent the PAYGO rules. It does not actually promote the drafting of balanced budgets due to the lack of restrictions on (1) discretionary spending (2) various taxes (3) Medicare. Given the questionable PAYGO proposal and his desire to expand government through long-term deficit spending, Obama’s committment to fiscal discipline in general and his motivations behind his PAYGO proposal need to be called into question. ---
**Author:** ![Yookeroo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/yookeroo/32/323_2.png) [@Yookeroo](https://boards.straightdope.com/u/Yookeroo)\ **Post date:** [June 10, 2009, 7:49am UTC](https://boards.straightdope.com/t/obama-proposes-pay-as-you-go-law-to-congress/499239/42 "2009-06-10T07:49:58Z")
> [@furt](#): > > right. Which is why unemployment is now _worse_ than the “what will happen if we don’t pass the stimulus” number advanced by Obama a few months ago. Because he didn’t spend nearly enough. ---
**Author:** ![Grumman](https://avatars.discourse-cdn.com/v4/letter/g/43a26b/32.png) [@Grumman](https://boards.straightdope.com/u/Grumman)\ **Post date:** [June 10, 2009, 9:09am UTC](https://boards.straightdope.com/t/obama-proposes-pay-as-you-go-law-to-congress/499239/43 "2009-06-10T09:09:00Z")
I like the _theory_ of politicians who support financial responsibility, but I do not trust that this is the goal here. I would not be surprised to discover the goal was to protect programs or tax hikes Obama supports by putting popular/essential “mandatory programs” on the chopping block instead. > [@SaintCad](#): > > 1. Obama is the right person for the job because we need tax and spend to get out of the recession Wasn’t the theory to spend and _not_ tax, so that the increased money supply would encourage action in the economy? Tax and spend isn’t stimulative unless you believe that government spending is more effective for this purpose than private spending. > [@Tim\_R.Mortiss](#): > > That’s like Hannibal Lector advocating vegetarianism…TRM Maybe he prefers the taste? ---
**Author:** ![flickster](https://avatars.discourse-cdn.com/v4/letter/f/7bcc69/32.png) [@flickster](https://boards.straightdope.com/u/flickster)\ **Post date:** [June 10, 2009, 10:51am UTC](https://boards.straightdope.com/t/obama-proposes-pay-as-you-go-law-to-congress/499239/44 "2009-06-10T10:51:14Z")
> [@Yookeroo](#): > > Because he didn’t spend nearly enough. The problem is with the type of spending they are doing with the stimulus money. They may create work, but they are not creating jobs. The continued employment will always be dependant upon yet additional government project funding. ---
**Author:** ![Mr.Moto](https://avatars.discourse-cdn.com/v4/letter/m/9de0a6/32.png) [@Mr.Moto](https://boards.straightdope.com/u/Mr.Moto)\ **Post date:** [June 10, 2009, 1:39pm UTC](https://boards.straightdope.com/t/obama-proposes-pay-as-you-go-law-to-congress/499239/45 "2009-06-10T13:39:30Z")
> [@raindog](#): > > Please cite this, please. [Cite.](http://www.taxfoundation.org/publications/show/1466.html) > [@](#): > > A wave of corporate income tax reduction is sweeping through many countries in the Organization for Economic Cooperation and Development (OECD), but not the United States. The latest to consider corporate income tax rate reductions are Australia, Germany, New Zealand, and Spain. Others, like Canada, are continuing to phase in corporate rate reductions in 2006 and beyond. This movement transcends political philosophy, with center-right (Australia), centrist (Germany) and center-left (New Zealand, Spain) governments all considering corporate income tax rate cuts. > > As OECD countries continue to lower their corporate income taxes, they can expect to reap more foreign direct investment from the U.S. A recent study by Deveraux and Lockwood found that a 10 percent corporate rate reduction by an EU member-state can reap a 60 percent short-run increase in investment by U.S. multinational corporations. > > While foreign governments entice U.S. investors by lowering their corporate tax rates, the federal government in the U.S. stands pat with the same rate structure it has had since 1994. Indeed, one of the ironies of tax policy during the Bush presidency is that five years of tax-cutting legislation have left the corporate income tax rate unchanged. > > The United States has the second-highest overall corporate income tax rate (39.3 percent combined federal and sub-federal) among all OECD countries. Japan (39.5 percent) and Germany (38.9 percent) have the first and third highest corporate income tax rates, respectively. The nation with the lowest corporate income tax rate in the OECD is Ireland (12.5 percent). There is also the issue of tax complexity - our tax code is sufficiently arcane as to add about $200 billion of cost annually to individuals and companies - some 20 cents for every dollar collected by the government. And all of this effort still can’t keep a Treasury Secretary, of all people, from screwing up his tax form. Various loopholes exist for companies to exploit to reduce their tax exposure - the problem there is using them vastly increases the compliance cost and channels business money into ventures that might not be as profitable. These are real issues and they have a tremendous economic cost. And especially now, when businesses are struggling and revenues are falling to the government, we need to examine which of these costs are necessary and which aren’t. ---
**Author:** ![The\_Tao\_s\_Revenge](https://avatars.discourse-cdn.com/v4/letter/t/73ab20/32.png) [@The\_Tao\_s\_Revenge](https://boards.straightdope.com/u/The_Tao_s_Revenge)\ **Post date:** [June 10, 2009, 1:51pm UTC](https://boards.straightdope.com/t/obama-proposes-pay-as-you-go-law-to-congress/499239/46 "2009-06-10T13:51:20Z")
> [@Mr.Moto](#): > > Yeah - already we’re screwing ourselves by setting a corporate tax rate that is way too high to be competitive. We should be able to cut that without monkeying around with very much else - especially as this is the sort of cut that should pay for itself many times over with increased economic activity. Yea Bush’s taxcuts showed how well trickle down works.:rolleyes: ---
**Author:** ![Mr.Moto](https://avatars.discourse-cdn.com/v4/letter/m/9de0a6/32.png) [@Mr.Moto](https://boards.straightdope.com/u/Mr.Moto)\ **Post date:** [June 10, 2009, 2:08pm UTC](https://boards.straightdope.com/t/obama-proposes-pay-as-you-go-law-to-congress/499239/47 "2009-06-10T14:08:58Z")
> [@The\_Tao\_s\_Revenge](#): > > Yea Bush’s taxcuts showed how well trickle down works.:rolleyes: My cite demonstrated that the Bush cuts didn’t affect corporate tax rates very much, so I don’t understand your criticism here. Frankly, while most of the Bush tax cuts were needed, especially at the time, the corporate tax issue and the problem of compliance costs should have been a much higher priority than they were at the time, and they are reaching a crisis level now. ---
**Author:** ![Lobohan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lobohan/32/79_2.png) [@Lobohan](https://boards.straightdope.com/u/Lobohan)\ **Post date:** [June 10, 2009, 2:23pm UTC](https://boards.straightdope.com/t/obama-proposes-pay-as-you-go-law-to-congress/499239/48 "2009-06-10T14:23:54Z")
> [@flickster](#): > > The problem is with the type of spending they are doing with the stimulus money. They may create work, but they are not creating jobs. The continued employment will always be dependant upon yet additional government project funding. This is a gross misunderstanding. The stimulus provided jobs aren’t supposed to give people work forever. They’re supposed to give people work in the short term, so that the increased spending they pump into the economy speeds the recovery. Then the businesses that have been laying people off because they aren’t making any money will hire people until they were back at capacity. Look you’re company X. You employ 1000 people. Suddenly sales drop 40% so you don’t need 1000 widget makers because 500 can meet demand. You lay them off. The economy rights itself and now your sales jump back to previous levels. You now have to hire 500 people to get the widget factory up to speed. I keep seeing this misunderstanding. Stimulus jobs are there to accelerate recovery and keep people employed in the meantime. The economy will hire them when everything is back to normal. ---
**Author:** ![IdahoMauleMan](https://avatars.discourse-cdn.com/v4/letter/i/71c47a/32.png) [@IdahoMauleMan](https://boards.straightdope.com/u/IdahoMauleMan)\ **Post date:** [June 10, 2009, 2:43pm UTC](https://boards.straightdope.com/t/obama-proposes-pay-as-you-go-law-to-congress/499239/49 "2009-06-10T14:43:22Z")
> [@Caldazar](#): > > With the exception of **athelas** , no one in this thread who has criticized the Obama pay-as-you-go proposal has mentioned either major political party. Certainly, no one has claimed that either a Republican President or a Republican-controlled Congress would necessarily have resulted in increased fiscal responsibility. On the contrary, it is some of the supporters of Obama’s plan that are characterizing this as a partisan issue. It is no such thing; it is fundamentally a fiscal and economic issue. 1. George Bush was a bad man. The Republicans are bad people. 2. Therefore everything they did, and everything they propose to do, is bad. 3. Mr Obama is a good man. 4. Therefore everything Mr Obama does, or proposes to do, is good. Even if it runs counter to policies of Mr Bush that produced beneficial effects. And even if it is the exact same thing, or something that is taken to a worse extreme, that Mr Bush and the Republican party did, or propose to do, that has negative effects. Unfortunately, that is the extent of the underlying logic of a large portion of the posts on economic and foreign-relation matters on the SDMB. Unfortunate, but true. It took me a while to get used to it, too. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [June 10, 2009, 3:41pm UTC](https://boards.straightdope.com/t/obama-proposes-pay-as-you-go-law-to-congress/499239/50 "2009-06-10T15:41:31Z")
> [@IdahoMauleMan](#): > > 1. George Bush was a bad man. The Republicans are bad people. > > 2. Therefore everything they did, and everything they propose to do, is bad. > > 3. Mr Obama is a good man. > > 4. Therefore everything Mr Obama does, or proposes to do, is good. Even if it runs counter to policies of Mr Bush that produced beneficial effects. And even if it is the exact same thing, or something that is taken to a worse extreme, that Mr Bush and the Republican party did, or propose to do, that has negative effects. > > Unfortunately, that is the extent of the underlying logic of a large portion of the posts on economic and foreign-relation matters on the SDMB. > > Unfortunate, but true. It took me a while to get used to it, too. This is one of the more fatuous things I have seen posted in a long time. Care to point out where this is the case or admit it for the mischaracterization that it is? The OP is asking about the PAYGO proposal and several responses were guffawing that isn’t it rich to hear someone who is spending money like a drunken sailor proposing fiscal responsibility (I am not commenting on whether PAYGO as proposed is a good idea here). This comes from the conservative (and/or fiscal conservative) types. It is a talking point on most conservative chat shows and blogs. The characterization is that they are trying to stop all this fiscal irresponsibility and protect us from these ruinous policies. Forgive me if I cannot accept these people trying to claim the ground of fiscal responsibility. When they were in power they were anything but. It is like they are Lucy from Peanuts promising that _this time_ she will not move the football when Charlie Brown tries to kick it. Call me cynical but I am not betting on Lucy not moving the ball this time, history argues against it. What is particularly egregious here is yelling about Obama as a big spender when the reasons for that big spending are manifest. Somehow this gets conveniently ignored. Yes it is bigger spending then ever before but most economists agree that it is necessary (of course they argue endlessly on the details). Bush & Co., conversely, held the record till this point and nicely spent us out of a budget surplus at a time when there was no economic disaster in our laps. It is not amiss to point this out when it is now those same people proclaiming themselves as the ones who are fiscally responsible (who also went in for a massive government bailout…short memories). ---
**Author:** ![Mr.Moto](https://avatars.discourse-cdn.com/v4/letter/m/9de0a6/32.png) [@Mr.Moto](https://boards.straightdope.com/u/Mr.Moto)\ **Post date:** [June 10, 2009, 4:20pm UTC](https://boards.straightdope.com/t/obama-proposes-pay-as-you-go-law-to-congress/499239/51 "2009-06-10T16:20:54Z")
> [@Whack-a-Mole](#): > > What is particularly egregious here is yelling about Obama as a big spender when the reasons for that big spending are manifest. Somehow this gets conveniently ignored. Yes it is bigger spending then ever before but most economists agree that it is necessary (of course they argue endlessly on the details). Bush & Co., conversely, held the record till this point and nicely spent us out of a budget surplus at a time when there was no economic disaster in our laps. > > It is not amiss to point this out when it is now those same people proclaiming themselves as the ones who are fiscally responsible (who also went in for a massive government bailout…short memories). So what, the Democrats who criticized Bush deficits are now fighting back with…deficits? You’re not making a whole lot of sense either, especially when you consider that the “surplus” you hold so dear evaporated all by itself - in the face of the tech bubble bursting and the economic disruptions caused by 9/11. In case you forgot, [there was a recession then.](http://en.wikipedia.org/wiki/Early_2000s_recession) And while I certainly won’t defend everything Bush did on the economic front, least of all his spending, it amazes me that you will defend Obama spending reflexively and attack Bush for squandering a surplus. ---
**Author:** ![MovieMogul](https://avatars.discourse-cdn.com/v4/letter/m/f08c70/32.png) [@MovieMogul](https://boards.straightdope.com/u/MovieMogul)\ **Post date:** [June 10, 2009, 4:29pm UTC](https://boards.straightdope.com/t/obama-proposes-pay-as-you-go-law-to-congress/499239/52 "2009-06-10T16:29:30Z")
> [@Whack-a-Mole](#): > > This comes from the conservative (and/or fiscal conservative) types. It is a talking point on most conservative chat shows and blogs. The characterization is that they are trying to stop all this fiscal irresponsibility and protect us from these ruinous policies. > > Forgive me if I cannot accept these people trying to claim the ground of fiscal responsibility. When they were in power they were anything but. It is like they are Lucy from Peanuts promising that _this time_ she will not move the football when Charlie Brown tries to kick it. Call me cynical but I am not betting on Lucy not moving the ball this time, history argues against it. > > What is particularly egregious here is yelling about Obama as a big spender when the reasons for that big spending are manifest. Somehow this gets conveniently ignored. Yes it is bigger spending then ever before but most economists agree that it is necessary (of course they argue endlessly on the details). Bush & Co., conversely, held the record till this point and nicely spent us out of a budget surplus at a time when there was no economic disaster in our laps. > > It is not amiss to point this out when it is now those same people proclaiming themselves as the ones who are fiscally responsible (who also went in for a massive government bailout…short memories). The [denial is pretty staggering.](http://www.nytimes.com/2009/06/10/business/economy/10leonhardt.html?_r=1) > [@](#): > > There are two basic truths about the enormous deficits that the federal government will run in the coming years. > > The first is that President Obama’s agenda, ambitious as it may be, is responsible for only a sliver of the deficits, despite what many of his Republican critics are saying. The second is that Mr. Obama does not have a realistic plan for eliminating the deficit, despite what his advisers have suggested. > > The New York Times analyzed Congressional Budget Office reports going back almost a decade, with the aim of understanding how the federal government came to be far deeper in debt than it has been since the years just after World War II… > > About 33 percent of the swing stems from new legislation signed by Mr. Bush. That legislation, like his tax cuts and the Medicare prescription drug benefit, not only continue to cost the government but have also increased interest payments on the national debt. > > Mr. Obama’s main contribution to the deficit is his extension of several Bush policies, like the Iraq war and tax cuts for households making less than $250,000. Such policies — together with the Wall Street bailout, which was signed by Mr. Bush and supported by Mr. Obama — account for 20 percent of the swing. > > About 7 percent comes from the stimulus bill that Mr. Obama signed in February. And only 3 percent comes from Mr. Obama’s agenda on health care, education, energy and other areas. > > If the analysis is extended further into the future, well beyond 2012, the Obama agenda accounts for only a slightly higher share of the projected deficits. [Fun with graphs](http://www.nytimes.com/interactive/2009/06/09/business/economy/20090610-leonhardt-graphic.html) ---
**Author:** ![smiling\_bandit](https://avatars.discourse-cdn.com/v4/letter/s/e9a140/32.png) [@smiling\_bandit](https://boards.straightdope.com/u/smiling_bandit)\ **Post date:** [June 10, 2009, 4:31pm UTC](https://boards.straightdope.com/t/obama-proposes-pay-as-you-go-law-to-congress/499239/53 "2009-06-10T16:31:21Z")
> [@Whack-a-Mole](#): > > Forgive me if I cannot accept these people trying to claim the ground of fiscal responsibility. When they were in power they were anything but. It is like they are Lucy from Peanuts promising that _this time_ she will not move the football when Charlie Brown tries to kick it. Call me cynical but I am not betting on Lucy not moving the ball this time, history argues against it. Given that fiscal irresponsibility (along with corruption) was a huge portion of why Republican leaders were voted out (as in, I didn’t want to vote for them until enough were kicked out), methinks you have no merit. We tok the lead in criticizing them, but had no power to change anything, as they had us over the barrel on other policies at the time. > [@](#): > > What is particularly egregious here is yelling about Obama as a big spender when the reasons for that big spending are manifest. Somehow this gets conveniently ignored. Yes it is bigger spending then ever before but most economists agree that it is necessary (of course they argue endlessly on the details). Bush & Co., conversely, held the record till this point and nicely spent us out of a budget surplus at a time when there was no economic disaster in our laps. No, economists do not agree that it is neccessary. One (large but stupid) school of thought favors it. This side is wrong. It is empirically wrong, in that no one has ever manage to spend their way out of a recession, much less a despression, yet. Roosevelt accomplished nothing exceopt to mitigate it and significantly harm the American polity in the process with his naked power-grabs and bad management. SOme people have failed to learn that you ought to model your behavior, if after anything, then after _sucessful_ strategies. The entire argument here is that if we just blow enough money we can somehow pull through. This ignores two things entirely: the cost of paying back that money, the risk that it will be wasted, and the the fact that there may not be enough money to do it, period. And if it so neccessary, please explain why the money is being blown in a wildly flagrant manner to shore up Democrat political support in a bad economy, and going to Democrat’s home districts? More to the point, if the economic strategy is going to wortk so well, why has it already failed horribly. Obama likes to crow about the many jobs he’s supposedly “created or saved.” Aside from being a meaningless phrase, his supposed “worst case scenario” is already much rosier than the actual picture, while his other boneheaded moves have already undermined investor confidence across the board. And finally, please cite that most economists support a massive bailout. Oh, and your political heroes claiming they do does not count. I won’t be holding my breath. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [June 10, 2009, 4:35pm UTC](https://boards.straightdope.com/t/obama-proposes-pay-as-you-go-law-to-congress/499239/54 "2009-06-10T16:35:23Z")
> [@Mr.Moto](#): > > So what, the Democrats who criticized Bush deficits are now fighting back with…deficits? You’re not making a whole lot of sense either, especially when you consider that the “surplus” you hold so dear evaporated all by itself - in the face of the tech bubble bursting and the economic disruptions caused by 9/11. > > In case you forgot, [there was a recession then.](http://en.wikipedia.org/wiki/Early_2000s_recession) And while I certainly won’t defend everything Bush did on the economic front, least of all his spending, it amazes me that you will defend Obama spending reflexively and attack Bush for squandering a surplus. Obama must spend to alleviate a profound economic crisis as supported not only by a huge array of economists but Bush as well (see earlier cites). Big, huge, colossal difference from what Bush faced in 2000. How is that “reflexive”? ---
**Author:** ![Lobohan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lobohan/32/79_2.png) [@Lobohan](https://boards.straightdope.com/u/Lobohan)\ **Post date:** [June 10, 2009, 4:58pm UTC](https://boards.straightdope.com/t/obama-proposes-pay-as-you-go-law-to-congress/499239/55 "2009-06-10T16:58:04Z")
> [@smiling\_bandit](#): > > No, economists do not agree that it is neccessary. One (large but stupid) school of thought favors it. This side is wrong. It is empirically wrong, in that no one has ever manage to spend their way out of a recession, much less a despression, yet. Roosevelt accomplished nothing exceopt to mitigate it and significantly harm the American polity in the process with his naked power-grabs and bad management. SOme people have failed to learn that you ought to model your behavior, if after anything, then after _sucessful_ strategies. This is not true. You have chosen to believe nonsense because it shores up your prejudices. Most economists agree that the government is the spender of last resort. And that inflation from spending is better than deflation in the long run. You are essentially arguing for the economic version of creation theory. Simply rubbish. > [@](#): > > The entire argument here is that if we just blow enough money we can somehow pull through. This ignores two things entirely: the cost of paying back that money, the risk that it will be wasted, and the the fact that there may not be enough money to do it, period. As I said, inflation is better than deflation. > [@](#): > > And if it so neccessary, please explain why the money is being blown in a wildly flagrant manner to shore up Democrat political support in a bad economy, and going to Democrat’s home districts? More to the point, if the economic strategy is going to wortk so well, why has it already failed horribly. Obama likes to crow about the many jobs he’s supposedly “created or saved.” Aside from being a meaningless phrase, his supposed “worst case scenario” is already much rosier than the actual picture, while his other boneheaded moves have already undermined investor confidence across the board. I shouldn’t have to explain this to you, but the economy is big. Like godzilla, it does not spin on a dime. Remember, any spending is stimulative. Period. Stimulus money for pothole repair. The city pays a contractor. The contractor pay’s his worker. The worker pays for his daughter’s Karate lesson. The Karate Sensei pays for a pair of roller blades. The Big 5 Sporting goods store pays its supplier. The supplier pays its accountant. Get it? Spending stimulates the economy, and they say that each dollar spent gives 1.79 into the economy as a whole. Whereas the Republican tax cut method means that people get a little back. And they tend to save it. So for each dollar spent some amount less than a dollar goes into the economy. Tax cuts stimulate less than spending. And if you can stimulate the economy and at the same time get lasting benefits, like say the potholes on main street being filled, bully for you. > [@](#): > > And finally, please cite that most economists support a massive bailout. Oh, and your political heroes claiming they do does not count. I won’t be holding my breath. I assume you mean the stimulus package, because that’s what was being discussed. Do you understand the the bailout and the stimulus are different things? [http://archives.chicagotribune.com/2009/jan/18/nation/chi-stimulus\_bdjan18](http://archives.chicagotribune.com/2009/jan/18/nation/chi-stimulus_bdjan18) > [@](#): > > While economists might quibble with specifics, the vast majority agree that some kind of massive government spending plan is necessary. [http://www.politico.com/news/stories/0209/18845.html](http://www.politico.com/news/stories/0209/18845.html) > [@](#): > > “Most economists say that [the stimulus] is so big it will have to do some good. It will generate some GDP growth,” said U.S. Chamber of Commerce chief economist Martin Regalia. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [June 10, 2009, 5:26pm UTC](https://boards.straightdope.com/t/obama-proposes-pay-as-you-go-law-to-congress/499239/56 "2009-06-10T17:26:42Z")
> [@Lobohan](#): > > [http://archives.chicagotribune.com/2009/jan/18/nation/chi-stimulus\_bdjan18](http://archives.chicagotribune.com/2009/jan/18/nation/chi-stimulus_bdjan18) > [http://www.politico.com/news/stories/0209/18845.html](http://www.politico.com/news/stories/0209/18845.html) Add: > [@](#): > > Most economists agree that the red ink is both unavoidable and appropriate. To prevent a steep recession becoming a depression, governments must step in to forestall financial collapse and counter the slump in private demand. Financial markets seem to agree. Yields on government bonds in most rich countries are extremely low as shell-shocked investors clamour for the safety of public debt. > > SOURCE: [http://www.economist.com/finance/displayStory.cfm?story\_id=13035552](http://www.economist.com/finance/displayStory.cfm?story_id=13035552) (Me waits for him to tell me The Economist and Chicago Tribune count as my political heroes) ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [June 10, 2009, 6:32pm UTC](https://boards.straightdope.com/t/obama-proposes-pay-as-you-go-law-to-congress/499239/57 "2009-06-10T18:32:06Z")
> [@furt](#): > > 1. It was always his intent to jack up taxes dramatically to pay for a huge permanent expansion of government. > > 2. He never really thought about it before now. > > 3. > * * * Here’s my #3: A large stimulus package that included significant tax cuts is urgently needed to get the economy moving again. That has created a larger deficit which needs to be fixed. The alternative to not doing a stimulus, in the opinions of most economists, would worsen the crisis. PAYGO is one element of bringing future deficits down to manageable levels. The deficit cannot be eliminated overnight because cutting spending or raising taxes right now to do so would be an anti-stimulus, and do further harm to the economy. Is that a reasonable answer for you? I’m sure it isn’t. Did you actually seek a reasonable answer? I’m not sure you did. For all of those economic conservatives who want to re-write history to make it look like most other economic conservatives advocated doing nothing as opposed to increasing the deficit. Not true. Even guys like House Minority Whip Eric Cantor advocated hundreds of billions of dollars in unpaid for tax cuts as his solution to getting the economy moving again. The anti-stimulus crowd is entitled to their own opinions, but they aren’t allowed to rewrite history to make it look like a lot of conservatives advocated no stimulus. Not to put too fine a point on it, any stimulus would have meant bigger deficits, whether it was due to tax cuts or spending increases. On **Mr. Moto’s** point about corporation tax rates, let us keep in mind that most corporations don’t pay anything in corporate taxes. [See table 1.](http://www.gao.gov/new.items/d08957.pdf) Finally, to the substance of the OP. There had been criticism that PAYGO as proposed by Obama doesn’t include controls on discretionary spending. As far as my memory serves, PAYGO has never included controls on discretionary spending, which has separate budget enforcement mechanisms which have never lapsed, never expired. ---
**Author:** ![Mr.Moto](https://avatars.discourse-cdn.com/v4/letter/m/9de0a6/32.png) [@Mr.Moto](https://boards.straightdope.com/u/Mr.Moto)\ **Post date:** [June 10, 2009, 6:57pm UTC](https://boards.straightdope.com/t/obama-proposes-pay-as-you-go-law-to-congress/499239/58 "2009-06-10T18:57:20Z")
> [@Ravenman](#): > > On **Mr. Moto’s** point about corporation tax rates, let us keep in mind that most corporations don’t pay anything in corporate taxes. [See table 1.](http://www.gao.gov/new.items/d08957.pdf) Right. I alluded to this issue above. [Here is a more detailed treatment of it.](http://www.usatoday.com/money/perfi/taxes/2008-03-20-corporate-tax-offshoring_N.htm) > [@](#): > > “The U.S. tax system does provide an incentive to locate production offshore,” says Martin Sullivan, a contributing editor to Tax Notes, a non-profit publication that tracks tax issues. > > At issue is the U.S. tax code’s treatment of profits earned by foreign subsidiaries of American corporations. Profits earned in the United States are subject to the 35% corporate tax. But multinational corporations can defer paying U.S. taxes on their overseas profits until they return them to the USA — transfers that often don’t happen for years. General Electric, for example, has $62 billion in “undistributed earnings” parked offshore, according to recent Securities and Exchange Commission filings. Drug giant Pfizer boasts $60 billion. ExxonMobil has $56 billion. > > “If you had two companies in Pittsburgh that both were going to expand capacity and create 100 jobs, our tax code puts the company who chooses to put the plant in Pittsburgh at a competitive disadvantage over the company that chooses to move to a tax haven,” says former White House economist Gene Sperling, a Clinton adviser. > > …Whatever the employment impact, the deferral provision is costing the U.S. government money. A new study published in Tax Notes this month concludes that multinationals shifted almost $50 billion in income to low-tax countries in 2004, depriving the government of $17.4 billion in tax revenue. To recoup some of the lost cash, Congress in 2004 allowed corporations a one-time opportunity to repatriate profits at a special 5.25% tax rate. In 2006, corporations paid $354 billion in federal taxes. > > So far, the Democrats have been alone in targeting for change the foreign income deferral. Presumptive Republican nominee Sen. John McCain of Arizona has called for a cut in the corporate tax rate to 25% but has not mentioned deferral. > > The Bush administration warned last year that U.S. corporate giants are at a competitive disadvantage in world markets because foreign rivals pay lower taxes in their home countries. The Treasury Department last summer convened a conference on business taxation but has not developed any formal proposal. In an interview with USA TODAY earlier this month, Treasury Secretary Henry Paulson said U.S. multinationals would “shrivel up” if they were discouraged from investing abroad. > > “The world has changed today. A global company can be headquartered wherever they choose. … Our global companies are taxed at a higher rate than other global companies around the world, and the trend is disturbing,” he said. So anybody with a reasonable reply to my assertion is welcome - I think it is self evident that corporate taxes are too high, too complex, and that the loopholes lead to unproductive and even economically undesirably corporate behavior. But if you think they aren’t, serve up some proof. ---
**Author:** ![YogSothoth](https://avatars.discourse-cdn.com/v4/letter/y/8edcca/32.png) [@YogSothoth](https://boards.straightdope.com/u/YogSothoth)\ **Post date:** [June 10, 2009, 6:58pm UTC](https://boards.straightdope.com/t/obama-proposes-pay-as-you-go-law-to-congress/499239/59 "2009-06-10T18:58:09Z")
> [@Caldazar](#): > > Why should the fact that deficit spending was deemed necessary by a majority be a valid reason for blindly borrowing up to $787 billion? Because in the opnion of most economists, it was necessary to spend our way out of the recession. To “blindly” borrow is a misnomer. We knew that future cuts will be necessary but that current spending is more important right now. There was nothing blind about it. To put it another way, if we didnt borrow, we’d go bankrupt and wouldnt have a future to borrow from. By spending future capital, Obama at least assures things won’t be as bad now, in an attempt to fix it > [@Caldazar](#): > > You can say you need to borrow money and at the same time also demonstrate how you plan to pay it back. Deficit spending and fiscally responsible budget planning are hardly mutually exclusive. But that’s what he’s doing. He’s using deficit spending and trying to prepare for the future at the same time. You may not see that, but that’s why we disagree > [@Caldazar](#): > > Pay-as-you-go provisions are neither sudden nor cataclysmic; they are already supposed to be an active provision in government budgeting. They were implemented in 1990-2002. They were again adopted in 2007, but were never properly enforced. So if its not sudden or cataclysmic, why do you expect change like instant budget solvency to be implemented? I was not referring to PAYGO as sudden or cataclysmic, you seemed to have misunderstood that point. I was saying that to expect PAYGO to be completely loophole free with no exceptions would be sudden and cataclysmic. You seemed to agree, since you said they were implemented years ago but never adopted. So what if Obama tries to implement it now but allows exceptions? Let his version work, and when the economy gets better, he can start closing the loopholes > [@Caldazar](#): > > Who here is advocating that we cut public services tomorrow to immediately balance the yearly budget? We’re in the midst of a severe recession, and some deficit spending is entirely appropriate. Sure, the size and nature of the spending can (and should) be discussed. But there’s nothing inherently wrong with borrowing money today because it’s been deemed necessary to do so. However, the point of the pay-as-you-go rules is that you then should specify how you will pay back the loan at some point in the future through some combination of tax increases and spending cuts. Pay-as-you-go rules do not require that you have a balanced budget each and every year; they require that you have a balanced budget over time. In this particular case for instance, Obama is proposing that average mandatory spending should be balanced against average revenues over a ten-year period. This again leads back to my initial concerns of why only now should fiscally responsible budgeting be a concern, and why only portions of the budget should be subject to pay-as-you-go rules instead of the entire budget. What is wrong with balancing spending against revenues? You seem to be arguing 2 things here: How terrible the stimulus was and how bad PAYGO is. I dont see anything wrong with the stimulus because it was necessary to spend a lot at the time when our economy was tanking. And I dont see PAYGO as fiscally irresponsible because it tries to achieve a balance between spending and borrowing. If your assertion is that the stimulus doesn’t mix with PAYGO, then that is a seperate issue entirely It is completely possible to be fiscally loose and then, a few months later when things look better, try to fix some of it. Being loose was necessary. > [@furt](#): > > right. Which is why unemployment is now _worse_ than the “what will happen if we don’t pass the stimulus” number advanced by Obama a few months ago. You didn’t really expect the recession momentum to suddenly stop the hour the bill was passed did you? > [@furt](#): > > I’d settle for Obama proposing a balanced budget by 2015. Instead, his own proposals and projections have the deficits getting bigger, not smaller, by then. I know Obama rocks and everything, but even he can’t completely stop the economic recession by himself. Besides, 2015 is a long way away, why don’t you stop fuming at him for what he may or may not do 6 years from now? > [@furt](#): > > I’m not a Republican, but yeah, I pretty much would. Provided we could keep congress from interfering with how the budgets get trimmed, I’d love to tell just about every single federal agency that their budgets will be shrinking 10% a year over the next three years. Of course, “provided” we acquiesce to your specific conditions, any scenario can play out. But we can’t, because Congress and the President works together on a budget. It would be impossible to take them out of trimming things out of the budget. So in my original example, I guess I’ll put you down as a “No, even I, **furt** , am not in favor of stopping all extraneous spending”, thus proving me right. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [June 10, 2009, 7:08pm UTC](https://boards.straightdope.com/t/obama-proposes-pay-as-you-go-law-to-congress/499239/60 "2009-06-10T19:08:22Z")
> [@Ravenman](#): > > Here’s my #3: A large stimulus package that included significant tax cuts is urgently needed to get the economy moving again. That has created a larger deficit which needs to be fixed. The alternative to not doing a stimulus, in the opinions of most economists, would worsen the crisis. PAYGO is one element of bringing future deficits down to manageable levels. The deficit cannot be eliminated overnight because cutting spending or raising taxes right now to do so would be an anti-stimulus, and do further harm to the economy. > > Is that a reasonable answer for you? I’m sure it isn’t. It isn’t for me. Every pro-Obama poster has dodged this question in every thread it is posted in. If it was stimulus, and only stimulus, and a one time thing, you would see this year’s 1.7 trillion dollar deficit and next year it would be back to 400 billion. But it doesn’t. It is NOT stimulus. It is a massive, perpetual increase in continuous funding of government programs. Answer these: 1. Is Obama predicting that we will still be in this bleak economic situation in 2019? 2. If not, then why is his deficit projected to be even higher that year than this year? What economic crises perpetuates the spending when by his own numbers we have returned to prosperity? It couldn’t be good, old fashioned liberal government expansion, could it? [Previous page](https://boards.straightdope.com/t/obama-proposes-pay-as-you-go-law-to-congress/499239.md?page=2) [Next page](https://boards.straightdope.com/t/obama-proposes-pay-as-you-go-law-to-congress/499239.md?page=4)