# Raising the debt ceiling with more balanced budgeting **URL:** \ **Category:** Great Debates\ **Created:** [July 15, 2011, 6:21pm UTC](https://boards.straightdope.com/t/raising-the-debt-ceiling-with-more-balanced-budgeting/589156 "2011-07-15T18:21:33Z")\ **Posts on this page:** 12\ **Page:** 5
**Author:** ![Northern\_Piper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/northern_piper/32/5304_2.png) [@Northern\_Piper](https://boards.straightdope.com/u/Northern_Piper)\ **Post date:** [July 21, 2011, 1:09pm UTC](https://boards.straightdope.com/t/raising-the-debt-ceiling-with-more-balanced-budgeting/589156/81 "2011-07-21T13:09:43Z")
> [@tim-n-va](#): > > The Canada system can’t work in the US as both political parties seem to be willing to allow the country to suffer short term harm as long as the other party gets blamed. But that’s my point. We have political parties have strong ideological divides, just like you do. However, our system of responsible government means that normally one party gets a majority in Parliament and then has complete responsibility to implement its program. The people then judge the results at the next election. Representative democracy in Canada does work, thanks to the constitutional structure. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [July 21, 2011, 9:39pm UTC](https://boards.straightdope.com/t/raising-the-debt-ceiling-with-more-balanced-budgeting/589156/82 "2011-07-21T21:39:19Z")
> [@furt](#): > > It’s both. > > Conservatives are unwilling to acknowledge the fact that our overall tax rates now are lower than they were when were last in surplus, and thus a huge chunk of our current deficit can fairly be attributed to that. Its not really both, its mostly the conservatives. > [@](#): > > Liberals are unwilling to acknowledge the fact that even were the Bush tax cuts repealed tomorrow – including the ones for the poor and middle class – and all troops currently deployed in the Middle East brought home the day after, we’d _still_ be in deficit. Well, if you back out the effects of the recession itself (in the form of lower tax revenues and higher social safety net costs) and you back out the cost of the dditional interest accumulating on the debt incurred to finance the war and the tax cuts and and the effects of the recession, then you are pretty much close to break even by next year. > [@](#): > > - On this point the “in theory” needs to be emphasized. The “Total” column on [this chart](http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=205) lists the % of GDP that the government has taken in over the last 75 years. Note that even when tax rates were much higher than they are now, (e.g. the 1950s and 1970s), the actual revenue collected was not greater. Why that is is a matter of dispute: conservatives would argue that it’s because the higher rates make investors less likely to grow the economy; liberals would say otherwise. There is no dispute about it. There are lies but not really a dispute. When tax rates were high, there were also a lot of tax loopholes. What you should look at is the actual increase or decrease in tax revenue as a percentage of GDP versus the CBO anticipated increase or decrease in tax revenue. When Reagaon cut top marginal taxes from 50% to 36%, he also got rid of individual tax shelters. The effect was supposed to be revenue neutral (as a percentage of GDP) and in fact it was. You’re only looking at top marginal tax rates as a proxy for the overall tax burden. The top marginal tax rate is just one aspect of the tax law. > [@](#): > > Balancing the budget without making major spending cuts would mean getting federal revenue as a % of GDP up to the 22-25% range, something that has never before happened. Not to say it can’t happen (most European countries do it) but it’s never been done _here_. The reason it is so high right now is the stimulus and the high level of social safety net ppayments going on right now. The stimulus goes away next year and the social safety net payments go away when the jobs come back. ETA: To be fair, the low tax receipts will also increase as the economy improves ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [July 21, 2011, 9:55pm UTC](https://boards.straightdope.com/t/raising-the-debt-ceiling-with-more-balanced-budgeting/589156/83 "2011-07-21T21:55:15Z")
> [@furt](#): > > If they say it’s _impossible_, then yes, it’s probably untrue. If they merely say it’s unlikely or improbable, well then their guess about the future is as good as yours, and they do have history on their side. > > In 1953, the lowest bracket paid 22% in tax and the highest paid 91%. It decreased steadily until by 1988, they stood at 15% and 28%. Tax revenue during the whole period fluctuated narrowly, between 17-18% of GDP. > > From 1988-2008 the lowest rate dropped to 10%, while the highest went up to 39%, then down to 35%. And all though that while, tax revenue fluctuated little, though in a slightly higher range between 18-20% of GDP. > > That’s not ideology, that’s data. Its cherrypicked, misleading data. Its easy to think of the top marginal tax rate as a proxy for the entire tax system but its a bit more complicated than that. > [@](#): > > For 60 years, across various booms and busts, with personal and corporate taxes rising and falling and all sorts of policy changes back and forth to maximize revenue, the government has never been consistently able to get above 19% of GDP. You’re welcome to believe that raising rates to (say) 1970s levels will lead to higher revenues then they did in the 1970s; and it may work out that way. But it’s far from some foregone conclusion. Mostly because the government doesn’t WANT to get revenue levels above 20% of GDP. If there was real political will to increase the government’s share of GDP, they could do it but changing the top marginal tax rate is often as much about who pays the tax rather than how much tax is paid. > [@](#): > > If your idea is that whatever works in Europe will naturally work here, you should be in favor of raising personal income tax, while _lowering_ corporate tax rates pretty sharply. [Cite.](http://en.wikipedia.org/wiki/File:Income_Taxes_By_Country.svg) Good luck getting many progressives on board for that campaign. This is one of the notes to thte chart:The ‘Corporate rate’ chart is noted as follows “Where a progressive (as opposed to flat) rate structure applies, the top marginal rate is shown.” It is showing the top rate for corporate taxes, not a mean rate. The actual tax rates being paid by corporations is lower than tax rates paid by corporations in other countries. With that said… we should lower corporate tax rates and remove a lot of the deductions, get depreciation back in synch with economic depreciation and get rid of the special tax breaks for various industries. > [@](#): > > Of course, given that most of Europe usually has historically had much higher unemployment levels than the US, as well as their own debt problems, I’m not sure “be like Europe” is a solution. They also count their unemployment numbers a lot more honestly but with that said, it is probably not their tyax system but their labor laws that stifle employment while protecting job security (I’m thinking of France). ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [July 21, 2011, 9:57pm UTC](https://boards.straightdope.com/t/raising-the-debt-ceiling-with-more-balanced-budgeting/589156/84 "2011-07-21T21:57:02Z")
> [@furt](#): > > Sure, and a company can lose money one year and not go bankrupt. Maybe two years. Maybe ten years. > > If a company had lost money 45 of the last 50 years, and was losing more and more money every year, would \*you \*invest in it? > > Oops, too bad, you already have. The objective of government is not and should not be profit. Our government can run deficits for the rest of eternity and as long as the debt grows at a slower rate than GDP growth then we are improving our position. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [July 21, 2011, 9:58pm UTC](https://boards.straightdope.com/t/raising-the-debt-ceiling-with-more-balanced-budgeting/589156/85 "2011-07-21T21:58:35Z")
> [@Gangster\_Octopus](#): > > I am quite aware, that is why you can reduce the debt by retiring MORE debt than you incur. But there is no fundamental reason why a country should be debt free and the idea that is more fiscally responsible does not make sense either. Now I am not saying anyone here is saying that, but there are of course those who truly believe that is the case. I understand folks here are talking about the size of the debt, but as a percentage of GDP it [isn’t alarming](https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html) Now, if we can get the economy moving again that will do a a lot to help reduce the debt, IMO. Now some argue that reducing the debt is what’s needed to move along the economy, I am not particularly in that camp. But many seem to argue that we need to reduce the deficit because debt is bad. That just is not true. Not to nitpick but the way you incurr less debt than you retire is to run surpluses. how else do you pay off the retiring debt? ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [July 21, 2011, 10:02pm UTC](https://boards.straightdope.com/t/raising-the-debt-ceiling-with-more-balanced-budgeting/589156/86 "2011-07-21T22:02:03Z")
> [@Northern\_Piper](#): > > But that’s my point. We have political parties have strong ideological divides, just like you do. However, our system of responsible government means that normally one party gets a majority in Parliament and then has complete responsibility to implement its program. The people then judge the results at the next election. Representative democracy in Canada does work, thanks to the constitutional structure. I think it would be great if we required live debates like we see in the British Parliament. It would be so much easier to call people on their bullshit. ---
**Author:** ![Gangster\_Octopus](https://avatars.discourse-cdn.com/v4/letter/g/a8b319/32.png) [@Gangster\_Octopus](https://boards.straightdope.com/u/Gangster_Octopus)\ **Post date:** [July 21, 2011, 10:53pm UTC](https://boards.straightdope.com/t/raising-the-debt-ceiling-with-more-balanced-budgeting/589156/87 "2011-07-21T22:53:39Z")
> [@Damuri\_Ajashi](#): > > Not to nitpick but the way you incurr less debt than you retire is to run surpluses. how else do you pay off the retiring debt? Year 1: I make $50 and I have $100 in expenses. I borrow $50 from my buddy to pay my $100 in expense. I have a $50 debt Year 2: I make $100 and I have $125 in expense, the $50 I owe and $75. I pay off the $50, spend $50 of my own and borrow $25. My debt is lower by $25, even though I spent more each year than I made. Now of course this is a simplification, what with interest and all. And you cannnot eliminate the debt this way, I was just stating that its possoible to lower the debt while running an annual deficit. ---
**Author:** ![Saint\_Cad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/saint_cad/32/18907_2.png) [@Saint\_Cad](https://boards.straightdope.com/u/Saint_Cad)\ **Post date:** [July 22, 2011, 12:03am UTC](https://boards.straightdope.com/t/raising-the-debt-ceiling-with-more-balanced-budgeting/589156/88 "2011-07-22T00:03:34Z")
> [@gonzomax](#): > > Except inaccurate. We know well that you can not cut your way to balancing the budget. It takes more revenue. We have been slashing programs for a long time. Really? So you claim that spending has decreased? ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [July 22, 2011, 1:23am UTC](https://boards.straightdope.com/t/raising-the-debt-ceiling-with-more-balanced-budgeting/589156/89 "2011-07-22T01:23:21Z")
> [@Gangster\_Octopus](#): > > Year 1: I make $50 and I have $100 in expenses. I borrow $50 from my buddy to pay my $100 in expense. I have a $50 debt > Year 2: I make $100 and I have $125 in expense, the $50 I owe and $75. I pay off the $50, spend $50 of my own and borrow $25. My debt is lower by $25, even though I spent more each year than I made. Um no the $50 you pay back in year two is not spending. In fact $25 of it is merely rolling over old debt and only the other $25 is surplus. > [@](#): > > Now of course this is a simplification, what with interest and all. And you cannnot eliminate the debt this way, I was just stating that its possoible to lower the debt while running an annual deficit. You are running a surplus the second year because you only spent $75 the second year and earned $100. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [July 22, 2011, 1:53am UTC](https://boards.straightdope.com/t/raising-the-debt-ceiling-with-more-balanced-budgeting/589156/90 "2011-07-22T01:53:00Z")
> [@Saint\_Cad](#): > > Really? So you claim that spending has decreased? WARNING PDF!!! [http://www.gpoaccess.gov/usbudget/fy11/pdf/hist.pdf](http://www.gpoaccess.gov/usbudget/fy11/pdf/hist.pdf) Lots of good information. around page 140 there are some charts that break down spending between discretionary and non-discretionary and breaks down the discretionary between military and non-military for every year since 1962. We cut non-military discretionary twice during Reagan (once when he first got into office and again in 1986) , once during Clinton and once during GWBush. (there were also cuts in '69) ---
**Author:** ![Saint\_Cad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/saint_cad/32/18907_2.png) [@Saint\_Cad](https://boards.straightdope.com/u/Saint_Cad)\ **Post date:** [August 8, 2011, 10:56pm UTC](https://boards.straightdope.com/t/raising-the-debt-ceiling-with-more-balanced-budgeting/589156/91 "2011-08-08T22:56:06Z")
> [@Damuri\_Ajashi](#): > > WARNING PDF!!! > > [http://www.gpoaccess.gov/usbudget/fy11/pdf/hist.pdf](http://www.gpoaccess.gov/usbudget/fy11/pdf/hist.pdf) > > Lots of good information. > > around page 140 there are some charts that break down spending between discretionary and non-discretionary and breaks down the discretionary between military and non-military for every year since 1962. > > We cut non-military discretionary twice during Reagan (once when he first got into office and again in 1986) , once during Clinton and once during GWBush. (there were also cuts in '69) So if I cut my monthly budget on movies then I’ve cut spending even if my overall spending goes up? ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [August 9, 2011, 3:18am UTC](https://boards.straightdope.com/t/raising-the-debt-ceiling-with-more-balanced-budgeting/589156/92 "2011-08-09T03:18:29Z")
> [@Saint\_Cad](#): > > Really? So you claim that spending has decreased? Did I say that? We had a program to save the economy that cost 800 bill. No telling how bad things would have been if we did not do that. Yes we spent money to fix the disaster caused by the imbalance. If we did not wage wars off the books. If we did not cut taxes. If we did not give a few trillion to Pharm.,we would not have had that program. [Previous page](https://boards.straightdope.com/t/raising-the-debt-ceiling-with-more-balanced-budgeting/589156.md?page=4)