[QUOTE=Honesty]
I don’t get this argument. It’s clear looking at the European crisis that nearly all of the countries implementing austerity are in Shit’s Creek without a paddle. Even the UK has careened into a double-dip recession which is likely due to the spending cuts that the government has implemented. It seems very obvious to me: decreased government spending during an economic downturn is deleterious to the economy.
[/QUOTE]
It might seem obvious to you, but, er, obviously not everyone agrees. Also, you seem to think that this is a choice for some of these countries. Also, you are assuming that it’s ‘austerity’ that’s responsible for their down turned economies, while again in several cases they were going to be tanking no matter what they did.
To me this is sort of like saying that Obama’s economic plans all suck because the economy is bad, without taking into account that he inherited an economy that was already tanking when Bush left.
No one is answering you because your question is a straw man. The purpose of ‘austerity’ isn’t to lead to instant economic growth and prosperity…it’s to try and get run away debt and spending under control, which in theory will eventually lead to at least some stability and balance wrt spending. I assume you are in favor of those governments simply borrowing more billions of Euros in order to…what? Keep things going for another year or so, before borrowing more? And more? What about those countries that can’t borrow more?
One also has to consider that austerity may be a better/the only viable choice when external constraints exist–for example, when you can’t float your currency to hold off the deleterious effects of a debt crisis because you’re locked into a single currency with people who aren’t experiencing the same levels of debt crisis and have no incentive to inflate the monetary base just to bail you out. Compare debt ratios and solvency between Japan and Greece, for example.
Is your case so weak that you need to obfuscate and argue with strawmen? We’ve still seen zero examples of people (other than Dick Cheney) advocating continual deficits, and zero examples of non-Keynesians who call themselves Keynesian.
This may be factually correct, but is still highly misleading. If we consider Gross Federal Debt as a percentage of GDP we see a number that declined from 94.1% to 32.5% between 1950 and 1981. This debt increased in the 1980’s and more recently in large measure due to … guess what? … tax cuts for the rich.
The shortfall in Federal government revenue today is roughly twice as large as the entire “discretionary” portion of the Federal budget. Focusing on this simple fact will yield far more insight than playing Humpty-Dumpty with strawmen.
If Dick Cheney is the only person who advocates continual deficits then why have we had then for 60 years? What isn’t there anyone other than Clinton during that time that has said maybe deficits in good times are bad and maybe we should have a surplus.
As I said before, you are expecting “Keynesians” to be doctrinaire in their strict adherence to every word that fell out of his typewriter, like he was Kim Il Sung or something. I don’t know of a single person who advocates such a thing. Even Keynes joked about this while he was still alive.
Sorry for the technical lingo. By share, I meant percentage. By GDP, I meant the typical measure of national economic output. By debt, I meant the debt of the United States. Let me google that for you: Link.
Another serious question: in your response, you posted a lot about deficits. Are you not clear on the difference between debt and deficits? Because I’m feeling as though we are at dinner and I asked you for the salt shaker, and you got confused at my reaction when you passed me the cheese tray or a shoe.
If I may be allowed to quote myself: "Plus, there’s the little matter of causation: example, the fact that deficits are routine is more a testament to our system of government and how resistant it is to change, rather than anyone actually advocating that deficits should be run in good times and in bad. "
Because the political and economic position almost every politician actually holds is “I will do whatever will get me re-elected/allow me to remain wealthy and powerful when I leave office”.
That usually means pork and pandering to special interests. And claiming that it’s really the other party’s fault that deficits keep happening.
It’s certainly not from any adhesion to any Keynesian doctrines, straw-based or otherwise. Not all that many US politicians claim to be Keynesian, as I understand it.
All that is fine to state but ultimately moot as we are in a recovery period and we need to spend our way out of it until the economy improves, then we can go back to trying to pay down the deficit. The GOP cannot be trusted, they fiddle with tax cuts, especially for the rich, whether we’re booming or suffering. There IS no such thing as trickle down, even the recent study done by Congress’s own in-house beancounters said that tax cuts for the rich do nothing, but the GOP pressured them to rescind that report. That just shows how they are completely divorced from reality, like under Bush when they went all anti-science on everything from abstinence to climate change. The GOP cannot be trusted and I neither listen to nor believe anything they say on taxes, education, or anything.
First, let’s get one thing straight: The upper 1% (THE RICH) pay on average about 37% of all tax revenues while the upper 10% (THE WELL OFF) pay on average over 70% of all tax revenues. NO FREE RIDES!!! GOT THAT?? Stop expecting others to pay your share of taxes or pay for your wasteful spending habits.
Next, we have been living beyond our means for ten years now, with deficits piled upon deficits with no end in sight. The current amount owed on our “credit card” called the US Debt is almost $50,000 dollars for every man, woman and child in the United States and that does not include interest payments! Got that?
I for one think the only compromise that makes sense is the current agreement labeled the “Fiscal Cliff”. Time to bight the bullet and end our outrageous financial behavior. We should have done this years ago and…
THE LONGER WE WAIT…
THE WORSE OUR LONG TERM FINANCIAL SITUATION IT WILL GET! :eek:
If any Wikipedia editor needs a good example for Innumeracy or How to mislead with statistics, I recommend this peculiar meme. Warren Buffett (along with most of the very rich) really does pay a lower aggregate tax rate than the middle class.
Why then do the rich pay such a huge percentage of the total tax? Because they have a huge percentage of the total income. Even if one rejects utilitarianism, charity, etc., large income inequality is bad for a country’s social, political and economic well-being and stability. The U.S. has a much more unequal income distribution than any other developed country.
Using Warren Buffett as an example of people making >$250,000 in annual income paying too little in taxes is just absurd. Warren Buffett’s tax payments will be effectively unchanged as a result of anything that the Democrats have proposed. They could raise the Federal income tax rate to 95% on people making more than $50,000 a year and Warren Buffett would still be unaffected. He’s the perfect example for people to use when they want to raise taxes while making dishonest arguments. He doesn’t pay much in taxes because all of his income is unrealized. He has the ultimate flexibility on how much he makes, when he receives it, and in what form he receives it. Nothing Bush did or Obama is proposing will change that.
Is it honestly your belief that the income inequality in the U.S. is a result of the tax code and that what Obama is proposing will be a solution to this problem?
So much confusion in your post. I scarce know where to begin.
First: My response was specifically to counter the nonsensical lead-in to another post. Had I wanted to connect dots back to OP’s question, I would have done so.
Second: The claim about Buffett applies to Joshua P. Scudley as well; it is your insistence on Buffett that is misplaced, not mine. The mention of “>$250,000” suggests you’re unclear on the difference between well-off and super-rich, but most importantly..
Third: “all of his income is unrealized” Do you think when Buffett made his claim about his income and tax rate, that he was including unrealized gains? I hope you’re not that poorly informed, but that’s what you imply. A way to affect super-rich like Buffett is to increase the tax on realized gains, though this was not a recommendation implied by my post, whose actual content and intent you’ve completely ignored.
Fourth: Your question about “income inequality [resulting from] the tax code” suggests you’re a fan of One Cause – One Effect thinking. Work on that hang-up; then come back and ask for help about the tax code.
If we raise taxes on the wealthy as Obama has proposed (effectively returning rates on only $250,000 / $200,000 earners to pre-Bush rates, don’t we still need to raise more revenue if we are not going to do meaningful entitlement reform? The CBO says that we need an additional $750 billion in revenue in the single year of 2020 to keep debt-to-GDP from rising. Raising taxes as proposed raises $110 billion. We’re still $640 billion short.
When we need to raise taxes again, do we just raise them on the wealthy again? Does raising them only on the wealthy now set us up for future problems in the future if we need to do another tax hike?
Didn’t we just have a big tax increase on the wealthy? i) 3.8% capital gains and divided tax going into effect in 2013 on $250,000 / $200,000 earners. ii) 0.9% Medicare tax on income for $250,000 / $200,000.
Who, exactly, is saying that we only need to raise taxes and not cut any spending at all? Depending on which proposal over the last couple years you want to look at, Democratic proposals on the deficit have consistently had spending cuts of a few to several times larger than tax increases. And by the way, weren’t conservatives just arguing a couple weeks ago that Obama’s $716 billion cut to Medicare was going to wreck the program? Are entitlement cuts back to being a good thing again? I get so confused when the talking points change after every election.
What might happen in the future isn’t relevant to what we’re discussing today. If I propose that we drive to Dallas to dinner, it is not relevant to ask if next year we’re going to drive to San Francisco.
Your definition of 0.9% as a “big tax increase” is funny. If you can carry a tune, your brand of political humor could make you the next Mark Russell!
Heck, we can just borrow more money, and print more money. If $5 trillion of stimulus was good, another $6 trillion should be even better…face it, the world is awash in cash…and foreign investors are eager to buy our bonds…so spend away.
As I’ve asked before, how’s that European austerity plan working out for you fans of the Austrian school? Have all those budget cuts and public sector layoffs resulted in the Reagan-like economic recovery miracle that you all projected?
Let me break it down in a simple way for you. People use Buffett and his tax rate to compare to average people because he is enormously wealthy and has name recognition, correct? Average people generally do not distinguish between unrealized and realized income because for your average person this is not an issue as their income is all realized, correct? Buffett’s enormous wealth is essentially entirely made up of unrealized gains, correct? People aren’t taxed on unrealized gains, correct? Buffett’s realized income is a tiny fraction of his wealth, correct?
If all of those things are correct, then isn’t talking about Buffett’s tax rate meaningless? You will never affect him by raising taxes on realized income.
What? No, of course not. I am saying that talking about his tax rate, which excludes his unrealized income, is misleading because essentially all of his income has been unrealized.
How can you possibly think this? He will just continue to leave all his income in unrealized gains.
What? I think income inequality is caused by a host of factors. It appears that you think that it is primarily caused by the tax code. How am I the one with the One Cause - One Effect viewpoint?
Did the Obama proposal that Geithner presented include any meaningful cuts to social security, medicare or medicaid? If social security, medicare, and medicaid are projected to exceed total government revenues in something like 20-30 years, how can any meaningful fiscal policy reform exclude cuts to them?
I have never seen Democrats make any meaningful specific proposal to cut entitlement spending. Perhaps you can point one out.
I don’t give a shit what stupid thing Republicans were saying or are now saying. “Conservative” is a meaningless marketing label, so I will just assume that you mean Republicans when you say “conservatives”.
Disregarding what might happen in the future seems like a wise strategy when planning our long-term fiscal policy.
I guess I’m confused. CBO estimates I have read put the 3.8% and 0.9% tax increases at $210 billion and act as the largest part of the funding mechanism for the entire PPACA law. Is that not a lot?
