# Where is Bush going to get the Money to Fund his new programs **URL:** \ **Category:** Great Debates\ **Created:** [November 22, 2004, 6:30am UTC](https://boards.straightdope.com/t/where-is-bush-going-to-get-the-money-to-fund-his-new-programs/276067 "2004-11-22T06:30:31Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![minty\_green](https://avatars.discourse-cdn.com/v4/letter/m/f6c823/32.png) [@minty\_green](https://boards.straightdope.com/u/minty_green)\ **Post date:** [November 22, 2004, 3:29pm UTC](https://boards.straightdope.com/t/where-is-bush-going-to-get-the-money-to-fund-his-new-programs/276067/21 "2004-11-22T15:29:18Z")
> [@Sam Stone](#): > > 1. Tax reform. Bush says this is going to be revenue neutral. That remains to be seen, but for now there’s nothing to discuss. Ah, the joys of Republican math, where it is possible to fund increased government spending on pet projects through tax reform that is “revenue neutral.” ---
**Author:** ![Master\_Wang-Ka](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/master_wang-ka/32/3325_2.png) [@Master\_Wang-Ka](https://boards.straightdope.com/u/Master_Wang-Ka)\ **Post date:** [November 22, 2004, 4:12pm UTC](https://boards.straightdope.com/t/where-is-bush-going-to-get-the-money-to-fund-his-new-programs/276067/22 "2004-11-22T16:12:13Z")
Where is Bush going to get the money to fund his new programs? Same place his old man found the money to pay off the Savings and Loan disaster. Us. ---
**Author:** ![bup](https://avatars.discourse-cdn.com/v4/letter/b/6bbea6/32.png) [@bup](https://boards.straightdope.com/u/bup)\ **Post date:** [November 22, 2004, 4:46pm UTC](https://boards.straightdope.com/t/where-is-bush-going-to-get-the-money-to-fund-his-new-programs/276067/23 "2004-11-22T16:46:06Z")
> [@hawthorne](#): > > And to satisfy the skeptics - who suspect that rhetoric about tax reform is just a cover story for redistributing income to the rich - they will, of course, wait for the revenue to come rolling in before the rate cuts take effect. That’s the first I’ve heard of that - what’s your source for that? ---
**Author:** ![bup](https://avatars.discourse-cdn.com/v4/letter/b/6bbea6/32.png) [@bup](https://boards.straightdope.com/u/bup)\ **Post date:** [November 22, 2004, 4:51pm UTC](https://boards.straightdope.com/t/where-is-bush-going-to-get-the-money-to-fund-his-new-programs/276067/24 "2004-11-22T16:51:03Z")
I been whooshed, ain’t I? ---
**Author:** ![Captain\_Lance\_Murdoch](https://avatars.discourse-cdn.com/v4/letter/c/47e85d/32.png) [@Captain\_Lance\_Murdoch](https://boards.straightdope.com/u/Captain_Lance_Murdoch)\ **Post date:** [November 22, 2004, 4:59pm UTC](https://boards.straightdope.com/t/where-is-bush-going-to-get-the-money-to-fund-his-new-programs/276067/25 "2004-11-22T16:59:07Z")
Borrow and spend. ---
**Author:** ![CrankyAsAnOldMan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/crankyasanoldman/32/11670_2.png) [@CrankyAsAnOldMan](https://boards.straightdope.com/u/CrankyAsAnOldMan)\ **Post date:** [November 22, 2004, 6:59pm UTC](https://boards.straightdope.com/t/where-is-bush-going-to-get-the-money-to-fund-his-new-programs/276067/26 "2004-11-22T18:59:50Z")
> [@Wesley Clark](#): > > “To pay for those large tax cuts, the administration is looking at eliminating both the deduction for state and local taxes, and the business tax deduction for employer-sponsored health insurance. That would raise nearly $926 billion over five years, according to White House and congressional documents.” That’s a handy thing to do, apparently. The latest Higher Ed Act will also eliminate the local- and state-tax deduction in the formula used to qualify for Pell Grants. That will make it look like poor families have more $$ available for college, and they will qualify for less aid or won’t qualify at all. Where else are they planning to apply this change? It could be the key to savings in other means-tested programs. This way the administration won’t have to cut the funding to programs, but by changing people’s eligibility according to a specific rule, they may curtail need for (or growth of) the social programs. ---
**Author:** ![ITR\_champion](https://avatars.discourse-cdn.com/v4/letter/i/c67d28/32.png) [@ITR\_champion](https://boards.straightdope.com/u/ITR_champion)\ **Post date:** [November 23, 2004, 5:38am UTC](https://boards.straightdope.com/t/where-is-bush-going-to-get-the-money-to-fund-his-new-programs/276067/27 "2004-11-23T05:38:08Z")
> [@clayton\_e](#): > > :eek: :eek: :eek: :eek: :mad: :mad: :mad: :mad: :mad: :mad: :mad: :mad: > I thought that must have been a typo. Friggin’ big bold **B** as in BILLION?!? > > ☹ [Believe it.]([www.nytimes.com/2004/01/](http://www.nytimes.com/2004/01/) 14/politics/campaigns/14MARR.html?hp ) Of course, 1.5 billion is a statistical blip, pocket change when you’re running a deficit of 420 billion. ---
**Author:** ![Netbrian](https://avatars.discourse-cdn.com/v4/letter/n/71e660/32.png) [@Netbrian](https://boards.straightdope.com/u/Netbrian)\ **Post date:** [November 23, 2004, 8:16am UTC](https://boards.straightdope.com/t/where-is-bush-going-to-get-the-money-to-fund-his-new-programs/276067/28 "2004-11-23T08:16:37Z")
> [@ITR champion](#): > > [Believe it.]([www.nytimes.com/2004/01/](http://www.nytimes.com/2004/01/) 14/politics/campaigns/14MARR.html?hp ) > > Of course, 1.5 billion is a statistical blip, pocket change when you’re running a deficit of 420 billion. Sorry, I can’t get your link to work. Are there other articles with a breakdown of the distribution of funds here? And does it also work to encourage same-sex marriage? 😉 Note to Sam – Thank you for addressing my questions. While I understand the logic behind the costs of Social Security privitization, it does mean that we’re increasing our debt burden **now** by even more (and paying interest on it), which does magnify even further the problems currently facing our currency, and might end up making the interest rates for our T-Bonds even more expensive. It just seems like it can’t help matters at this point, even if Social Security does need to be changed. I’m also skeptical of the tax changes being revenue neutral, if only because for every deduction/exemption/etc you take out, you get an army of angry lobbyists and their congressmen pets at your door. Moreover, Bush seems to want to have a legacy in all spheres, including social programs, which doesn’t necessarily bode well for spending in those areas. ---
**Author:** ![blowero](https://avatars.discourse-cdn.com/v4/letter/b/41988e/32.png) [@blowero](https://boards.straightdope.com/u/blowero)\ **Post date:** [November 23, 2004, 9:23am UTC](https://boards.straightdope.com/t/where-is-bush-going-to-get-the-money-to-fund-his-new-programs/276067/29 "2004-11-23T09:23:56Z")
> [@sleestak](#): > > blowero: > > The way I understand it is that lowering capital gains taxes can actually increase the taxes raised, at least in theory. So says Alan Greenspan: > > “The point I made at the Budget Committee was that if the capital gains tax were eliminated, that we would presumably, over time, see increased economic growth which would raise revenues for the personal and corporate taxes as well as the other taxes we have. The crucial issue about the capital gains tax is not its revenue-raising capacity. I think it is a very poor tax for that purpose. Indeed, its major impact is to impede entrepreneurial activity and capital formation. While all taxes impede economic growth to one extent or another, the capital gains tax is at the far end of the scale.” > > Basically the idea is that lowering the capital gains tax allows people to move money around in _investments_ which grows the economy. The taxes lost by the cut in capital gains is made up by taxes in other areas. O.K., thanks for that explanation. Now I have more questions. Isn’t that basically what was called “Reaganomics” in the 80s? I didn’t know people were still kicking that around as a supposedly viable theory. Also, for people born into “old wealth”, don’t investments often comprise their main source of income? So let’s say, as a hypothetical, you have a few hundred million in the bank. If you’re smart, you could live off the income from investing that money, without even touching the principal, right? And that’s what’s called “capital gains”, isn’t it? So wouldn’t extremely wealthy people who are investing what they already have, and using that as their primary source of income, be getting off scot free as far as being taxed? Now, I understand what you are saying, that theoretically this might stimulate the economy and increase the tax revenue brought in in the future. But when we talk about “revenue neutral”, that’s referring to _right now_ isn’t it? It’s not revenue-neutral with respect to some unspecified time in the future when the tax base supposedly increases, is it? Maybe a hypothetical would help. Say there are only 2 citizens in the U.S., Mr. Big Bucks, and Joe Schmoe. Big Bucks gets all his income from investments, and Schmoe gets all his income from employment. Let’s also say that Big Bucks paid 5000 dollars in income tax last year, and Schmoe paid 2000 dollars in income tax. Now let’s say, under a tax reform plan, the capital gains tax is eliminated, but the structure remains revenue-neutral. That means they have to take in the same amount of money as before, right? So Big Bucks’ tax bill would go down to zero, while Schmoe’s bill would go up to $7000, at least until the economy grows (and even then it’s assuming that the economy _will_ grow). Is that about the size of it, allowing for the over-simplification of my example? Or is there something I’m missing. ---
**Author:** ![sleestak](https://avatars.discourse-cdn.com/v4/letter/s/919ad9/32.png) [@sleestak](https://boards.straightdope.com/u/sleestak)\ **Post date:** [November 23, 2004, 11:19am UTC](https://boards.straightdope.com/t/where-is-bush-going-to-get-the-money-to-fund-his-new-programs/276067/30 "2004-11-23T11:19:38Z")
blowero Well, your simplification misses somethings. First, capital gains is tax on investment income when sold or traded. Mr Big Bucks buys 1 million dollars of Big Evil Corp™ at a dollar a share. The price of goes up to 1.50 a share. Mr Big Bucks sells those shares. He now has 1.5 million. The 500,000 he made is the capital gains. Capital gains are taxed when the sale happens. This is different than dividends which is a share of a company’s profits that it pays to investors. Dividends are taxed. I don’t know the rate (and don’t feel like looking it up, sorry) The arguement against high capital gains taxes is this: If Mr Big Bucks now has 1.5 million in BEC and wants to sell that stock to buy stock in another company, lets call it Small New Company(SNC) the capital gains tax is an instant hit to his investments making Mr Big Bucks _less_ likely to sell BEC and buy SNC. SNC is a small new company, hence the name, and needs investment to grow. Mr Big Bucks wants to buy some SNC. But the capial gains tax is a negative influence on Mr Big Bucks and makes it less likely for him to move his money. Why? Because he loses alot when he sells BNC. So Mr. Big Bucks is more likely to keep BEC than to sell it and SNC doesn’t get the capital it needs to grow. So Mr Big Bucks keeps his money in BEC and keeps the dividends, which are taxed, and his principle(the 1.5 mil) stays in tact and SNC does not get the investment it needs to grow. Now, Joe Schmoe, who was on the short list to be hired by SNC, is no longer iup for the job because SNC doesn’t have enough money to hire new people. Note, the capital gains tax doesn’t work aginst just rich people. It is levied against anyone who makes a capital gain. That’s the thory as I understand it. Somewhat simplified of coarse. Personaly I am for lower capital gains taxes. In fact I am for less taxes in general. And I am _not_ rich. It would be nice if the government would lower the debt and all goevenment spending. But it ain’t gonna happen anytime soon. Slee Oh, and a note about old wealth. IIRC something like 90% of milionaires are _new_. They earned the money, they didn’t inherit it. Or at least all of it. Check out [http://moneycentral.msn.com/content/SavingandDebt/P80541.asp](http://moneycentral.msn.com/content/SavingandDebt/P80541.asp) for more information ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [November 23, 2004, 4:12pm UTC](https://boards.straightdope.com/t/where-is-bush-going-to-get-the-money-to-fund-his-new-programs/276067/31 "2004-11-23T16:12:09Z")
**NetBrian** said: > [@](#): > > Note to Sam – Thank you for addressing my questions. While I understand the logic behind the costs of Social Security privitization, it does mean that we’re increasing our debt burden now by even more (and paying interest on it), which does magnify even further the problems currently facing our currency, and might end up making the interest rates for our T-Bonds even more expensive. It just seems like it can’t help matters at this point, even if Social Security does need to be changed. I’m now a bit out of my depth when it comes to the intricacies of deficit financing of Social Security vs borrowing by other means, and the impact that will have on the financial markets. I don’t know to what degree the financial markets have already discounted the huge unfunded liability of the SS system. For all I know, that’s already factored into bond prices, and legitimate attempts to fix the system may actually cause the markets to respond favorably even if short-term debt goes up. But I really don’t know. > [@](#): > > I’m also skeptical of the tax changes being revenue neutral, if only because for every deduction/exemption/etc you take out, you get an army of angry lobbyists and their congressmen pets at your door. Moreover, Bush seems to want to have a legacy in all spheres, including social programs, which doesn’t necessarily bode well for spending in those areas. Tax simplification is one of those places where good intentions go to die. In broad strokes, everyone agrees with it. It’s stupid to have thousands of pages of special exemptions, loopholes, and shelters that force companies to hire armies of accountants to wade through. In reality, every one of those exemptions and loopholes has a constituency. Going to eliminate the hybrid car tax credit? Fuel credits for farmers in some areas? Tax incentives for conservation? Every one of those exemptions was put on the books by someone who lobbied hard for them and was possibly elected with a promise to put them in place. You want to see infighting? Wait until the White House budget boys put on their green eyeshades and start red pencilling some of those line items. Republicans and Democrats will all be up in arms. And there are just as many, if not more, special tax breaks aimed at the ‘red states’, so Bush will be fighting his own constituency. But who knows? The guy has shown an amazing ability to get things done. Maybe he’ll be the guy to break the log jam. But I’m not betting on it. As for the capital gains tax - I’m not sure it needs to be eliminated. What needs to happen, though is for the capital gains rate to match the tax rates of other forms of investment. That way, the tax system isn’t distorting the market. Money should be free to flow where it does the most good, without having to consider tax implications of the choices. That’s the road to efficiency. ---
**Author:** ![Squink](https://avatars.discourse-cdn.com/v4/letter/s/b5e925/32.png) [@Squink](https://boards.straightdope.com/u/Squink)\ **Post date:** [November 23, 2004, 4:23pm UTC](https://boards.straightdope.com/t/where-is-bush-going-to-get-the-money-to-fund-his-new-programs/276067/32 "2004-11-23T16:23:05Z")
Per the OP: > [@](#): > > Republican lawmakers and the Bush administration are examining a number of accounting strategies that would allow the expensive transition to a partially privatized Social Security system without – at least on paper – expanding the country’s record annual budget deficits. The strategies include, for example, moving the costs of Social Security reform “off-budget” so they are not counted against the government’s yearly shortfall. [Republicans Finding Ways To Account For Overhaul](http://www.washingtonpost.com/wp-dyn/articles/A5525-2004Nov22.html) ---
**Author:** ![rjung](https://avatars.discourse-cdn.com/v4/letter/r/45deac/32.png) [@rjung](https://boards.straightdope.com/u/rjung)\ **Post date:** [November 23, 2004, 6:22pm UTC](https://boards.straightdope.com/t/where-is-bush-going-to-get-the-money-to-fund-his-new-programs/276067/33 "2004-11-23T18:22:04Z")
Great, so not only is George W. Bush the “CEO President,” we’re now going to get accountants from Enron? :rolleyes: ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [November 23, 2004, 6:42pm UTC](https://boards.straightdope.com/t/where-is-bush-going-to-get-the-money-to-fund-his-new-programs/276067/34 "2004-11-23T18:42:44Z")
Another supremely helpful post from **rjung**. Do we have to look forward to four years of every thread on public policy being filled with message after message of gratuitous Bush bashing? ---
**Author:** ![Carnac\_the\_Magnificent](https://avatars.discourse-cdn.com/v4/letter/c/ccd318/32.png) [@Carnac\_the\_Magnificent](https://boards.straightdope.com/u/Carnac_the_Magnificent)\ **Post date:** [November 23, 2004, 6:48pm UTC](https://boards.straightdope.com/t/where-is-bush-going-to-get-the-money-to-fund-his-new-programs/276067/35 "2004-11-23T18:48:54Z")
> [@Sam Stone](#): > > Another supremely helpful post from **rjung**. Do we have to look forward to four years of every thread on public policy being filled with message after message of gratuitous Bush bashing? How about Canada bashing? When are you folks going to step forward and shoulder more of the military burden? ---
**Author:** ![ElvisL1ves](https://avatars.discourse-cdn.com/v4/letter/e/5daacb/32.png) [@ElvisL1ves](https://boards.straightdope.com/u/ElvisL1ves)\ **Post date:** [November 23, 2004, 6:53pm UTC](https://boards.straightdope.com/t/where-is-bush-going-to-get-the-money-to-fund-his-new-programs/276067/36 "2004-11-23T18:53:04Z")
The comparison is certainly uncomfortable for you, **Sam** , but that hardly makes it gratuitous. Your heros in the GOP are indeed looking for ways to make money appear from thin air, just as Enron did. Those of us south of the 49th are going to have to pay for it somehow eventually, too. Perhaps you might put yourself in our position sometime to see how it feels. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [November 23, 2004, 7:03pm UTC](https://boards.straightdope.com/t/where-is-bush-going-to-get-the-money-to-fund-his-new-programs/276067/37 "2004-11-23T19:03:01Z")
Been there, done that. It wasn’t long ago that Canada’s debt/GDP ratio was much higher than the U.S.'s. And by the way, I’m a deficit hawk and think that the big deficits are a major Bush failing. **Carnac:** I’m with you. I lobby our government all the time to increase defense spending, as does a majority of Canadians. They just aren’t listening. ---
**Author:** ![bup](https://avatars.discourse-cdn.com/v4/letter/b/6bbea6/32.png) [@bup](https://boards.straightdope.com/u/bup)\ **Post date:** [November 23, 2004, 7:47pm UTC](https://boards.straightdope.com/t/where-is-bush-going-to-get-the-money-to-fund-his-new-programs/276067/38 "2004-11-23T19:47:16Z")
**rjung’s** comment was specifically in reply to **Squink’s** link (wink), which said that the new way they were going to deal with the debt was to _move some of the losses off the books_\*. It was perfectly compared to Enron. ---
**Author:** ![sixor9](https://avatars.discourse-cdn.com/v4/letter/s/43a26b/32.png) [@sixor9](https://boards.straightdope.com/u/sixor9)\ **Post date:** [November 23, 2004, 11:33pm UTC](https://boards.straightdope.com/t/where-is-bush-going-to-get-the-money-to-fund-his-new-programs/276067/39 "2004-11-23T23:33:47Z")
> [@sleestak](#): > > SNC is a small new company, hence the name, and needs investment to grow. How does buying stock of SNC allow the company to grow? Unless you are buying the stock from the company, I don’t understand how the company is making any money on the sale of their stock. Companies make money by selling more of their products and services. Am I missing something about stocks and trading once past the IPO? ---
**Author:** ![blowero](https://avatars.discourse-cdn.com/v4/letter/b/41988e/32.png) [@blowero](https://boards.straightdope.com/u/blowero)\ **Post date:** [November 24, 2004, 9:03am UTC](https://boards.straightdope.com/t/where-is-bush-going-to-get-the-money-to-fund-his-new-programs/276067/40 "2004-11-24T09:03:36Z")
> [@sleestak](#): > > blowero > > Well, your simplification misses somethings. > > First, capital gains is tax on investment income when sold or traded. Yes, but if the capital gains tax were eliminated, wouldn’t wealthy people simply chose investments with relatively low dividend payments in favor of more trading, since selling investments would result in untaxed profit? > [@](#): > > Now, Joe Schmoe, who was on the short list to be hired by SNC, is no longer iup for the job because SNC doesn’t have enough money to hire new people. I understand the _theory_, but is there any empirical evidence that “trickle down” theory is _valid_? > [@](#): > > Note, the capital gains tax doesn’t work aginst just rich people. It is levied against anyone who makes a capital gain. Yes, we know that. However, poor people don’t possess the capital to _make_ investments, so they consequently aren’t going to have a lot of capital gains. So it disproportionately affects the poor and middle classes. > [@](#): > > Personaly I am for lower capital gains taxes. In fact I am for less taxes in general. And I am _not_ rich. It would be nice if the government would lower the debt and all goevenment spending. But it ain’t gonna happen anytime soon. Lower taxes would be great, but I’d like to see the poor and middle class get the lion’s share of the tax relief (or at least an equal amount), not the extremely wealthy. > [@](#): > > Oh, and a note about old wealth. IIRC something like 90% of milionaires are _new_. They earned the money, they didn’t inherit it. I don’t see that statistic in the article. Can you quote exactly where it says that? Besides, that’s a survey of what millionaires _said_. I would expect that most people, when asked, would downplay the fact that they had anything “handed to them”, and would tend to try to portray themselves as self-made. Also, even if they didn’t get _all_ their money from inheritance (I doubt anyone gets _all_ his money from inheritence anyway), doesn’t mean there’s no “old wealth” in the family. I don’t think you can really say, “Mr. X got some of his money from inheritance, and some on his own, therefore he’s entirely a “new” millionaire.” [Previous page](https://boards.straightdope.com/t/where-is-bush-going-to-get-the-money-to-fund-his-new-programs/276067.md?page=1) [Next page](https://boards.straightdope.com/t/where-is-bush-going-to-get-the-money-to-fund-his-new-programs/276067.md?page=3)