Corporations are paying half what they did back 40 years ago. The wealthy are paying much less. We have tax loopholes, offshore banking and zillions of ways for the wealthy and corporations to shrink their share of the tax load.
Our problem is lack of revenue.
[QUOTE=gonzomax]
Corporations are paying half what they did back 40 years ago. The wealthy are paying much less. We have tax loopholes, offshore banking and zillions of ways for the wealthy and corporations to shrink their share of the tax load.
Our problem is lack of revenue.
[/QUOTE]
And yet government revenue is up from 40 years ago…by a large amount in fact. How do you explain how ‘Corporations are paying half’ and ‘The wealthy are paying much less’ when total government revenue is actually up. Are you positing that everyone else is paying more, as a percentage of their income than they did 40 years ago? If so, do you have any evidence that this was the case?
I think our problem(s) are more complex than simply saying we have a lack of revenue.
-XT
If deficits are the result of low taxes, could someone please explain why the Euro zone is awash in debt?
Why is Britain heavily in debt, when its taxes are about 11% of GDP higher than U.S. taxes?
How come Greece is defaulting, when its taxes are about 7% of GDP higher than the U.S.'s?
Italy, which is also in big financial trouble, has taxes almost 15% of GDP higher than the U.S.
Portugal and Spain, also under threat of default, also have much higher taxes - in the same range as Greece’s.
Do all those countries have a revenue problem as well?
Here’s the problem: Any time the government spends more than it takes in, you can claim it’s a revenue problem, or you can claim it’s a spending problem. The problem is the gap. The Republicans would argue that Democrats have been saying that deficits were a revenue problem in 1985, when total government revenue was about 32% of GDP. But by 2007 revenue had reached almost 37% of GDP - and there were still deficits.
The Republican argument is this: The government will grow until it consumes all revenue, and until it borrows as much as it can politically or economically get away with. This is a given. Therefore, attempts to correct the fiscal deficit with revenue increases will, in the long run, result in even bigger government and even larger debt. The real problem is out of control spending, and the only check on that spending is the government’s ability to consume ever more of society’s resources. The only way to stop it is to stop feeding it. And looking at the history of tax increases, they have a point. TEFRA was a ‘grand bargain’ in which Reagan agreed to tax increases in exchange for a 3:1 ratio of spending cuts to tax increases. Both sides agreed to this because of increasing public pressure over the deficit. So the taxes were implemented immediately, and the spending cuts were ‘to be determined’. But once the deficits began to fall because of the tax increases, the political pressure to cut spending vanished, and so did the cuts.
The same thing happened to Bush I, who broke his “Read my lips - No New Taxes!” pledge on a promise from Democrats to cut spending 3:1. Only this time they’d really mean it! The taxes came, the spending cuts didn’t.
True spending control didn’t happen until the Republicans took back the House and Senate under Clinton. Then they simply refused Clinton’s first attempts to grow the government, and then Clinton switched teams and became a born-again small government guy, declaring “The era of big government is over.” This combination of fiscal discipline and a roaring economy is what eliminated the deficits in the 1990’s.
Have a look at this graph: Federal Spending as a percentage of GDP, 1980-2010. You can see the story of the Clinton era - spending declined dramatically compared to GDP. This wasn’t primarily because of cuts to government, but because government growth was stopped for 8 years while the economy boomed.
This Chart shows spending in constant dollars, corrected for population growth. And it tells the same story - spending rose dramatically between 1980 and 1990, and deficits went up. Then spending was held flat for almost ten years, and the deficits vanished. Then under Bush, and then Obama, spending started going up again, increasing in rate.
Now, if you think there’s a revenue problem, look at this chart of federal government revenue over the same period:
Federal revenue as % of GDP, 1980-2010. Notice that federal revenue peaked at just over 20% during an economic bubble, and while the size of government was held low. That’s the absolute highwater mark of federal revenue. Over time federal revenue has averaged about 18.5% of GDP, regardless of tax rates. It fluctuates within a couple of points of that number, generally moving with economic conditions rather than tax rates.
Right now, the federal government is spending about 25% of GDP, and revenues are about 15% of GDP. Without any tax changes at all, you could expect revenues to come back to historical levels of GDP once the economy is relatively healthy. That would still leave a gap of 6.5% of GDP between spending and revenue.
So if revenue was at historical levels, but spending is 7% of GDP higher than it was at the end of the Clinton administration, how can you define this as a revenue problem?
Right now, I think you could argue that revenue might have to be increased. But increasing tax revenue as the country slides into a double-dip recession is a very dangerous thing. And you’re not going to get it from the ‘rich’, since they don’t have it. In fact, one of the reasons revenue fell so dramatically in this recession is because the tax system has been increasingly skewed towards depending on the rich, and its’ their income that is most susceptible to a downturn (they have lots of capital writeoffs when asset bubbles pop). You’ll have to go to the middle class for your taxes, perhaps with a VAT.
But even a VAT will only get you 2 or 3 percentage points of revenue - you’re still going to have to cut the size of government twice that amount.
Greece does. With better enforcement it could raise more revenue and still not squeeze anything out of the economy since the extra revenue would come from the tax evaders.
No they are not. Our tax structure has been slashed. It was not long ago we actually had a balanced budget. You may remember Clinton. You may not. But Bush cut taxes twice, started 2 wars off the books and pushed a huge giveaway to the Pharmacy companies. That is what happened to the budgets.
We could have paid for the wars and we would have trillions less debt. We could have stopped the tax breaks for the rich and we would have trillions less debt.
No XT it is just that simple.
To be honest I am not convinced there is.
Every government - EVERY new politician - promises to get rid of waste, and they never do. The truth is that
A) Much of what you call waste isn’t waste, and
B) There’s simply a level of actual waste that a government of a given size and structure will create and there’s nothing you can do about it.
A famous local case is that of Toronto’s new mayor, Rob Ford, who promised to “stop the gravy train.” Toronto is a pretty big government - it has a larger population than six of the ten provinces and fifteen of the U.S. states - and has serious deficit problems.
Well, they hired consultants to find the waste. Surprise; there simply isn’t anything substantial that could be cut without seriously impacting basic municipal functions. The only way to get rid of the deficit would be to cut things people don’t want cut, like firing a bunch of cops (which they could do but God forbid you suggest that) or raising taxes.
If you think cutting waste is easy, take out a budget for any government and give it a shot. It’s amazingly hard, really, unless we’re talking about a rare case of a municipal government going insane, like Glendale trying to have an NHL team.
[QUOTE=gonzomax]
No they are not.
[/QUOTE]
Then it should be no problem for you to find a cite showing that government revenue has dropped steadily since the 80’s, when taxes went down substantially. Feel free to do so.
Has it? Well, again, feel free to demonstrate rather than assert.
What’s with the change of subject? We were talking about government revenue. Focus here.
Well, I voted for him in his second term, so I’m pretty sure I remember him, yes. 
All of which had enough Democratic support to pass. Yes, I seem to vaguely recall…I think it was in the papers. But we were talking about government revenue, remember?
Again, we were speaking of government revenue, not the budget. You claimed that corporations pay half (and if we are talking about federal taxes I’d actually buy this one, at least nominally) and ‘the wealthy are paying much less’ (presumably less than half…‘much’ less than half I assume). So, it should be child’s play for you to demonstrate that government revenue has gone down substantially, or that everyone who isn’t ‘wealthy’ or a ‘corporation’ is making up the difference and laboring under crushing taxes. So…feel free to so demonstrate. Please don’t give me a drive by link to some article about the budget, or something concerning ‘Pharmacy companies’…that’s not what we are discussing or what you claimed. I’m not asking for more than a drive by link, since I know it’s futile for me to get any sort of effort or analysis from you. All I ask is that you focus on providing some cites (or even A cite) that actually demonstrates what you are claiming. Is that fair enough?
It would have been better if we hadn’t had those wars, and I have serious doubts that not having the Bush tax cuts would have cut trillions from the debt, but that’s neither here nor there…I’m not asking about those things. I’m asking you to back up your statements.
Life is NEVER ‘just that simple’, gonzo. If it seems that there are simple answers to complex questions, it’s almost surly that you are wrong.
-XT
nm
I have, once, if you count a university as a school.
No. It is not. Else projects would never go over budget, & all kinds of things, from life-saving surgeries to fixing a motor vehicle to new building construction, would go unfinished far more often than they in reality do.
I’m sorry you think that way, I guess you will be doomed to leave things unfinished; but the successful, in any field, do not think that way. Not surgeons, not architects, not mechanics. Some indifferent civil servant or middle manager might think that way, but anyone who ever did anything worthwhile knows that an estimate is an estimate, & results are results.
I don’t think “owl vomit studies” aka basic research, is pissing away money. Nor is sending managers to a training retreat outside the norm of practice in private companies.
Realistically, the money we spend on government goes to good purposes. The majority of it is spent on SS, Medicare/caid, interest, and the military.
Really? You do not think that any of the money spent on government research is wasted on unnecessary studies that can be done more efficiently in the private sector? How about things like the $330K outhouse built in Pennsylvania? Or the story of the Feds who spent hundreds of thousands of dollars debating whether to make it acceptable for people to market “prunes” as “dried plums”? How about the growth of the Dept of Agriculture when compared to the negative growth of the farming industry? Wool subsidies? Federal Flood insurance? Cash for Clunkers?
The difference in spending $53K on the public school and the private sector is that if the private company pisses away money, it goes out of business. (and, before you go there, I would cut their subsidies and bailouts as well). The public school has no accountability for their spending. The schools are a great example of this, actually - we have thrown millions and billions to “fix” schools, and none of it has worked. Schools have gotten worse, and private schools have done far more in bad areas with much less income.
Leaving aside the issues of entitlements and defense (which are the biggest chunks, as you note), you also listed “interest”. Does it make sense to you to spend more, when interest is one of our biggest expenditures? On what planet does that make sense?
At what point are any of these politicians become accountable for where we are now? I will not support any tax increases until such time as public servants are held responsible, from both sides of the aisle. We can start with Obama’s unfunded social programs, go back through GWB’s wars, and on down the list. And then we can come up with a plan to cut waste, shore up what we’re keeping, and pay back what we owe. If tax increases are a part of that plan, then I’m fine. But otherwise, I’m done writing a blank check for the government, left or right, local, state or Federal.
How’s that workin’ out for ya?
I don’t get it.
You are making a number of mistakes here. Very few project management goals are unpredictable based on the wealth of collective knowledge we have and the laws of statistics and large numbers. Good project management takes all that into account and leaves room for error for individual projects but not nearly as much for all of them collectively. In other words, if asked a team of engineers to build one bridge and they told me it would cost $1 million dollars, I wouldn’t be surprised if the project ran into obstacles and ended up costing $1.5 million.
If I asked them to build 100 bridges for $100 million and it ended up costing $150 million, then they had a 50% cost overrun and the managers of that project should be fired. You can make a mistake on one project but realistic budgeting goes both ways. Sometimes you go over and sometimes you come in under budget. The way the current system is set up, you rarely see the latter. Excess money gets pissed away to keep budgets intact so most of the deviations are for overruns. That is not acceptable project management methodology. Given a large number of projects, the actual cost versus the final true cost should always be within a few percent. If it is not, something has gone horribly wrong in management.
The Boston Big Dig is an extreme example of that. The original cost was supposed to be $2.8 billion and the final cost is $14.6 billion and still growing. People did get fired over that and one newlywed female got killed because a substandard ceiling tile dropped on her on the way to her honeymoon flight as a direct result of corrupted contracts. You seem like a feeling type person. How does it make you feel when budgeting incompetence kills innocent people?
Forgive me if I call your ignorance on this but you have no idea what you are talking about and probably don’t even understand why. To use your examples of surgeons, sure some cases have going to have unforeseen complications and require very expensive interventions to keep the person alive. The flip side of that of that is that some patients will make a remarkable recovery and require less so it all balances out. The actuaries at insurance companies and hospital managers understand all of this so that the difficult cases are offset by the easy to miraculous recoveries using modern statistical tools. The government doesn’t work the same way. Underestimating is expected and tolerated because the expectation is that they can always come back for more. That is simply unacceptable.
When we are talking about government as a whole. We aren’t talking about one especially problematic patient that bankrupts the insurance company and the hospital. We are talking about not only every patient in a hospital but also every patient in the nation and someone in that field better know with a percentage point or so how much those treatments are going to cost. If the patient gets better on her own overnight, the doctors and nurses can’t just take the night off and spend the rest of the budget on pizza and beer. They have to move on to the next one and figure out how to cut costs but not the quality of work to do better next time. The government should be just as accountable to the costs of their work and operate the same way but the don’t have many incentives to right now. It could be done because the knowledge is there.
In short, you are looking the potential for cost overruns on individual projects when that isn’t an issue in well-managed projects that are grouped together because estimate deviations go both ways and the true costs as whole are easy to calculate. Responsible government would also have an emergency reserve only to be used in times of true emergencies like 9/11. However, the point still stands that when you have budgeted the best that you can and you run out of money in total, the government has to stop, think, reflect, and readjust priorities. In that case we are in a sinking lifeboat and have to concerned with survival as a whole and not looking at the people cast overboard wishing life was more fair.
Like the $2000 toilet, I’m guessing most of the things you say aren’t quite as they are typically represented. In other words, cite.
Cash for Clunkers and Federal Flood insurance aren’t wastes. You might disagree with the wisdom of the programs, but it’s not like they are setting piles of money on fire.
As for the dept. of Agriculture. A common theme I’ve noted in these type of debates is that the people going on about waste don’t actually know what the departments they want to cut actually do. The Dept. of Agriculture runs nutrition programs, regulates the nation’s food supply, does rural development, manages natural resource, and funds basic research. There is little reason to see a correlation between the growth of the farming industry and the budget of the dept of Agriculture, unless of course, you don’t know what the Dept of Agriculture does.
Yes, I’ve heard this rhetoric time and time again. It’s one of those things everyone knows, but can’t provide any actual proof for. You mention schools, but there’s no evidence that private schools are better than public schools. The only thing they are better at is being able to pick their students. In terms of actual effectiveness, I’ve never seen the proof.
What makes sense to me is to have a tax level that matches long term spending. I, of course, support having a tax level that will fund spending. That is a separate debate from where government expenditures should be.
The Outhouse - http://www.theplumber.com/outhouse.html
Quick details on the “dried plum” debacle - http://abcnews.go.com/Health/story?id=117656&page=1. For some reason, prune grower had to apply to rename prunes - and it took several years for the name change to be “approved”. Aren’t prunes just dried plums? Why the need to administer the name of a fruit?
The Department of Ag runs food stamps and school lunches, true, but puts a big chunk of money toward food and farm subsidies and enact trade restrictions. Also, their subsidies of “rural areas” don’t seem to do any actual good most of the time, even outside the issue of whether or not they are appropriate.
So far as schools go, pretty much across the board, I have not seen any evidence that increasing funding has produced better outcomes. If you have some, I’d be happy to see it. Here is an excellent piece on spending versus outcome - http://www.cato.org/pub_display.php?pub_id=12775
I don’t know that private schools pick and choose their students - I’m sure they can, but in inner city areas where the public alternative is a crime-ridden hellhole, it is my understanding that they do not. They require the kids to work a little harder, both mentally and by helping out, but they provide a much-needed stability to the neighborhoods. I will concede that the biggest single factor is probably that the parent has to act to get the kid in a private school, which may also indicate an involved parent. Either way, government is not involved in those decisions.
If your herpes outbreak is the lowest it has been in years, do you then conclude that what you need is MORE herpes?
Everyone who yells that taxes are too low is really saying that OTHER people’s taxes are too low. Would you personally be willing to pay more? The same amount more, relative to your income, that you advocate others paying?
If not, you are a hypocrite and a thief. You want to forcefully take what belongs to someone else to pay for something you want. If you are willing to do so, then feel free. The IRS will happily accept your donation. Just keep your grubby little paw out of my pocket.
The thing is, I could give 100% of my income and it still wouldn’t pay for anything my community needs. But if we all gave a little more, it could.
So far, it seems the best answers to the thread title are:
(1) too much of a disconnect between paying taxes, especially federal, and receiving services, especially local (=the “few benefits from our taxes” argument)
(2) ignorance of what taxes do (=the “too much waste” argument)
Just from reading the news I’d add:
(3) math phobia
and from this thread:
(4) disagreement with policy decisions (=the “unnecessary spending” argument)
#1 is a uniquely American problem because of the size of the country, both area and population; #2 & #3 a reflection on Americans’ education (my own grasp of economics is very poor); #4 I’d guess a reflection of the very partisan two-party winner-take-all system and us-vs.-them mentality.
Part of the reason for this is that a progressive tax system leads to an us-vs.-them mentality. The pressure from the bottom half who pay little or on tax to raise taxes on someone else to pay for services for themselves is almost unavoidable.
It generally isn’t “we all”, though. Proposals for “we all” be taxed in some form of flat tax get roundly condemned on the SDMB and in liberal circles generally.
The odd thing is that Democrats who are now claiming that the deficit cannot possibly be fixed without tax increases voted to extend the Bush tax cuts back when they controlled Congress and the White House. Back when they had the ability to do what they claimed was necessary, they didn’t do it. Now the GOP controls the House, and the Dems have someone to blame, suddenly tax increases are the *sine qua non *of deficit reduction. Go figure.
Regards,
Shodan