The Democrats have it wrong

Discussion in 'Budget & Taxes' started by Shiva_TD, Jun 29, 2011.

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  1. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    Many of us have been watching the drama unfold between the Democrats and Republicans on budget cuts that will lead to an increase in the national debt limit and I must admit that the Democrats have got it backwards.

    I'm one of those that don't believe that we can reach a balanced budget without tax increases. I opposed the extention of the Bush era tax cuts for anyone. We simply have too much deficit spending and the $370 billion dollars in lost tax revenues for 2011-2012 was not something we could afford if we seek a balanced budget.

    The Democrats are calling for tax increases along with budgetary cuts while the Republicans oppose them but for now the Democrats are wrong. First we need the budgetary cuts and we need dramatic cuts in government expendatures.

    The following information from 2010 reflects to some extent the scope of deficit spending and where it is coming from.

    http://www.politicalforum.com/polit...evel-should-you-pay-taxes-16.html#post4105999

    As I've noted either we need to cut expendatures in two different categories of the federal budget because that is how the US government has organized taxation and expendatures and/or increase taxes. Social Security and Medicare are funded by FICA/payroll taxes and all other expendatures are funded by taxes other than FICA/Payroll taxes and each needs to be addressed independently.

    But before addressing tax increases all of the possible avenues of reducing expendatures must be explored and those budgetary reductions need to be implemented. The Republicans are currently correct in that these reduction have not been explored and implemented. The Democrats need to focus on cutting all possible expendatures before the subject of increased taxation is addressed.

    If all possible expendatures reductions are exploited and we still have a deficit then and only then can the Democrats justifiably address possible tax increases to eliminate deficit spending. If there is nothing left to cut then even the Republicans will have to support tax increases to eliminate the deficit. We're no where near the point where all possible reductions in expendatures have been met so as of today the Democrats do not have a valid argument for a tax increase.

    Tax increases should only be a last resort to balance the budget once all possible expendature cuts have been made and not used merely to reduce the amount deficit. If they don't lead to an immediate elimination of the deficits then they cannot be justified. Simply raising taxes while continuing to spend more than the revenues of the government accomplishes virtually nothing as the national debt will continue to grow and it isn't the deficits per se that are the problem but instead it's the national debt that's the problem.

    By way of example, a trillion dollar deficit in one year has virtually no impact if the next year that trillion dollar's worth of borrowing is paid back so that the national debt has a zero increase over a two year time span.
     
  2. Landru Guide Us

    Landru Guide Us Banned

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    Explain to us why a tax increase on the top bracket, who have increased their wealth enormously as a result of Bush's tax cut and unfunded wars, isn't warranted?

    Put another way, if you really are worried about deficits (and I think the anxiety is wrong -- as does Krugman, as does Stieglitz to drop some names) why not increase revenues by increasing taxes on the wealthy?
     
  3. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    I don't know were the idea came from that I oppose a tax increase for the wealthy comes from as I explicitly stated that I believe that tax increases will be required. The flaw in the logic is that the wealthy have enough money to bail out the run-away spending by Congress.

    If the US government confiscated all of the wealth of all of the US billionaires it would only fund the US government for a month. If we confiscated all of the wealth from all of the millionaires it would go much further but that is really an attack on the middle class as the average American really needs to accumulate between $2-5 million for their retirement years if they expect to maintain the same life style they had prior to retirement.

    We can also see that the distribution of wealth did not go to the wealthy under the Bush tax cuts based upon the loss of revenues when those tax cuts were extended. The US government lost $370 billion in revenues but only $70 billion of those tax breaks went to the wealthy while $300 billion went to the middle class.

    We must also face the fact that simply increasing taxes does not balance the budget. The US government currently recieves about $2.5 trillion in revenues and $2.5 trillion is more than adequate to fund the US government but the Congress spends about $3.5 trillion. If we raised the taxes to generate $3.5 trillion history establishes that the Congress will spend $4.5 trillion or more.

    So far, from what I understand, between the Democrats and Republicans they can agree on about $2 trillion in reduced expendatures OVER TEN YEARS!!!! That's only about 10% of the projected deficits and most of that "savings" is five to ten years into the future which, undoubtably will never happen. We need a trillion cut in expendatures for 2012 and not a promised $200 billion reduction in 2017 that will probably never happen.

    Those that aren't worried about the national debt are fools. This year we spent about $150 billion in interest on the almost $14 trillion debt but that was based upon the corruption of the "value of money" by the Federal Reserve which forced interest rates down by creating more currency. The typical "value of money" which establishes interest rates is more accurately around 5% so a national debt of $14 trillion would require an interest payment of $700 billion or almost 1/3rd of all current US government revenues. To pay this interest requires taxation which does not provide for the services and delegated responsibilities of our government.

    I will return to some simple math. Assuming a projected annual deficit of $1 trillion then if Congress can cut that budget by $630 billion then I support the repeal all of the Bush era tax cuts as their repeal would generate $370 billion in additional revenue to balance the budget. If the Congress can cut the budget by $930 billion then I could support just repeal of the tax cuts for the wealthy (those making over $200-$250/yr).

    But lacking the budgetary cuts necessary to balance the budget it makes no sense to increase taxes. If Congress is intent on bankrupting America then it's actually better to do it sooner than later.
     
  4. Landru Guide Us

    Landru Guide Us Banned

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    No, the flaw is this red herring. Nobody is proposing that we tax the rich to pay off the debt tomorrow. That's a straw man.

    The proposal is to increase taxes on the rich, use the revenues to funds programs that increase productivity in the realm of infrastructure, health and education, and then as the economy grows everybody makes more money and thus the government has more revenues to pay off the debt.

    So stop attacking a straw man and deal with what is actually being proposed, not only by me and people on this forum, but Nobel prize winning economists like Krugman and Stieglitz.
     
    catalinacat and (deleted member) like this.
  5. Joey_Sac

    Joey_Sac New Member Past Donor

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    Cut the crap. Eliminate tax loopholes, and make corporations pay 35% tax or jerk their corporate charter to do business in the United States. Economic problem solved.
     
  6. Revere

    Revere New Member

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    Several states closed huge budget shortfalls with spending cuts only, and revived dead business climates with tax cuts.
     
  7. since1981

    since1981 Banned

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    With a growing number of millionaires in the United States every yr, even in this economy, I say tax the rich. It makes perfect sense. Pay a little more rich folks; it's the least you could do. Your life won't change much, only psychologically.
     
  8. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    With current deficits in the trillion dollar plus per year range we cannot afford any new spending for any purpose.
     
  9. LibertarianFTW

    LibertarianFTW Well-Known Member

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    Then you would be wrong. Solving the deficit can easily be done with just cuts -- it doesn't even have to be that dramatic.

    Solve it yourself
     
  10. Landru Guide Us

    Landru Guide Us Banned

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    Another pseudoproblem cooked up by the Rightwing Noise Machine.

    The budget historically gets paid off BY economic growth that produces more tax revenue, not by slashing budgets that plunge the economy into negative growth.

    As Steiglitz points out -- if people are willing to loan you low interest loans in the billions, take the money, invest in your future and pay off the loans with the increased revenues. It's just basic business practices, which is why of course the Tea Party is mystified by it -- they lack a basic understanding of tax and accounting principles.
     
  11. since1981

    since1981 Banned

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    How about investing? Can we afford to do that?
     
  12. liberalminority

    liberalminority Well-Known Member

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    Americans will not Republicans take their medicare or social security so that is not worth discussing.

    As for the second expenduture it is military along with small welfare programs for the poor, if any expendature should be cut in this category it is military not welfare programs as they are very small expenses compared to the military.
     
  13. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    Private investment and consumption expands the economy and not deficit spending by the US government. What we can't afford is deficit spending.
     
  14. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    Americans are going to have to accept the fact that Social Security and Medicare are bankrupt and that both require significant reductions in expendatures. Even the Democrats recognize this fact although they are unwilling to actually address the problem.

    If the military budget was eliminated completely, which obviously can't be done, it still wouldn't balance the budget. I am an advocate of substantial cuts to the US military budget which would require the withdrawal of all US military forces from foreign bases and the conversion of the US military to predominately a reserve force as opposed to a standing army. The purpose of the US military is to defend the United States and not to be used as a tool of US foreign policy. 75% of the US military budget could be eleminated without adversely effecting the ability of the US military to respond to an attack of the United States by a foreign nation.

    That would still leave us about 1/2 trillion dollars from a balanced budget which is roughly the amount of the deficits being created by Social Security and Medicare.
     
  15. since1981

    since1981 Banned

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    "deficit spending" is just a term that Republicans call the Obama administration's invetsments. And if republicans win in 2012, the democrats will play the same game. Investing in clean energy is not deficit spending. And neither is education.
     
  16. liberalminority

    liberalminority Well-Known Member

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    On the contrary, investment deficit spending in alternative energy can be afforded in the long term because it will lessen American dependence on oil and create new industries to replace the failing oil driven economy.

    The Iraq and Afghanistan wars were waged to set up military bases in the middle east to further secure the oil industry and American oil investments in Alaska and Texas.

    Eventually the US will be forced into a more devastating and costly war for oil than already seen and it is paramount that Republicans allow Democrats to deficit invest in clean energy.
     
  17. Landru Guide Us

    Landru Guide Us Banned

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    1. Obviously private investment in education, roads, healthcare simply doens't happen on the scale needed for the largest economy in the world. We tried that -- it's called The Third World.

    2. We can afford to borrow money at low interest rates, invest in productivity and reap the benefits in higher living standards and higher tax revenues. Indeed, we can't afford NOT to do that. It's what makes our economy tick. Indeed every business in the US does the same thing.

    3. With falling income for tens of millions of American workers, due to the market evangelist policies you seem to favor, consumption will continue to slump as more and more wealth accumulates into the hands of fewer and fewer wealthy people That is the major problem we face as Americans; not the bogus defict hawkery.
     
  18. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    Republicans lead by former President Bush doubled the national debt with deficit spending. This is by no means a partisan issue as both parties are equally guilty of deficit spending and increasing the national debt. What we can't afford is the doubling of the national debt again under President Obama as we can't even afford the national debt we have today.

    As I mentioned if it weren't for short term Federal Reserve intervention the payment on the national debt would by $700 billion/yr which is almost 1/3rd of all federal revenues. The Federal Reserve cannot keep up its creation of fiat money indefinately because that leads to runaway inflation which is devastating to the economy.
     
  19. Landru Guide Us

    Landru Guide Us Banned

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    Given that Bush's conservative policies left the US on the verge of a deflationary spiral like the Great Depression, a little inflation is exactly what we need.

    When exactly is this hyperinflation going to hit? The conservatives keep predicting it's just around the corner, and when we get there, it isn't. In an economy with real income dropping or stagnant for tens of millions of American workers, due to foolish tax cuts for the rich and other anti-worker policies, worrying about inflation is just silly. You better start worrying about whether there are going to be enough consumers with cash in their pocket to buy anything.
     
  20. Irishman

    Irishman Well-Known Member Past Donor

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    Yeah, so much good the stimulus did. :rolleyes:

    How are those "shovel ready jobs" coming along?

    Save it, nobody is buying this administrations bull(*)(*)(*)(*) anyone. Shiva is right, we need to cut waste and STOP with the spending.
     
  21. SiliconMagician

    SiliconMagician Banned

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    Stop it.

    Your Democrats are not (*)(*)(*)(*)ing interested in expanding the economy. Any stimulus money that gets 'invested' goes to POLITICAL CRONIES, UNIONS AND GODLESS LEFTISTS.

    It does not go to independents, it does not go to Republicans, It only goes to those who have literally proven themselves through campaign donations, that they are a loyal democrat donor.

    Without that seal of approval, you get no stimulus funds.

    The "Green" energy industrialists are lying to every American, saying they have the answers to all our energy problems if only we give them billions of dollars and elevate them to the level of Big Fossil.

    The teacher's unions lie to every American when they claim they can't teach our kids.

    The SEIU and other slimy apparatchik groups lie to every American because any tax increases on them will be offset the next election cycle once they elect a proper democrat to give them a raise that counteracts any tax increases they may see.

    They are all selling snake oil.

    Democrats only invest in (*)(*)(*)(*) and cannot be trusted. Your kind cannot be trusted. I don't want your (*)(*)(*)(*)ing equal outcomes. I just want I and my employers left alone to make profit and not be bothered with your (*)(*)(*)(*)ing wussy social justice.

    <<< Mod Edit: Off Topic Flamebaiting >>>
     
  22. Landru Guide Us

    Landru Guide Us Banned

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    1. Actually the Stimulus Package did a lot of good and stopped the spiral into deflation and unemployment that Bush and his policies initiated.

    2. Unfortunately the SP included tax cuts, which really don't work well. Glad you agree with that.

    3. Ah, the old waste fraud and abuse meme. When are you guys going to get over that. You don't want to cut waste, you want to destroy the social safety net, so 8 year old kids can starve on the street. Stop being disingenuous about your moral bankruptcy.
     
  23. since1981

    since1981 Banned

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    In my mind, the deficit is a lot like a fishhook stuck in your finger. You can't just yank it out. You have to push it in a little farther (spend, a.k.a "invest"), then cut off the barb, so you can pull it out safely. In other words, it's going to get worse before it gets better, as Obama has said many times. We have to invest our way out; that's the only way. Taking no action because of being afraid to spend a dime is the worst thing to do.

    In addition to that, US workers will ultimately have to accept lower wages. There are Chinese construction workers who only make $12 per day. In the US, construction is a high-paying field of work. So to compete, workers will have to do their part in taking MAJOR sacrifices. But will they?
     
  24. liberalminority

    liberalminority Well-Known Member

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    There is a difference, bipartisanship is slowing progress of the country and Americans need to pick the right side.

    President Obama must double the national debt because he is making the right investment whereas President Bush made the wrong investment when he doubled the national debt.

    The worst thing to do is not spend.
     
  25. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    The following story would contradict this as the recovery we're experiencing is following the same pattern that existed related to previous recessions going back hundreds of years where there was no government intervention.

    http://news.yahoo.com/economic-recovery-turns-2-feel-better-yet-175012609.html

    This is a very good article that addresses the causes and effects of the current recession when compared to prior recessions. As it notes the primary cause behind the slow recovery is the personal debt of individuals which the Stimulus Package didn't address. Until the debt of the average individuals is reduced they don't have the money to consume and only consumption will result it the recovery. The government cannot change this as the people owe far more than government revenues by many times over.

    I will return to the primary issue and that is that both Democrats and Republicans agree on some minimal reductions in expendatures. They are going to have to make much more substantial reductions and the reductions need to come before the tax increases. When every dime of spending that can be squeezed from the budget then and only then does Congress have justification for raising taxes. As long as unnecessary spending continues then they have no case with the American taxpayers to raise taxes.

    The budget could be balanced in 2012. We don't need less than a hundred billion dollars reduction in expendatures in 2012 but instead we need hundreds of billions of dollars in reduced expendatures. They need to be in two different categories with one being general expendatures and the other related to Social Security/Medicare as they depend upon two independent forms of taxation.
     
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