The Democrats have it wrong

As an American taxpayer I demand that Congress raise taxes on billionaires before it makes ANY cuts to social programs.

 

I didnt notice the third page.

Banks that made successful CRA loans were encouraged to expand. Thus, we had a period of expansion for many banks that had looser loan standards. This can be attributed to the loose loaning that occurred.

The cause can be attributed to the government trying to increase home ownership even when people couldn't afford them. Deregulation probably did have an impact, but the repercussions were multiplied tenfold due to overencouragement of home ownership by the federal government.

 

Businesses understand the harm of stagnant production and sales. They'll take the initiative if they see an opportunity to create demand (by investing in the economy and unemployed workers with jobs).

Notice that our consumer industries werent hit hard during the early years (Hoover) of the recession/Great depression. you're argument about creating consumer demand is thus irrelevant. The capital/durable goods industries that were hit usually produced expensive products (cars, yachts, industrial equipment) that only the rich could have afforded. Depriving the top earners of their income would have further reduced demand for the durable/capital goods, thus worsening the situation.

Under our laissez-faire system in the 19th century ("gilded age"), We saw an era were industries became more efficient (Carnegie steel) and products became cheaper for consumers. Under Carnegie's direction, steel rail prices dropped from $160 per ton in 1875 to $17 by 1898. History books talked about the "predatory pricing" that laissez faire encouraged, but there are no empirical examples of any happening. In fact, prices of commodities actually decreased. Steel (58% decrease), Zinc (20%), Sugar (22%) from 1880-1890.

Standard Oil also brought this new commodity into American homes by lowering prices and improving efficiency. Kerosene was $1 per gallon in the 1870s, but under Standard oil, it fell to 10 cents by 1880s. Rockefeller also managed to derive 300 products from the waste product of the process as well. Now, Americans could afford to illuminate their homes. Also, Standard Oil didn't force other firms out of business. Smaller companies voluntarily merged with standard oil (couldnt compete with lower operating costs), and these small company executives often became major shareholders in Standard Oil.

These are examples of Laissez-faire at its finest. While I'm not an advocate of complete hands-off government, I can't stand to see someone defame its name by using common misconceptions. Laissez-faire did work, and could have potentially worked again in 1929.

I said no such thing. You're obviously misquoting me (somehow I talked about Reagan and W's economic policies?)

Keynesian policies in the New Deal did not end the great depression. Up till the war, unemployment was no where close to normal levels and economic growth continued to remain stagnant. Treasury Secr. Morgenthau admitted the failure of keynesian spending. Theres nothing to indicate that keynesian policies directly caused the positive growth. We actually steered away from keynesian policies by lowering taxes from New Deal levels in the 1950s and 60s.

Then DONT blame "deregulation," thank the meddling hands of the Federal Reserve.

The buying stocks beyond your means caused the Recession, not the Depression

First of all, excise tax on checks fueled the run on banks (first escalation from recession to Depression). Then, we had the tariff that shut down int'l trade. Then, we have the restricted money supply by the Federal Reserve that limited chances of a quick recovery. Blame these 3 major government policies that worsened recession into depression.

My contention was that Hoover's corporate tax raises DID negatively influence recovery chances.

The rich and middle class often save up the remaining income for future spending. Its called financial security and common sense. Distributing the money to the poor (who often could afford living costs if they didnt use credit cards to live beyond their means) simply subsidizes the poor financial strategy that the poor use (credit debts accumulate due to overspending beyond one's means).

Hoover's intervention in the economy also caused the great depression to occur from the recession.

You still think the New Deal ended the depression. Check the prewar stats in 1941. Economic growth and unemployment weren't much better than earlier depression levels. The Depression was still there. It was the government transition in policies after the war that allowed our country to grow towards prosperity.

just saying that if you're a supporter of keynesian economics, don't just pick out the principles you like. Keynes (despite his attitude towards government spending), staunchly opposed too much debt.

Recession shows that the federal spending created no sustainable jobs in the economy, only federally funded jobs. Labor costs for private companies continued to be high (due to union negotiations and strikes) and stunted growth in the private sector. Theres a reason why economists emphasize growth in the private sector, it's not dependent on an external source of money and results in a larger positive growth in the economy than federal jobs.

many classical economists dont all adhere to the austrian school. Many renowned economists during the 1930s vehemently opposed FDR's policies for fear of the damage to the recovery it might do.

But you are wrong when you said
"Poor peter schiff and his poor predictions."

Schiff was simply implying that as the government prints money, currency devalues. That was true in the case of the stimulus money, when the USD did see a drop in value.

I'm not really an adherent of Schiff (i'd actually never heard of him before)

THe recession was a bipartisan effort, as both sides refused reforms in the financial and housing sectors in terms of government presence. What is one relief that is actually necessary for the recession that the GOP is blocking? We already extended the unemployment benefits again, isn't that enough?

So far we still HAVENT come out of the recession, stagnant growth rates are still evident and nothing the government has done has worked. Instead, we've wasted almost $1 trillion in stimulus money for political pork projects.

I hope using these measures "correctly" doesnt mean artificially lowering interest rates during the recession (what happens when interest rates inevitably rise to normal levels? A new recession).

 

This is a "liberal" position that fails completely upon review as it would accomplish nothing in the end for several reasons so let us address the facts.

First is the simple problem that the billionaires don't have enough money to really make an impact on the deficits. If every dollar from every billionaire was confiscated by the US government it would only fund US government expendatures for less than a month. The combined assets of all of the billioniares in the United States is only about $250 billion but the deficits are over one trillion dollars a year.

Next is the fact that it wouldn't do anything to resolve the deficits being created by Social Security and Medicare because these programs are funded with dedicated taxation from FICA/Payroll taxes and the redemption of T-bills held by the Social Security Trust fund. While taxing billionaires would provide limited funding to redeem the T-bills in the Social Security Trust fund that fund is rapidly being depleted and Social Security/Medicare still face bankruptcy once those funds are gone.

This reminds me of the lyrics from Ten Years After which said, "Tax the rich, feed the poor, 'til there are no rich no more".... and then when there are no rich the poor starve. Simply taxing the wealthy does not solve the problem because the government is spending more than the combined assets of the wealthy. Ultimately it is excessive government spending that exceeds the ability of the wealthy to pay for.

As was demonstrated by the review of revenue losses related to extending the Bush era tax cuts the extension of those cuts for the wealthy (those earning over $250K/yr) only resulted in a loss of $70 billion/yr but it resulted in a loss of $300 billion/yr from those earning less than $250K/yr. I opposed the extension of those tax cuts but even with none of them being extended it still wasn't enough to eliminate the deficits. If this is addressed by just raising taxes then it isn't a lack of taxation of the wealthy that is the problem but instead its the 38% of American households that pay no federal income taxes at all where many of them actually receive "tax refund" payments from the government for taxes they never paid.

In the end the only solution is to reduce government expendatures as no amount of tax increases can be imposed that will support the expendatures of our government. As noted, before even considering tax increases the Congress needs to reduce expendatures and they need to reduce them by hundreds of billions of dollars per year. Once the spending is brought under control which is going to require cuts in both military spending and social spending, the two elephants in the living room, then Congress and the American People can address the remaining deficits but prior to those cuts we don't even have an idea of how much taxes need to be increased.

 

Defecit spending has become a pejorative. If you ever need to pay for something by loan or by credit card, it is in fact defecit spending. The question is not whether there is defecit spending or not, because there is and even should be. The question is how in the red you allow yourself to go. Approaching the inability to pay it back is too risky. But defecit spending within the ability to pay it back is what everyone does all the time. It's the only way anything big ever gets done.

 

Well said.

It is further evidence that Democrats (and Obama in particular) don't understand that they aren't dealing with good faith argument from the market evangelists, but calculated memes that have no basis in fact.

The deficit meme purports to claim that macroeconomics rewards thrift. There is no evidence of that. Indeed, the evidence is to the contrary. It makes sense to go into debt to invest in infrastructure that will return higher productivity and hence higher tax revenues to pay off the debt. When and where to do that, by how much, these are all prudential issues that relate to particular situations. There is no anti-deficit theory that can make sense of how economies actually work.

And of course the same is true on a personal level, since that's what the meme is really drawing on. It makes sense to take out a loan, and buy a car that can allow you to commute and get a better paying job that makes better use of your skills. It doesn't make sense to work in a lower paying job for 10 years to save up the money to buy the car and then try to get the job.

Same is true of college tuition, or expanding your business, or buying a house. If we all followed deficit hawkery, our living standard would go down, not up.

 

I stopped reading right there.

It's a straw man. So stop it.

The proposal is not to tax the rich to pay off the entire debt. The proposal is to increase taxes so that capital can be funneled down to working people, either through larger tax breaks for them, or indirectly through government services and infrastructure. With a more productive population, you get economic growth, higher income and hence more tax revenue.


So please, enough with the idiotic Tea Party memes. They don't work here.

 

What does this even mean? Nothing in the CRA lowered lending standards. Period. If banks wanted to lower standards to make more profit, that argues for MORE regulation, not less. Nor did the CRA even relate to subprime loans, which made up the bulk of the defaulted mortgages.

So -- that had nothing to do with CRA, which doesn't lower lending standards. PERIOD.

No it can't. Since nothing in the CRA lowered lending standards. The CRA stopped redlining. Period.

Is this the best you have because if it is, you're rebutted completely.

 

With trillion dollar annual deficits there isn't any money to funnel down to the poor.

As noted though 38% of American households don't have any income tax liability. This includes millions of households that don't need any government assistance except to buy a new Blackberry or 50" flatscreen.

I'm not opposed to helping the poor. I give over ten thousand dollars a year to charities exclusively for that purpose. This isn't "tax money" that is forced from me, and I pay enough taxes to easily support a family of four, but instead is on top of that. I really don't mind the taxes and I certainly do enjoy being in a financial position to help others through charitiable contributions so that isn't the point.

The point is that the government is spending too much money. It is spending more than all of the millionaires and billionaires combined can actually afford to pay for. People simply fail to grasp how much a trillion dollars really is. To make matters worse in the very near future the interest on the national debt is going to be a trillion dollars per year. That is one trillion dollars that can't be used to help those in need.

 

So now you've changed your argument.

But your claim is false nonetheless.

1. Increase taxes on the top bracket.

2. Decrease taxes on the bottom brackets.

See, it isn't that hard. Apparently you want us to believe that the $14K trillion is due tomorrow. It isn't. and that's the point. Increase productivity, and you can pay off this debt, which as a percentage of GDP is much smaller than the WWII debt.

Or how about this.

1. Increase taxes on the top bracket.

2. Slash military spending.

3. Increase or keep at current levels expenditures for infrastructure.

Or any variations thereof.

 

Economists Kathleen Engel and Patricia McCoy found that banks would receive CRA credit by lending or brokering loans in lower-income areas that would be considered high-risk by ordinary lending practices. These banks would inadvertently facilitate this by financing lenders. The CRA did nothing to stop these lending practices. That has to be lowering lending standards.

Banks who made higher-risk loans to lower income areas received more credit from the CRA, making expansion easier.

Artificially inflated home-ownership created a housing bubble, which might not have burst on its own, but greatly amplified the consequences of the collapse.

 

Seeking a compromise I would offer the following.

Decrease spending to eliminate the deficits completely and then increase taxation exclusively to pay off the national debt and to redeem Federal Reserve Notes, which are promissory notes of debt, with lawful money (gold and silver coins produced by the US Mint) in accordance with the existing law.

When the national debt no longer exists and there are no government promissory notes in circulation then that additional taxation can be used for whatever Constitutional purpose the Congress decides or it can reduce the taxation as it deems appropriate.

 

The debt isn't due immediately, but paying compounded interest on such a high debt reduces the government's ability to fund normal services. Right now, we pay over $430 billion a year in interest payments alone, or 15 cents from each tax dollar. While holding onto such a debt won't tank us into default in the foreseeable next few decades, it greatly impairs appropriations ability of congress and really would cost a lot over a long run.

1. Increasing taxes on the top bracket may look like a great way to get revenue, but the wealthy will simply shield their income in tax free municipal and state bonds. It has been proven that a higher nominal tax rate results in a lower effective tax rate because less people are willing to pay.

2. I agree with you here. Reduce the bloated budget of the Pentagon, end foreign involvements, add a requirement that Congress must declare war upon a nation before military action can be taken (our last dec of war was WWII). This would do much to check the growth of new foreign involvements and bring savings over the long runs.

3. Infrastructure funding comes from the gasoline tax (18 cents, not including state gas tax). Increasing this tax would simply strain consumers at the pump, and since gas is still a commodity that many people need, it would not bring forseeable benefits. I would encourage enforcing tolls or leasing highways to private companies who charge tolls and maintain the road.(like CA or CO is doing, because they cant afford to maintain all of their highways).

 

WW II was a national emergency which necessitated borrowing by the government. Logic would dictate that no borrowing would be required for the normal operation of government and that during times of prosperity the government would pay off the national debt completely.

There have been no national emergencies that required borrowing by the US government since WW II so we've had over 60 years to eliminate the debt from WW II.

Taxes are scheduled to increase at the end of 2013 under current law. Simply increasing taxes on the wealthy doesn't come close to balancing the budget. If we wanted to balance the budget by raising the taxes on the wealthy it would require cuts of over $900 billion in annual expendatures.

I agree with slashing military spending and I've proposed this on other threads. The withdrawal of all US military forces from foreign bases and converting from standing military to a reserve military would allow us to reduce the deficit by about 40% but we would still have over $600 billion is deficit spending.

I always wonder what people mean by infrastructure. Highways, roads, bridges, etc. are paid for with State and Federal fuel taxes. Overwhelmingly roads are a State issue and not a Federal issue. The exception being the major interstates but local roads and State highways belong to the State and State fuel taxes fund them.

In a recent documentary on the aging of infrastructe of America they cited water systems some of which are well over 50 years old. Of course water systems are paid for by the water consumers they pay for the maintenence of those systems every month. No one can tell me that over 50 years the water ultilities were unable to save enough money to pay for replacement of the water systems.

What other "infrastructure is being referred to? Most of the infrastructure belongs to the states and is paid for with fees and taxation at the state level.

 

Yep. Anti-defecit speak could only make sense to the kind of person who only pays cash and only keeps his cash burried in jars in the backyard.

 

"thrift" allows for the accumulation of wealth, which allows people to buy more durable goods that cost more without taking on credit card debt.

Deficits and debt creates high compounded interest payments, which (projected to reach 20% of future GDP by 2020) will seriously reduce the government's ability to fund important institutions. Currently we spend 15 cents from each dollar of revenue on interest payments.

 

First, is was $414B last year and 451B in 2008, so it actually has gone down. The projected amount for 2011 is $385B. But it's a big figure. All the more reason to raise taxes on the wealthy.

Yes, yes, and if you outlaw murder, murderers will find trickier ways to kill people. This isn't an argument, just an excuse for not taking action.

If the wealthy want to shield their income by buying massive amounts of double excempt muni bonds, I say go for it. It's a good thing. But in fact the superwealthy love betting on hedgefunds, and don't want to buy low return munis.

Well, we agree on something.

You have a crabbed view of infrastructure. Infrastructure, used broadly, is anything that contributes to the productivity of the generaly economy -- such as regulatory enforcement, an efficient court system, health care, education. Not just road.

 

CRA wasn't intended to stop banks from making bad loans; it was designed to prevent banks from not making good loan, based only on redlining. We have other legislation to prevent banks from making bad loans -- wait a minute -- we used to UNTIL THE GOP DEREGULATED THE FINANCIAL SERVICES INDUSTRY.

Again, this is nonresponsive -- there is noting in the CRA that lowered lending standards and I defy you to cite such language.

Further your response again doesn't address the fact that most of the bad loans were subprime -- they weren't even part of the CRA system.

Again -- you have made an argument for MORE regulation, not less.

Banks that made LOANS to lower income areas received proper credit due to the termination of their redlining practices. If your claim is that redlining means avoiding high risk loans, that is a false claim. Redlining is the practice of not making good loans to creditworthy borrowers based soley on zip code.

Housing has increase consistently in most areas of the country for the past 50 years. That wasn't the issue. The issue is how the risk got handled. Banks with too many bad loans got bought out, problem solved. But because Republicans with similar views as yours regarding regulation exempted CDSs from regulation, the bad loans got chopped up and sold to almost every bank, causing a systemic problem.

Blaming the inevitably disastrous consequences of GOP deregulation on working people for buying houses is typical Tea Party cant.

 

This continues to ignore the fact that the wealthy don't have that much money. As previously noted the combined assets of all of the billionaires in the United States is only around $250 billion. We can toss in the "millionaires" but that includes average income workers nearing retirement as it requires several million dollars in retirement assets to retire and maintain the same pre-retirement lifestyle.

To make matters worse the continuing deficits and future rising interests rates (the FED is currently keeping interest rates artificially low) will increase the interest on the debt to well over one trillion dollars annually within a few short years. This is "lost" money as far as government expendatures are concerned. It cannot be used to maintain our military (which does need to be dramatically reduce) or to provide social services or fund infrastructure projects.

Without dramatic reductions in expendature eventually the interest on the national debt will exceed all of the possible taxation. Before addressing new taxation it is logical to reduce the expendatures to eliminate the national debt completely.

As I've noted, I'm an upper middle class income earner and I will gladly pay more taxes but only if those taxes are exclusively used to pay down the national debt. I will not approve of additional taxation that continues to fund deficit budgets or for existing expendatures. It is the national debt and the lost revenues that go to pay the interest that is bankrupting the government.

 

Again, I stopped reading after this line. You keep repeating this straw man and misrepresentation, so it's hard to take you seriously.

The proposal is not to pay off the debt in one year by raising taxes on the rich. So stop rebutting a claim nobody is making.

 

Nobody takes the Laffer curve seriously but you and some Tea Party obscurantists. Even Stockman, looking back, found it laughable.

Reagan's trick has been exposed over and over again, so I'm surprised you're still repeating this nonsense.

Reduce capital gains and you always get a shortterm bump in revenue as the wealth adjust their portfolios to lock in the lower rates. Then you get falling revenue. And that's exactly what happened with Reagan's trick.

Sorry, this isn't a Tea Party convention -- posters here are too knowledgable to fall for this meme.

 

Typically market evangelists make high falootin' comments about government inefficiency, but have zero, and I mean zero, evidence that government isn't efficient in creating infrastructure that results in higher productivity across the board. Indeed, all the evidence is it's the only way to go.

We tried the private industry route - - a complete failure. That's why every advanced prosperous nation on the planet has a robust public sector, and every failed third world economy doesn't.

 

If you read my post you would have know that I actually favor spending for useful causes. Wasteful causes that i mentioned, such as NCLB, have been claimed by BOTH the left and the right to be an abomination. No Child Left Behind, ever since instituted under the Bush presidency, enforced a standardized system of testing that has done nothing to increase educational performance, and actually may have increased incentives for schools to cheat in order to receive more funding.

It is also unfair, as it rewards schools on improvements from previous years' performances. The local high school in my township had i think one of the top 10 highest average SAT scores for PA public schools, yet it was rated by the state standardized testing service as one of the worst performers on the PSSA (standardized test) because its scores were already so high that there was not much performance to be had. As a result, funding was directed away from this successful school tfor no reason other than that its scores were too high. That is the sad fate that is occurring in many schools across the nation, and if we removed NCLB, we would not only save a lot of money, but we would let teachers go back to doing what they do best, teaching the curriculum instead of teaching the test.

I guess these economists below are also tea party fools like me...

Yu Hsing in 1996 pinpointed the rate of maximum revenue to be from 32%-35%.
http://www.sciencedirect.com/science/article/pii/S105353579690013X

Kurt Hauser on his Hauser's Law, in which the tax revenue of the US has always remained close to constant around 19.5% of GDP despite the fluctuating rates (28% to 91%).
http://www.hoover.org/publications/hoover-digest/article/5728
http://books.google.com/books?id=X7...&resnum=1&ved=0CBcQ6AEwAA#v=onepage&q&f=false


A study on various European countries and their experience with the Laffer Curve. The study DOES have credible sources.
http://adamsmith.org/files/CGT-II.pdf

 

Exactly what countries are you referring to? Darn if some of ya'll don't sound like the same dripple I use to hear from years ago when I basically stop posting on boards because of the stupid conclusions that some how transferred into some strange facts.