President Obama gave another speech this morning, this time announcing his deficit reduction class warfare plan:
President Obama called on Monday for Congress to adopt his “balanced” plan combining entitlement cuts, tax increases and war savings to reduce the federal deficit by more than $3 trillion over the next 10 years, and said he would veto any approach that relied solely on spending reductions to address the fiscal shortfall.
“I will not support any plan that puts all the burden for closing our deficit on ordinary Americans,” he said. “And I will veto any bill that changes benefits for those who rely on Medicare but does not raise serious revenues by asking the wealthiest Americans and biggest corporations to pay their fair share.
“We are not going to have a one-sided deal that hurts the folks who are most vulnerable,” he continued.
…Mr. Obama is seeking $1.5 trillion in tax increases, primarily on the wealthy and corporations, through a combination of letting Bush-era income tax cuts expire on wealthier taxpayers, limiting the value of deductions taken by high earners and closing corporate loopholes. The proposal also includes $580 billion in adjustments to health and entitlement programs, including $248 billion to Medicare and $72 billion to Medicaid. In a briefing previewing the plan, administration officials said on Sunday that the Medicare savings would not come from an increase in the Medicare eligibility age.
The plan also counts a savings of $1.1 trillion from ending the American combat mission in Iraq and the withdrawal of American troops from Afghanistan.
…But Mr. Obama spent much of his talk in the Rose Garden making an impassioned plea for what he called fairness in taxation, on the premise that “middle-class families shouldn’t pay higher taxes than millionaires and billionaires.”
“This is not class warfare,” he said. “It’s math.”
“It’s math”
….I can see it now; this will be the new campaign slogan.
And that’s all this is. It’s a speech, and a plan, laying the groundwork for 2012. There is nothing serious in this plan. Nothing that will get passed by Congress and no indication that Obama will seek to compromise. Instead we get more class warfare in the hopes that somehow, someway, this will get him re-elected.
From The Tax Foundation:
Some specific effects which will arise from these proposals include:
- Creating perverse incentives for healthcare providers
- Decreasing the long-term solvency of Social Security by claiming to veto any bill affecting Social Security without nebulously defined revenue increases
- Handicapping lawmakers with the 2:1 spending-cut-to-revenue-increase ratio
- Relying on static economic conditions rather than the more realistic dynamic conditions which affect the source of capital gains taxes (one of the most volatile sources of revenue), as large part of the “Buffett Rule.”
The dire nature of the country’s fiscal situation, which Obama’s proposal is meant to address, will be exacerbated, not helped, by most of the proposals he put forth.
“Veto threats, a massive tax hike, phantom savings and punting on entitlement reform is not a recipe for economic or job growth — or even meaningful deficit reduction,” said Senator Mitch McConnell of Kentucky, the minority leader. “The good news is that the joint committee is taking this issue far more seriously than the White House.”
Mr. Boehner said, “This administration’s insistence on raising taxes on job creators and its reluctance to take the steps necessary to strengthen our entitlement programs are the reasons the president and I were not able to reach an agreement previously, and it is evident today that these barriers remain.”
Obama’s speech was nothing more than empty rhetoric to play to the base. It was a speech reminiscent of his speeches in 2008 but what this man can’t seem to grasp is that times have changed. The hopey-changey crapola isn’t playing anymore because people now see what his policies have wrought. Furthermore, if he thinks he has some kind of leverage because of the automatic cuts due to come in December, if no deal is reached, then he is sorely mistaken…again. Republicans would rather have budget cuts without tax increases, which is what we will get with those 1.2 trillion dollar automatic cuts. There are some defense cuts built into those automatic cuts which we would rather not see but if this man really believes the GOP will make a deal to increase taxes, in this economy, he is high as a kite.
I’ll close this out with this great observation from Ed Morrissey:
With even his own party insisting that they’re not going to bite on more spending and higher taxes, Obama’s already starting to isolate himself on economic policy. He issued this warning in a sad attempt to impress a few people on the Left with his “leadership,” but issuing empty threats isn’t real leadership. It’s an expression of political impotence.
See author page
I live in a rich city. Huntington Beach, CA. Most of the streets need to be re-paved, but they only get patched. My kids went to a public high school (Marina) good enough to get both of them into Ivy League colleges, but in “permanent” and portable buildings which were dilapidated, dingy, and depressing. There were jacks holding up the roofs and buckets catching rainwater from mid-winter storms. Class sizes are large. It’s ridiculous, is what it is. All in the name of low taxes. There’s an aging, outmoded bridge crossing the Ohio River in Cincinnati which carries an unbelievable percentage of the nation’s total cargo load. There are aging bridges crossing the Ohio River between Louisville and Southern Indiana which don’t have the capacity which is required to keep tens of thousands of people moving to and from work on the other side.
All over America, it’s like this. We have a third class rail system. Bullet trains don’t make sense everywhere, but they sure do between LA and San Francisco.
Spending money on projects like this isn’t flushing money down a toilet. It’s building for the present and future and it’s paying people good wages today and giving them money to spend in local restaurants and malls and on new cars, which certainly does help private sector employment.
Why don’t you read what Eric Schmidt had to say on “This Week?” Google’s business model obtains revenue from literally all sectors of the economy. He knows a thing or two about business hiring and economic health. It doesn’t make him right, but it should at least make you challenge declarations such as #49.
– Larry Weisenthal/Huntington Beach, CA
Larry, California bankrupted itself paying salaries for large numbers of government employees, their generous pension and benefits, and hundreds of clever but nonessential government projects such as high speed rail. We pay some of the highest income taxes in the country and still they ran out of money. The state government’s ability to squander money is infinite. At the same time, businesses are being driven out of the state by burdensome tax and regulatory requirements; it is a business-hostile environment run by ignorant socialists, a smaller scale version of what the Democrat Party seeks for the entire country.
High speed rail is exactly the kind of needless bright idea that has helped wreck the state’s finances. We have airplanes and highways, and they are quite good enough. In what way does this boondoggle, initiated with a 10 billion dollar bond sale, make sense anywhere? The 10 billion dollars is just a down payment. It will take at least ten times that to finish a partial system and it will operate at a loss forever. The first segment is going to be put out in the Central Valley, between two points in the middle of nowhere. The state is already broke and they want to pour money down this rathole. It is a giveaway to unions and any transportation it ever provides will be just a sideline.
Remember the 3 billion dollar bond sale to fund stem cell research? It was a reaction to the Bush adminstration limiting federal funding for research using fetal stem cells. The initiative’s mandate was for using fetal cells, basically to give the finger to George Bush. Yet, the advances in the field have come from adult stem cells, outside the institute’s funding. Shiny new research buildings have been constructed by friends of the funding board, some real cronyism there, and really nothing much else to show for it.
What do we spend on state education per student compared to the national average, Larry? And what do we have to show for it?
The money for the streets in your town is going into the pockets of government employees and “friends” of politicians. If they take even more money, it will end up in the same place.
WmT, Californians put Brown into Sacramento, knowing what he was. He didn’t do enough harm the first time.
The voters are demanding to be drowned. They just can’t get enough socialism, and thrive watching bureaucratic stagnation of anything remotely resembling a capitalistic entity.
In California, destroying employers is Job One, and increasing debt is a systemic addiction.
Hi William.
First, you picked an inopportune time to trash the California Stem Cell initiative:
http://cirmresearch.blogspot.com/ (See Sept 20 2011 entry)
Patience. Research takes a long time. In the pharmaceutical industry, it takes many years to go from conception to clinical trials. This particular research program has barely hit full steam. California Universities and Biotech firms funded by this initiative are world leaders.
San Diego County is now considered to be the Silicone Valley of Biotech and the initiative is contributing substantially to strengthening this. I’ll happily trade the California businesses which have relocated to Texas (more on this below) for what continues to be developed through infrastructure investment like this (and a lot of the money literally went/is going for physical infrastructure), plus the hugely disproportionate share of venture capital which investors (who vote with their wallets) continue to plow into California as opposed to Texas. The stem cell initiative helps to keep all that private investment capital right here, because it strengthens the critical mass of brainpower and science infrastructure. And this wasn’t a bill foisted on unwilling citizens by the legislature. It was a statewide initiative which passed by a 59 – 41 margin. It’s what the voters wanted and we’ll all see how it works out, down the road.
With regard to businesses allegedly leaving California because of “high taxes” and “regulation,” this is way overblown. When the Fluor Corporation relocated its headquarters from Orange County CA to Dallas, the CEO explained that their business was overwhelmingly Texas and East Coast and they wanted to be in the Central Time Zone. Housing is dramatically cheaper in Texas and so are labor costs in general. So companies migrate to low cost areas in the USA in the same way that they migrate to low cost areas overseas.
http://forum.dallasmetropolis.com/archive/index.php/t-5329.html
And that’s the truth of it. California has become overpopulated and overcrowded. No one living and governing in California is looking to attract migrants from other states, the way it is in Texas. “Growth” is not a positive word in most places in California. So any outmigration is basically a needed correction.
With regard to taxes and debt, this is also overblown. California’s debt, as a percentage of state GDP, is in line with the rest of the nation and not out of line with Texas. Our total tax burden is only a couple of percentage points higher than Texas, but our wages are higher, also. Money spent on education is higher, because salaries, real estate, transportation and the like are higher. As our class sizes have expanded, our test scores have gone down.
I’ve done a reasonable amount of traveling between LA and SF. It’s an unpleasant trip by air (4 – 6 hours of total door to door time for a one hour flight, with most of the time not being time where one can get any work done, between going to and from airports, catching shuttles, going through security and the unpleasant boarding process, not being able to take out your computer until we’ve reached 10,000 feet and then turning them off only a half hour or so later. Not being to use your mobile phone at all. Not infrequent flight delays and cancellations).
It’s entirely unpleasant and non-productive. The drive through the grapevine and up the I-5 can be pleasant or it can be miserable, but it’s still a 7 hour drive, either way.
I’ve taken the bullet trains between major Japanese cities. The experience is entirely wonderful, by comparison. Pleasant, quiet, productive…and FAST.
A bullet train would be a huge boon for businesses, including the tech and biotech businesses, and for many of California’s 40,000,000 people. Sure it’ll be expensive and it will take a long time, but it will be a huge success if and when it’s ever completed. It just takes the same sort of vision that it took for the Interstate Highway system.
– Larry Weisenthal/Huntington Beach CA
Hi Doug (#15): Can you explain your numbers to me? Can you itemize how you see yourself going from 43% to 56% by 2013? Are you talking total tax burden or marginal tax rate? I can’t respond without being able to figure out what you calculate is supposed to happen to you. You are talking Federal Tax + payroll (or self employment) tax + Medicare + real estate + personal property (boat/airplane) + business property? And that’s somehow going to shoot up from 43% to 56%? I don’t understand the math which applies to your situation. – Larry W/HB
want some real economists. as brother Bod posted. cafehayek.com , or go over to mises.org. don,t listen to that idiot fake economist paul krugman.
Luckily, most people hate math.
@openid.aol.com/runnswim:
Umm no Larry. They showed how tax cuts increased revenue and DID NOT hurt revenue. You use projected revenue from tax increases (wildly inaccurate) to claim that tax cuts reduced revenue (deliberately dishonest). Not that you are capable of grasping the facts, but go back to the threads if you want proof (for the umpteenth time). You seem to forget I was involved in those debates. I asked you for proof on certain claims you made. You could not or would not produce it. I demonstrated how the debt to GDP arguement was bogus and that economists are hardly the gurus you pretend they are. Yet, here we are all over again.
All you do is spew the same disproven leftist mantra. Tax cuts bad, tax increases good. You deliberately ignore the insane spending so you can justify your support of an all powerful government.
I’m not surprised you refuse to face reality since your entire political belief system is based on ego. That is quite typical of the left.
I’m also not surprised you say the same things over and over. You aren’t trying to convince us, you’re trying to re-affirm your political views to yourself and therefore your self annointed superior intelligence, superior compassion, and elite status.
BTW, the expiration of all Bush tax cuts would further damage the middle class and the economy. Either you don’t care about that or you are as mindlessly leftist as you appear to be.
Really, it’s tiresome to have the same debate with you ad nauseum.
@openid.aol.com/runnswim:
The thing is, Larry, that that is exactly what increasing taxes would do, and you hit upon it in your post #47 here;
Increasing taxes on those who work will only further depress consumer confidence. Your idea of infrastructure spending is only a stopgap measure that doesn’t create longterm employment, which is exactly what is needed.
The idea that the Bush tax cuts “cost” the government anything is flat-out wrong. I explained, and showed, with numbers from the government, exactly why that is, in another topic. In short, the 2007 end of year federal revenues ended up higher by a few Billion $$$ with the tax cuts than what it would possibly have been without them, and given the average(previous ten years) revenue increases had been added in. What that told me was that federal revenues would have been roughly equal either way, and with the tax cuts in place, unemployment dropped. What’s more, revenues were heading upwards into the same percentage to GDP area as it was during the Clinton years. Tax cuts didn’t “cost” the government anything.
The problem is, and has been, federal spending. That problem has become much worse during Obama’s presidency, in large part due to the first stimulus bill where much of the spending became enrolled into annual budgets from the various dept’s and agencies. All of that spending is now subject to the baseline budgeting models where a fat 4-7% annual increase in spending is automatically assumed. Stupid, stupid, stupid.
You are arguing for increasing taxation to pay for that massive increase in spending. Why? So that the federal government can be involved in doling out the $$$ in areas it has no business being involved in?
The problem is that you, and other liberals here, look at it as there not being enough money brought in. Myself, and other conservatives here, and in no way like those faux “conservatives” you tout, such as Greenspan, look at it as there being too much money spent by the federal government. And, Constitutionally, we have more standing than you do.
Here’s an idea; Start with real cuts in spending, trimming down the budget, cutting out spending in departments and agencies duplicative in state governments, cutting out waste, fraud and abuse, and trimming the federal payroll. Don’t tell me it cannot be done.
Then, after real cuts in federal spending are enacted, we can talk about the tax structure and just how much the federal government needs from us. You, and other liberals, are looking at the problem completely backwards. Cut the spending, then determine the revenue needed.
Larry-
The Stem Cell Initiative – seven years, 3 billion dollars, and you present: one, repeat one, experimental clinical patient glowingly described in one of the Institute’s own press releases. Peep.
Businesses leaving California – you say basically, let them go, who needs them. An anecdote about the reported point of view of one company’s CEO is useless when describing a larger trend. In fact companies are leaving in large numbers, and it is not because of crowding or freeways or the cost of housing, it is because of the regulatory and tax environment in the state.
You say about the high speed train project:
If and when. If it’s not completed, what then? This thing will cost a hundred billion dollars to even partially complete, and even then, it will bleed money as long as it operates. And, do you seriously think that the special trains are going to escape the security procedures used by airlines? The problem is not the mode of travel itself, it is the inept and politically correct security procedures superimposed on the travel. Cleaning up the security for commuter air travel would make more sense than a giant railroad project.
Texas has no income tax. California has a high income tax and high local sales taxes. The tax burdens are not the same.
All of the progressives like to say that the right will hurt “Teachers, Police, and Firemen….” like those are the only people who could be furloughed, but the truth is that the progressives in power would furlough ONLY these people, so as to intentionally hurt this society. Then they could, ever so righteously, claim that the right did this, when you could furlough street sweepers, and other municipal employees, with less effect on our basic structure.
But these morons are like children who would rather destroy the sand castle than allow anyone else to play with it.
@James Raider: I voted against Brown, of course, and all the other idiocy. Brown’s opponent, Meg Whitman, was a drab nonentity. Perhaps nobody but an oddball would want to be governor at this point, since the state is at the point of collapse.
Part of the statists taking and holding power has been the cultivation of an uninformed electorate. People vote for fun stuff and I don’t think it ever occurs to them that it has to be paid for.
The central reality of politics in California is the permanent Democratic majority in the legislature, and their enthrallment to the state workers unions. The looting is massive and ongoing, and nothing will stop it except the day that payment in full finally becomes impossible.
@Wm T Sherman:
Iowahawk (a web humorist) asked:
Why, indeed.
In CA we already know our mini-high speed train is 3 times over original planned budget.
(From ~$14 billion to $43 billion with not one inch of line laid.)
Some are sure the final cost will be around $213 billion.
Earlier this month Federal Funding for California’s High-Speed Rail was Slashed
We learned from Iowa that there is already a luxury bus service where you can sit for the trip, play or work on your laptop, use your cell phone, and relax with a beverage all for $18 one way.
But the high speed rail will cost $50 for the same trip and take several minutes LONGER!
Larry is way off on the idea of high speed rail.
High Speed trains will be a financial disaster, but if Californians want to pay for it entirely, be my guest. If they expect federal subsidies though, they can go suck an egg.
@openid.aol.com/runnswim:
Not true at all, Larry. You further state;
Now, let me tell you, and show you, why that line of thinking by yourself, and other liberals, is quite wrong.
First, one fact to get out of the way now: The bulk of the Bush tax cuts, and ALL of the rate changes, were enacted in 2003, retroactive to the beginning of the year.
So, we have the Bush tax cuts, in 2003, and the federal revenues for that year were $1.9011 Trillion (constant 2005 dollars, as is all figures used). The federal revenues for 2007 were $2.414 Trillion. Those are actual figures.
In the previous decade, from 1991-2000, the average increase in federal revenues was 5.7% over the previous year. Remember, much of this was during the dotcom boom. For contrast, the decade before, which included Reagan’s terms, the average increase was around 2.1%. For the period from 2003-2007, the average increase was 6.7%. Over the period of 1981-2007, the average increase was 3.9%.
Starting in 2003 from $1.9011 Trillion, and using the average increase from the 90’s of 5.7%, the expected revenues in 2007 would have been $2.373 Trillion, or, $41 Billion less than the actual figure.
So, what conclusion can be drawn from this exercise? Well, for one, it should show that the Bush tax cuts didn’t “cost” the government any revenues whatsoever.
And, while I don’t claim this as fact, an inference can be made that the Bush tax cuts helped generate more revenue over the period from 2003-2007 than otherwise might have been realized. Several factors might play in to this, such as increased employment and greater wage increases, which both may, or may not have, happened regardless of the Bush tax cuts.
As for the revenue to GDP numbers, the average during the Clinton years was almost exactly 19%. During the time of 2003-2007, that number grew from 16.2% up to 18.5%, and likely would have continued to go higher if not for the housing bust.
All in all, one cannot claim that the Bush tax cuts “cost” the government revenue with any degree of factual accuracy. Your claims are based on pure speculation. Namely, that the increase in GDP and the robust economy seen during the 2003-2007 time period would have happened even if the Bush tax cuts had not been enacted. For my part, I seriously doubt the economy would have been near as good without them, as evidenced by the 2002-2003 differences in revenues, which you have claimed before was after the downturn due to the dotcom bust.
I do not know how you can truly be for higher taxation when the unemployment is as bad as it is, with the consumer confidence so low. You want more spending, with the threat of higher taxation, and somehow believe that this will get the economy moving again. Really? Have you forgotten how that worked the first time? And don’t tell me that it’s just a matter of spending the money smarter. Our government has proven, time and time again, and regardless of who runs it, that the one thing they don’t know how to do is spend money wisely.
All numbers from here;
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=200
@Hard Right:
That would be my point as well. I live in IN and see no reason why my tax dollars should go to pay for some other state’s assumed benefit. Just as I see no reason why my state of IN should be subjected to the environmental desires of those on the west coast, and use my tax dollars in order to regulate it.
California’s problems are not my problems. Don’t ask me to pay for their “solutions”.
@openid.aol.com/runnswim:
Sure, but it’s complex. And I am only talking about income here, those other taxes on sales, real estate, etc. have different disincentive effects. I am focusing entirely on the disincentives for producing income through work or saving. As a basis for comparison please keep Canada in mind: their national tax rate is 29% and provinces add 12-14%. So a Canadian faces a tax rate in the low 40% range. Also keep France in mind: a Frenchman pays 40-41%.
So a Californian in a high tax bracket pays 9.3% to the state, and 35% to the feds, and 1.45% in medicare. This calculation is assuming he/she is not a small business paying the other half of the employer tab on medicare. So all in that would be 45.75% today. However that’s not the end of the story, because he/she can deduct some of the 9.3% against the federal tax. 35% of 9.3% is 3.25%, so netting that out, leaves him/her paying a tax rate of right around 42%. We’re still not done, though, because very likely he/she is also being hit with AMT which “phases out” the deduction of the high state income tax. It’s very hard to say exactly what that is, because it will vary based on individual circumstances. It could be as high as all of it! In my case, add back 1%. So there you have the 43% figure for today, about what a Canadian or Frenchman pays. Bear in mind that because I am getting old, I have savings on which I plan to retire, and therefore have investment income which is also taxed, much of it at this same rate. We will have to come back to that in the next calculation.
Now let’s take stock of where we’ll be in 2013. Federal jumps to 39.6%. Medicare is still 1.45%, however an additional 0.9% is slapped on as a surtax (remember we are talking marginal rate here), so call that 2.35%. State is still 9.3%. Total that is 51.25% but we are not done yet. Also returning is the itemized deduction “phaseout”, which reduces your deductions by 2% for every dollar above some AGI level. This is roughly speaking about the same as a 1% bump in the top rate, because a Californian is losing the deductibility of his/her state income tax at that rate all the way up. So we are at around 52%, give or take. Once again we have the impossible-to-predict issue of AMT, versus the possibility of deducting as much as 3.5% versus the state income tax. So somewhere in the range of 50-52% is about right. Now for the coup-de-grace: the 3.8% medicare investment tax! Remember that the person’s other choice is to stop working, work fewer hours, have his/her lower-earning spouse stay home, etc. So what happens is that an extra dollar of work income above the $200k threshold ($250k if a couple) triggers a 3.8% extra tax on a dollar of investment income. Exactly how much affect this has is again going to vary based on individual circumstances. Young workers with little savings will scarcely notice. Older workers with taxable savings will see an extra 3.8% disincentive to continue working on each marginal dollar, until all of their investment income is “phased out”. For example, if you have $50k in investment income, and you work for $150k, then the next $50k of your income is effectively taxed at a rate that’s 3.8% higher than the official tax tables would suggest. This sort of “kinked” tax structure is similar to the AMT, whose bizarre phaseouts cause the rates to be as high as 35% before dropping back to the official 28% top rate. All-in, a worker who has taxable retirement savings and a good but not exceptionally high income will see an effective rate of 54-56% due to this effect.
I can tell you that this is pretty discouraging. Public employees are retiring in their early 50s with spiked pensions of $100k or more, COLA’ed for life, and health benefits. To replicate that as a private employee, I would have to have on the order of $4 million given the current low-yielding investment environment. Good luck saving that much in a 401k with a $22k/year limit (and remember most of my career the limit was a lot lower). So, to have any hope of such a retirement, which isn’t exactly lavish, a private employee needs $millions in taxable savings, and therefore is exposed to the odious new medicare surtax. If he/she is conservative (and, given the performance of the stock market for the past 10 years, who can blame him/her?), a lot of this will be in bonds where he/she is being hammered by the tax system at every turn. The tax system doesn’t care if your interest “income” is really just inflation, it doesn’t care if some of your capital gains (assuming you have any) are just inflation, it treats this income the same as if it were “real” income (which all work-derived income is). The 3.8% surtax is, as I said, just one more shot in America’s war on savers.
Combined state and local sales taxes in California are approach 10% in many localities.
9.3% of our incomes, 9% of every purchase, 1% or more of real estate assessed value, high corporate taxes and fees, billions in Federal stimulus money quietly transferred to bail them out. (Note that the state government helps itself to some of the local tax revenues. Their income is not limited to statewide taxes – it is considered fungible at the discretion of the state.)
And still the state is going broke.
They don’t have a revenue problem, they have a spending problem.
The money that could have fixed a pothole in Larry’s town went instead to build a bigger fatter ass on some unionized government employee or to some retired government official drawing a $200,000 annual “pension.”
@Hard (#58):
I’m very sorry, but you are entirely incorrect. You don’t understand economics. You simply look at tax receipts and you see that they go up after tax cuts. This is the way that bloggers analyze the relationship between tax cuts and tax receipts, but it is not the way that economists do it. Tax receipts track with GDP. GDP tracks with population. You look at the trend lines of tax receipts, government spending, GDP, and population, and they all track upward together, very nicely, except in times of recession, when there’s a stall in both GDP and tax receipts. But then the recession ends and the GDP rises and so do the tax receipts.
I provided links to 10 conservative economists who all agreed that tax cuts don’t pay for themselves and therefore contribute to the debt. Mata provided links to an economic study of every tax cut since the 60s and none of them paid for themselves; they all reduced revenues below what they’d have been, absent the tax cuts.
Rather than making assertions and attacks on my personal integrity, why not accept my challenge to provide a link to an analysis by a credible economist who’s willing to stand up and defend the theory that tax cuts pay for themselves by generating sufficiently increased economic activity to make up for the revenue shortfall attributable to the tax cuts.
You don’t understand the difference between debt and debt to GDP ratio and why the latter metric is the universally accepted measure of actual indebtedness. It’s a simple concept, really. If I have $100,000 in debt and $500,000 in income, I’m in much less trouble than if I have $100,000 in debt and $50,000 in income. That’s why California’s debt load is on a par with national averages, relative to the state’s economy. Yeah, it’s a big debt, but it’s also a big economy.
– Larry Weisenthal/Huntington Beach CA
Because Larry, others and myself have already so over and over. I’m tired of playing this game with you. You aren’t capable of understanding because of your leftist views. In fact because of that, I have a better grasp on economics than you do.
Hi John, I look forward to discussing/dissecting the Bush tax cut data with you. That’s the best type of a discussion to have — focusing on something and considering it in depth. I want to ask the favor that you’ll stick with this over the following days. I’d rather that we both take the time to do a good job, as opposed to shooting from the hip and firing things back and forth, over a short period of time.
I’ll get back with you on this. Thank you very much for providing a good starting point.
Hi Doug, Back with you later, as well.
High speed rail between LA and San Francisco is nothing like between Chicago and Iowa! Someone suggested that, if I didn’t want to waste all that time not being able to work while I travel, I should just take a bus. That’s 9 hours. Amtrak is even slower (11 hours). The drive is 7 hours. Flying is 4-6 hours, depending on a variety of factors. Someone made a joke about why anyone would want to take high speed rail out of Chicago to go to Iowa. Well, there’s lots of reasons why millions of people would love a better way to get from LA to SF and vice versa.
Hi Sherman, As I wrote in my comment, it takes years to go from concept to the start of a clinical trial in any pharmaceutical research. The California stem cell initiative has already yielded enormous benefits to the state in terms of cementing our leadership in biotechnology. The clinical trial in question is incredibly exciting. Whether or not it pays off (most clinical trials of new drugs and technologies don’t pay off, by the way), it is a certainty that this is only the first of a great many exciting clinical trials to follow in the coming years.
California’s total tax burden is 10.6%. The national average is 9.8%. I’m certainly more than willing to pay the extra 0.8% for the privilege of living and running a business here.
– Larry Weisenthal/Huntington Beach CA
@ Wm T Sherman: #62,
She also had the morals and principles of a gnat. Unfortunately I agree with your sense on the future of California. A beautiful State has been destroyed by selfishly blind culture of I-Want-Now. But none of them want to pay for it, as you say.
Even Skook’s Limousine Liberals dominating the California landscape have a perverse and narcissistic perception of realities down the hill from them. In Palo Alto for many years, as an example, some of the comments and views that permanently burned many WTFs? in my mind, were related to the East Palo Alto getto just 5 minutes away on the other side of Hwy 101. Having spent my life “colour blind”, I was blown away that these Steve Jobs neighbours gave racism new meaning. Low and behold, these very same people voted for Obama, stimulating another WTF? To this day, I still don’t fully grasp what it’s about, . . . and “guilt” isn’t the simplistic answer. But Limousine Liberals, they ARE. And believe me, they don’t want to fund the education of the poor kids in the getto. They actually don’t give a damn. Give them an enclave where their own children are sheltered from the riffraff, and then can come out through a formal débutante ball. Such is the enigma that is California – physical beauty with not so pretty underbelly.
There is nothing on the horizon that suggests this will change for California and for the Nation. It is only a matter of time before a decade long depression is acknowledged. But worse may occur if some serious action isn’t taken soon, including confrontation and correction of the trade imbalance disaster with China.
Bernanke and his buddies, including Geithner, are totally wrong with their strategy, and what’s sick is that it’s obvious, but no one with influence wants to call them on it. Amongst other things, they are continuing to prevent banks from stepping into the economy with loans to businesses. Why should banks take any risk when the Fed gives them no incentive to do so? The Fed has to begin raising interest rates today. Much else needs to be done, but you have to start there.
@James Raider:
But they didn’t.
The ”twist” was approved just now.
The Fed will be selling short-term bonds.
The Fed will be using that money to buy 6-year to 30-year treasuries.
They will pump $400 billion into this.
That keeps interest rates low, even lower than they were.
Our 10-year treasury is now the lowest in years.
Our 30-year treasury is the lowest since 2009.
The fed vote was 7 to 3.
Banks will NOT be loaning to folks like you and me.
OK Larry, how about a tax rate of 100% on all the millionaires and lets see what happens. Think they are just going to work for nothing?
@openid.aol.com/runnswim:
What is the defintion of “total tax burden” that you are using, and what is the source for the figure? You, personally, are not paying a total of 10.6%. It’s higher.
The tax burden on people who pay no taxes is zero, or actually a negative number if they are getting entitlement payments. The total tax burden on the producers is much higher, and this was described in some detail a few posts above. You appear to be reporting the average tax burden of everybody, the payers and the payees lumped together, and that is just disingenuous.
If the state gives easy money to payees, it will get more of them. If the state punishers producers, it will get fewer of them. Your eager willingness to get boned to pay for state featherbedding and cranky feel-good projects is a private eccentricity that can’t be extrapolated to the entire population.
@Nan G: #73
“The fed vote was 7 to 3.”
Make those “3,” KINGS for a day.
@openid.aol.com/runnswim:
For the most part, you are correct. However, during economic slowdowns, people keep more of their money than they typically would close at hand. The same with businesses. That money, therefore, is not used the same as it would be during good economic times, meaning less is spent on consumer items considered wants by individuals, or on expansion and growth by businesses. People tend not to overextend themselves, and the result is less tax revenue than during good economic times, concerning revenue to GDP. That is why even as GDP grew from 2000 to 2003, tax receipts dropped from a high of $2.31 Trillion in 2000 to a low of $1.91 Trillion in 2003.
@openid.aol.com/runnswim:
Not true, as I showed you with the period concerning the Bush tax cuts. You cannot assume that economic growth would be equal to what it is after tax cuts are enacted. To do that is to dismiss basic common sense and basic economic principles.
Hi John (#78), I’ll be back with a detailed response at a later time/date.
A whole lot of study has gone into the issue of whether tax cuts pay for themselves by generating sufficiently increased economic growth to make up for revenue losses. These studies always model the impact of the tax cuts on economic growth to determine how much incremental economic growth was attributable to the tax cuts. I’ve never seen a study which concluded that any tax cut ever returned more than 20% or so of the lost revenue through stimulating increased economic activity. I’ve previously quoted on this blog a WSJ editorial from a conservative economist bemoaning the fact that it’s never been possible to demonstrate that any tax cut ever paid for itself (i.e. that any tax cut didn’t cost the treasury in terms of increasing debt). I think I also remember linking an interview with Art Laffer where the father of the Laffer curve himself conceded that there aren’t any real world examples to show that this actually has ever worked.
Here’s a rather stinging rebuke from a former supply sider who’s been honest enough not to confuse wishful thinking with real world results and data:
http://economix.blogs.nytimes.com/2011/07/26/are-the-bush-tax-cuts-the-root-of-our-fiscal-problem/
– Larry Weisenthal/Huntington Beach, CA
Higher Taxes Won’t Reduce the Deficit
History shows that when Congress gets more revenue, the pols spend it.
http://online.wsj.com/article/SB10001424052748704648604575620502560925156.html
Hi Sherman, Of course, we can’t tax our way out of debt. But we can’t cut our way out of debt, either. We’ve got to do both, as concluded by everyone. The reasons why politicians spent more money that we took in was that, for decades, politicians said that deficits don’t matter. Cheney was saying this into the Bush Presidency. Bill Clinton was the first President ever to make deficit reduction the centerpiece of his economic program. Everyone else (up to and including George W Bush) focused on economic growth. Clinton (and Rubin) focused on deficit reduction. The sweet spot in recent national governance came in the Clinton Presidency (prior to the GOP shifting attention to Monica), pre-1996, when the Democratic President and the GOP congress actually worked together for the good of the country. A combination of tax hikes and spending moderation actually did what it was supposed to do. Just like it would (hopefully will) do, this time around.
– Larry Weisenthal/Huntington Beach CA
One more thing (said Columbo)…someone complained that he didn’t want his tax dollars going to build a bullet train for California. You all should remember that California currently bails out the national treasury to the tune of $50 billion per year. That’s the difference between the money we send to Washington and the amount we get back. This is in contradistinction to the typical red state, which more often than not are net recipients of Federal largesse, vis a vis what they send in taxes. Just give us that extra $50 billion a year back and we’d instantly pay off our debt, again cut UC college tuitions to zero, and give ourselves all a big tax cut, to boot.
We richly deserve our bullet train.
– Larry Weisenthal/Huntington Beach CA
The study reported in the WSJ journal article asserts that raising taxes can actually make the deficit worse, because of the nature of the political animal to regard the new revenue as found money and spend it with abandon; on average, $1.17 in new spending for each new dollar of tax revenue. This is based on an empirical study of historical data, not on a theoretical model, and includes tax increases that were specifically sold by politicans as being for deficit reduction.
People who argue for tax cuts argue that tax rates and tax revenues do not have a simple linear relationship -that, e.g., a 5% cut in the tax rate will not result in a 5% drop in tax revenue. This point is often ridiculed by people who want to raise taxes – they argue (1) that a 5% increase in rate will lead to a 5% increase in revenue and further, (2) that that spending is not a function of revenue. But historically, changes in tax rates do affect private sector economic activity, and spending is a function of revenue
Cutting government spending is the one thing that has not been tried. The garbled Keynsian idea that cutting government spending will immediately tank the economy is an axiomatic assumption that many people make these days. There is empirical evidence that it is not necessarily so.
Apparently Larry lives in an isolated town in California because I know at least 20 different people, some family, who have had to either relocate out of state or move to say Santa Cruz or to a town up in Northern Californa just to find a job in the bordering states as many communities in Cali is failing badly.
@openid.aol.com/runnswim:
Ah, the good old days of the Clinton years and the balanced budget, eh? So let’s look at some of the tailwinds Clinton had and ask ourselves how many of these things we can conjure up by hiking tax rates:
1. Oil glut and concomitant price collapse
2. Peace dividend from the collapse of the Soviet Union
3. Unprecedented bubble in stocks, especially tech stocks
4. Baby boom workers in their prime earning years
None of these things are going to repeat, in fact we now face a headwind on every single one of these factors. The economy did well under Clinton in spite of, not because of, his tax hikes, which brought in about 1/3 of what the CBO projected they would.
@openid.aol.com/runnswim: From the first source you cited:
From the second source you cited:
And then you said:
Tell me Larry, are you an asshole all of the time or just when you post here? Two of those businesses were owned by friends of mine. They did not “cowardly” decide not to stick it out, those businesses were their livelihoods. One of them had to lay off all the part time help because of a letter they received from the federal government telling them that they needed to have health insurance in place for those part time employees, and the other business closed their doors partly because of increasingly anti-business regulations – regulations put in place by Obama.
Before you say something so asinine maybe you ought to stop and take a breath next time.
You said:
This is a favorite falsehood of the left. Right up there with the wars in Afghanistan and Iraq causing our national debt to be at the level it is.
Where was this “proven”? You mean in the 80s if you let people keep more of their own money, they increased their financial activity, but today if you let people keep their own money, they do what? Burn it?
@openid.aol.com/runnswim: You said:
Nope, all in the name of over burdening pensions and benefits brought about by the teachers’ unions.
@openid.aol.com/runnswim: You said:
Why can’t we cut our way out of debt? The federal government brings in around 2.2 trillion dollars a year. Are you saying that amount is not enough to fund all the necessary programs of the federal government? Before Obama’s insane orgy of spending, 4 trillion dollar budgets were unheard of. Now that he has incorporated the stimulus spending into the baseline of the federal budget, the Dems are crying that they don’t have enough revenue.
Bullshit. Go back to 2006 spending levels, repeal Obamacare and get rid of the hundreds (if not thousands) of new, burdensome, needless regulations and I don’t see any reason why we cannot cut our way out of debt.
Recently, Senator Colburn had a study done called Back in the Black where he identified some $350 to $400 BILLION PER YEAR no brainer cuts (10% of the Federal expenditures) that could be made dealing with waste, duplication and abuse. That’s $3.5 to $4 TRILLION over 10 years.
Notice that these cuts would in essence be twice as much as any tax increase Obama has proposed, repeatedly. Now consider for a moment IF you were a liberal whose ideology says the government can do things better than the individual because of Meritocracy (smart people telling the dumb what to do) and economy of scale. Is it not in the interest of the liberal ideology to cut waste and duplication so as not to discredit the idea the government is more efficatious than the individual? Isn’t it true that any government loss in efficacy is a disproof of liberalism since the point of the bureauocracy is to run the government therefore waste and abuse of tax payer funds meaning any incompetence by them or politicians is intolerable?
So IF Obama is passing up the chance to prove liberalism works by refusing to cut the federal budget by a no brainer 10% that is being wasted, then what is his real motivation to raise taxes and keep wasting 10% of the federal budget? You see, all this dueling over a tax increase is an obfuscation of the real intent here. Consider for a moment the Fed is creating money out of the air to loan to the banks who inturn buy US Treasuries to finance the deficit spending. The banks make money off the spread and thus are making up their losses, without this deficit spending they wouldn’t have that chance. Printing money debases the currency meaning eventually the cost of everything is going to go up and hence the price of housing will also. Therefore at some point if you debase the currency enough, all those underwater mortgages will no longer be technically underwater.
Think about this for a while and connect the dots… I will post some more tomorrow to stir that thought process.
Hi Wm Sherman:
Here’s where you can easily look up the information for all the states:
http://www.taxfoundation.org/news/show/335.html
Here’s the methodology:
As I quoted, California’s tax burden is 10.6%. National average is 9.8%. Texas 7.9% (lower than CA, but per-capita Texas income is also lower than in CA, although Texas home prices and general cost of living are much lower. Tax burden includes all taxes: income, real estate, sales, etc., to my understanding.
– Larry Weisenthal/Huntington Beach, CA
Hi Antics:
With regard to tax cuts never paying for themselves, I’ve discussed and backed this up extensively on other posts. I can’t possibly go through all of the relevant information, links, citations, etc. each and every time. I stand 100% by the statement that no tax cut has ever paid for itself in the era from the late 60s onward. In other words, each tax cut has contributed to the debt crisis. The concept that tax cuts generate sufficiently increased economic activity to pay for the lost income owing to a reduction in tax rates is a fantasy. No one believes it anymore, save for bloggers and politicians parsing their words. It’s the second most discredited theory in modern economic history (second only to the theory that communism would work better than capitalism). it was voodoo economics in 1980 and it’s been proven to be voodoo economics today.
My statement was that a business which would go under simply because of a letter stating that they’d have to have health coverage in place for part time workers 3 years hence, simply was not a viable business in the first place. This is a ludicrous explanation for going out of business. I fully expect the GOP to sweep in 2012 (maybe even 60 Senators, to go along with President Perry) and ObamaCare to be repealed. They wouldn’t have had to add coverage until 2014. And they couldn’t make it until 2012 to see how the election came out?
With respect to the business which went under because of federal “regulation;’ I can’t comment except to say that this doesn’t seem at all that it was a business which was long for the world, also.
I’d wager that the biggest problem for both of your friends’ businesses is that they just didn’t have enough customers for what they were selling.
Post-Script: As is par for the course, I’m now faced with too many people at once making too many comments at once. I read everything, but I can’t possibly respond to everything. If I fail to respond, I’m not being disrespectful. Just take satisfaction in having the last word.
– Larry Weisenthal/Huntington Beach
@openid.aol.com/runnswim: Cal’s tax burden is a self-inflicted wound- don’t come crying to us about this, nor beg us for a bullet ttrain to nowhere- the whole idea of a train is insane. Perhaps that’s why progressives like this idea- but forget Cal- how do you make it work, crossing all the interstates, and rural roads in the heart of America? You know, “flyover land”, as Unca Joe Biden likes to refer to it?
Use the money for something useful- perhaps if we can get out of the hole the Anointed One keeps digging deeper, then we can look at bullet trains.
For now, however, lets be realistic, and have enough common sense to realize that we need to have jobs, and a home , and some sense of financial security before we go for the gravy.
And that will be when we scrape the ooze that is progressivism out of the WH and Congress.
You are wasting your time with delusional larry, people. He is thoroughly in fantasy land and there is absolutely nothing you can do to bring him out of it. He is convinced beyond all facts that big, socialist government is the way to utopia and you will never dissuade him of that belief. No matter what proof you provide he will be back in a few days or weeks vomitting out the same arguements over and over.
Hi Blake: California’s tax burden is 10.6%. The national average is 9.8%. My state sends a net of $50 billion a year to the federal treasury to support, among other things, those states which are net recipients of federal largesse. Can you tell me what state in which you live? I’d like to compare and contrast the burden of your state compared to mine.
The fact that a bullet train doesn’t make sense everywhere doesn’t mean that it doesn’t make sense in a specific area. The potential ridership between LA and SF is huge; travel alternatives are poor (as I have explained), and vast sections of the route are over pancake flat farmland (the Central Valley).
Whether or not you approve of bullet trains, the following is an interesting story, with which both proponents and opponents should be familiar:
http://www.midwesthsr.org/where-is-our-old-man-thunder
– Larry Weisenthal/Huntington Beach CA
@openid.aol.com/runnswim:
Larry, you have stated these items;
All of you posts, regarding taxation, have nearly one thing in common. You accept as gospel the words of some egghead contributing a column to the NYT, or WSJ, or other publication and you apply little to no thought process of your own to the data.
For example, you contend, based on other’s words, that tax cuts do not pay for themselves. Yet, I have given you evidence that they do (at least concerning the Bush tax cuts). And still you dismiss it out of hand and simply link a column by someone stating otherwise. You never addressed the numbers I presented, nor the conclusions I drew from them. You could continue to link and regurgitate all the words from others that you wish to and I still wouldn’t accept your stated assumptions. Why? Because they are not your own and are simply others’ words that support your liberal thinking.
Tell me, if you can, or dare to, in your own words, after your own mind has been engaged, why what I stated in #65 is wrong.
Remember, in your #79, you said this;
In order for that figure you claim to be correct, that tax cuts never return more than 20% of the lost revenue, you would have to assume that during the period from 2003-2007 the average increase in revenues over the previous year would have to be much larger than the 6.7% actual increase. I’d say that your assumption, if true, would mean that an average increase of over 10% would have been possible. However, going back to the previous decade, under Clinton, and during what most people would claim were some of the best economic times in recent memory, the highest increase in revenue from year to year was from 1999 to 2000 at a percent increase of 8.1%. The four year period of growth required for that 20% figure to be acceptable has never been seen in our economy, ever.
I believe that the problem most people have, those who believe as you do, is that they look at the actual numbers and then want to add in the assumed increase over those numbers, even when there is no basis in fact for it. For example, instead of the real world revenue in 2007, of $2.414 Trillion in revenues, they look at that number and then figure an additional couple hundred billion $$$ from the difference in tax rates between then and now, and call that a loss in revenue. Not possible, and highly unlikely, as I explained with the numbers regarding the increases, from year to year, in revenue.
So, in order to tell me that I’m wrong, you have to explain away the average 6.8% increase in revenue from year to year, during the period of 2003-2007, as being either an anomaly due merely to the business cycle, or that the average increase would have been much, much higher, at a percentage not seen during any other four year period on that table I linked, but most specifically during Clinton’s years, of which you claim taxes should be adjusted back to. There is absolutely no evidence available to support your claims.
And that leads to your insistence on using revenue as a percent of GDP as somehow being an indicator that the tax cuts did not pay for themselves. If you remember from a previous post, I stated that the Bush tax cuts, specifically the rate changes that everyone is concerned with, didn’t happen until 2003. That is an undeniable fact after looking at the tax cut bills themselves. Your linked article from the NYT has the writer in question misleading his intended audience by claiming tax cuts in 2001, 2002, 2003 AND 2004. He is wrong and the legislation itself proves him wrong.
But, back to revenue vs. GDP. In 2003, that figure was 16.2%. It had dropped by greater than one percentage point every year prior to that starting in 2000 (the high point of the Clinton years, and before the dotcom bust). In 2004, it dropped even further, to 16.1%, however, in 2005 it jumped to 17.3%, an increase of 1.2%. In no year during Clinton’s terms in office did it increase by even close to that much. It ended in 2007 at 18.5%, and likely was set to continue increasing, if not for the housing bubble bursting. Your use of this figure as “proof” that the Bush tax cuts didn’t pay for themselves is misguided, particularly when you fail to note the increases in the figure seen from the point of when the Bush tax cuts were enacted to the point where the economy tanked(something one cannot attribute to those tax cuts).
The assumptions you have to make, in order to support your assertions, are thus;
-One, that the normal business cycle would not have been so normal anyway, and that the growth in the economy would have been higher than seen during Clinton’s terms.
-Two, that the decreases in revenue, from 2000-2003, were all attributable to the Bush era economic policies, completely discounting such facts as the dotcom bust and that the bulk of the Bush tax cuts(and all of the individual tax rate changes) didn’t happen until 2003.
-Three, that the federal deficits happened as a direct result of those tax cuts, even though spending jumped dramatically during the Bush years (as a percent of GDP).
So, prove my assertion wrong. Tell me how I’m mistaken in my conclusions.
Hi John, I said that I was going to respond specifically to your armchair analysis of the effect of the Bush tax cuts, but I wanted to do this in a thoughtful way. Yes, I do admit to not doing my own amateur analysis of gross macroeconomic data. But, in my discussions on this, I’ve never quoted a liberal economist like Krugman. I’ve only quoted conservative economists (as in my last quote/link), and, by now, I think that the number is up to 11. I also cited the most comprehensive study ever done, posted by none other than Mata, which examined the effect of tax cuts on treasury receipts, going back to the 1960s. They all supported my statements and claims.
Now, maybe you are smarter than all of the other conservative economic analysts I’ve cited (analysts with real world conservative economic credentials). I think that I’m smart enough to go over your numbers and check them and I respect you enough to take the time to do this. But I haven’t done it yet; I hope to do it over the weekend.
Just a couple of quick corrections. First, I never said that the debt:GDP ratio was the sole metric to gauge the effect of tax cuts on revenues. Again, I relied not on my own analysis, but on that of the economists, who do sophisticated analyses of the impact of tax cuts on economic growth and determine what portion of the economic growth was attributable to the tax cuts versus how much was attributable to other factors and could therefore calculate how much additional revenue was owing to the tax cuts through stimulating economic growth versus how much was lost by taxing at lower rates economic growth which was NOT attributable to the tax cuts.
Second, I never stated or implied that all the Bush (or any other Presidential) deficits were owing to tax cuts. That’s why correction of this problem will require a so-called “balanced” approach (tax increases combined with spending cuts).
– Larry Weisenthal/Huntington Beach CA
@openid.aol.com/runnswim:
I look forward to it, Larry.
Personally, I don’t care what some egghead on TV or newsprint might say about it, regardless of their affiliation. Why, you ask? Several reasons. Agendas. Cherry-picking data. Misleading data. Misleading assumptions.
And here is the biggest problem with you regarding this issue, Larry. You state that any address of the actual financial well-being of the federal government must involve both tax hikes AND spending cuts. Ok. Let’s say that is what truly needs to be done. On the one hand, we have the GOP, who refuses to even talk about tax hikes. On the other, we have Obama and the Democrats, whose rhetoric claims willingness to talk spending cuts, but whose actions are in complete contrast with that. One group is being honest about their intentions, while the other group(Obama and the Dems), are dishonest about theirs. Yet, you support Obama and the Dems.
If you could show me, or if my conclusions of my “armchair analysis” was opposite, I could begin to entertain the view that tax hikes were needed. I can admit that. Most conservatives would do the same. However, no amount of numbers and “proof” that SPENDING is the problem will ever get Obama and the Dems to admit to REAL spending cuts. Ever. And without real spending cuts, the federal government will never attain financial health again. Yet, you still support them.
@openid.aol.com/runnswim: You said:
One was a bowling alley, and the other was a restaurant. Hardly wanting for customers, they ran into problems because of intense government interference in their workplace. When the restaurant lost its part timers, they had to rely on family members to work and that led to their inability to stay open. Say what you want, but they couldn’t even afford the fine that would have been in place, per employee, for not providing health care.
As for the bowling alley, a whole slew of new OSHA regs hit them pretty hard. Now what exactly those regs were, I do not know and wasn’t about to be nosey enough to ask.
Most small businesses operate at a narrow margin and it sometimes doesn’t take much to force them out of business.
As for your crowing about tax cuts not paying for themselves, well Reagan’s tax cuts brought in massive dollars to the federal coffers, problem is, the Democrats in Congress spent something like $1.80 for every dollar brought in. Gee, no wonder the debt increased.
You just don’t get two very important items, Larry –
1. It is NOT the government’s money, it is the PEOPLE’S money.
and
2. No one can spend more than they bring in, not even the federal government.
Hi John, What you said about Dems being unwilling to compromise isn’t true. I’ve previously gone through the history of deficit reduction negotiations and proposals. The opening offers were for 50% cuts and 50% tax increases. The Obama/Boehner negotiations had a tentative agreement on a $4 trillion cut, with only $600 billion in tax hikes. This is greater than a 5 to 1 ratio, cuts to hikes, and it included entitlement cuts. But Obama’s base went ballistic and he had to come back to Boehner with a 3 to one formula (a trillion in tax hikes; 3 trillion in cuts). And this wasn’t Obama’s final offer; he was open to further negotiation, but he needed to make the counter offer he did for political cover. But Boehner walked away. Boehner was getting a ton of heat for agreeing to ANY tax hike and it was convenient for him to blame Obama for changing the target.
Now, I don’t blame Boehner and I don’t blame Obama. Both were, to an extent (Boehner more than Obama) prisoners to their respective bases. Left to their own devices, I’m quite sure that they’d have worked out a great deal, which would be good for the country.
Anyway, as it stands now, I’d vote for Obama over Perry but I’d vote for Romney over Obama. Romney is a political chameleon, and he’ll adjust his positions to strengthen his political hand. Once he’s in office, he’ll slide a bit to the middle to shore up independent support and to get the odd Dem vote on his legislation. The base will squawk, just as Obama’s base has been furiously squawking. I’m not going to vote for Romney because he’s principled but because he’s pragmatic, and that’s what we need — a pragmatist.
I was supporting Romney on Internet political discussion groups as late as January, 2008, when he made his very hard (and very phony) lurch to the right. But times change and so has Romney. I glad that he’s not backing away from RomneyCare and saying that “I made a mistake,” even though he’ll be forced to make the effort to repeal ObamaCare. I’m ecstatic that he’s a strong supporter of social security. If the GOP is smart, they’ll nominate Romney. He may well be a CINO, but I’m sure you’ll agree that he’d be an improvement over the incumbent and the judges he appoints will be true conservatives. So Romney is a good deal for you guys. Some may think that Perry’s the real deal, but people like me will never vote for Perry and I think that this is true for a lot of people even to the right of me.
P.S. to Antics. You say that Reagan cut taxes but the Dems increased spending. This isn’t true, as I was discussing with John. There were no new major social programs or other major new domestic spending, until Part D Medicare. There was major increased spending under Reagan, but it was all defense build up. The build up may or may not have been necessary, but if it was that important (for frightening Gorbachev into surrendering, or whatever), then it should have been paid for. As I said, whenever the Dems increased spending, they also raised taxes. Reagan raised spending and cut taxes. GW Bush doubled down on this.
– Larry Weisenthal/Huntington Beach, CA
@openid.aol.com/runnswim: You really could not be more wrong about Reagan.
Under Reagan there were 60 straight months of economic growth following his tax cuts in 1981. He oversaw the creation of 18 million new jobs and by the end of 1987 America was producing about seven and a one-half times more every year than it produced in John Kennedy’s last year as president.
He increased federal receipts from $618 billion in 1982 to just over $1 trillion in 1987. And yes he spent a lot on the military, but his promised cuts to domestic spending didn’t materialize. Why? Because he faced a Democratically controlled House and a Senate controlled by what we now call RINOs. So, even with his vetoes and using the bully pulpit of the White House, his wish to cut domestic spending, as I said, didn’t happen.
In fact, spending for welfare rose so sharply that it almost doubled from $106.1 billion in 1980 to $173 billion in 1988.
From the Heritage Foundation:
Reagan’s big mistake was taking the Democrats at their word. His TEFRA program ended up being an economic loss rather than the victory that his earlier tax cuts had been. Congress promised three dollars in spending for every dollar of tax increase. However, the Dems only cut 27 cents out of every dollar of tax increase.
Lesson learned: Get the spending cuts up front. That is why Boehner didn’t take Obama at his word.
So you go ahead and live in your fantasy world. The numbers do not lie, Larry.
Hi Antics, Thank you very much for taking the time to do your analysis of the Reagan years and for presenting your interpretation and conclusion. This provides me with the opportunity to address specific points. John Galt also did this for the Bush years.
What I intend to address, probably on Sunday, are the points made by both of you.
This has turned into a great discussion. Thanks again.
– Larry Weisenthal/Huntington Beach CA
So then, Mr. O’Neill, the question is: