Debt Debate in Congress

[guido911]

Obama has said all along that taxes on those making over $250,000 a year should go back to pre-Bush levels.

Then why did he say this?

Obama agreed with Ferguson's premise – raising taxes in a recession is a bad idea. "First of all, he's right. Normally, you don't raise taxes in a recession, which is why we haven't and why we've instead cut taxes. So I guess what I'd say to Scott is – his economics are right. You don't raise taxes in a recession. We haven't raised taxes in a recession."

Now, if he is one of those out there that believes that ending the Bush tax cuts is not a tax increase, I'll take that bait. In 2001, I and I image many like me, were making nowhere near enough to have saw a tax reduction with those cuts. It WILL be a tax increase on all of those that were not in the higher end bracket. In any case, its been 10 years since those cuts were done. If they are ended, it will be an increase. Here is Pataki talking about this point (ignore the hyperventilating in the source and watch the vid).

http://newsbusters.org/blogs/eric-ames/2011/07/08/former-gov-pataki-takes-msnbcs-barnicle-his-strange-tax-math

[heironymouspasparagus]

Even with his limited and stunted intellect, Bush recognized that the TEMPORARY, by definition, cuts should end.  His biggest problem was that he was totally inadequate to understanding that they should have ended earlier.

[nathanm]

Now, if he is one of those out there that believes that ending the Bush tax cuts is not a tax increase, I'll take that bait. In 2001, I and I image many like me, were making nowhere near enough to have saw a tax reduction with those cuts. It WILL be a tax increase on all of those that were not in the higher end bracket. In any case, its been 10 years since those cuts were done. If they are ended, it will be an increase. Here is Pataki talking about this point (ignore the hyperventilating in the source and watch the vid).

A tax increase won't hurt the economy in this particular circumstance regardless of what Obama says. Here's why: The money is just sitting around unused anyway. If money is actually flowing taking money out of circulation like that is as good as raising interest rates and thus shrinking the money supply. However, if the money is sitting on the sidelines anyway, it's not in the real money supply, so taking it out doesn't matter. It can't have an effect until after a recovery, when that money would have been put to use again.

Similarly, reducing taxes is ineffective because the money left in private hands won't get spent anyway. Tax policy is as ineffective as monetary policy right now, which is to say it's almost meaningless.

[guido911]

As much as I hate polls, I sorta can see its accuracy. In particular, the 32%ers


http://www.gallup.com/poll/148472/Deficit-Americans-Prefer-Spending-Cuts-Open-Tax-Hikes.aspx

[nathanm]

Ironically, when you ask people what they want cut, they have a hard time picking anything that would actually make a significant dent in the deficit.

The other irony is that the number one thing we could do to reduce the long term budget deficit is to deficit spend about a trillion or two dollars on actually buying/building stuff. As long as the economy stays weak and more importantly as long as unemployment remains high (most federal revenues come from individual income tax and payroll tax, and very little, comparatively, from corporate tax, so the record profits being posted by our largest institutions aren't terribly helpful), tax revenues will remain in the dump.

Cutting budgets further will only further depress the economy as more and more employees are laid off and the government buys less and less stuff from the private sector. Exactly the opposite of what we want in a down economy, but exactly what we'd want in a robust recovery, so as to help forestall inflation without actually having to raise interest rates. We're already seeing that as state governments downsize. That downsizing is largely responsible for the very poor job creation numbers and the uptick in unemployment in the last month.

[guido911]

Ironically, when you ask people what they want cut, they have a hard time picking anything that would actually make a significant dent in the deficit.

That's why we hire people like Presidents, Senators, and Reps to decide. Will they? I hope so. Paul Ryan, like him or not, is making these very decisions right now and look what that get's him.

I'm a hawk when it comes to the military, but I am convinced that cuts in defense spending are needed as are entitlements. And yes, there needs to be an increase in tax revenue.

[guido911]

And this sort of crap is not helping.

No, not Obama "abruptly" leaving the debt meeting. The fact that that is a damned story being reported. Why do journalists stir things like this up?

[Hoss]

That's why we hire people like Presidents, Senators, and Reps to decide. Will they? I hope so. Paul Ryan, like him or not, is making these very decisions right now and look what that get's him.

I'm a hawk when it comes to the military, but I am convinced that cuts in defense spending are needed as are entitlements. And yes, there needs to be an increase in tax revenue.

And it's only taken 10 years of running up the country's credit card for many in Washington to see that if you don't have a job (tax income) then you shouldn't be spending what you don't have.  Both parties now are equally to blame for extending the credit.  Now, Moody's is looking at downgrading the US credit rating from AAA based on the talks happening right now.

[Gaspar]

And it's only taken 10 years of running up the country's credit card for many in Washington to see that if you don't have a job (tax income) then you shouldn't be spending what you don't have.  Both parties now are equally to blame for extending the credit.  Now, Moody's is looking at downgrading the US credit rating from AAA based on the talks happening right now.

We've really pushed it lately.  LOL!

[nathanm]

Now, Moody's is looking at downgrading the US credit rating from AAA based on the talks happening right now.

Moody's is concerned with the fact that we can't get an agreement to raise the debt ceiling, not the amount of debt. That concern will wait a couple of years.

Gaspar, it continues to amuse me that you steadfastly refuse to acknowledge the income half of the equation. Or that the deficit naturally should rise in a recession. Unemployment Insurance is expensive. So are the social programs that expand due to greater numbers of low income earners.

[Gaspar]

Moody's is concerned with the fact that we can't get an agreement to raise the debt ceiling, not the amount of debt. That concern will wait a couple of years.

Gaspar, it continues to amuse me that you steadfastly refuse to acknowledge the income half of the equation. Or that the deficit naturally should rise in a recession. Unemployment Insurance is expensive. So are the social programs that expand due to greater numbers of low income earners.

Happy to entertain you, but I actually agree with you!  It's a tragedy that this administration has gone 3 years without doing anything about unemployment.  All of the social expansion is just dandy, but instead of doing what we already know works to spur private sector growth they chose to re-animate the Keynesian corpse again as an excuse to plunge through a mountain of garbage. 

Sure, it was the perfect crisis for them, and hard to resist letting it go to waste, but thinking it would correct itself with the promise of new regulations, taxes, and healthcare burdens was less than intelligent.

Instead of helping unemployed families by making private sector expansion a possibility they simply promised to hand out more unemployment money in an attempt to shore up mid-term votes. 

FAIL!

[Hoss]

Happy to entertain you, but I actually agree with you!  It's a tragedy that this administration has gone 3 years without doing anything about unemployment.  All of the social expansion is just dandy, but instead of doing what we already know works to spur private sector growth they chose to re-animate the Keynesian corpse again as an excuse to plunge through a mountain of garbage. 

Sure, it was the perfect crisis for them, and hard to resist letting it go to waste, but thinking it would correct itself with the promise of new regulations, taxes, and healthcare burdens was less than intelligent.

Instead of helping unemployed families by making private sector expansion a possibility they simply promised to hand out more unemployment money in an attempt to shore up mid-term votes. 

FAIL!

FAIL was/is the ten years of the expanded tax breaks for the wealthiest Americans.  Especially when it was shown, during that time period, that they were not working.  But I guess for some, ideology trumps common sense.

'Read my lips....'

[nathanm]

Gassy, we've already had a trillion dollars in tax breaks since Obama took office. You seem to think the economy needs more of the same proven failure.

[Gaspar]

Gassy, we've already had a trillion dollars in tax breaks since Obama took office. You seem to think the economy needs more of the same proven failure.

Most of those breaks did little or nothing for Job Creators.  They were targeted at individuals, and failing industries.  They were designed to delay decline, and they weren't enough to do that. 

The bulk of cuts were for clean energy, and efficiency projects.  The economy was failing and President Obama was attempting to remake it in his image through this type of stimulus.  It was a noble liberal attempt, but companies don't want to re-tool to natural gas or wind power when they can't even afford to buy coal.

There was an odd salting of other stuff in his cuts too, like housing credits for low income, and a wacky tax credit for the purchase of an electric vehicle (up to $7,500 I think) that just caused wealthy people to buy extra golf carts.

His stimulus was designed by someone who doesn't' live in the real world!  Someone who thinks that he can wave a wand and make everyone drive an electric car or build a windmill.  These evolutions take time, and you don't push them, especially in a recession. 

You are right, close to $1 Trillion in wasted tax cuts!

[TheArtist]

  They cut taxes, and increased borrowing.  Then when we were knee deep into a recession and needed to pump some extra money into the economy, and were having to spend more on benefits, while also having the lower taxes in place still increasing borrowing, aaand not having raised taxes to fund several wars and instead borrowing more....  Well here we are.

 Interesting though, that while all this has been going on, corporations and ceo's have been raking it in and have been sitting on the money.  We are asking for shared sacrifice to help the country out of the mess.  The little guys income has gone down, while the big guys income has increased.  The little guy who is hurting is being asked to sacrifice, but not gonna ask the big guy who is doing well to help out the country.  

 The little guy is working just as hard (if he has a job) as he was years ago, but is making less.  The big guy is working just as hard as years ago, but is raking it in.  They are both working equally hard as ever, (Can you really say that these big corporate guys are making all this money because they are working harder than they were before? and the little guys making less because they are lazier than they were before?) one is making less, the other is making more. (some could argue that the big guy wouldnt be making any money if it werent for the little guy in the trenches busting it to make the wealth in the first place, or the government borrowing to prop up system, but I digress) One making less and prepared to sacrifice, the other making more, and not prepared to sacrifice.  

 Just one perspective.

You all know I am usually the one who is pro corporation/business.  But we are in a unique situation.  And something just seems amiss.  How is it that corporations are sitting on trillions of dollars, and others are making big money (and thats fine with me) while others have been seeing their wages decreas WHILE AT THE SAME TIME (and her is the unique situation) the ones who have (and this having hasnt translated into doing more for the economy) arent being asked to sacrifice while the ones who have steadily been making less are being asked to sacrifice?  Shouldn't those who have been very doing well in this country also stand up to chip in when the country needs them to?  Well, they are afraid its gonna hurt the little guy because these corporations and rich folk are the ones who employ people and taking away money from them will cause them to employ less... Not seeing it in this situation where they are sitting on lots of money, making more than they ever have while seemingly doing nothing. Well if they earned it they should keep it, no wealth redistribution thats bad.... Well, I would get that if they were working so much harder in order to earn all that extra dough, but that doesn't appear to be the case.  The are working just as hard as always, so is the little guy, while one is doing much better and the other is doing worse.  The system should help all boats rise. The government is the problem, but the government is also the solution.  

Pure Democracy like pure Capitalism would end horribly.  Both must have checks and balances.  Its finding the right balance in both systems that keeps things working.