Social Question

ETpro's avatar

Republicans in Senate block tax cuts they originally proposed. Are they hoping a bad economy will help them win in 2012?

Asked by ETpro (34466points) June 23rd, 2011

It’s hard to believe that anyone in leadership would be so cynical as to deliberately sabotage any nascent recovery to retake power in government. But I don’t know what else to make of it. The new majority GOP members in the House all ran on the platform of Jobs, Jobs, Jobs. So did the state legislators and GOP governors who took over so many states in the last elections. But what have they done? House Republicans have pushed one after another culture war bill they knew had zero chance of passing the Senate or being signed by the president. The only moves they have made that even relate to jobs were attempts to de-fund programs thereby getting more people laid off. The Senate Republicans yesterday killed a payroll tax holiday that would have helped workers and employers—an idea they themselves originated. They are road blocking every single attempt to get Americans back to work. GOP governors and legislatures, when they aren’t union busting, and laying off teachers, firefighters and police, are rejecting stimulus funds for their state.

The Wisconsin GOP controlled legislature even refused to accept Federal funds to extend unemployment insurance for laid-off workers there. Even their firebrand governor Scott Walker thought blocking that was a bad idea. But apparently, the game plan is to do everything in the GOP’s power at the local, state and national level to undermine the economy in hopes that will get them elected in 2012. Will it work? If most Americans remain as poorly informed about politics as they are today, my guess is it will. And then we can look forward to a national program of union busting, voter disenfranchisement, tax cuts for the wealthy, dismantling the social safety net and ending public education, replacing it with private, for profit schools.

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60 Answers

marinelife's avatar

In a word, yes.

tedd's avatar

Congratulations. You just explained the hypocrisy that is the majority of the modern Republican party.

Their goal I’m sure is deficit reduction, but they’re incredibly disingenuous to claim they’re out to make jobs imo. They may argue that by cutting public jobs they’ll create private jobs, but they ignore the fact that it’ll be less jobs, paying less, many could be sent overseas, and government oversight to do the jobs correctly will be removed. They have this assumption that a pure free market knows best and will always work without flaw…..... the assumption is wrong.

ETpro's avatar

@marinelife I hope you’re wrong, but unfortunately, I fear you are right and we will pay a terrible price for it as a nation.

@tedd Republicans are responsible for $9.2 trillion of the current debt. It was $1 trillion when Reagan slashed taxes 60% for the top earners. He tripled the debt on his watch. We’d been paying down the WWII debt till Voodoo Economics. Reagan’s Budget Director, David Stockman, admitted in his dying days that they ran up the debt deliberately so it could be used in Management by Crisis to kill all the social programs they so hate.

mazingerz88's avatar

It’s not about fixing, it’s about winning so, yes.

wundayatta's avatar

You never want to wish bad on your people. It’s an axiom in politics.

I think the Republicans aren’t really thinking strategically at all. They are moving from symbol to symbol with no overall plan. You’re giving them far too much credit. They aren’t smart enough to think like that. They don’t believe in planning for the future. They believe it makes no sense because you can’t predict anything, such as global warming.

So, yeah. I don’t think they’re that smart. It’s just more idiocy as usual.

tedd's avatar

@ETpro You’re preaching to the choir my friend.

Jaxk's avatar

Typical Democratic strategy. It didn’t work last time so let’s do it again. The tax holiday is the same one we’ve had. The incredibly small return is not used for anything other than an insignificant rise in the savings rate. When you see a couple extra bucks in your paycheck, you don’t change your spending habits. You don’t go out and buy a new car. It’s simply not enough money to make a difference. But it does add to the debt. When the recession first started an injection of cash had possibilities but it didn’t work. Trying it again expecting different results is what the Democrats are all about.

GracieT's avatar

But @jaxk, aren’t you explaining the failure of tax cuts as well by using the “few more dollars in your pocket analogy”? I seem to remember the GOP emphasizing the need to give everybody (read: the rich!) a few more dollars to stop the freefall our economy in the US is in!

Mamradpivo's avatar

Yes. That is the only way they can win is by helping to re-torpedo the economy, through the same methods they used from 2000–2008.

josie's avatar

I love this shit.
They are all self centered, power hungry, perk driven assholes in one fashion or another.
But everybody has THEIR favorite assholes.
This is why I joined Fluther.

jerv's avatar

I rarely bother to question the motives of the insane.

And speaking of insanity, @Jaxk, haven’t the Republicans also been doing the same stuff and expecting different results for a while? It’s what they are all about too. Next time you make a statement like that, make sure it’s not the pot calling the kettle black.

Jaxk's avatar

@GracieT

The tax holiday is temporary, it is very small, and we’ve already done it. Let’s examine what you proposing. I know examining the bill is not something Democrats do but let’s give a shot anyway.

The biggest problem we have right now is confidence in the economy. That’s why the savings rate went up about 6% since the start of the recession. The tax cut is only 2%. No matter how you twist the numbers, the tax cut did not find it’s way into the economy.

When the original cut went in I was all for it. I thought it might help. It didn’t. It didn’t because it was too small and too temporary. It did absolutely nothing to instill any confidence in the economy and it did not create any expendable income. The basic idea for any stimulus package to work is that you must create some extra disposable income for somebody. It doesn’t matter whether that stimulus is tax cuts or spending if it doesn’t create new purchases, it won’t work. Since the beginning of the recession we have had lower employment (less people spending), higher health care costs (less money to spend), higher gas prices (less money to spend), about 5% inflation (your money is worth less), and higher taxes primarily state taxes (less money to spend). Now to off-set that you want to lower the employment tax by 2% and you think that will spur the economy. You’ve got to be kidding.

Jaxk's avatar

@jerv

When you have no ideas nor reasonable arguments, you call the other guy names. Typical Democratic strategy. I can’t fault you for it though, without it you would be completely unarmed.

jerv's avatar

@Jaxk I have seen enough Republicans/Conservatives do the schoolyard name-calling thing that I cannot even comprehend how any sane, intelligent person could say that the Democrats are the only ones who do that.

Your last sentence implies that I am a Democrat. Far from true; I merely feel that, by comparison, Democrats are saner and (slightly) less full of shit. Of course, over the last decade or so, the GOP has set that bar so low that being slightly less full of shit still puts it over 90%...

dabbler's avatar

@wundayatta I sure hope you’re right but I see more and more evidence to the contrary. “They aren’t smart enough to think like that” they have outsourced all of their thinking to the Cato Institute and American Heritage Foundation and other Koch fueled think tanks where they are very smart and have built this strategy from the day Barry Goldwater lost his election. It’s the new feudalism and “You never want to wish bad on your people” yes they do – if by ‘bad’ you mean job insecurity (means lower wages for corporations) less education (less informed/more easily manipulated electorate) no health care (plenty more desperate workers where we came from).

Linda_Owl's avatar

Absolutely they are. When people get desperate enough, they will try almost anything that sounds even vaguely promising. They will listen to people they should not believe & put their trust in broken political system & frequently they will make a bad situation even worse.

ETpro's avatar

@mazingerz88 Yep. Mitch McConnell came right out and said as much. Boehner said the same.

@wundayatta I just hope the electorate doesn’t follow suit.

@Jaxk The stimulus diodn’t work? We were losing 7809,000 jobs a month when this administration took office. We’ve created private sector jobs now for 15 straight months. Sure, I would like to see us doing far better, but to claim it didn’t work and then fall back on more tax cuts for millionaires and businesses that won’t spend is not trying to fix the problem, it’s doing just what I am accusing Senate Republicans of doing.

@GracieT Good call.

@Mamradpivo And they wish to return to thise same methods on steroids, fully expecting this time to get a different result than last time.

@josie Ha! With $3.8 billion dollars spent on lobbying in Washington in 2010, I am sure there are more than enough perk-driven assholes to satisfy the biggest ass man in history.

@Jaxk I won’t quibble with your 6% or 2%, only the conclusion you draw. You are simply asserting that. It doesn’t follow from your numbers that the savings rate would have risen by 4% if we had not had the payroll tax holiday. Your numbers do nothing to demonstrate where they 2% actually went, into increased spending or into savings. Probably some of each, which isn’t necessarily a bad thing.

@Jaxk After saying “I know examining the bill is not something Democrats do but let’s give a shot anyway.” in the post directly above it, you tell @jerv insults are a Democratic only strategy. Nice work proving your willingness to call the kettle black.

@dabbler That is so true. And while the Koch brothers are the evil billionaires du jour, they are far from alone in the list. I compiled a list of the Billionaires that fund the nationwide netowrk of far-right think tanks that now cover all 50 us states. The far right Oligarchs include the Walton (Wal-Mart) family’s $83.8 billion; the Koch Brothers’ $43 billion; casino billionaire, Sheldon Adelson’s 23.2 billion; Rupert Murdoch’s $6.2 billion; Dallas Superfund king, Harold Simmons’ $5.7 billion; Charles Schwab’s $4.7 billion; casino and gaming billionaires, Frank and Lorenzo Fertitta’s $2.1 billion; Direct TV’s Stanley Hubbard at $1.9 billion; real-estate magnate, George Argyros’ $1.7 billion; Paypal founder, Peter Thiel’s $1.5 billion; real-estate magnate Harlan Cros’s $1.4 billion; Home Depot’s founder, Ken Langone’s $1.3 billion; Amway founder, Rich DeVos’ $1.2 billion and Publisher Richard Mellon Scaife’s $1.2 billion.. That’s $178.9 billion. How utterly unfair that George Soros would use his $14.2 billion to drown out all that influence peddling.

@Linda_Owl Sadly true. We wouldn’t have had leaders like Hitler, Stalin and Mao if it were not so.

Jaxk's avatar

@ETpro

Kinda sounds like a mutual admiration society here. Of course coming from a guy that still believes the Great Depression was a success story, makes you wonder. Makes me glad I’m the one your disagree with.

I might also mention that not a single post other than mine even talks about the bill itself, it validates my point. “I know examining the bill is not something Democrats do”

If you don’t believe the money went to spending, maybe it went to all those jobs created that nobody seems to get. Maybe they were created in China.

ETpro's avatar

@Jaxk As usual, you are deliberately ignoring the point of the question, instead deflecting in every direction to derail any real debate of the topic. The point is this was a Republican idea that the Republicans now don’t support. That and that they have done exactly NOTHING since gaining a majority in the House to try to actually create jobs.We are not discussing the merits of this particular bill, although it would have probably done a bit to help. We’re discussing doing nothing versus doing something.

And if you would care to argue that Herbert Hoover’s restore confidence in Government moves were superior to FDR’s WPA approach once again, I am ready with the statistics that again prove how massively wrong you are. Could there have been an even faster way out of the Great Depression. Certainly. But to suggest Republicans, sho brought it on, had superior answers to Democrats who ended it, is laughable.

dabbler's avatar

@ETpro good list ! Thanks.

Jaxk's avatar

@ETpro

So if I understand your response correctly, you’re not really looking for any alternative explanation of your theory, only those that agree with it. And eve taking it a step further, you don’t want to consider the fact the the Democratic Senate has thwarted every attempt to stabilize the economy and that the Democrats have not put anything forward that would create jobs but only want to consider arguments that show the house has not been able to steamroll the Senate and President.

I can only conclude that you’re simply looking for responses that whoop and holler that you are right, regardless of the gaping holes in your theory. You should have stated in your question that you were only looking for responses that agree with you. I could have saved my self some effort.

And just for the record, if you want to compare who had the worst policies, you should include Jimmy Carter and Obama. You’d have a more comprehensive list and the competition for that title would be intense.

ETpro's avatar

@Jaxk My “Theory” is not contained in the single sentence of the question, so simply claiming that Republicans now think their own idea won’t work doesn’t refute my theory, however disingenuous I may find the assertion. My “Theory” involves the entire question details, including the fact that the only actions that Republicans have pushed that affect Jobs since the midterm elections are ones to CUT jobs, not create them. Otherwise, it’s been all culture war legislation that they knoew full well was going nowhere. And there’s the fact that numerous key Republican leaders have come right out and said they want to sabotage the economy to take ther White house from Obama. I provided links to the actual speeches.

I am perfectly willing to consider an assertion that Democrats have been deliberately or unwittingly trying to block job creation. As far as I know though, you have made no cogent exposition of such a theory for me to consider.

Believe it or not, I am not a liberal ideologue. I don’t love high taxes and want mine raised. I do love all Americans who want to work being able to find a decent paying job. I will listen to anybody that has ideas that might promote that, without regard to what party they come from.

dabbler's avatar

@Jaxk Except for a couple statements that some of the administration’s efforts weren’t in fact big enough (Hey, thanks to Republican logjams. You’re agreeing with the original premise. There may be hope.) every one of your other “facts” is the distorted plop of the neo-fascist echo chamber. You’re spouting insults, being adamantly dismissive, and show no sign of actually wanting to discuss anything. You’re even recycling “Typical Democratic strategy” as if that means anything. In short, you got nothin and even know it.
Jump back in when you have something grownup to contribute, if you know how to do that.

@josie and @jerv come closest in this thread to pinning down what’s really happening, most politicians have been bought and paid for. The Dems lack of gumption to push needed programs and taxes into law at effective scale, and the Reps stalling and disrupting to drive the nation further into crisis are both treasonous.

Jaxk's avatar

@ETpro and @dabbler

I know you both think I’m a conservative ideology but there are some things going on that Are either under the cover or you simply don’t believe are significant. Since the beginning of this recession, my revenues have decreased slightly. Nothing that would have really hurt me but enough to notice. My taxes, fees, and regulation however have gone through the roof. The taxes have been the least significant part but even something like the cigarette tax hurt. It should have been neutral in that the tax went up, I collect more tax from the consumer and and net I should be a pass through. Not so, the convoluted way it was implemented cost me about $1600 in tax I was not able to collect from the customer. Even the sales tax in general has turned into a revenue tax. Not based on how much you sell but total revenue. Things like volume discounts are now being incorporated into sales tax. I can’t collect the tax but still get charged for it. You would never see this since the tax rate didn’t change only the regulation concerning how it’s calculated. Since the beginning of the recession, My fees have increased about 1000%, in addition regulation has cost me about 25% of my total gross profit. All this since the beginning of the recession. And through all this I have to listen to you all tell me that taxes have not increased and we need more regulation. Poppycock.

If you look at government spending we are currently spending more than 40% of our GDP. We are fast approaching the level of spending we saw during WWII. You all want to brag about the economy during the Clinton years but if you’ll notice, spending went down. That’s how we got to a balanced budget (or at least close). The business climate in this country is toxic. As long as we continue to argue that we need more spending and more taxes, we can not recover. I have no more people to lay off. My next step will be closing the doors. And it’s not a lack of business that’s doing it, it is the government.

Last point. We continue to produce insane regulation like the latest cigarette labels. It is not free and will generate costs with no change in either product or revenue. Is that what we need right now. We need some stability. We need to stop talking about more spending and more taxes and let the business environment catch up with what has already been done. We don’t need to generate another $110 billion in deficit spending that has little or no chance of producing jobs but will only trigger more intensity to raise taxes. It’s counter productive. For God’s sake we’re in a recession. Give us a chance to get out of it before continuing to poison the water.

jerv's avatar

@Jaxk Taxes have increased in the wrong places. Small businesses pay more while multinationals pay less (or get more as they officially show negative revenue!). The middle class pays a higher effective tax rate so that those at the top can pay less, keep their capital gains (which is why their effective tax rate is about half of what the tax rate on their “normal” income is) and skew the wealth distribution to the point where the only way many Americans can have any dollars is to print up more and thus devalue our currency.

We do need less spending, but it seems that the GOP is more interested in cutting programs that they disapprove of than in cutting things that are costing us enough that the cuts would be more than a piss-squirt in the ocean while supporting things that cost us trillions over the next decade. By the same token, the Dems are not exactly helping as they don’t have any realisticallty workable proposals either, but given that any sane, effective plan would be fillibustered, I can’t exactly blame them for not trying.

Sorry, but we aren’t going to fix this mess with partisanship; we are going to fix it by cutting the expenses that are actually bleeding us dry rather than the annoying pin-pricks, and we won’t solve anything by cutting our own throats. It also means that people like you and me are going to have to tell the boys in DC to quit dicking around and do their damn jobs or GTFO and let their (hopefully saner) replacements do what needs to be done.

dabbler's avatar

@Jaxk thank you for your illuminating post, I sympathize entirely.
As @jerv well notes “Taxes have increased in the wrong places”. Taxes and fees etc need to be applied according to benefit accrued from the social structure along with ability to pay, which go hand-in-hand. In some other thread today somebody wrote in support of progressive tax structure when what we have is a bell curve. Considerring capital gains tax accomodations the wealthiest don’t even pay an even share per their cost to society and their benefit extracted, they pay much less.
As a small-business person you aren’t in the privilege class either and are getting the short end of the deal to fund a small elite’s lifestyle. It’s not the liberals who are taking your money.
I totally want government funding to turn a corner to encourage prosperity among people who need it, if at the expense of people who have way more than they could ever possibly need. Straightening out revenue is an idea that has been obscured big time.

I’m not all about big spending either. But Medicare is approximately self-funding and could be moreso if less insurance middlemen were involved. If Medicare were extended to everybody it is proven that a lifetime customer approach to healthcare is cheaper and provides better results. I can’t think of a better boon to small businesses than taking healthcare expenses off the table to put them on a level where they can be dealt with most efficiently for the whole society.
Social Security insurance is self-funding and could be indefinitely if the cap on income used to determine the premium were lifted.
I don’t think these two are the big squanders of our common dime.

Jaxk's avatar

@jerv

I don’t necessarily disagree. I could pick at a few points but not significantly. So let me ask, if the problem is that the big guys don’t pay the percentage that they should, if they are getting deductions or deferred revenues or whatever else they’re doing, how does raising the rate help? They won’t be paying taxes on a higher rate but all the guys in the middle will be paying taxes at a higher rate. How does this address the problem? If I’m a big guy and I’m paying zero taxes at a 35% rate, raising the tax to 39% only means I will be paying zero taxes at the 39% rate. You’ve solved nothing, but hurt the middle class.

The problem lies in the complexity. Every time we try to change something we complicate the hell out of it. The cigarette tax I mentioned above is a prime example. What happened was the government wanted to make sure that they collected the extra tax from everyone on the day the tax started. But if everyone had to pay tax on all their inventory, it would mean a massive payment from the cigarette companies and distributors At the time I figured it to be about $50 billion. It’s not clear they could have come up with that much in such a short time period. So what they did was to allow the cigarette companies and distributors to raise the rate prior to the implementation. Now they had the massive payment covered but they were afraid that someone might stock up on pretax cigarettes and either make more profit or sell them cheaper. So they decided to charge everyone the tax on thier inventory as well. The net result was that I paid the higher price prior to the implementation and I paid the inventory tax on cigarettes that I had already been taxed at the higher rate. I paid twice to insure that everyone paid at least once. There is no need to complicate the tax code at this level. If I had a tax attorney or lobbyist in Washington and Sacramento I would be able to see how this was coming down. With that information I could have manipulated my business so that I only paid the tax once. I don’t blame the big guys for doing this, it’s the only way you can survive in this environment.

You’re right that we won’t fix this with partisanship, but we won’t fix it by raising the rate either. And we certainly won’t fix anything by continuing to pass bills with a couple thousand pages of ambiguous regulation designed to create jobs for tax attorneys. It’s time to take a break and let the dust settle.

jerv's avatar

@Jaxk Raising the rates on earned income won’t do shit and we both know it.

Like I said ad nauseum, much of the reason for the effective tax rate on the rich being so much lower is that the majority of their income is only taxed at 15%. The trick is trying to balance any changes out so as not to hurt smaller investors (those whose capital gains are measured in thousands instead of millions) or businesses who invest. And given how the government really does like to do things, I don’t see that happening very well even if they can get around GOP cock-blocking. Granted, it is supposed to change in 2013, but it was supposed to have changed back in 2008, so there is every possibility that there will be another extension.

Also note that the government likes complicated words yet simple numbers? Yes, tables are easier for people to figure out than equations, so they make some broken tables so we don’t have to do math. Once you hit around $380,000/year, your marginal tax rate doesn’t increase one bit even if you earn $38,000,000 so just from a purely mathematical standpoint, we have an issue. I’m sure that one could write a rather simple equation that would make our tax rates truly progressive which, combined with altering our treatment of capital gains, would balance things out without punishing or rewarding any income bracket unfairly… unless you consider progressive (or even flat-rate) taxation itself to be totally bogus.

dabbler's avatar

Raise revenue to make revenue progressive, probably that involves raising rates and closing loopholes so the rates are meaningful and get collected.
Loopholes and special interest accomodations are definitely complicated, and removing that sort of thing uncomplicates things and raises revenue. The extent to which jobs are jeopardized by income tax increases on high income persons is greatly exaggerated. Person with may more income than they can possible spend “invest” it and suck more wealth out of the economy with speculative interests.
Instead raised rates encourages keeping money in investments so increased wealth doesn’t get taxed as income. That creates jobs. Jobs make more customers for goods and services. This is proven to work, although not to the advantage only of international corporations or speculators.

An area that could get easy attention are securities transaction fees/tax. Even a minute tax would be hardly noticed for an investor, but is big enough to raise revenue and slow commodities price fluctuations. If you don’t like taxes consider that speculation by parties with no interest in commodities delivery adds substantial costs to a lot of what you buy just because the speculators are allowed to get in the middle. Most markets are big enough that w/o speculators liquidity is just fine but speculators still claim special privileges for providing it. Really they are providing a solvent for themselves to leach resources out of the markets that you and I need most for constructive enterprise, including food and fuel and credit.

Jaxk's avatar

@jerv and @dabbler

Capital gains are broken into two separate categories, long term and short term. If you’re speculating on (especially) commodities, you most likely looking at short term capital gains. Those are already taxed at the normal income rate (up to 35%). Long term capital gains are a different animal. They include things like expanding your business, buying a house, investing for retirement. And yes the big boys get in as well. But long term capital investment is not a bad thing. It actually helps the economy.

If you want to address the speculators (which are already taxed at the regular income rate) you’d have much more impact by addressing the margins. Increase the requirement so that they need more money upfront, thus reducing the size of the trades they control with little upfront money.

@dabbler Transaction taxes would be a brand new category of taxes for the government to exploit. If you think they would keep them low, I’ve got a bridge in Alaska I’d like to sell you.

dabbler's avatar

Depends on what you think is low, it’s been analysed that very small amounts would suppress a majority of speculative trading by making it less cost-effective. There is a long way to go before a transaction tax on securities would affect the flow of transactions for which we need the markets. The government needs more revenue and this would be a great source and help fund oversight agencies that have been throttled by budget cuts into being less effective than we need them to be. It “hurts” only people who will still be very comfortable with that tap shut off.
And it’s not brand new at all, we’ve had transaction taxes before and things were just fine. Many countries in the G20 have such taxes and their markets work fine and are more stable as a result. The US was one of just a few holdouts among G20 nations who would come up with some uniform way to do this so no nation has an advantage for speculators markets.

jerv's avatar

@Jaxk That is why I mentioned that is has to be done correctly. Then again, I don’t understand why a company would pay someone “Fuck you” money to invest back into their own company when they could skip the middle-man and just have the company do the investing. I mean, people don’t make nearly as many jobs as companies.

Besides, are they going to stop investing because they only keep $800,000 out of every million instead of $850,000? Think about those that only keep $65,000 out of their $100,000 incomes before you answer that. I still think there is a way to do it.

As for speculators, yes, they need to reform the whole leverage thing. I know that if I went to a casino, I would have to pay for all of my chips; they wouldn’t just trust me that I am good for a kajillion dollars. Make Mr Fatwallet pay for his shit too!

GracieT's avatar

@ETpro, once again I find myself agreeing with the points you raise and the way you express them. “I do love all Americans who want to work being able to find a decent paying job. I will listen to anybody that has ideas that might promote that, without regard to what party they come from.”
Those two sentences eloquently express my feelings as well.

ETpro's avatar

@GracieT Thanks. I have been away from this thread long enough now that it will take some catching up on the debate raging between @Jaxk and @jerv & @dabbler. Too much reading for this late hour. More to come. :-)

@Jaxk I’ll just say for now that I for one don’t argue that we need more spending right now. I think we needed that in 2008. I’d keep spending where it is with the exception of cutting anything that is identifiable waste and fraud. I’d raise revenue. And when the economy recovers I’d look for additional ways to reduce spending. We could save hundreds of billions in Medicaid and Medicare by just educating Americans on the price they pay for obesity. Kids 8 years old and younger now are coming down with type 2 adult diabetes. We’re on track to 50% of the population having the disease. If that’s not a public health crisis, then there is no such thing! I also think long range we can change education and teach people to lift themselves out of generational welfare, saving more.

The Ryan budget gives $1 trillion to the corporate jet set and millionaires, and pays for it by taking $3 trillion from seniors and the poor. It ends up adding $6 trillion to the deficit in 10 years. I think that is the wrong priority. The crumbling middle class is a good part of why the US business climate is toxic now, and the Ryan budget just doubles down on what’s been killing our middle class.

jerv's avatar

@ETpro I wonder… how much could we save on Medicaid and Medicare if we also did more preventive care instead of waiting until medical problems got real bad and more expensive to fix?
Also, you might like this

@Jaxk Too bad the Capital Gains tax is also all-or-nothing. It used to be progressive, and it would be again if it weren’t for the sunset provisions of all of Bush’s tax cuts going into daylight savings time.
Now, maybe you could answer some questions I have about the Bush tax cuts.
1) Why were there sunset provisions if we are just going to ignore them anyways?
2) If they are working then how is our situation getting worse?
3) If they are not working then why bother continuing them, especially if they are causing/worsening other problems?
4) Why are they so damn important that the GOP was willing to hold our nation hostage to keep the most controversial and costly portions of them?

dabbler's avatar

@jerv “preventive care” does save money. The concept of “lifetime customer” is the basic approach of the VA which for all the sorts of care they are charged to carry out costs less over the whole lives of their “clients”. A huge non-profit HMO in California, KaiserPermanente has also found over several decades of operations that taking the lifetime view produces healthier results at less cost. The same organization has for-profit operations as well and they find they have to run things a bit differently to make that work.

Jaxk's avatar

@jerv

There has been long term and short term capital gains as long as I can remember. Certainly long before the Bush tax cuts. Short term capital gains have always been taxed at the normal income rate. The Bush tax cuts brought the long term gains down from 20% to 15%. I know you guys want to believe there is no connection between the capital gains rate and the economy but I think that is bit naive. You need to look a little closer at the connection between the stock market and the economy These guys estimate an 8.6% drop as a result of reverting to the pre Bush capital gains and dividends taxes. But then what do the financial guys know about the market. I’m sure we can predict the results much better than they can.

As for your questions.
(1) the sunset provision was there because Republicans didn’t have a super majority like the Democrats have had. I sure you already know that. It has nothing to do with good or bad, only how many votes they could get.

(2) you may not be aware but we are in a recession. The cause of the recession is much different than the cure. Obama is spending a $trillion/yr more than Bush. If spending were the solution shouldn’t we be seeing some improvement? And if you want to say the tax rate should change, why are you not arguing that. you want your taxes to stay the same but raise them on others. Sounds a bit hypocritical to me.

(3) The issue is not cutting taxes but rather raising them. We have been paying the same rate for the past 8 years. Leaving them where they are is not a tax cut but raising them would be a tax hike. Most economists will tell you raising taxes during a recession will hurt the economy and prolong the recession.

(4) Same as 3. Raising taxes during a recession will slow the economy. Even Obama knows that which is why he did his little tax cut in the first stimulus. Unfortunately a small temporary tax cut does not have much impact. It needs to have some longer term effect, people need to be able to plan on it. However you want to view the current tax rate no one is suggesting a tax cut. I would have recommended it in 2008 but we’ve incurred so much debt with the asinine stimulus that we can no longer afford it. Nonetheless, if we just stopped threatening everyone with a tax hike, we may be able to recover. Whether you agree with the GOP or not they want to keep us from going back into recession (double dip) that is why the tax rates should not change.

The major difference between Republicans and Democrats (as far as I can tell) is that the democrats see no problem in racking up more debt. Even when Obama derides the current tax rate he also includes additional spending plans. He obviously doesn’t want the tax increase to reduce debt but rather to fund even more aggressive spending. Moody’s has already told us that our credit rating will be lowered if we don’t do something about the spending. Democrats seem to want to ignore that. If our credit is lowered we will create a significant increase on the payment of our current debt which will increase our deficit. It turns into a spiral that we can’t fix. If you don’t believe that debt is a problem, then stop complaining about the Bush debt. If you do think it is a problem then stop the overspending.

jerv's avatar

@Jaxk We both know that excessive spending won’t help, and I understand the theory, but I fail to see how forcing the money to the top helps. Sure, companies are posting record profits, but they weren’t using those for job creation. The top tiers of individuals have seen their incomes skyrocket while most of us are barely keeping up with inflation or just plain unemployed. This is one of those things where theory and fact are different.

As for tax rates, I merely want them to not follow a bell curve as they do now. The current combination of excessive spending and semi-regressive taxation is largely why we are here in the first place, and I don’t think that putting the pedal to the floor is how we will stop speeding out of control.

ETpro's avatar

@Jaxk You would need a group that were more than “a bit naive: to get them to swallow the assertion that the Clinton Administration that produced the most jobs in modern history, the longest economic boom and the largest budget surplus was far inferior to the Bush Administration, which had the worst record of job creation since Herbert Hoover, produced the worst economic crisis since the Great Depression, and doubled the national debt. Once more, you are trying to claim that because someone left a couple of grains of sand off the tally of an ant hill’s size, it is actually far taller than Mount Everest.

I agree excessive spending won’t help us, but can you point to one time where massive spending cuts turned a recession into an expansion?

Jaxk's avatar

@ETpro

Do you get a twitter message from Obama to tell you what to tout this month? I can’t believe you’re still trying to push that ‘Jobs created’ number. Do you realize that half the jobs created last month were at McDonalds? I understand there’s not much to brag about in this administration but really, that’s your best number? Unemployment went up because these all went to kids or second jobs for people struggling and you’re trying to brag about what a good job Obama is doing. I’m sorry that’s really pathetic.

jerv's avatar

@Jaxk Sorry, maybe I am going blind, but I don’t recall @ETpro even mentioning Obama here recently, and that leads me to believe that, just like many other discussions I’ve had with Conservatives over the last few years, you are letting partisanship overrule intelligence, logic, and/or reality.
Please prove me wrong.

Jaxk's avatar

@jerv

Connect the dots. What do think the job creation number was all about.

jerv's avatar

@Jaxk I thought that was regarding a wider window of time that begins before ½0/09 a things have been relatively constant for longer than Obama has been in office. While the current administration doesn’t have bragging rights, that doesn’t mean they deserve all the blame.

ETpro's avatar

@Jaxk I can understand your desire to project, but I’m truly not an Obama acolyte. I’m not an ideologue. And I wasn’t talking about the jobs created last month. Go back and check what I wrote. I said in the Clinton Administration. That ended almost 11 years before last month.

If we simply allowed the Bush tax cuts to expire, the CBO says we would reach a balanced budget in 5 years. And yet Mitch McConnell says all revenues have to be off the table. Gut Medicare, Medicaid, Social Security and funding for vital needs for the middle class so billionaires and corporate jet setters can enjoy the lowest tax rate in over 60 years, or he plans to let the US government default on its debt, most likely triggering a second Great Depression.

Is it really that hared for the millionaires, who have gotten all the breaks, and the Wall Street Banksters who brought all this suffering on, to share just a little in the sacrifices? Hey, if that’s your point. so be it. But be clear on what you’re asking for. Don’t throw up all the smoke screens. As long as you presist with ad hominems in lieu of evidence, I will assume that means you have nothing you dare actually say that is factual.

Jaxk's avatar

@ETpro

You seem to be a moving target. But let’s examine what you are now saying. We started out talking about an extension to the payroll tax. You didn’t like my analysis that said it wasn’t productive but would cost $110 billion. In fact what you said was the extension was better than doing nothing. And went further to say the republicans are proposing ‘doing nothing’.

Now in you’re post above, you really are proposing we do nothing. OK, that’s a new position. A position that has not been proposed by either side but let’s at least look at it. Letting the Bush tax cuts expire affects everyone. Not just the rich. In fact the whole reason Obama agreed to the current extension was that he didn’t believe we could afford to let all the cuts expire. Remember that the 10% bracket goes away, many of the lower tax brackets increase, and the personal and dependent exemptions revert from $1,000 to $500, In fact if you look at the ten year projections for letting the Bush tax cuts expire, they range from $3 to $4 trillion. Of that the projected revenue from the rich (> $250K), the projected revenue is about $700 billion. That means that the bulk of the revenue shifts to the middle and lower class. Maybe I’ve misread your comments but it would seem to be the exact opposite of your argument.

Also the ‘Doc Fix’ goes away. We are already losing doctors that will treat medicare patients. Neither Democrats nor Republicans have suggested we stop the ‘Doc Fix’ simply because the migration would only happen faster. Sure you’d have medicare but no doctor to treat you. I’m not sure that fixes anything.

And lastly your projections assume that by raising taxes on everyone, the economy will grow and recover immediately. I am not aware of any credible economist that believes a general tax increase in the middle of a recession will help spur growth. Nor does any of this even address what seems to be the concern that the rich are using loopholes to reduce their tax burden. It simply raises the rate for those that are already paying their taxes.

Now let me address some of the misconceptions I think have been circulating. I apologize up front for dragging this out but there have been so many claims that I think a little reality is in order. In 1999, the CBO estimated the budget figures for the next ten years. They do this every year but I thought it might be interesting to look at what they thought would happen vs. what actually happened. Remember that 1999 was after the Clinton tax hikes, before the 2000 recession, before 9/11 and before the Bush tax cuts. In other words, the economy was rosy, growing like a weed, and our outlook was damned good. At that time the CBO estimated federal revenues for 2006 to be $2.393 trillion. Actual revenue in 2006 was $2.406 trillion. A bit more but I would think pretty good for seven years out. The CBO also projected a $306 billion budget surplus. The actual for 2006 was a $248 billion deficit. Hell that’s a $554 billion swing. How the hell did that happen. The answer is not hard to find. The CBO estimated spending to be $2.086 trillion actual spending was $2.655 trillion. So if you look at the numbers the spending accounts for ALL of the deficit. I’ve never argued that Bush didn’t spend too much, in fact I’ve argued that he did. And the spending is the reason for the deficit.

Federal revenues even after the recession, 9/11 and the Bush tax cuts did not suffer from the rosy projections that were done before they occurred. Whether you want to argue that the tax cuts helped us recover or not, it is hard to say they hurt us. There is no smoke screen here nor talking points. See if you can address the issues without them yourself. Try using some facts.

jerv's avatar

@Jaxk I am at work right now and can’t check for myself, but what have Iraq and Afghanistan done for/to the budget?

Jaxk's avatar

@jerv

Without looking up the numbers it is clear that added spending. In fact I would say that between the wars and the Prescription drug plan, it accounts for most of the excess spending. Although there was a significant increase in federal government as well. Things like Homeland Security (what a fiasco that was). I’m not sure where you’re going with this but let me make some assumptions so that we can see where we agree and where we don’t.

The wars (both) were supposed to be short lived. They weren’t. They definitely added expense and it is a personal decision as to whether you feel they were worth the cost. The prescription drug benefit is expensive and personally, I don’t think we could afford it. I didn’t think we could afford it when it passed and I still don’t. Again, your call as to whether you think it was worth the cost. The massive expansion of government, I am and will always be against.

The argument here, as I understand it, is that by raising taxes to the Clinton era, we will increase federal revenue and get more money from the rich. I think the statistics above clearly show that’s not the case. We generated more revenue under the Bush tax cuts than they projected at the peak of the economic boom with the Clinton taxes. And we generated a larger portion of those taxes from the rich.

So if we want to argue the war, OK, I can do that. Or we can argue the taxes, or the spending. I can do any of that. I am not however, interested in debating the personalities of those involved. Bush didn’t do everything right nor did he do everything wrong. Same with Clinton or any other president you care to name. I am much more interested in what worked and what didn’t. I have no reason to denigrate the rich nor defend corporations. I do have a reason to want the economy to grow. If anyone could provide a lucid explanation as to how raising taxes would spur economic growth, I would listen. So far I’ve only heard how raising taxes would spur government growth. And I have no interest in doing that.

Jaxk's avatar

By the way, If I don’t respond promptly to any additional posts, it’s because I’m out celebrating. I just heard the the Safeway has run out of gas and had to shut down the pumps. Since they are my biggest competitor, it means more business for me. It may only be a few hours but hey, I’ll take what I can get. I’m going to get drunk.

jerv's avatar

@Jaxk I am at work right now and can’t check for myself, but what have Iraq and Afghanistan done for/to the budget?

Jaxk's avatar

@jerv

Even tipsy it only takes a minute to look it up. $120 Billion total war on terror, Iraq, and Afghanistan (according to the CBO). Do you have a point?

dabbler's avatar

@Jaxk “Things like Homeland Security (what a fiasco that was is).”
There fixed that for you. Seems to be one of the most unaccountable sides of the Military Industrial complex.
The wars put money into the economy only if you ignore the other side of the accounting, the borrowing accrued. Borrowing for highways make highways we can increase commerce on, we can get to work on trains and subways, and enables shipping the goods we should be making here around to their customers.
We get nothing of value for much of our military expenditure, but stuff blown up in places where they don’t like it any more than we do.

On top of debt we got nothing for it. Borrowing the same money to make a bridge (make the parts in the US not China, I’m talkin’ to you Oakland Bay Bridge!) at least you got a bridge to show for it. Pour money into a state university system so that anyone with the brains and discipline can go to college and you get smart workers and innovators and sophisticated consumers.

Pouring money into a single-payer health care system would provide that for the lowest cost to society possible. It would relieve business of the huge disadvantage to overseas businesses that are very likely not to bear that expense the way companies do here.
On top of that it would give workers a lot more flexibility in employment and not tie them desperately to one employer to keep health care. Talk about a boon for small business as well as employees.

ETpro's avatar

@Jaxk First, congratulations on outlasting a competitor.

I can understand the confusion with my “do nothing” comment. I wasn’t suggesting that’s a good idea. It is just interesting that it actually would result in a balanced budget because doing nothing would allow something to happen that would increase revenue. I favor letting the tax cuts expire for those earning over $250,000 (joint returns) or $200,000 if filing individually. I would also index those break points to inflation. I realize that alone won’t resolve our debt problem. No single step is likely to do that. But it is one step we could take that wouldn’t do the economy serious harm and would help reduce the deficit.

Let’s be realistic with one another. You are right no economist in their right mind suggests raising taxes massively in a recession. But also admit that no economist other than those driving for a right-wing ideology suggest massively slashing spending in a recession either. Neither one has a stimulative effect. In fact, the CBO’s studies indicate that, dollar for dollar, raising revenues is a better approach in a recession than cutting spending. Put differently, spending stimulates more than an equal amount of tax cutting..

Senator McConnell today said that every family knows when you have a debt problem you have to cut spending. Well, wait a minute. What if your boss offers you a big raise? Are you going to say, “Sorry, only spending cuts will solve my debt problem. I don’t want a raise. In fact, I was thinking a pay cut would help!” If we’re going to put it in terms of a family, let’s be honest. Would a family already stretched thin decide to stop eating, live in the street, or work a second part-time job to pay down their debt?

Ultimately, we are only getting out of this by growing the economy. Again, the CBO’s studies show that spending cuts have a far heavier depressive effect than equal revenue increases.

Further, the CBO tells us that total federal revenues have averaged around 18% of GDP over the past 2 decades. In 2000 at the end of the Clinton years and under his tax rates, they hit their high of 23%. In 2009 and 2010 they hit their low of 15% under the Bush tax plan. Meanwhile, defense spending doubled from the Clinton Administration to today. My contention is not that it’s all a simple matter of raising taxes. I think we need to look at raising revenue some AND cutting spending some. But the CBO’s numbers prove that the claim that higher taxes always produce lower revenue, and lower taxes always produce higher revenue simply isn’t true.

It’s the Republican claim that the entire debt solution must come only from spending cuts that I take issue with. That and the fact that they insist we absolutely must keep tax subsidies for corporate jets, and big oil and big agribusinesses. We have to preserve the tax breaks for corporations that off-shore jobs, Can’t cut a penny of spending on the rich. No, all cuts need to impact only the poor and middle class. To ad insult to injury, they insist that failure to accept this position amounts to class warfare—an attack on the rich. Seems to me there is class warfare underway, but the poor and the middle class haven’t fired a single shot.

jerv's avatar

@Jaxk Now that I am home, I actually have a real connection and a real screen to display data on.

Even half-exhausted to the point where it feels like I’ve had a six-pack, It appears to me that your figure is only for 2006, and ignores 2001–2005 and 2007-present. Another quick search places the number closer to ten times that amount as of three years ago, and another seems to corroborate that.

But we can’t cut a single penny there I guess, and the entire bill is all Obama’s fault, even the part that got racked up before the 2008 election that we will be paying for for who-knows-how-long.

dabbler's avatar

@ETpro “Seems to me there is class warfare underway, but the poor and the middle class haven’t fired a single shot” Absolutely. The parasite class are laughing all the way to the bank with their hysteria about “class warfare” while they have successfully waged war on the middle class since Barry Goldwater lost his election.

jerv's avatar

@dabbler Can we cut the middle class a break here? Nobody else does. The poor envy them and think that they are richer than they actually are while those who actually are rich want them to pay higher taxes than they do so that they can take advantage of the “critical mass” effect of money at the expense of the other 95% of Americans.

dabbler's avatar

I hope I wasn’t confusing, I’m totally for supporting the poor and middle class much more than they have been. I.e. the rich have been executing a brilliant campaign steamrolling everyone else, and are the only ones who have fired a shot in the class war.

ETpro's avatar

@dabbler “The parasite class are laughing all the way to the bank…“That certainly is the right-wing mantra, but of course it is a preposterous claim. If being poor is such a great deal, it’s easy to achieve. Claim to be too retarded to work and give all your money away. What’s topping all those abused rich guys in the GOP corporate jet set from cashing in on the bonanza of poverty in the USA?

Jaxk's avatar

@dabbler

I’m struggling with your statement that the rich are the only ones firing a shot. So I just need a little clarification. When Obama said corporate jet owners need to give up thier tax beak, was that where the rich are shooting at the poor? As I understand it we’re talking about changing the depreciation schedule for private jets from 5 years to 7 years. Is this the massive tax break we’re talking about? You know of course that the bill the Democrats passed in December last year allowed them to write off the cost in the same year (1 year depreciation).

I’m sure that since Obama mentioned this 6 times in his speech it must be a big issue. Maybe as big as the ‘Cowboy Poets Festival’. I’m just looking for a little clarification here.

dabbler's avatar

Oh, golly you will find an eensy weensy contrary example here and there, of attempts to level things out. It’s always such a hazard to say always or never or none, someone’s bound to fixate on a possible exception to dodge the actual point. Might as well struggle behind a semantic point instead.

The elimination of advantageous jet depreciation is a negligible shot, and the parasites are whining ‘class war’ over that? Are you kidding me?
Where was anyone screaming ‘class war’ over the past few decades of waves of tax reductions and exemptions that benefited the top incomes in huge disproportion? They were few. The media won’t carry that story, their own interests fall right in line with the top brackets. We all thought they were going to create a bunch of jobs didn’t we? They keep telling us they will. Instead they buy T-bills or hedge fund shares, and the people who pay taxes at rates that makes a real difference in their lives get to pay the bond holders that bond-income that by the way is exempt from tax in most jurisdictions.

Besides taxes there are the globalists who have accommodated sending a big chunk of our industry overseas. WTO and NAFTA have only enabled degrading the quality of life of our workforce toward slavery and by the way a lot of it’s outsourced now. Tariffs would be one way to change that back. And manufacturing standards that require goods sold in this country to be certifiably made by people who have a minimum standard of civil rights and prosperity. Gee whiz that might violate the WTO.
Hey, look, a treaty that yields national sovereignty to an unelected body of international corporatists. Who put that (WTO) there?

Union busting is practically a religion these days. It used to be that people understood the need for big labor to face off with big business. Do you like your weekend? holidays? vaguely 40hour week ? You can thank the positive influences of unions for that.
You can thank the shots from you-know-where for the perception that unions are good for nothing.

I don’t know to what “massive tax break we’re talking about” you refer. I don’t think I mentioned massive tax breaks.
Most adjustments to taxes I’d recommend are not in the ‘break’ direction.
I want that bell curve straightened out in a sustainable progressive line that reflects the greater extent to which wealthy get that income due to support from the commons that are paid for by taxes.
Pretending more tax breaks will stimulate the economy is just Keynesian suicide wagon banter, proven repeatedly to Not Work in every case applied. (Chile? Honduras? Nicaragua? Japan?) And I’m not talking about small business tax breaks, I’m all for those and already said so. the top brackets must be brought to fair levels for our economy to work.

Any massive tax break I’ve alluded to would be the huge wrench of tax rates into that bell curve we’re talking about, where the top end isn’t even taxed near rates collected from the middle class. These have been granted repeatedly since Reagan’s time, ironically usually justified by their capacity to let the rich folks create jobs. The wealthy create jobs a lot more when their wealth is in their companies not their pockets. Any times when rates on the wealthy were high that’s exactly what happened, they invest and build – all those things they like to claim excuse the cost of having them around.

Corporate governance law has so tilted the control of publicly held corporations to their board that they no longer act in the interests of the shareholders in many cases and don’t have to. How did that get that way? Big and little legal accommodations (shots) in language most of us aren’t prone to read has let a very few people collectively control the biggest corporations to their own personal great advantage. Hear many shots in the opposite direction?

The point, if you need further clarification, is that if you insist there is a shooting match going on, I can only concede a sort of pea-shooter vs cluster-bomb activity in proportion and effect.

Jaxk's avatar

@dabbler

Good rant. A bit long on ranting and bit short on detail. Let me make a few points. First of all I’ll ignore the union rant. If you have to go back a hundred years to find something good they did, it’s not much of an argument.

A couple of points on taxes. Government revenues have been about 18% of GDP for the last 60 years. High growth periods tend to raise it and recessions tend to lower it. Nonetheless, if you look at the trend Federal Revenue Chart&state=US&color=c&local=s, it is amazingly stable given the fluctuations in tax rates. Remember that during the period of the chart posted, the top tax rate has fluctuated from a high of 91% to a low of 28%. Even after the Bush tax cuts the revenue returned to 18.4% of GDP.

Also it is significant to note that since the late 70s, the rich have been paying more and more of the total tax bill. In fact the top 1% of earners have continually paid a higher and higher percentage of the total tax bill as the tax rates have declined. So that in 1977 the top 1% paid 20% of all taxes, In 1995 they paid 30% and in 2007 they paid 40%. I’m struggling with this idea that the top are paying less and less. The numbers just don’t work that way.

You want to straighten out the bell curve. First it’s not a bell curve but let’s not quibble. You can’t fix it by adding more exceptions or qualifiers to the tax code. The tax code currently is more than 67,000 pages. It is a tax attorney’s playground. And making it bigger won’t change that. Every time you decide that some special tax needs implementing or some special industry needs an exemption, you add to the size of the code and we hire another few hundred tax attorneys (or lobbyists). It has been estimated that we spend 6.2 billion hours/yr on taxes. No more specials. I know you guys love to criticize Reagan but when he simplified the tax code, the rich started paying a higher percentage of the taxes than they did when the taxes were at 71%.

Your right about corporate governance. What you need to ask is why? I know you all think they’re just greedy bastards trying to outwit the average dolt but as long as you look at it that way, you’ll never figure it out. I used to teach management classes back in the 80s. A time when everyone thought the Japanese were going to take over the business world. There was a cute phrase we used that went something like this:

“When regulation is passed in Japan business hires a hundred engineers to solve the problem. In America, we hire a hundred lawyers.”

That was a cute phrase to use but didn’t really tell the story. In America it took a hundred lawyers to figure out what the government wanted them to do. It’s all in the complexity of the both taxes and regulation. The more complex it is, the more leverage congress has to hand out favors and the more opportunity for lawyers to figure out ways to take advantage. I don’t blame business for that, I blame Washington. If you look at this latest shot at corporate jet setters. Say you pass the tax to get even with those lousy corporate jets. The tax lawyers start drooling and Corporations hire a few more to figure out what to do. In the end a few will buy Turbo Props instead of Lear Jets and a few may just keep thier existing jet instead of upgrading. In total nothing will change except the lawyers will get richer. Oh, and you’ll be able to complain next year that those bastards weaseled out of paying the new tax.

It never ceases to amaze me that everyone thinks they can outsmart the corporations by adding cleverly worded pages to the tax code or very specialized language to the regulation. You can’t outsmart them by adding complexity. Only by removing it. It’s time to stop complaining that they aren’t paying thier fair share even after you added a couple thousand pages to the tax code to fix the problem. Duh.

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