Big Buget, Big Taxes

[Perchoutofwater]

If you take the money and run, other businesses will fill the void. Demand will not change one iota. Neither will employment or unemployment - it's all about demand.

 

As for your supe, sure he's rich relative to the rest of the nation. That's simple. Sure he works hard - if he's any good, so do the people under him earning half that. The "hardness of the work" is not in question. The only real reason your supe would decide it isn't worth it any more is nothing to do with taxation and everything to do with having enough amassed to pack it in. Offer him a $50,000 pay raise that you both know will be taxed at ~35% and see if he takes it or if the loss of $17,500 - $20,000 in taxes depresses him enough to turn it down.

 

"You've got to earn it to receive it" is quite true but no more so than mine - you have to earn it to pay it. Like I said in my other (unanswered) post, I'll take 70% of $120k over 100% of $20k every time.

 

I don't think you understand or are willing to admit how bad the business environment has gotten lately based on litigation, regulation, and soon to be more taxation. Do you think I'm alone in my thoughts on this? Do you think I'm the only one who is real close to being fed up? If I had finished the book, I think this is the point in the argument I'd raise the question "who is John Galt?"

 

You say that "you've got to earn it to receive it" is true, but it isn't being practiced today, as I'm earning it, through coercion the government is taking it and handing it out to people who did not earn it.

 

Your argument about what people are willing to take, yes they will take they 70% of the 120K, but are they willing to earn it? And when you couple the punitive tax system we have with the overbearing regulation and the constant threat of litigation, at what point does the scale tip where the risk out weighs the potential reward?

 

You can flip me off and say good riddance, that the market will correct itself if I leave, and you are right, but what if 5,000 others like me leave? And while it will correct itself, how long will it take? Do you think the new start up that replaces me will have my expertise right of the bat? Are they going to have to include all their screw ups into the pricing or are they going to absorb them? How long will they be able to absorb them? We are at a point where a lot of business owners are about ready to flip you and the leeches off.

[bpwallace49]

Whatever the rich are selling, they are giving value for it.

 

have you been paying attention to the banking debacle, Goldman Sachs and business that give out record bonuses for doing their part to damage the US financial system? Is that "giving value"? growing too big to fail, receiving US taxpayer money to save their company, and then receive huge bonuses for doing . . . what? What value was given again?

[Perchoutofwater]

have you been paying attention to the banking debacle, Goldman Sachs and business that give out record bonuses for doing their part to damage the US financial system? Is that "giving value"? growing too big to fail, receiving US taxpayer money to save their company, and then receive huge bonuses for doing . . . what? What value was given again?

 

A lot of people who couldn't afford houses were given houses? Seriously I'll admit that Wall Street is partially to blame. Are you and your socialist bear friend willing to admit that the US government is just as much to blame there the CRA, Fannie, Freddie, monetary policy, and encouraging if not outright forcing banks to make suspect loans? Will you admit that the government protecting the unions instead of allowing the Big 3 to squash them is at least partially to blame for the failure of Chrysler and GM? Will you admit that the current financial crisis is at least partially due to the lack of consumer confidence largely due to an unprecedented amount of public debt? Yes it is popular to blame wall street and the evil bankers for the problems we face, but Washington is as much to blame as anyone, and by default we are to blame for allowing our government to expand beyond all reason.

[westvirginia]

have you been paying attention to the banking debacle, Goldman Sachs and business that give out record bonuses for doing their part to damage the US financial system? Is that "giving value"? growing too big to fail, receiving US taxpayer money to save their company, and then receive huge bonuses for doing . . . what? What value was given again?

 

So, how many of those people making $30-$40K have a serious nest egg with GS or any house? probably less than 2%, if that. Those people live hand-to-mouth, have never NOT had a car payment, nor paid a credit card off, etc. Also, these people ONLY have the lifestyle they do because of this easy credit, and the fact that food prices are subsidized. I'm not crying for anyone right now, but when you give dollars for bread, milk, a CD, a cell phone, or a gallon of gas, then YES, you get value for your dollar.

[bpwallace49]

FACT CHECK: Obama budget a leap of faith on growth

 

 

WASHINGTON – President Barack Obama's proposed budget relies on a commission without teeth to help his administration wrestle the deficit out of the danger zone. It forecasts stronger economic growth than most economists expect and calls on Congress to cut programs that lawmakers cherish.

 

All budgets from the White House are leaps of faith of some sort. This one is no exception.

 

The economic forecasts used in setting spending priorities are in line with independent expectations for now. After that, though, the administration's projections appear ever more fanciful.

 

A look at some budget assumptions and how they compare with the facts and political realities:

 

____

 

BUDGET: Forecasts four years of growth of 4 percent or more and unemployment dropping to 8.2 percent in 2012.

 

THE FACTS: No one knows what will happen, but the administration's projections are rosier than private economists expect.

 

For 2010, the administration is projecting that the overall economy, as measured by the gross domestic product, will grow at an annual rate of 3 percent, when measured from the fourth quarter of last year. That is very close to the 2.9 percent GDP growth forecast from economists surveyed by Blue Chip Economic Indicators.

 

However, the administration is projecting that growth in 2011 will jump to 4.3 percent and remain at 4 percent-plus for three years, a scenario that is much stronger than the forecasts of private analysts. The Blue Chip consensus is for growth to be more than a percentage point lower in 2011 at around 3.1 percent.

 

Likewise, the administration's projection that unemployment, currently 10 percent, will end the year around 9.8 percent is in line with the outlook of most private economists. Many are looking for the jobless rate to peak at about 10.5 percent this summer and then gradually decline as the recovery gains strength.

 

However, for next year, the administration is projecting the jobless rate will drop to an average of 9.2 percent and will average 8.2 percent in 2012, the presidential election year. Many private economists don't believe the jobless rate will improve that quickly, given all the headwinds now facing the economy.

 

Stronger economic growth and more people working translates into more revenues for the government and less spending in such areas as unemployment insurance and thus a smaller budget deficit. However, private economists reviewing the administration's forecasts said the actual track for the economy is likely to be more sluggish, making future deficits, already expected to be huge, even larger.

 

"The administration's economic forecast is highly optimistic," said David Wyss, chief economist at Standard & Poor's in New York. "This is going to be a half-speed recovery. Usually you get a bigger kick coming out of such a deep recession, but we think there are just too many headwinds out there."

 

___

 

BUDGET: Save some $20 billion by cutting programs.

 

THE FACTS: Congress typically disregards most items on a president's budget-cutting wish list and puts money into the programs anyway. Several dozen of the programs Obama proposes cutting in the new budget were marked for elimination in his budget a year ago.

 

Obama actually got more than usual on this front in 2009, persuading Congress to go along with more than $6 billion in cuts out of the $17 billion he sought. But he achieved those savings from just a few big-ticket defense and related programs, such as canceling production of the F-22 fighter.

 

This time, there are fewer massively expensive programs on the list, and it will be an uphill battle trying to get lawmakers to back off on nickel-and-dime spending important to their states.

 

Although supporting major military systems this time, Obama does want to save $2.5 billion by stopping purchases of the C-17 cargo plane.

 

The Pentagon tried to cease production of the aircraft before, but lawmakers restored the money to save jobs in their states.

 

Obama also wants to save $115 million this year and $1.2 billion over 10 years by eliminating payments to states and Indian tribes that have completed cleanup of abandoned coal mines. His reasoning: The job has been finished, so the money should stop.

 

But he was rebuffed when he tried the same thing last year. Lawmakers from mining states say the money is needed to create jobs and to clean up other mines, and already a half dozen from both parties are vowing to keep the program intact.

 

Obama also wants to eliminate the B.J. Stupak Olympic scholarship, a $1 million annual program named for the late son of Rep. Bart Stupak, D-Mich.

 

Stupak was a leader of moderate Democrats who won a battle to include language forbidding money in the House health care bill to help pay for abortions, a provision that angered liberals and has been a major stumbling block in completing the legislation. Former President George W. Bush also tried to cut the scholarship, which helps an Olympic training center in Stupak's northern Michigan district.

 

___

 

BUDGET: Counts on a presidential commission to help the administration reduce the deficit to 3 percent of the overall economy, a level that private economists generally believe is manageable. That would be a significant improvement from this year's projected record-breaking $1.56 trillion deficit, which would equal 10.6 percent of GDP.

 

THE FACTS: The commission has yet to be appointed and there's no sure path to having its recommendations considered by Congress.

 

Even with its proposed partial budget freeze and tax increases on the wealthy, the administration would not achieve its goal of getting the deficit down to 3 percent of GDP, only reaching 3.9 percent by 2015. Achieving that last one percentage point of deficit reduction is where the commission is supposed to come in.

 

The trouble is that the idea of establishing the commission by law failed last week when senators in both parties opposed it. Republicans expressed worry the commission would open the door to tax increases, even though most budget experts say it will probably take a combination of tax increases and cuts in the government's big spending entitlement programs such as Medicare and Social Security to get the deficit under control.

 

Some Republicans are urging a boycott of the panel that will result. Even if Obama manages to get Republicans to serve, it is not at all clear the commission's recommendations, due at the end of this year, would be voted on in Congress.

 

Democratic leaders of both the House and Senate have committed to such a vote, although it won't come until after the November elections.

 

But under the agreement brokered by Vice President Joe Biden, the commission's proposals would have to first win support of 60 senators to guarantee the effort would not be blocked by a filibuster.

 

A great summary of why this budget is already under fire. It is very encouraging that the process used OUTSIDE PRIVATE economists in its analysis (to try and avoid the partisan hackery that is guaranteed to follow). Unfortunately it actually expects Congress to do two unthinkable things.

 

1.) Drop unneeded programs in their districts, something BOTH parties simply dont have the balls to do.

2.) Expect the right to actually work in a manner that is best for the country and participate in a budget review commission. Which BTW . . . was proposed by the right in the past, but mysteriously is not a good idea now Especially since some far left Congresspeople dont want the ocmmission either because its aim is to look at big spending projects and make needed cuts.

[WaterMan]

THE FACTS: No one knows what will happen

 

Yeah but it sure gets panties in a bunch wondering what's going to happen.

[Perchoutofwater]

A great summary of why this budget is already under fire. It is very encouraging that the process used OUTSIDE PRIVATE economists in its analysis (to try and avoid the partisan hackery that is guaranteed to follow). Unfortunately it actually expects Congress to do two unthinkable things.

 

1.) Drop unneeded programs in their districts, something BOTH parties simply dont have the balls to do.

2.) Expect the right to actually work in a manner that is best for the country and participate in a budget review commission. Which BTW . . . was proposed by the right in the past, but mysteriously is not a good idea now Especially since some far left Congresspeople dont want the ocmmission either because its aim is to look at big spending projects and make needed cuts.

 

I'd love to see both.

[bpwallace49]

A lot of people who couldn't afford houses were given houses? Seriously I'll admit that Wall Street is partially to blame. Are you and your socialist bear friend willing to admit that the US government is just as much to blame there the CRA, Fannie, Freddie, monetary policy, and encouraging if not outright forcing banks to make suspect loans? Will you admit that the government protecting the unions instead of allowing the Big 3 to squash them is at least partially to blame for the failure of Chrysler and GM? Will you admit that the current financial crisis is at least partially due to the lack of consumer confidence largely due to an unprecedented amount of public debt? Yes it is popular to blame wall street and the evil bankers for the problems we face, but Washington is as much to blame as anyone, and by default we are to blame for allowing our government to expand beyond all reason.

 

I agree with all of the above Perch. It is popular to just blame Obama and put on earmuffs when we talk of the past. This box we are in started awhile ago, and simply blaming the current guy in charge isnt solving the problem. Also the programs put forth in the past sure havent worked either.

 

more than any other time in the last 20ish years, our elected officials on both sides need to put the country and its future first. Working together to solve these problems should be the first priority. Instead, bitter partisanship is all we get. That is why I just dont understand the hate for Obama. All these things he has had to deal with ahve been cumulative, and he hasnt made every right move .. not by a long shot. Obama didnt create all the debt we have now . . he didnt start any wars . . . he didnt start Fanny and Freddie Mae . . . he didnt deregulate wall street. What DID do is try to fix the destroyed hulk in front of him . . and has been trying to do so while almost half our legislative body sits on their hands and refuses to help.

 

While the right (as admitted by your spokesman, Rush) stated that they "hope Obama fails". is that good for america? Is refusing to participate and simply wait for the next election cycle so they get the "credit" if things turn around GOOD for America? health care costs have been spiraling out of control for YEARS. Obama just had the balls to bring it up . . . and it turned out poorly with a bill that doesnt address a lot of the issues of cost containment. Your view to just to comtinually put that on the back burner . . never to be addressed. Does that solve the problem?

 

Govt is way too bloated and full of excesses and purchased influence on BOTH sides. I wish that Congress could make some hard choices, work together, and maybe realize that the greater good of teh US is more important than their specific entitlements for their districts. But we all know that will never happen . . .

[Perchoutofwater]

bp my problem with Obama is his spending, plain and simple. He is spending or proposing to spend more than anyone ever has. We already are in dire straits with regard to the deficit, and he want to blow it up even more. I don't see that any good can come from that. I'd love to see health care more manageable, but honestly question if now is the time to do it. I've already outlined several times how pending health care reform has slowed the economy. We need to be cutting back spending not ramping it up. If being opposed to spending more makes me an obstructionist, then I guess that is what I am. If we want to talk about ways to legitimately reduce the debt without expanding the role of government I'm all for it. I don't blame Obama much for where we are (though I don't think he ever voted against a spending bill in his short time in the Senate, and he did receive a lot of money form many of the organizations above that you agree helped cause this mess). My objection is what he is doing is having little or no effect and is only digging the hole we are in deeper.

 

If Obama would just come out and say I'm not going to sign any budget that does not reduce the overall budget (all categories) by 5% each of the next three years (and had the balls to veto if need be), even if he raised taxes by 5%-10% I can honestly say that regardless of what letter is behind his name, he would be the best President of my life time.

[Ursa Majoris]

I don't think you understand or are willing to admit how bad the business environment has gotten lately based on litigation, regulation, and soon to be more taxation. Do you think I'm alone in my thoughts on this? Do you think I'm the only one who is real close to being fed up? If I had finished the book, I think this is the point in the argument I'd raise the question "who is John Galt?"

 

You say that "you've got to earn it to receive it" is true, but it isn't being practiced today, as I'm earning it, through coercion the government is taking it and handing it out to people who did not earn it.

 

Your argument about what people are willing to take, yes they will take they 70% of the 120K, but are they willing to earn it? And when you couple the punitive tax system we have with the overbearing regulation and the constant threat of litigation, at what point does the scale tip where the risk out weighs the potential reward?

 

You can flip me off and say good riddance, that the market will correct itself if I leave, and you are right, but what if 5,000 others like me leave? And while it will correct itself, how long will it take? Do you think the new start up that replaces me will have my expertise right of the bat? Are they going to have to include all their screw ups into the pricing or are they going to absorb them? How long will they be able to absorb them? We are at a point where a lot of business owners are about ready to flip you and the leeches off.

I'm not flipping you off, far from it. I happen to know that your firm is a market leader......we all have our information sources.

 

If you sold it, you'd get good value for it. We're straying from the points though. The points are:

 

You can't have your cake and eat it - there's a reason nearly half the country isn't paying income tax and it's because those people are slowly but surely being overtaken by the tax threshold. Given that the national wealth has been increasing - and we know it has - the inescapable conclusion of all this is that the people who ARE paying tax are receiving more of the wealth.

 

On top of this, the elimination of $75k jobs and replacement by $30k jobs increases profit so that those still in decent jobs and the investing classes are able to share that $45k differential between themselves.

 

Regardless of the level of taxation - and isn't it a shibboleth of the right that US taxation is so much less than those socialist Euros? - the incentive to earn more is always there. GBPFan hasn't yet got back to me with an example of anyone turning down a pay raise because the tax was too high.

 

Downward pressure on labor costs coupled with the Wall Street imperative that profit must always increase (not just be a profit, but INCREASE) have assisted in creating a situation where less people pay income tax because they earn less and companies are increasingly frantic to find more and more reductions in costs to please the Masters of the Universe for one more quarter.

 

Until the Wall Street shackles are broken and we go back to a sanity that understands that simple profit year on year is just fine, we're in an unsustainable system that forces increasing numbers of losers and diminishing numbers of winners......though the winnings get bigger.

[Perchoutofwater]

Ursa have you thought that the reason fewer people are net tax payers is because we continue to increase the size of the entitlement class, not because they aren't making the money but because the federal government is just doing more redistribution with more programs? Medicare D under Bush is perfect example.

[gbpfan1231]

If you take the money and run, other businesses will fill the void. Demand will not change one iota. Neither will employment or unemployment - it's all about demand.

 

As for your supe, sure he's rich relative to the rest of the nation. That's simple. Sure he works hard - if he's any good, so do the people under him earning half that. The "hardness of the work" is not in question. The only real reason your supe would decide it isn't worth it any more is nothing to do with taxation and everything to do with having enough amassed to pack it in. Offer him a $50,000 pay raise that you both know will be taxed at ~35% and see if he takes it or if the loss of $17,500 - $20,000 in taxes depresses him enough to turn it down.

 

"You've got to earn it to receive it" is quite true but no more so than mine - you have to earn it to pay it. Like I said in my other (unanswered) post, I'll take 70% of $120k over 100% of $20k every time.

With that same theory you would take 20% of 120k over 100% of 20k - So I say go ahead and do that and then you lefty bleeding hearts can use that extra money YOU gave up and can give that to the people that do not work hard and live off other people and I would then be able to have more of the 120K that I have worked hard all of my life for.

[Ursa Majoris]

With that same theory you would take 20% of 120k over 100% of 20k - So I say go ahead and do that and then you lefty bleeding hearts can use that extra money YOU gave up and can give that to the people that do not work hard and live off other people and I would then be able to have more of the 120K that I have worked hard all of my life for.

So your assumption is that low paid people don't work hard, is that it? Your obsession with the mythical freeloaders is ridiculous - I know you get spoon-fed this nonsense that all your tax money is going to fund some black chick's fingernails but it isn't. It's going to fund this.

 

So, even if you eliminate ALL discretionary spending, you're going to reduce the budget by 17%. We already know you think every dollar of defense spending must automatically be well spent, so what exactly are you going to cut? Latasha's nails aren't enough.

[Ursa Majoris]

So your assumption is that low paid people don't work hard, is that it? Your obsession with the mythical freeloaders is ridiculous - I know you get spoon-fed this nonsense that all your tax money is going to fund some black chick's fingernails but it isn't. It's going to fund this.

 

So, even if you eliminate ALL discretionary spending, you're going to reduce the budget by 17%. We already know you think every dollar of defense spending must automatically be well spent, so what exactly are you going to cut? Latasha's nails aren't enough.

More detailed graph.

[Azazello1313]

You can't have your cake and eat it - there's a reason nearly half the country isn't paying income tax and it's because those people are slowly but surely being overtaken by the tax threshold.

 

you keep making this statement....what is your evidence backing it up? seems like the best statistic to measure this would be inflation-adjusted median income (meaning half the people make more, half make less), which was flat to trending upward over the period you're talking about.

 

on the other hand, there are specific new tax credits, exemptions, tax cuts, etc. that one can point to as reducing the overall number of people paying income taxes. it seems it is obviously the latter rather than the former causing fewer and fewer people to be net income tax payers.

Edited February 2, 2010 by Azazello1313

[Ursa Majoris]

you keep making this statement....what is your evidence backing it up? seems like the best statistic to measure this would be inflation-adjusted median income (meaning half the people make more, half make less), which was flat to trending upward over the period you're talking about.

 

on the other hand, there are specific new tax credits, exemptions, tax cuts, etc. that one can point to as reducing the overall number of people paying income taxes. it seems it is obviously the latter rather than the former causing fewer and fewer people to be net income tax payers.

Thanks for that. Two things:

 

Over the entire 2000 to 2008 period, median income increase is net zero, making my point exactly.

As for the tax credits, etc, etc......tax cuts are always good, aren't they?

[Perchoutofwater]

Thanks for that. Two things:

 

Over the entire 2000 to 2008 period, median income increase is net zero, making my point exactly.

As for the tax credits, etc, etc......tax cuts are always good, aren't they?

 

You will note the main cause of that was a recession started by the tech bubble and added to by 9/11. If you look the dip from the recession was much shallower than previous recessions.

Edited February 2, 2010 by Perchoutofwater

[Azazello1313]

Over the entire 2000 to 2008 period, median income increase is net zero, making my point exactly.

 

umm, no it doesn't. your point is that people in the middle are sliding out of the net income taxpayer category because their income is decreasing. zero increase is also zero decrease, and this is "real" inflation-adjusted income, not absolute dollars -- which means that actual nominal (number of dollars) income is UP in lock-step with any tax bracket creep. which means the thing you keep pointing to is actually having no impact whatsoever.

 

As for the tax credits, etc, etc......tax cuts are always good, aren't they?

 

well, no, but that's not the point here in any case. it's not a value judgment, it's just a factual observation the reason fewer and fewer people are paying income tax is a direct result of new tax credits and other specific government policies, not the bogeyman of a disappearing middle class you keep dreaming up.

[Ursa Majoris]

umm, no it doesn't. your point is that people in the middle are sliding out of the net income taxpayer category because their income is decreasing. zero increase is also zero decrease, and this is "real" inflation-adjusted income, not absolute dollars -- which means that actual nominal (number of dollars) income is UP in lock-step with any tax bracket creep. which means the thing you keep pointing to is actually having no impact whatsoever.

I guess it's your turn to offer an explanation as to why 50% of the population is a zero income tax payer, then.

 

I'm fairly sure, too, that your "median net income" chart is hiding a multitude of statistics.

 

It covers the "boom years" of George Bush and his splendiferous tax cuts and not the dismal 2008/9.

No median household increase in the GWB "boom" even though some folks got spectacularly wealthy in that period?

[Azazello1313]

I guess it's your turn to offer an explanation as to why 50% of the population is a zero income tax payer, then.

 

are you serious? how many times do you need me to say it?

 

"on the other hand, there are specific new tax credits, exemptions, tax cuts, etc. that one can point to as reducing the overall number of people paying income taxes. it seems it is obviously the latter rather than the former causing fewer and fewer people to be net income tax payers."

 

"it's not a value judgment, it's just a factual observation the reason fewer and fewer people are paying income tax is a direct result of new tax credits and other specific government policies, not the bogeyman of a disappearing middle class you keep dreaming up."

 

so again, the reason fewer and fewer people are net income taxpayers is that we keep changing the tax code so that more and more people have no tax liability. new credits for this, larger credits for that, eliminating the lowest brackets entirely, etc. and again, I have NOT said that I consider this to be good or bad, just that it is the obvious reason why the percentage of net taxpayers keeps decreasing, and not the disappearing middle class fairy tale you keep repeating.

 

I'm fairly sure, too, that your "median net income" chart is hiding a multitude of statistics.

 

It covers the "boom years" of George Bush and his splendiferous tax cuts and not the dismal 2008/9.

 

oh my bad, I kinda thought that when you were talking about the "slow but sure" evisceration of middle class jobs, you were contemplating a longer time frame than the last year and a half.

[Azazello1313]

back to the initial topic, two devestating posts here and here.

[cre8tiff]

back to the initial topic, two devestating posts here and here.

 

Henessey, eh? I like his liquor.

[bushwacked]

Henessey, eh? I like his liquor.

 

I bet he didn't adjust for intoxication.

[bpwallace49]

back to the initial topic, two devestating posts here and here.

 

A devastating counter blog to your blog . . .

 

here

[bushwacked]

back to the initial topic, two devestating posts here and here.

 

 

So does the former Economic Policy and Director under George W have good or bad things to say? I'm too busy reading Matt Millen's devastating critiques of current NFL GMs.