Glenn Reynolds (linked site) is always a worthwhile daily read, but his latest opinion piece is terrific. I only wish the house had the leadership to follow through with things like this. Why the GOP should give Obama the higher taxes he wants By: Glenn Harlan Reynolds Well, the debt deal is behind us, but it's clear that the White House wants more taxes. Instead of fighting this head-on, the GOP might want to think about future ways of giving President Obama what he says he wants. Done properly, it just might be what academics like Obama call a "teachable moment." One of the things that's been floating around the Web over the past week is a video clip from 1953. It's a short film produced by the motion picture industry, seeking the end of a 20 percent excise tax on movie theaters' gross revenues that had been imposed at the end of World War II as a deficit-cutting measure. (Yes, gross, not net). In the film, figures ranging from industry big shots to humble ticket collectors talk about how the tax is hurting their industry and killing jobs, and ask Congress to repeal the tax. They even explain, in a sort of pre-Art Laffer supply-side way, that a cut in theater taxes might actually produce an increase in federal revenues as the result of greater economic growth. The effort -- which includes a call aimed at "Congressman John Dingell," father of the current Rep. John Dingell, who took over from his father a mere two years later in 1955 -- ultimately succeeded. But while I'm usually for tax cuts, in this case I think that's too bad. Because with this battle over, Hollywood stopped talking loudly about the damage done by high taxes, pretty much for good. When, since, have we seen such a firmly expressed appreciation of the harm that excessive taxation can do to the economy, voiced by representatives of the entertainment industries? Today, those industries are a major source of Democratic contributions and spread-the-wealth rhetoric, even as they prosper based on this tax cut, and numerous other bits of favorable treatment scattered throughout the Internal Revenue Code. It's time for a change. Were I a Republican senator or representative, I would be agitating to repeal the "Eisenhower tax cut" on the movie industry and restore the excise tax. I think I would also look at imposing similar taxes on sales of DVDs, pay-per-view movies, CDs, downloadable music, and related products. I'd also look at the tax and accounting treatment of these industries to see if they were taking advantage of any special "loopholes" that could be closed as a means of reducing "tax expenditures." (Answer: Yes, they are.) America, after all, is facing the largest national debt in relation to GDP that it has faced since the end of World War II, so a return to the measures deemed necessary then is surely justifiable now. The president's own rhetoric about revenues certainly suggests so. Perhaps the bill could be named the "Greatest Generation Tax Fairness Act" in recognition of its history..... (entire piece here)
There are only two ways to reduce the deficit. 1. Reduce spending. The people who actually vote don't want this. The biggest three are defense, Social Security, and Medicare. The voters don't want cuts in Social Security or Medicare. The GOP doesn't want to cut the Defense budget. 2. Raise taxes. It's really not that complicated. No matter how many times you say "lower taxes," if you can't cut spending (and you can't, because it's not what people want), you're just raising the deficit.
Targeting percieved Democatic constituencies? How very American. Other than Medicare (spending is about 12% of GDP or twice the historic norm) or Defense (about 6% of GDP, historic norm is about 5% GDP, wars not included), there is nothing significant left to cut. You could cut the interest payments on the debt, but that would require actually running a surplus for a very long time. Otherwise, we have reached the equilibrium on the level of government services, the people have determined they want. If not by there votes, then through the fear instilled in generations of politicians to actually cut anything else. Even the tea-partiest of congressmen interested in re-election wouldn't dare put there name on cutting this stuff if they thought it would actually pass. Now all that is left is to figure out how to reach that number without having half the workforce eating ramen noodles 3 times a day. You will be required to show your work.
The country can always resort to legalizing nonviolent crimes and collecting taxes from these industries.
The majority of the country backs legal marijuana. It is going to happen as the population ages, you might as well start collecting the tax benefits now.
It is a BIT MORE complicated than that. In fact, if the taxes are not lowered - just stabilized - a reasonably predictable (and encouraging) environmemt can exist and real economic progress can be made. It happened under Kennedy, Reagan, and Bush. More output + more jobs = more tax revenues. That said, when things get better (and I think they will under conservative policies) we can't crank-up another spending binge. Medicare and other entitlements need to be reined-in.
A strong case can be made that the majority of increased revenues under all 3 came from increased spending by the government that created more economic activity. In fact, we only have one example in modern history where a President, or in this case back to back Presidents, increased taxes and reduced spending, Bush Sr. and Clinton. And revenues exploded as a result. Laffer's theories only work in the extreme. If the cut marginal tax rates from 80% to 30% you will see a boost in activity. there is no evidence that cutting marginal taxes from 37% to 34% has any positive impact on the economy, and most likely is simply a wealth transfer from the government to the rich. Spending is a much more reliable predictor of government revenue growth than tax cutting.
Not much of an argument from me. One reason I think this payroll tax holiday is bologna. (Whatever happened to stabilizing Social Security??) Uncertainty is the killer. While I'd 'kinda like to see tax reform in the form of a flat tax or some version of a 9-9-9 for simplicity and perception of fairness (we're all in this together), I'd be satisfied if the politicians would "just leave taxes alone" and work on the spending side of the equation.
I agree that predictable fiscal policy is the more important than the actual numbers, so long as it is sustainable. Rolling back spending and taxes to 1999-2000 equivalents would be good enough for me. Sent from my MB860 using Tapatalk
I think it would be far easier to do the tax end (I don't recall exactly where the top marginal rate was at the time) but, regretably, the Dems (and many of the GOPs unfortunately) would never allow such a substantial cut.
Can't cut spending? Is that how individuals live their lives? Is the government God to individuals? Gimme a break. It will take real LEADERSHIP to get reforms of Social Security & Medicare. Obama has done nothing. (Despite his bipartisan commission he praised and then ignored.) Congress is almost as bad, but (at least) the newer (2010) members (Tea Party backed conservatives) ARE willing to do this (unpopular but necessary heavy lifting). Why? Because most are outsiders & non-professional politicians -- they don't care if they don't get re-elected, which is what 99% of congress has typically considered most important. These congressmen (& their brothers who will be elected in 2012) are actually more important than (who becomes) the next president. Without them, nothing of real change will occur. 1/ On spending: I'd add that government itself needs not just a haircut, but MAJOR cutbacks. Get rid of certain depts totally... Commerce, Education, Energy (move the NRC to another dept), etc. Phase (gov employees) out (attrition) & you'll save (not only) the current (yearly expenses of infrastructure & salaries), but the (fat guaranteed) government pensions & benefits they all cost (future taxpayers). 2/ Taxes are at their limit. If you don't agree with that, then lets just double them all... and see what happens. You can't tax yourself to prosperity. We have the highest Corporate taxes in the world. And we (frickin) wonder why businesses (who are facing difficulties in a tough economic climate) are willing to move overseas? How stupid is that? With our current world interconnected-economic system, we ignore natural competitive economic forces at our peril. Milton Friedman explained that the true tax on the American people is the level of spending... the resources taken from the private sector and employed in the public sector. Whether financed from direct taxation, inflation (printing money), or borrowing, spending is the burden. Our (Fed) government now spends (exponentially) more every year than it takes in. This... is unsustainable. And is leading us to certain destruction. So to NOT want lower taxes... is to want MORE government... is to reap certain economic destruction in the near future. Gov (spending & interference with rational markets) has grown so outta control it's the root of our current problems. Calvin Coolidge cut back government (spending) dramatically (40-50% ). It resulted in the great economic boom of the roaring 20's. It's basic, proven, common-sense (Austrian) economics.
Here's one plan: Table 1 includes cuts to individual and business subsidies, cuts to state aid, cuts to military expenses, cuts to the growth in entitlement programs, and privatization of federal activities. The sections following the table discuss these various types of cuts, and further analysis of the cuts is available at www.DownsizingGovernment.org. Table 1 Proposed Federal Budget Cuts Agency and Activity Annual Savings $ billion Department of Agriculture End farm subsidies 29.5 Cut food subsidies by 50 percent 52.7 End rural subsidies 4.2 Total cuts 86.4 Department of Commerce End telecom subsidies 2.3 End economic development subsidies 0.6 Total cuts 2.9 Department of Defense Enact Preble/Friedman reforms** 150.0 Department of Education End K-12 education subsidies 52.7 End student aid and all other programs 33.1 Total cuts (terminate the department) 85.8 Department of Energy End subsidies for energy efficiency 10.2 End subsidies for vehicle technologies 5.2 End the technology loan program 1.2 End electricity research subsidies 2.0 End fossil energy research 1.1 Privatize the power marketing administrations 0.5 End nuclear energy subsidies 0.6 Total cuts 20.8 Department of Health and Human Services Block grant Medicaid and freeze spending** 226.0 Repeal 2010 health care law** 87.0 Increase Medicare premiums** 39.8 Cut non-Medicaid state/local grants by 50% 37.7 Cut Medicare payment error rate by 50% 28.6 Increase Medicare deductibles** 12.6 Tort reform 10.0 Total cuts 441.7 Department of Housing and Urban Development End rental assistance 28.6 End community development subsidies 15.0 End public housing subsidies 8.9 End housing finance and all other programs 8.3 Total cuts (terminate the department) 60.8 Department of Justice End state and local grants 5.0 Department of Labor End employment and training services 4.8 End Job Corps 1.7 End Community Service for Seniors 0.8 End trade adjustment assistance 1.3 Total cuts 8.6 Social Security Price index initial benefits** 41.1 Raise the normal retirement age** 31.4 Cut Social Security disability program by 10% 13.2 Total cuts 85.7 Department of Transportation End urban transit grants (federal fund savings) 5.8 Privatize air traffic control (federal fund savings) 5.8 Privatize Amtrak and end rail subsidies 2.9 Total cuts 14.5 Department of the Treasury Cut earned income tax credit by 50% 22.5 End refundable part of child tax credit 22.9 Total cuts 45.4 Other Savings Cut federal civilian compensation costs 10% 29.6 Cut foreign development aid by 50% 5.2 Cut NASA spending by 50% 9.8 Privatize the Corps of Engineers (Civil Works) 10.6 Repeal Davis-Bacon labor rules 9.0 End EPA state and local grants 6.5 End foreign military financing 5.4 End subsidies for the Corp. for Nat. Comm. Srv. 0.6 End subsidies to the Corp. for Public Broadcasting 0.5 End the Neighborhood Reinvestment Corp. 0.2 Total cuts 77.4 Grand total annual spending cuts $1,084.9 Note: Data items are outlays for fiscal 2011, but items with ** refer to the value of savings in 2021.
Wow. A choice between cutting programs that would have no appreciable effect on the deficit or cutting everything to the point of collapsing American society, There is so much fail in those last two posts. It wasn't that long ago that we had a surplus budget. Healthcare, defense and interest on the current debt are the three big nuts. Everything else is just crumbs and not.worth talking about. Kinda like driving 5 miles out of your way to save a penny a gallon on gas. The reason Congress, regardless of who's in the majority hasn't cut spending is because the electorate won't let them. Every district wants something, Ag subsidies for example, and in order to get it their Reps need to vote for an amtrak or a road project in NY. So in the most generic terms, we spend what we spend. Since the last balanced budget, the Prescription Drug benefit and the Bush Tax cuts are the largest recurring expenditures. Start there if you can. Next, pay for the past decade of war as fairly as you can without bankrupting families. Third, restore the housing market by forcing wall street to restructure mortgages of people who can afford to pay bases on todays market value. Their malfeasance caused the cascading drop in equity, so they should have to write off a chunk of that as losses. They can handle that, now. After that, see were we stand. I think we'd be pretty close to where we need to be. You can argue whether or not we need an education department then. Sent from my MB860 using Tapatalk
It's a mater of values & principles. Your response shows the left's general un-seriousness to what most Americans see & know (about their government today). Wasteful & destructive spending is either good or bad. You either continue it, or stop it. With your logic, I guess it's all right if you beat your wife, as long as you don't hurt her too badly. Collapsing American society? Gee, how'd all those previous generations survive & prosper (without government taking 100% of GDP)? We're reaping the "benefits" of the collectivist welfare state intrusion that started last century. That budget "surplus"... as positive as it was... didn't count the (true hidden) unfunded liabilities (that any corporation would have to declare). Government doesn't play by the same rules as those it writes laws for. So lets not get too excited about that... (Clinton & the Newt driven conservative congress) alliance (and during one of the biggest economic (tech) booms (tax revenues) in history.) We have 100 trillion in Medicare liabilities alone. Add in Social Security & many state & municipal pension promises. Where TF is that gonna come from as your children (workers) become older? Taxes? Sure, lets increase em 500% I'm just sayin... Medicare & interest are worse because they grow (exponentially) faster. But EVERYTHING needs to be cut & reformed. Freeze government spending where it's possible, and CUT EVERYTHING that's not vital. If/when we do, we send a (positive) signal to world financial markets. If we simultaneously simplify the tax code & slash corporate taxes (from the highest in the world), we MIGHT start to turn the Titanic towards a safe direction. But NOTHING in the last 4 years has done a thing toward that end. Doing nothing has only brought us closer to some inevitable (bad) reckoning.
I like seeing the laundry list of "stuff" that should be considered for cutting. Let's put this - and all the other items (entitlements) on=the-table for everyone to see. A big part of the problem and the reason things are out of control is "nobody sees anything". We've got to have an adult conversation. Certainly, the Tea Party folks (affiliated or, merely, sympathetic) recognize that and are ready to deal - to some real extent - with it - Even with our beloved Medicare. How many folks were brought up with the notion that Social Security was in a lockbox? Not since "The Great Society"? There is a difference between "cutting spending" and simply "cutting the INCREASE in spending". We need to educate people. History tells me that, if the economy improves - and I think / hope it will - if we don't continue "on the crack-pipe", and make some changes now, the medicine will be less painful. If enterprise continues to be assailed by the government, the economy may not "get better" and, then, we'll be in real trouble sooner than later.
We need higher taxes not tax cuts. Most of the big cuts have been made and there is no other way to attack the deficit than to raise taxes. Taxing the rich more and closing loopholes on US companies with overseas addresses will help a little and we should do it, but the middle class (what is left of it) always ends with the tax burden. The best thing for America would be publicly funded political campaigns with no private donations allowed. I don't like the idea of my tax money going toward some political blowhard's campaign but it is the only way to keep big money from influencing our national agenda. It is really quite odd that the people who have the biggest part of the tax burden have the least amount of influence and it is time to change that.
Even Bill Clinton says raising taxes during this time is a mistake. You don't raise taxes, you cut spending. Something the government never does but should.
