The proposed 2012 budget...

[Bilge_Rat]

I will make one serious comment. One of the proposed solution to the medicare/medicaid issue is to transfer responsibility to the individual states and have the federal government make lump sum payments, with limited future increases presumably capped to cost of living. Unstated, but presumably under the premise that individual states could administer Medicare/Medicaid at a lower cost by tailoring the system to local conditions.

This solution is what was implemented in Canada 30 years ago. In the late 70s, the can. federal govt. was facing ballooning deficits. At the time, the fed. govt was funding 50% of public health care and many other social programs and the other 50% was paid by the provinces. They came up with a similar plan where the responsibility for the programs would be transferred to the individual provinces and the fed. govt would only pay a lump sum annual payment, increased each year by a cost of living increase.

Well, it turned out to be a great plan for the federal government. Over the past 30 years, the federal share of health care spending has gone down from 50% to around 30% while the provinces now pay around 70%. The federal govt, up until 2008 was running surpluses while the provinces have chronic deficits and the political problem of trying to figure out what programs to cut or what taxes to raise.

So the GOP solution sounds fine on paper, but all you wind up doing is transferring the problem to the individual states.

[kraznyi_oktjabr]

Could some one explain this "lower-taxes-fixes-everything" idea? Simple Finn does not understand...

I assume that GOP wants to go competition with PRC and lure industries back to USA. In that case my simple mind says that they would have to either:
1. implement tariff system to make importing goods unfeasible and ease export
2. or cut wages.

In my understanding option 1. would conflict with St. Free Trade (patron saint of conservatives am I correct?) and would therefore be out of question. I personally doubt success of option 2...

[Armistead]

It really doesn't address the issues, just the same old theory of voodoo economics, make the rich richer and we'll see a trickle down effect from it.
Due to regulations, shelters, trade laws, etc, 10% now hold about 80% of all wealth. That's where selling out to corporations has got us. Make no doubt about it, lobbiest wrote this bill. Some things sound good, but they always do, cap and decide what and how much to spend on this or that.

As long as lobbiest and special interest run this nation we'll be changing dance partners every election.

I have no doubt we'll have to scrap medicare/caid/SS to a great degree in the future. That's where the money goes. Until we can solve healthcare, we'll continue to see mass unsubtainable debt. The only way to do it is make all health care nonprofit, regulated and affordable. The GOP
for healthcare is simply thin the herd...can't keep up, fall out and die.

[gimpy117]

is that that road map tax plan again? I read a report from a watchdog group that tore it a new one.

they said it would actually raise taxes for the middle class, while cutting taxes for...guess who!...the rich. and that it actually wouldn't solve the budget.


also...defense spending to "below 2008 levels" that probably means just below. But what they don't mention is that we were in a war in 2008, so what does that mean? will we be spending as if we were in a war for the next 10 years? I bet GE loves that. Free money! they don't even pay taxes here.

[Sailor Steve]

Originally Posted by kraznyi_oktjabr

Could some one explain this "lower-taxes-fixes-everything" idea? Simple Finn does not understand...

My personal belief is that the people responsible for creating taxes should be of the opinion that all taxes are evil. I'm not saying that they are, but too many people think that they're good, rather than just a tool.

In my ideal world there would be no taxes. Impossible? Of course. Government has no means to generate revenue, so if we want roads, police etc. we need taxes. If people were perfect we wouldn't need governments, but people aren't perfect, so we have governments and we have taxes.

But at the same time you mock the idea of lower taxes fixing things, I don't see you addressing the opposite. Are you saying that higher taxes can fix everything? If that's the case then shouldn't you be advocating 100% of everything we make going to the government, and then the wonderful people we elect can decide how much we need to live on?

I see you mocking one side, but ignoring the problems of your own. It's an all-too-common idea around here: "I'm right and you're stupid."

[Onkel Neal]

Originally Posted by Bilge_Rat

I read it.

It is the same, lame "solutions" right wing conservatives have been proposing for 30 years:

1. cut taxes;
2. cut spending;
3. balance the budget.

Wait, how is that lame????

Cutting taxes? Yes, it's my money, not yours. You want to contribute extra to the federal govt, go for it. You have no right to induce others to do the same.
Cutting spending? Sure, who says there's not enough govt spending?
Balance the budget?

@gimpy

they said it would actually raise taxes for the middle class

No, it cuts taxes for them...but of courseshifts it to other taxes so they end up paying more taxes but different ones, same with the healthcare its just juggling.

I bet GE loves that. Free money! they don't even pay taxes here.

What strikes me is the accelerated cuts they propose in the WOT, have the publicans gone soft on terror?

@ whom it may concern

Of course it is Hap. The Dems are scared to death that the Republicans might actually address their run away spending habits so instead of actually considering the bill they will reject it because of who created it rather than what it contains.

Why do I get the idea that August actually hasn't read the document?
I suppose it goes with the problem of Haplo not seeing the document for what it is.

@Neal

Wait, how is that lame????

Because.
They don't cut they just shift
They don't reduce they just move.
Balance.....yeah heard that one before

@Mookie

It quotes the Heritage Foundation. And you're gonna try and tell me that this is a unbiased and objective document?

Be fair, it is in essence really from the heritage foundation. It is based on their commission and is their interpretation of the model they bought.

[Bilge_Rat]

Originally Posted by Neal Stevens

Wait, how is that lame????

Cutting taxes? Yes, it's my money, not yours. You want to contribute extra to the federal govt, go for it. You have no right to induce others to do the same.
Cutting spending? Sure, who says there's not enough govt spending?
Balance the budget?

I was using bullet points to summarize a 70+ page document. The GOP plan uses these three familiar slogans which no one can really say they are against, but which mean nothing in practice. Let's look at the plan.

1. Tax Cuts: the theory behind cutting taxes is that individuals/businesses will use the savings to reinvest and create additional jobs and economic growth. This has been tried under Reagan and Bush jr, but no one can say the economic situation in the USA has been growing increasingly better in the past 30 years. The Republican solution is usually to say that we have to try even deeper cuts.

However, the reality is that most economic activity in the world is controlled by multinational corporations which already pay little or no tax since they can shift most of their taxable income to tax havens. They shift their production to low cost jurisdictions which the USA no longer is. A tax cut would not bring them back to the USA.

2. Cutting Spending: it sounds good, but there are no real cuts in the GOP plan. Real cuts means cutting programs or services which does not appear here.

3. Balanced Budget. Just like Mom&apple pie, no one can be against this, but if you cut taxes without really cutting spending, how can you balance the budget? The only way, which is what they do here is by grossly overestimating future revenues while underestimating future spending.

[mookiemookie]

Originally Posted by Sailor Steve

But at the same time you mock the idea of lower taxes fixing things, I don't see you addressing the opposite. Are you saying that higher taxes can fix everything? If that's the case then shouldn't you be advocating 100% of everything we make going to the government, and then the wonderful people we elect can decide how much we need to live on?

Steve, that's a false choice argument. The opposite of saying "tax cuts fixes everything" is not advocating a 100% tax.

I'll explain why in a roundabout way of explaining the idea to kraznyi_oktjabr: the idea that lowering taxes is the answer is based upon the Laffer curve:

.

Proponents say that by reducing the tax burden on people and businesses, they'll have more money in their pocket to spend on things, which boosts the economy and makes everyone richer. (In the diagram above, you're moving from "Point B" to the top of the curve, closer to the "Equilibrium point", thus increasing revenues.)

There are numerous problems with such an economic model - it sounds legit on the surface, but when you start examining history and budgets, it falls apart. Too boring to go into here.

The problem is that Republicans will always tell you that we're in the left side of the curve where tax cuts will increase revenue. Reagan dropped the top tax rate from 70% to 28%. But yet they still tell you we need to drop it further. They ignore their own model - at some point dropping taxes will end up in reduced revenues. (going from Equilibrium to "Point A") But that point is conveniently swept under the rug.

[kraznyi_oktjabr]

Originally Posted by Sailor Steve

My personal belief is that the people responsible for creating taxes should be of the opinion that all taxes are evil. I'm not saying that they are, but too many people think that they're good, rather than just a tool.

In my ideal world there would be no taxes. Impossible? Of course. Government has no means to generate revenue, so if we want roads, police etc. we need taxes. If people were perfect we wouldn't need governments, but people aren't perfect, so we have governments and we have taxes.

But at the same time you mock the idea of lower taxes fixing things, I don't see you addressing the opposite. Are you saying that higher taxes can fix everything? If that's the case then shouldn't you be advocating 100% of everything we make going to the government, and then the wonderful people we elect can decide how much we need to live on?

I see you mocking one side, but ignoring the problems of your own. It's an all-too-common idea around here: "I'm right and you're stupid."

First I don't see myself to be right nor you to be stupid. What I write is my opinion and does not assume other posters to be mentally retarded idiots.

I don't mean that higher taxes fixes everything - you can raise taxes to 100% and still I wouldn't be surprised find out that government is forced to take loan to cover expenses. This is because politicians always try to give everyone everything to get as much votes as possible which is expensive. Problem would also be that there would be no point for private business to have factory or other profit making activity in country where government would take all profit and leave expenses to company.

Reason for my question was that I just don't get it why for some "lower taxes" seems to be magic wand which fixes everything from economy to your aunt's marriage or your dog's diarrhea. Economy does not revolve around taxes only. For corporations lower taxes are ofcourse nice benefit but they are not only factor considered when they decide where to place their new shiny factory will be placed. Other important factors are costs from employees like wages & social security expenses and materiel availability & cost to mention few examples.

In media (atleast when watching from here Europe) taxes seem to play very large part in American policy discussion although it is just one part of package to consider if your country wants to remain competitive (which I assume to be goal).

I'm not perfect and I don't say that I'm absolutely correct in this. If I'm wrong then I'm happy to get constructive feedback. Btw what you mean with "my problem"?

[mookiemookie]

Looks like the ol' Heritage Foundation is already monkeying with the numbers.

Yesterday they claimed they were using a 2.8% unemployment rate in their projections - a rate that's never been that low in all of history (we'll not get into what that would do to inflation). Today...that assumption has magically disappeared from the documents.

Forgive the Krugman link, but he's got links to both PDFs that the Heritage Foundation released - both yesterday's and today's that's been through the magical eraser treatment:

http://krugman.blogs.nytimes.com/201...gman&seid=auto

How on Earth can you honestly say that this is objective and non-partisan?

[Armistead]

I would be all for corporate tax cuts if they worked for America, they don't. They'll use those cuts to get even richer in a global economy where
doing things cheap at the expense of others works best. Corporations are making good profits in a terrible world economy, do they really need to pay less taxes?

[gimpy117]

Originally Posted by Armistead

I would be all for corporate tax cuts if they worked for America, they don't. They'll use those cuts to get even richer in a global economy where
doing things cheap at the expense of others works best. Corporations are making good profits in a terrible world economy, do they really need to pay less taxes?

exactly. Cutting corporate taxes here is a farce. We can never make goods as cheaply as India, china, or any other 3rd world nation. Our workers simply cannot survive on those wages...so really, cutting their taxes isn't really a job creating measure, its a profit creating measure because even with lower taxes they will still outsource to Asia. Im sure even if we did some kinds a plan of getting rid of corporate taxes if a company only employed legal Americans, it would still be cheaper to go to china.

[Bilge_Rat]

Originally Posted by Sailor Steve

I see you mocking one side, but ignoring the problems of your own. It's an all-too-common idea around here: "I'm right and you're stupid."

Steve,

I was quite ready to look at the GOP budget objectively and I am not one to mock my opponents in debate. In my day job, I analyse financial statements and reports all the time and know what to look for. This is not a budget per se, but simply a political document.

A lot of things dont add up. They say they want to cut spending, but never mention specific programs to cut. Most of the savings would seem to come from cutting out fraud and mismanagement, but that could not account for more than say a 5% savings. Despite that, they still have spending remaining at around 20% of GDP out to 2035-2040.


On taxes, the GOP wants to cut taxes and say the tax cut would have the following benefits:

According the analysis, this budget would produce the following results:

Faster economic growth:

$1.5 trillion in additional real gross domestic product over the decade.

More jobs:

Nearly one million new private sector jobs next year and 2.5 million new private sector jobs in the last year of the decade.

Higher wages:
$1.1 trillion in higher wages, salary and income.

More prosperity:
$9.35 trillion in higher real household income, translating into an average of $1,000 per year in higher income for each family.

By achieving sustainable levels of spending, deficits and debt – along with growth-oriented reforms to the tax code, this budget sets the nation on a path to prosperity.

However despite the tax cuts, they have government revenue as a % of GDP increasing from 17.4% in 2012 to 18.3% in 2020. How can the % go up if the tax rate is going down? They could presume that a higher percentage of the population will enter the workforce, but that would require an explanation of what demographic factors would account for that.

On the other hand, the GOP is also asking for a Tax Reform to close "loopholes" at the same time as they reduce taxes. If the overall effect of reform is to increase the taxable income of households and therefore the tax bite, that would account for the increase, but that would be a disguised tax increase, not a tax cut. This would also contradict their listed benefits (see above).

They also have the budget switching to surplus after 2020 without explaining how that would happen.

I am quite willing to discuss this document, but lets be clear on what it is: it is the political manifesto of the GOP. It is not a government budget.

@Bilge Rat
on your fraud and mismanagement section for savings it must also be considered that this really means more expense and bigger government.