The proposed 2012 budget...

[mookiemookie]

Originally Posted by Bilge_Rat

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:



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.

They also used an unemployment rate of 2.8% in their analysis (the line that says so has since been deleted) and they say that 2.5mm more jobs will be created, but yet the numbers for wages and salaries and inflation are about equal to the President's plan. Explain how you will achieve full employment below what most will argue is the natural rate of unemployment due to general and normal turnover in the labor market (4-5%)? Explain to me how adding 2.5mm more workers to an economy will not result in wage inflation? Explain to me how wage inflation will not lead to CPI inflation?

These numbers make absolutely no sense. It's smoke and mirrors.

It's smoke and mirrors.

There you have the solution, the economy will be fixed with a new tax on smoke and mirrors

[Bilge_Rat]

good point Mookie, the last time the U.S. unemployment rate dipped below 3% was in ....1953.

[August]

Maybe we'll get lucky and the Federal government shutdown will make everyone realize they're not as vital to our continued existence as they like to make themselves out to be.

[gimpy117]

Originally Posted by Bilge_Rat

good point Mookie, the last time the U.S. unemployment rate dipped below 3% was in ....1953.

when the top tax rate was....drumroll.....93%

Maybe we'll get lucky and the Federal government shutdown will make everyone realize they're not as vital to our continued existence as they like to make themselves out to be.

Maybe the shutdown will last, then people can celebrate the affect on veterans care, the tending of such trivial things like national museums and monuments, the loss of tourism and of course problems with travelling, I look forward to the complaints about unsecured borders and why there is a lack of police on the streets.
Now of course some of those are instant impacts as "essential" workers can continue working without pay though can still recieve benefits, others are more longer term impacts.
I would love to see the teabaggers jumping around boasting of how they stopped the government putting new border agents down south to stop the mexican horde

[onelifecrisis]

Originally Posted by Tribesman

Maybe the shutdown will last, then people can celebrate the affect on veterans care, the tending of such trivial things like national museums and monuments, the loss of tourism and of course problems with travelling, I look forward to the complaints about unsecured borders and why there is a lack of police on the streets.
Now of course some of those are instant impacts as "essential" workers can continue working without pay though can still recieve benefits, others are more longer term impacts.
I would love to see the teabaggers jumping around boasting of how they stopped the government putting new border agents down south to stop the mexican horde

US citizens are very well armed. If there were no government and no law then the problem of immigration might get dealt with quite quickly by those who have strong feelings on the matter.

[tater]

Originally Posted by gimpy117

when the top tax rate was....drumroll.....93%

Do have even the slightest clue how the tax code works (and did work)?

Tax brackets tax all adjusted income above a certain value. So you have a 95% top marginal rate on, whatever, income over 1M$. That means that the last dollar before 1M$ is taxed at the next lower rate, and so on.

In addition, when the tax brackets were higher, the loopholes were vastly greater. There were also like 25 tax brackets. All you need do is look at US tax revenues as a % of GDP. It varies in a range of high teens to ~20% of GDP. The top marginal rate apparently had nothing to do with total revenues. In point of fact, the "rich" pay a higher % of taxes actually collected than ever.

So Ryan's talk about limiting spending to 20% of GDP is entirely reasonable. History shows that this is in fact slightly above total federal revenues. Adjusting tax rates should certainly be on the table. Alternately, scrapping the current tax code which is built to intentionally be complicated. It is full of pay offs as "incentives." Just set a flat tax designed to put 20% of GDP into the coffers.

Medicare and SS need to be cut.

I could promise top give you, gimpy, $100,000 in a week if you give me $10,000 today. Would you jump for joy? Why, when I don't have 100 grand to give you? So 1 week from now, I'd become persona non grata at subsim, and you get nothing—in fact you are out 10 grand. What if Neal convinces me that SS is so cool that maybe I could give you something, and I could stay around... so I offer you $50,000 for your 10 grand, instead. Do you take it, or whine that I owed you more, and get nothing?

That's where we are as a country. The entitlements are ridiculous promises that cannot be kept. If the country goes the way of Greece/Spain/Portugal, the people counting on SS/MC will be SOL. Ditto if we go the way of Argentina (hyper-inflation). Bottom line is that someone has to get off their ass and propose budgets that actually deal with the problems. That means reducing spending.

So far we have Ryan's plan. That's it. The administration and the Dems have as the plan to spend 1.2 trillion per year more than we have, then crow that it's 100 billion less than it could've been. That's it, that's their plan.

Look at the current dems. They owned both houses, and neglected to do their job last year and make a budget. THAT is why there could be a "shut down." Had they done their job last year when they controlled the entire government, no impasse now. Instead, they are bent about cuts that are chump change compared to their own vast overspending. If they can't pass 60 B$ in cuts, how can they address ~1.5 trillion in needed cuts (not over 10 years, but THIS year)? They can't because they have no desire to cut spending. Not now, not ever.

[Bilge_Rat]

Tater,

I dont disagree. Limiting spending to 20% of GDP is entirely doable since it was more or less the historical average.

What is not doable is: limiting spending to 20% of GDP, plus cutting taxes as well and expecting to balance the budget.

There is no magic formula. To balance the budget, you have to cut spending, which means cutting programs or services and raise taxes to generate revenues.

There is no free ride, every other country in this situation has had to bite the bullet and make tough decisions.

[tater]

Tax revenues are already very nearly 20%.

There is no need to mess with them unless you scrap them and start over. The tax that most needs reduction right now is the corporate income tax. Slash it to a reasonable level, but eliminate all loopholes so that they actually pay.

Raising the payroll tax (or cap), OTOH, should be out of the question. SS/MC need to come from the payroll taxes as they are. If there is a shortfall, cut benis. It's not fair for people who paid in at under even the current 15.3% FICA to expect workers now to shell out more, when all the money they paid in was already spent—on themselves.

Right now, what is the democrat plan, exactly? Spend ourselves into solvency?

[Onkel Neal]

Originally Posted by gimpy117

when the top tax rate was....drumroll.....93%

I don't know how you can think a 93% tax rate is fair.

[Dan D]

That is why it is called "Houston,Texas" and not "Houston, Taxes".

[mookiemookie]

Originally Posted by Neal Stevens

I don't know how you can think a 93% tax rate is fair.

I don't think he's arguing the point that it's fair, but it certainly does poke holes in the "the solution to everything, including unemployment, is to lower taxes" argument.

[gimpy117]

Originally Posted by mookiemookie

I don't think he's arguing the point that it's fair, but it certainly does poke holes in the "the solution to everything, including unemployment, is to lower taxes" argument.

thanks mookie, im glad somebody knows what i was getting at.

[August]

Originally Posted by mookiemookie

I don't think he's arguing the point that it's fair, but it certainly does poke holes in the "the solution to everything, including unemployment, is to lower taxes" argument.

Nice straw man mookie but I don't think you could find that anyone here that has made that argument.

Lower tax arguments are always coupled with decreased spending and improved efficiency. They have to be. Federal spending must be reigned in or even 93% tax rates aren't going to make a bit of difference.