This Whole Debt Limit Thing

[eeyore1954]

If we can't pay for the spending we are doing, then obviously the problem is both. You can increase revenue, decrease spending, or both.

No the problem is not obviously both. If you are spending more than you can pay for, one obvious solution is to spend less or what you can afford.

 

[Bri]

No the problem is not obviously both. If you are spending more than you can pay for, one obvious solution is to spend less or what you can afford.

Or get a second job. Or both.

As you said, cutting spending alone is one solution, but of course not the only one. A large part of the current problem is the Bush tax cuts in conjunction with increased spending on wars and health care (under both Republicans and Democrats). And let's not forget the recession.

So, yes, allowing tax cuts to expire (along with tax reform and spending cuts) would certainly help.

What has produced these huge budget gaps? Tax cuts and wars have been big factors, as have recessions and expanded spending for health care in both Republican and Democratic administrations. For example:

• Income-tax receipts are down sharply since the Bush tax cuts. In fiscal 2000, the year before the cuts began to take effect, receipts from the federal income tax on individuals amounted to 10.2 percent of GDP. That figure was down to 6.2 percent of GDP last year.
• Spending for the military and for homeland security has risen substantially since the attacks of Sept. 11, 2001. Spending for national defense rose from 3.0 percent of GDP that year to 4.8 percent last year.
• Non-military spending also has continued to rise. President George W. Bush pushed through an expensive prescription drug benefit for seniors in 2003, the largest expansion of Medicare in its history. In the financial crisis of 2008, Bush also pushed for and signed for a massive banking bailout. In early 2009, President Barack Obama pushed for and signed an expensive stimulus measure, and after a long fight in Congress he signed another expensive plan, the health care law, in March of last year, aimed at expanding coverage for millions who lack health insurance.
• Two economic recessions have had their effect. The recession of 2001 began in March and lasted until November. And the worst downturn since the Great Depression began in December 2007 and continued until June 2009. In both cases unemployment remained high for long after business activity began to recover, holding back both wages and the taxes that jobless workers would have paid on them.

http://factcheck.org/2011/07/fiscal-factcheck/

-Bri

 

[tyr_13]

NO WAY?

Well, historically regardless of tax rates and collection policy, our collected revenue streams have always bounced around within fairly narrow bounds - 17-19% of GNP. That's because this is a classic problem of predicting outcomes in a dynamic environment with (although liberal elitists don't believe this) EQUALLY INTELLIGENT ADVERSARIES.

From this we certainly can say that an effort to move tax collections to 22%, 24% or 26% of GNP will almost certainly fail. 2010, we spent 23% of GDP. Highest collections ever, 1944 at 20.9%.

So I think you are wrong in assuming

If one don't believe the spending is not worth it, one would define it as a spending problem. If one does believe the spending is worth it, one would define it as a revenue problem.

That would be a true statement within the bounds of reasonably anticipated historical collections. But we are outside those bounds already and headed for worse.

Any business manager that tried to call this a revenue problem would be fired.

You base this on what is historical collections. That isn't an objective measure of 'rightness' or 'wrongness'. The question isn't 'is revenue higher than it historically has been' but 'what are the ways to bring revenues in line with expenditure'.

Your 'from this' statement isn't well supported, it's supposition.

EDIT: That is, the reasoning 'we haven't done so, so we can't do so' is faulty.

 

[mhaze]

You base this on what is historical collections. That isn't an objective measure of 'rightness' or 'wrongness'. The question isn't 'is revenue higher than it historically has been' but 'what are the ways to bring revenues in line with expenditure'.

Your 'from this' statement isn't well supported, it's supposition.

EDIT: That is, the reasoning 'we haven't done so, so we can't do so' is faulty.

Yes, it looks reasonable to me. Say you were the guy in charge of collections for a major corporation. You are asked how much you can increase the collections ratio. Perhaps the last couple years had a bad manager, and you think you could do better than that.

But it'd be a fool who thought he could do better than 50-100 years of data on the subject. I grant you of course we have fools in Washington, excepting those who propagate the "tax the rich" meme for political purposes, instead of reality based actual solutions oriented thinking. They have a type of smart, but they are fools as far as problem solving.

There isn't any "rightness or wrongness" here, it's simply numbers. Budget, collections ratios, increasing revenue, decreasing spending...any small businessman deals with these subjects every day.

 

[Cain]

You are just seeing "sausage making". Both sides are demagoguing the issue. Both sides have been up to "antics". Which side you see at fault is a neye-of-the-beholder matter. If you can't understand the opposition's position IS a mater of principle - then you are just part of the political polarization problem.

Steve, you're full of it. This is false equivalence nonsense -- simple-minded "both sides do it." Look at the past ten years. This issue has come to a head because of naked Republican opportunism.

Many Reps were voted into office based on a pledge of fiscal responsibility - lower spending and no new taxes. How exactly do you think they should vote if they are representing their constituents ? Don't you think representing your constituent's wishes is principled ?

I guess you have no awareness of public opinion polls, the logic of collective action, or how elections actually work: small, motivated groups exercise disproportionate influence. This is what happens in the case of Norquist's tax pledge.

As for the rest of your rant, almost everyone agrees we ought to adopt a long-term fiscally sane strategy. Naturally they violently disagree over what this will look like. If nothing else, my thread is primarily about who has been more reasonable at the negotiating table, and I'm sort of impressed that three-quarters of respondents got it right.

 

[NoahFence]

That was the most childish 30 or so minutes I've ever seen Washington put forth last night. All they did was plead with their parents, pointing to each other, saying "he did it!!"

pathetic.

 

[Bri]

There isn't any "rightness or wrongness" here, it's simply numbers. Budget, collections ratios, increasing revenue, decreasing spending...any small businessman deals with these subjects every day.

The problem is that the numbers don't actually show what you say they do. Although spending is higher than it's been since the 1940's as a percentage of GDP, revenues are also lower than they've been since the 1950's.

And we can also look at 2001 when we had a surplus, and figure out what got us from there to here. One of the major factors was the Bush tax cuts. The wars and the economy were other factors. And there was spending on health care under both the Republicans and the Democrats.

So the numbers would indicate both a spending problem and a revenue problem. Almost every economist (including Republican-leaning economists) admit that we are going to have to cut spending and increase revenues in order to balance the budget.

-Bri

 

[BeAChooser]

Although spending is higher than it's been since the 1940's as a percentage of GDP, revenues are also lower than they've been since the 1950's.

But the reason revenues are lower is not because tax rates aren't high. It's because we are still in a recession (depression?) that is due to the non-tax policies of Obama and democrats who have made business VERY leary. To understand ... if you even want to, you need only notice that since 1945 revenues have remained about the same percent of GDP no matter what the tax policy. Here:

http://uselectionnews.org/wp-content/uploads/2011/07/Outlays-vs-Revenues-Since-19301.png

Even when tax rates were astronomical the revenues didn't go up and stay up. Even when tax rates were lower than now, the revenues didn't go and stay up. Revenues as a percentage of GDP just stay within a narrow range REGARDLESS OF TAX RATES. So what's reducing revenues right now is clearly not tax rates. It's the stupidity of Obama and socialist democrats, who fundamentally do not understand economics.

 

[JoeTheJuggler]

The problem is that the numbers don't actually show what you say they do. Although spending is higher than it's been since the 1940's as a percentage of GDP, revenues are also lower than they've been since the 1950's.

And let's not forget that we've had a recession, so GDP isn't growing as it was!

Again, I think shrinking the government significantly in the next year or 2 is a really bad idea. Even though the private sector has been creating jobs (slowly) those gains are offset by the loss of public sector jobs.

 

[JoeTheJuggler]

Even when tax rates were astronomical the revenues didn't go up and stay up.

Why should they? When the economy contracts, tax revenues also contract.

And, FWIW, the Bush tax cuts came before skyrocketing unemployment. So the mantra that cutting taxes results in job creation is clearly not always true.

 

[Bri]

http://uselectionnews.org/wp-content/uploads/2011/07/Outlays-vs-Revenues-Since-19301.png

Did you read the article that the image you linked to came from? They seem to have come to a very different conclusion than you did. I posted a quote from the same article in a previous post.

-Bri

 

[BeAChooser]

Why should they? When the economy contracts, tax revenues also contract.

You've missed the point. I'm not talking about in the last few years.

If you look back, since 1945 revenue as a percentage of GDP has remained in a very narrow range the whole time. The figure I linked shows that. And that's regardless of tax policy which has changed a lot over that time.

Here's another figure that shows that is true back to 1960:

http://www.fundmasteryblog.com/wp-content/uploads/2010/06/heritage-spending-revenue-gap-6-2010.jpg

The figure also shows that while higher tax rates can raise revenues for a while, taxpayers change their behavior causing revenues to fall back to the long-term trend line.

In short, raising taxes will not work to lower the debt.

It's all explained here:

http://blogs.marketwatch.com/fundmastery/2010/07/02/does-hiking-tax-rates-raise-more-revenue/

if you don't believe me.

 

[BeAChooser]

Did you even read the article that the image you linked to came from? They seem to have come to a very different conclusion than you did.

Factcheck is written by leftists, like you, who won't learn from history, even when it is staring them in the face. They try to twist it EVERY TIME.

I suggest you look at my last post and read the article linked there, if you really want to understand why Obama is LYING when he says we can solve the debt crisis by raising taxes.

Taxes are not the problem.

Spending is the problem.

Socialism is the problem.

And the unfriendly business climate that democrats have created is the problem.

And history proves it time and again.

But liberals just can't seem to learn from history.

 

[BeAChooser]

I tell you what? Let's see what Obama thinks ...

http://www.nationalreview.com/corner/272768/carney-gets-hit-ten-minutes-obama-plan-daniel-foster

After bobbing-and-weaving for nine minutes, Carney finally says what everybody knows: the president won’t put his plan on paper because he doesn’t want it to become “politically charged” before a compromise can be reached. In other words, you’ve got to pass it to find out what’s in it

 

[BeAChooser]

http://www.rushlimbaugh.com/home/daily/site_072611/content/01125108.guest.html

July 26, 2011

RUSH: Obama's speech last night, let's just call it what it was. It was his malaise speech.

Yes indeed, Obama is becoming more Carteresque all the time.

And like Carter was back then, Obama is the problem.

 

[JudeBrando]

Strictly partisan Democrats blaming Republicans for everything as always.

"Carney Admits Obama Has No Plan..."

http://www.nationalreview.com/corner/272768/carney-gets-hit-ten-minutes-obama-plan-daniel-foster

"Carney Gets Hit for Ten Minutes on The Obama Plan... Or the lack thereof. After bobbing-and-weaving for nine minutes, Carney finally says what everybody knows: the president won’t put his plan on paper because he doesn’t want it to become “politically charged” before a compromise can be reached. In other words, you’ve got to pass it to find out what’s in it:



And this is before the Liberal Washington Press Corp!!!!

Wake up!

Vote for Obama again and kill the country!

 

[ladmo]

This entire mess could be cleared up without all of the hyperbole. Quite simply... if there was a balanced budget amendment (forget the debt ceiling) which said "if a balanced budget is not reached, then all members of Congress and the President are not eligible for re-election... ever."

Nobody but those 536 people can fix what these 536 people broke.

 

[icerat]

http://www.fundmasteryblog.com/wp-content/uploads/2010/06/heritage-spending-revenue-gap-6-2010.jpg

Just a quick question. As I understand it, in 2010 Obama started including the cost of the Iraq/Afghan wars in the budget, prior to that they weren't reported.

It looks as if that cost has been included in the graph from that point, but not before, which if so would be .... incredibly misleading .... would it not?

 

[BeAChooser]

"if a balanced budget is not reached, then all members of Congress and the President are not eligible for re-election... ever."

Not harsh enough. How about "AND you lose your government pension"?

Plus we still need to get spending back to reason without being taxed to death. So I'm all for Cut, Cap and Balance.

 

[MattusMaximus]

Seems to me that the GOP/Tea Party is starting to form a circular firing squad on this whole situation, what with the Tea Party types now turning against Boehner. Yeah, that's it Republicans, just keep up the "no compromise" talk. On August 3rd, people will remember what you did, or - rather - failed to do.