The Glade 4.0

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Good for them. Are we willing to do the same?

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"Dress cops up as soldiers, give them military equipment, train them in military tactics, tell them they’re fighting a ‘war,’ and the consequences are predictable." —Radley Balko

Is the American public willing to raise taxes and cut spending?

Short answer: No.

Long answer: Bwahahahahaha!!! No.

We can't raise taxes. The U.S. tax situation is already untenable for 99% of the population; and raising taxes further on those who "can pay" will simply cause them to stop paying entirely.

I really wish you'd stop thinking we can and should raise taxes in the United States, RangerDave.

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One of the (or only one?) unions responsible for those government workers is claiming that the elimination of the ~500,000 jobs will end up costing the private sector ~425,000 jobs.

That made me LOL RD.

Based on the city council meeting I attended Monday, I agree.

Ok, let's discuss this seriously for a minute. Why do you (Aizle and RangerDave) think we can raise taxes and cut spending in the United States?

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I think there's room to increase taxes without seriously harming growth because (a) we've had higher taxes and solid growth before, including quite recently; (b) other developed, western countries are able to do it; and (c) plenty of smart economists say it's feasible. Note, however, that when I say "raise taxes," I mean raising overall tax receipts, not (exclusively) raising top marginal income tax rates. I think what's called for is a package including a new high-income bracket with a slightly higher marginal rate, a broadening of the income tax base, some sort of consumption tax, and maybe a carbon tax, coupled with reforms to the way corporate and capital gains taxes are handled, simplification of the tax code (i.e. eliminating most deductions and tax credits/subsidies), etc.

On the spending side, the three biggies are defense, social security, and medicare. I think we could probably make a solid dent in defense spending without undermining readiness, and I think if we changed social security and medicare to means-tested / need-based programs instead of universal entitlements, we'd save a fair bit there as well. After that, I think some trimming around the edges can certainly occur on the discretionary spending as well.

In a nutshell, I think a "spread the pain" approach could get us there. However, my "bwahahaha" comment was in reference to the political impossibility of any of that happening in the near future.

What kind of economic activity would you like to see less of in the US RD?

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"...but there exists also in the human heart a depraved taste for equality, which impels the weak to attempt to lower the powerful to their own level and reduces men to prefer equality in slavery to inequality with freedom." - De Tocqueville

Here is an argument why we will need to raise taxes:

http://www.nationalreview.com/exchequer ... -candyland



I have to say I'm forced to agree unless someone can show me how the numbers work otherwise and what would have to be done to make them work.


Meanwhile, in France:

http://www.msnbc.msn.com/id/39735520/ns ... ws-europe/

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“Strong people are harder to kill than weak people, and more useful in general”. - Mark Rippetoe

I could do without publication of the next Twilight book. I'm also not fond of Cheetos, so there's that.

OK, you're going to have to explain this one. How is the tax situation "untenable" for 99% of the population when over 50% aren't even paying income taxes?

As Medicare/Medicaid is the main budget problem, the choice is pretty much between a large tax increase, printing money, or letting literally hundreds of thousands of poor and elderly die, along with significant morbidity for millions, due to lack of health care. My bet is the government will choose to print money as it's more easily covered up than tax increases.

You think, or you know? That's a rather significant distinction to make in this case.As I've demonstrated time and again, this is a falsehood. Just because the highest marginal is Y does not mean that the aggregate tax collection rate is higher than it is now. Indeed, the fact that you believe taxes were effectively higher speaks precisely to the power of the Democratic political engine. They weren't. There is a reason Hauser's Law exists: tax collection in the United States, as a function of GDP, is relatively static. It operates within a limited range and produces a limited amount of money, regardless of how the tax structure is actually codified.This is a tu quoque fallacy, particularly since the United States government possesses neither the infrastructure nor the capability to deliver equivalent level of services to its citizenry. In fact, the largest problem your plans face is POPULATION. The United States is currently the third most populous nation on the planet; and it's a geographically separated population at that. Quite simply, you're attempting to compare places like France and Sweden and Denmark to the United States (or even Canada), but they all smaller countries. Even Canada has a tighter geographical population saturation than the United States.Which economists are you referring to that haven't widely discredited themselves in the last 2 years? Paul Krugman and Tyler Cowen have both demonstrated themselves incompetent and politically biased. Even armchair economists like Megan McArdle have shown themselves to be foolishly attached to an economic policy system grossly failing the nation as we speak. So, which economists are you referring to?Alright, so you want to raise tax receipts while the economy continues to contract, unemployment rises, and the U.S. labor market is currently correcting itself for 40 years of oversaturation. The Housing market is already in a confirmed double dip because the genius at the banks and in speculative development projects thought resuming construction was a good idea when 60% of their inventory wasn't moving in the first place. The fundamentals here are just horribly, horribly flawed. Where are you going to place these taxes without further marginalizing an already bleak and tremendously weak economic foundation?A new high-income bracket serves what purpose other than to drive the best earners into non-wage positions that use alternative compensation packages. Why a consumption tax on top of an already punitive front-end tax system? What purpose do duties and excise taxes serve when you're already marginalizing 40% of available capital for ALL non-welfare recipient earners in the first place? It seems to me you have all these ideas for more taxes, but you haven't considered the consequences of those taxes or any method of solving the already problematic system in place. More taxes, more taxes, more taxes ... and, yet, the United States is in a depression. Speaking of which, adjusted job numbers showed more losses last month and the growth revisions now have every quarter since Q2 2007 as negative. Funny how there's no recovery.Defense spending is already barebones. Any dents to be made are in bureaucracy, which isn't going to happen unless you have a competent panel heading up the Joint Chiefs of Staff. And, quite honestly, since all our military colleges have produced since Vietnam is functionaries and bureaucrats, I'm not sure we can really trust the officer corps as they stand to run the military in any sane manner. As for your changes to Social Security and Medicare, why not abolish them? What gains are to be had from making either means-tested and need-based? In real terms, because the U.S. is faced with double digit inflation (2 value meals at McDonald's is now $12.00 -- think about that), some 60% of the population will fall under useful minimums within the next 5 years.

So, why on earth do you think we can raise taxes? By the by, just to put this in perspective, the U.S. in the top 10 for highest aggregate tax rates among wage earners in its population. It broke into the top 10 during George W. Bush's presidency.

In a nutshell, I think a "spread the pain" approach could get us there. However, my "bwahahaha" comment was in reference to the political impossibility of any of that happening in the near future.[/quote]

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Because it is? Actually, it's quite simple. The 50% of the labor force with a net-negative income tax burden is actually over taxed and below the real poverty level for this nation. Moreover, because we use a front-end withholding system, this marginalizes their income and removes some 40% of their available capital from the economy for 11 out of every 12 months. You ever wondered why May is the biggest month for durable goods purchases? It's because all the money people put into long term purchases is tied up in interest free loans to the U.S. government.False dilemma.

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I don't think it is. Medicare cannot be feasibly cut and remain workable, as it already underpays doctors. Cutting payouts would just make every doctor refuse to accept it. It's all or nothing on the program.

Doctor's are already refusing to accept Medicare/Medicaid and quitting. It's not because the system underpays; it's because the system inflates them out of their market.

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Think.


You're overstating your case here. You can't reasonably conclude that Hauser's Law applies regardless of the tax structure, as the basic structure of the US tax system has been relatively stable over the relevant time period - the percentages have moved around, but the basic structural elements have not. Would Hauser's Law hold if a VAT or a carbon tax were introduced? If we eliminated corporate taxes and operated on a purely pass-through basis? If we eliminated the tax distinction between capital gains and wage income? Heck, is Hauser's Law even valid once you account for the changes in payroll taxes over the last 50 years? Hard to say. And all that aside, even if Hauser's Law is correct and would hold no matter what changes were made in the tax system, we're still running a couple percentage points below trend, so even granting your point, there should be room to increase receipts.


That's a fair point, but they are the most similar data points available, and there are certainly no more-closely-matched contrary examples.


Because you disagree with them doesn't mean they're "widely discredited." And though my own economic reading is limited to bloggers like Cowen (I don't usually read Krugman, unless linked to him), I think it's safe to say there numerous reputable economists in government, business, and academia who think there's room to raise taxes. Again, you may disagree with those people, but that doesn't mean they are, ipso facto, discredited.


I'm not saying we should raise taxes, at least not all taxes, right now. I'm talking about long-term correction of the government's balance sheet.


The main purpose would be to more accurately reflect the differences in earning/lifestyle at the upper end of the income scale. People making $300-400k per year are very well off compared to almost everyone in the country, but they're simply not equivalent to people making $3-4 million. The tax rates should reflect that. As for the alternative compensation problem, that's why I advocate eliminating deductions, treating corporate and capital gains taxes more like personal income taxes, and so forth. Close the loopholes, simplify the code, and tax-avoidance strategies become less of an issue.


Because different tax incidences have different effects, and at least partially splitting the increase between front-end and back-end could perhaps take advantage of those differences. I don't know enough about the issue to have a firm position on this, but most of the commentary I've read from both left and right seem to agree that consumption taxes are a potentially useful alternative to straight income tax increases.


Once Iraq and Afghanistan wind down, the situation should improve, and I think a reboot of overall strategy, organization, procurement, etc. could make a difference. There's no question meaningful cuts would impact capabilities, but I'm skeptical of the idea that the impact would be excessive once the current wars are finished.



I really wish you wouldn't throw out claims you know are far from mainstream as if they were uncontroversial and obviously correct. I'm sure you have a detailed rationale for thinking that double-digit inflation over the next 5 years is likely, but that view is not widely shared.

Ok guys:

Lets ignore the income tax for now since a portion of the population doesn' pay it (although those on unemploymet mostly do, so do SS recipents and on and on but lets ignore it).

Tax via inflation.
Sales Tax
Local Tax
Property Tax (applies to renters)
Gas tax (incorporated into the price of anything shipped).
Corporation Tax (incorporated into anything)
And on and on and on.

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"...but there exists also in the human heart a depraved taste for equality, which impels the weak to attempt to lower the powerful to their own level and reduces men to prefer equality in slavery to inequality with freedom." - De Tocqueville

Cut federal spending 25% across the board in every category, stop earmarks and use the savings to pay down the debt.

Then cut taxes.

And, if folks think that spending can't be cut 25%, try losing your job. I'm thinking 25% is easy in comparison.

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In time, this too shall pass.

Actually, the basic structural elements have changed quite significantly. The period of time covered by Hauser's Law saw the inception of payroll taxes, capital gains taxes, and corporate income taxes as well. These things did not exist until the Twentieth Century.Almost indubitably, since either tax as an attachment to current tax policies would simply further marginalize the ability of markets, individuals, and businesses to enter into any transaction.Most likely, since the code changes between Clinton and Bush seemed to have little effect on Federal revenues. Currently, payment of corporate income taxes is so delayed that inflation offsets actual payment. It's rather complex, but Corporate Income taxes are such a small portion of Federal Revenues that it falls within the error range of Hauser's Law.Absolutely, since people would simply stop investing.It's not hard to say at all, since it's precisely those changes in payroll taxes that actually maintain the relatively static state of revenue generation from taxes. Because real income continues to decline, payroll taxes are the only way to insure the consistent stream of revenue into the federal coffers. You don't think it's rather curious that rough 40% of Federal Revenue is generated by a specific tax that used to produce roughly 1.6% of total Revenues?Not really. There's no room to increase receipts when people are currently incapable of meeting their tax burdens as it is. The U.S. system of taxation is toxic and deleterious to the point that its hindering growth. This is especially true in a system that fails to produce durable goods at any reasonable measure. When you consider some 60% of our GDP is produced by paper transactions for non-material trade, it becomes highly problematic to actually tax anything. Our economic system (the so-called Service Economy) is already removing wealth from the system as an astronomical rate (see imports). Further taxation at this point merely marginalizes what scant (read that as still negative) savings going on in the system. And because money is leaving the country faster than we can earn it, we have all sorts of other problems to deal with in the long run.A lack of comparable data points doesn't make "almost comparable" data points useful. Consider this: the United States has more people than all four of those countries combined.Except they are, seeing as how every economist you've ever linked continues to advocate increasing the deficit in the short term and fixing the problems that causes later. That said, since we're in, arguably, year 13 of a recession that started with the Dot-Com Bust and transitioned into a depression around 2007, why on earth would you even consider them credible for advocating the same series of policies that have failed to produce results in your life time -- in your memory life time at that. You don't. It's simply not rational to listen to people who continue to advocate the same sort of parties the previous (and now politically disastrous) administration used.Again, a long term correction to the government's balance sheet requires we first re-think the entirety of our economic policy. As long as we continue to operate under an entitlement system that accrues more and more unfunded liabilities, there's absolutely nothing we can do about the deficit, government debt, or the negative savings rate.So, you advocate the status quo? Please, do read up on the Alternative Minimum Tax, which if the current House has its way, will start affecting everyone who makes $125,000 or more in a year. It seems to me that if the system fails, despite intentionally attempting to close the alternative compensation gap, that you need to re-think what businesses and individuals are doing with that money in the first place.The key word there is "alternative", not addition. Consumption taxes, for the most part, are the best way to tax anyone and anything. First, it limits the point at which taxes take effect in the economy. Second, it allows reserve capital to go unfettered by government intrusion. In reality, it increases the amount of money able to be moved by limiting taxation to the point of transaction. That said, combining the two would be simply deleterious, as it is in states with high income taxes and high sales taxes.Except, you don't really know what's excessive until some lunatic launches a Russian missile as us. The point is, at 18% of our total spending, the defense budget isn't problematic. If our government was actually operating within appropriate Constitutional boundaries, we wouldn't need most of the remaining 82% in the first place.Double-digit inflation is already going on, RangerDave. You are aware that the CPI (Consumer Price Index) the government uses to track inflation dropped Housing, Clothing, Food, Transportation, and Energy from its tabulations right?

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That won't be enough of a cutback in federal spending. You also won't be able to cut that much and not get into sacred cows like SS or medicare. Thats the issue.

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"...but there exists also in the human heart a depraved taste for equality, which impels the weak to attempt to lower the powerful to their own level and reduces men to prefer equality in slavery to inequality with freedom." - De Tocqueville

Maybe I am misinterpreting but there seem to be parties stating that we can't fix this problem with higher taxes, lower spending and/or any combination thereof. I would simply ask, what (besides open revolt) is the solution?

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Heh. On the subject of CPI -- I've come to the conclusion that the end goal is to drop everything that's not affected by Moore's Law from the basket of goods...

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"Aaaah! Emotions are weird!" - Amdee
"... Mirrorshades prevent the forces of normalcy from realizing that one is crazed and possibly dangerous. They are the symbol of the sun-staring visionary, the biker, the rocker, the policeman, and similar outlaws." - Bruce Sterling, preface to Mirrorshades

It may not be enough, but it's a start.

And I should be the first to cry a river about sacred cows, but the honest truth is we've got to lead something to the slaughter. 25% will hurt, undoubtedly. That's what happens when folks get used to living beyond their means.

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In time, this too shall pass.

The Federal government needs to cut its collections by 60% and spending by 75%.

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LOL. The sad part here is that I'm sure you're serious.