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PostPosted: Thu May 20, 2010 1:36 pm 
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Budget Simulator:

http://crfb.org/stabilizethedebt/

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The debt of the United States is rising to unprecedented – and unsustainable – levels. According to the Peterson-Pew Commission on Budget Reform, under reasonable assumptions, the public debt of the U.S. is projected to grow to 85% of GDP by 2018, 100% by 2022, and 200% in 2038. No country can support debt at these levels without huge costs to its standard of living at a minimum and most likely a severe crisis.

Drastic action now would threaten the already fragile economic recovery. But failing to convince markets and creditors that the U.S. is serious about reducing its debt in the longer term would cause interest rates to rise dramatically and likely trigger a fiscal crisis.

We need to establish a fiscal goal and commit as a nation to achieving it. The Peterson-Pew Commission recommends a goal of stabilizing the debt at 60% of GDP by 2018 in the report, Red Ink Rising. We must set an ambitious, yet attainable, goal that Americans can support. See more about the reasoning behind this goal on the FAQ page.

This simulation was designed to illustrate the tough budget choices that will have to be made and to promote a public dialogue on how we can set a sustainable fiscal course. How do your choices stack up? Good luck.


Interesting thing about this simulator is that it's based on actual, concrete proposals that are out there under consideration right now, so it's not asking for implausible inputs like, "We should cut 50% of the military budget." If you can hit the target with this one, you can do it in real life.


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PostPosted: Thu May 20, 2010 1:47 pm 
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Its interesting that this commission is advocating that actions to reduce the deficit and therefore spending, is a bad idea right now because of the effect on the economy, but those are the exact conditions leveled against Greece by the EU, and supported by everyone but the unions in Greece.


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PostPosted: Thu May 20, 2010 3:01 pm 
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adorabalicious
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I got it to 51% with some tax cuts and lots of spending cuts.

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PostPosted: Thu May 20, 2010 3:05 pm 
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62% on my first attempt, with a mix of tax increases and spending cuts. Will try again later with a more detailed look through.


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PostPosted: Thu May 20, 2010 3:08 pm 
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Interesting. Renewing the tax cuts apparently adds a bajillion dollars, and no choice for actually reducing discretionary spending.

Biased much?


I got it to 62%, but that's after keeping the 2001-2003 tax cut which allegedly adds hundreds of billions.

I also refute the idea that cutting corporate taxes would reduce revenue in the end.

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PostPosted: Thu May 20, 2010 3:09 pm 
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I got to 58% pretty easily.


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PostPosted: Thu May 20, 2010 3:13 pm 
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Those of you who aren't Elmo:

How many tax increases did you go for? This calculator seems set up to propogate the idea that higher taxes are a good idea, despite historical evidence to the contrary.

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PostPosted: Thu May 20, 2010 3:19 pm 
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What "historical evidence" are you referring to? This calculator assumes that raising taxes (from their current baseline) will increases tax revenue and lower taxes will lower tax revenue, at least within the time horizon under consideration. The contrary assumption - essentially, that we're currently on the wrong side of the Laffer curve - is not widely held among economists.


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PostPosted: Thu May 20, 2010 3:23 pm 
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RangerDave wrote:
Yes, this calculator assumes that raising taxes increases tax revenue and lower taxes lowers tax revenue, at least within the time horizons under consideration. The contrary assumption - essentially, that we're currently on the wrong side of the Laffer curve - is not widely held among economists.

The same economists that believe we have to spend our way out of an economic crisis?


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PostPosted: Thu May 20, 2010 3:27 pm 
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*sigh* Look, I don't want to get into another big debate about the fundamental assumptions of economic theory. If you think cutting taxes will increase revenue, then this calculator isn't going to be of much interest to you.


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PostPosted: Thu May 20, 2010 3:29 pm 
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Income via taxation sticks at 19% of GDP regardless of % of the actual tax, however GDP tends to grow with lower taxation.

Given that the percentage of income is not affected by raising the tax rate but GDP is increased when lowering the rate of taxation...what effect will lowering the tax rate have on
:GDP?
:Income as a percent of GDP?
:Income in a dollar amount?

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PostPosted: Thu May 20, 2010 3:40 pm 
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RangerDave:

Of eligible tax payers in the United States, how many actually pay taxes? I ask, because invoking the Laffer Curve generally entails some assumptions about how the curve actually looks in the United States. More to the point, unless we're talking about 3 or 4 dimensional extensions, we're not likely to produce a useful curve relative to personal, corporate, or aggregate income taxation in the United States. Consequently, I'd like to know what assumptions are being made and exactly where you're getting the notion we're not "on the far side of the Laffer Curve."

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PostPosted: Thu May 20, 2010 4:09 pm 
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RangerDave wrote:
*sigh* Look, I don't want to get into another big debate about the fundamental assumptions of economic theory. If you think cutting taxes will increase revenue, then this calculator isn't going to be of much interest to you.



I think cutting taxes will increase GDP, which makes the debt a smaller portion of GDP, which is allegedly the purpose of the calculator. In other words, the programmer was short-sighted because they were only looking at revenue.

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PostPosted: Thu May 20, 2010 4:13 pm 
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DFK! wrote:
RangerDave wrote:
*sigh* Look, I don't want to get into another big debate about the fundamental assumptions of economic theory. If you think cutting taxes will increase revenue, then this calculator isn't going to be of much interest to you.


I think cutting taxes will increase GDP, which makes the debt a smaller portion of GDP, which is allegedly the purpose of the calculator. In other words, the programmer was short-sighted because they were only looking at revenue.


Ah, I see. My apologies for misinterpreting your comment. Fair point.


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PostPosted: Thu May 20, 2010 4:17 pm 
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Khross wrote:
RangerDave:

Of eligible tax payers in the United States, how many actually pay taxes? I ask, because invoking the Laffer Curve generally entails some assumptions about how the curve actually looks in the United States. More to the point, unless we're talking about 3 or 4 dimensional extensions, we're not likely to produce a useful curve relative to personal, corporate, or aggregate income taxation in the United States. Consequently, I'd like to know what assumptions are being made and exactly where you're getting the notion we're not "on the far side of the Laffer Curve."


You're beyond my knowledge base here, Khross. I invoked the "wrong side of the Laffer Curve" as a shorthand for the idea that lowering federal tax rates from their current levels will lead to growth effects sufficient to produce higher federal tax revenues over the near term (e.g. the 8 years contemplated by the calculator).


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PostPosted: Thu May 20, 2010 10:54 pm 
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I kept the tax cuts and dropped it to 48%

I win yes?

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PostPosted: Thu May 20, 2010 11:11 pm 
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Müs wrote:
I kept the tax cuts and dropped it to 48%

I win yes?

No, no. We all lose.

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PostPosted: Fri May 21, 2010 12:53 am 
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Kaffis Mark V wrote:
Müs wrote:
I kept the tax cuts and dropped it to 48%

I win yes?

No, no. We all lose.


We all lose equally. The goal of socialism.

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PostPosted: Fri May 21, 2010 1:04 am 
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This was the single most ideologically biased thing I've ever seen posted here.

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PostPosted: Fri May 21, 2010 10:17 am 
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RangerDave wrote:
You're beyond my knowledge base here, Khross. I invoked the "wrong side of the Laffer Curve" as a shorthand for the idea that lowering federal tax rates from their current levels will lead to growth effects sufficient to produce higher federal tax revenues over the near term (e.g. the 8 years contemplated by the calculator).
Again, this depends on how and for whom you're calculating aggregate tax rates paid into Federal coffers. Strictly speaking, because we've adopted a front end tax structure, the United States is ALWAYS wrong side of the Laffer Curve. Front end marginalization reduces the available funds subject to expenditure across the board. Consequently, excise taxes decrease. That said, since some 90% of 2010 Fiscal year Revenues should be comprised of Individual Income and Individual Payroll Taxes, we're certainly on the far side of the Laffer Curve there.

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PostPosted: Fri May 21, 2010 10:20 am 
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So, do you think that if the Federal government lowered it's individual income and payroll tax rates, but changed nothing else, total federal revenues from all sources would increase?


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PostPosted: Fri May 21, 2010 10:32 am 
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RangerDave wrote:
So, do you think that if the Federal government lowered it's individual income and payroll tax rates, but changed nothing else, total federal revenues from all sources would increase?

Elmo alluded to this, and I posted an article about it recently entitled Hauser's Law, that shows since at least the 1940s, federal income has averaged around 18.5% of the GDP, or the last 30 years, it has average 18.3% of GDP. There are slight variations going lower, sometimes higher, usually as a very short term response to changes in the tax code.

If lowering taxes increases the GDP, and if the trend of the last 80+ years holds then yes, lowering taxes will increase revenue after a relatively short adjustment period.


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PostPosted: Fri May 21, 2010 10:45 am 
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DFK! wrote:
Those of you who aren't Elmo:

How many tax increases did you go for? This calculator seems set up to propogate the idea that higher taxes are a good idea, despite historical evidence to the contrary.


Very few if any if I recall right. Mostly the "tax increases" I went for were plugging loopholes that allow people to dodge taxes that are already out there. Although I have to admit, I was tempted by the increased tax on anyone making more than 1 million a year, but I didn't select that. But even with that the vast majority of my balancing came in the form of reduced spending.


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PostPosted: Fri May 21, 2010 11:16 am 
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I got 54% with no defense cuts other than reducing troops in Iraq/Afghanistan, and no tax increases, although I did go for one or two of the "convert this to that" things.

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PostPosted: Fri May 21, 2010 11:39 am 
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RangerDave wrote:
So, do you think that if the Federal government lowered it's individual income and payroll tax rates, but changed nothing else, total federal revenues from all sources would increase?
Sources don't matter as much as inflation adjusted totals. And that's a really curious thing, because in 2000 Dollars, Obama's first full fiscal year is going to show a loss of real revenue.

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