Thursday, December 08, 2005

Debt? what Debt?

Remember Porkbusters? And all the budget cuts that were passed through congress recently?

Well guess what, now they are cutting TAXES! What a GREAT IDEA! Why didn't WE think of that. I mean it makes perfect sense, if you cut back on how much you are spending that you cut back on how much you take in, right? Especially when you're already spending on a huge deficit.

I had to read this article (thanks mark) twice to make sure it said what I thought it said.

Maybe we need to get some non rich people into congress that understand what a budget is, and how it is supposed to balance, and how when you have a debt you should be paying it off, not making it bigger.

I'm going to go shopping on my credit card now, I've got at least a grand left before it maxes out, after reading that, I need new shoes. And maybe some jewlery.

Update: Brendan Nyhan debunks an editorial in the WSJ claiming that the tax cuts will generate revenue.

6 comments:

Averroes said...

Here is the truth:

1) Tax cuts resulted in increased government revenues three times in the twentieth century.

2) So saying does not mean that cutting taxres at another time would do the same. It depends on conditions.

3) Some supporters of tax cuts seem to be using the old American penchant for thinking that if sxome is good, more must be better. Which leads to...

4) Why don't we just collect no taxes for maximum revenue?

I would further assert with absolute certainty that:

5) NO arguments about the Bush tax cut are likely to have any import because the effects are too embedded with unusual and unforseen events. (Shinobi will let you know what they might be if you don't know.)

What i think about this is:

A) Instead of trying to figure out what the Bush tax cut might have done if, we should pay atention to what the reality is now.

B) We are racking up immense debts.

C) Debt is not good.

D) We should reduce debt.

E) The best way to reduce debt is to reduce spending.

F) E should not be construed as sayng that increasing revenues through taxation wsgould not be considered, nor that it may not be necessary.

G) ALL taxation should be fair and equal, as the founding fathers intended. If you must have an income tax, it should be a flat tax.

I) The argument is made in the cited article that tou5ing less of a shortfall in revenues as if it were increased revenues is deceitful. It is. And it is an old political trick, used by all sides. For instance, we went through a round of "Bush cut education spending" when what he actually did was increase education spending, just not as much as he origianlly said he would. See how it works?

J) A similar deceit is claiming that rich people will get more benefits. In general, this omits the truth that the rich are taxed unfairly now. that is, if they haven't hired a lawyer to get them less taxes, something they can do because we hqave such a dense tax code. A flat tax would solve this problem.

K) The other (WaPo) cited article compounds the dishonesty:

Democrats have long charged that the cuts overwhelmingly benefited the affluent. The liberal watchdog group Citizens for Tax Justice says that the richest 1 percent of Americans, with an average income of almost $1.3 million in 2009, would enjoy 53 percent of the value of the extension that year, while 78 percent would receive no benefit.

Notice that they cite the "value." Of course, if there is a tax cut, those paying more will end up getting more value from a cut. I wounder why WaPo didn't report what %-age of taxes the top 1% are paying.

The little trick about those getting little is akin to the trick pulled by a Democratic congressman back when the cuts were up for vote, way back when. he paraded a lady into the chamber, noted that she was a single head of household making $24,000/yr for her and her three kids. The congressman claimed that Bush's "tax for the rich" would not give anything to her at all, and that she would receive no tax cut at all. in fact, it turned out that he was right. The lady paid no taxes before the cut.

Ain't politics wonderful?

Anonymous said...

Is it not possible to even agree that simply cutting the tax rate does not necessarily lead to decreased revenues? Are we not, or just recently, experiencing some of the largest tax revenues in our history? I do not recall taxes being raised to accomplish that.

JD

Anonymous said...

JD,

I don't think it's a fair test when you are also increasing gov debt and spending so much... if you give 5 billion in contracts to Halliburton, how much do you get back in taxes?

Clearly these are curves on graphs that we are talking about, you can't cut taxes 100% and get an increase, you can't raise them 100% and double revenue either... we are talking about balance, and where to find it, and yet... I don't think the politicians are talking about that, they seem to get an idea and want to push it to the max.

More finding of the balance would be nice.

I do agree with the principles you are mentioning.

Anonymous said...

-pyrrho

Anonymous said...

pyrrho : Notice, I intentionally did not mention spending. However, the post seems to posit that cutting taxes decreases revenues in a time when we cannot afford to do so. The recent numbers do not bear that out.

Now, if the discussion is spending, let's have at it. There has not been restrained spending in so long I cannot remember when.

JD

Shinobi said...

JD
I think the problem is that the government and activist recently worked very hard to push through some budget cuts so that we could pay for the Katrina clean up and other things. It was a struggle to make the small reductions that we did.

And then they cut taxes by twice the amount that was removed from the budget.

Though youmay be right and this MAY bring in increased revenue, I don't really understand economics enough to see how this is possible. Though I know it has worked in the past, I don't know that there is actual proof within a controlled situation where this has occured.

So while this MAY lead to increased revenue, it also might not, and that, could suck a lot. So why not just stick with the status quo for a while instead of taking what I consider to be a big risk.

I hope it pays off though.