Logjam Limerick

The President and Speaker did bid
To avoid an economic skid.
But the answer’s quite clear:
More balance, less austere.
Just undo what Doubleya did.

- Loveland

58 Responses

  1. From the Institute for Policy Studies’ (IPS) analysis:

    If corporations and households taking in $1 million or more in income each year were now paying taxes at the same annual rates as they did back in 1961, the IPS researchers found, the federal treasury would be collecting an additional $716 billion a year. In other words, if the federal government started taxing the wealthy and their corporations at the same rates in effect a half-century ago, the federal debt to investors would almost totally vanish over the next decade.

    • Oh, that’s perfect. Let’s revert back to the economy in 1961. Why don’t we shrink federal spending back to what it was relative to GDP, as well? Even liberal JFK saw the folly of taxing people and businesses to the point of stalling the economy — thus his tax cutting proposals. Oh where did the old liberal party go?

      • Context, Mike, context–it is one thing to cut tax rates when they are very high, it is another to cut them when they are very low. After all, if we were to make cuts like Kennedy did, now, the rates would be close to zero.

        (unless you think that the Laffer curve would then produce an infinite amount of tax revenue if the marginal rate is 0)

      • Thus, its one thing to cut spending when its very high… like now. Did you know we have cabinet level departments exporting guns to Mexico and the Department of Education has its own SWAT teams? I keep wondering why that doesn’t interest liberals. For one thing, its money not gettin directly spent on patronage.

      • Re: SWAT teams.

        Washington Post says:

        The Department of Education did not conduct the search by a SWAT team, nor does the Department of Education own or operate a SWAT Team, as was originally reported.”

        But I’ll grant you, the Department of Education does have an Office of Inspector General unit to collect student loans and enforce fraud laws, and they did apparently kick down someone’s door. If you want to label them a SWAT unit and get rid of them, fine. It might feel good, but such an elimination wouldn’t make a dent in the deficit. In fact, you have probably increased the deficit because loan collections would arguably decrease if fraud enforcement decreased.

      • Not so much the deficit. It’s just that civil libertarian liberals used to be concerned about the over-policing of America…like when W was in office. And it does cost money.

        OK, what about fast and furious Joe? Can you casually explain that away?

      • So your position is that DOE SWAT teams are necessary as a tool to fight loan and benefit fraud. They’d probably be useful for Medicare and Social Security as well. Have I got that right?

        I just think you guys would be much more credible deficit hawks if there were EVER some skepticism these bureaucracies.

      • Re: ATF’s “fast and furious” gun deal.

        I don’t know a lot about it, but what based on what I know, I think it’s idiotic. I agree with you. Kumbaya. Reforming non-defense discretionary spending is a worthy and necessary endeavor, but it just won’t get us very far in terms of deficit reduction, because it’s only 15% of the budget. For serious deficit reduction, you need to look at the big $ items – tax rates, tax loopholes, wars, entitlements. You can’t take any of those items off the table if you’re serious about deficit reduction.

      • Re: Do I support enforcement of Medicare fraud, as I do student loan fraud.

        Absolutely, and any health care provider will tell you that Medicare/Medicaid fraud enforcement is rigorous. They collected $2.5 billion in the most recent year. The Office of Inspector General – the group labeled a “SWAT team” in the DOE case — is used in those cases as well.

        By the way, the Office of Inspector General enforcement in hardly an Obama invention. OIG enforcement happened under the Bushes and Reagan as well.

  2. According to Reagan economic disciple Bruce Bartlett, federal taxes (as a % of GDP) are lower now than they have been in 60 years.

    If you don’t want to bring the tax rates back to where they were in 1961 (5% annual economic growth), could we at least bring tax rates back to where they were in the Clinton years (3.5% annual growth). Either would be a vast improvement of the performance of the Bush taxation strategy.

    • Tax collections are down because we have 10% unemployment and 20% underemployment. Thats what that tax / gdp metric reflects.

      • Well, it also had a little to do with President Bush passing one of the largest tax cuts in American history ($1.8 trillion, disproportionately benefiting the wealthy) and President Obama temporarily cutting income and payroll taxes by $425 billion as part of his stimulus package.

        If the debt-hating Republicans are successful in extending the Bush tax cuts, they will be extending the biggest debt creator in American history, according to the non-partisan Center for Budget and Policy Priorities.

        If you get rid of the Bush tax cuts and bring rates back to what they were in the Clinton era, when the economy was stronger than it is now that we have stuffed the Job Creators’ pockets, you bring the debt down to a manageable 3% of GDP. Get out of Bush’s unwinnable wars, and the debt gets more manageable. Just undo what Doubleya did.

      • I dunno, we can probably look for the tax / gdp metric in 2006 -07 to see if that’s true. We had about 5% unemployment then and the Bush tax cuts were fully implemented. I bet it was at 18 – 19% or so, near historical norms.

        You have to undo the Bush tax cuts for the middle class to accomplish what you describe.

      • But after 2006, Obama cut taxes again, by a lot:

        Citizens for Tax Justice, a self-described non-partisan organization, released a report on Tuesday that read: “The 2009 economic stimulus bill actually reduced federal income taxes for tax year 2009 for 98 percent of all working families and individuals.” This total includes the 95 percent of working families that will or have received tax credits in the range of $400 to $800.

        The health care bill passed by the administration, meanwhile, includes a tax credit that could cover up to 35 percent of the premiums a small business pays to insure its workers. The Recovery Act, meanwhile, included such tax breaks as a $1,500 credit for home energy improvements, and an $8,000 credit for first-time home buyers.

        It has been a buffet of tax breaks and credits offered by this administration (occasionally to the chagrin of progressive economists, who want more focus on stimulative federal spending).

        Yet polling numbers indicate that Americans are barely aware of these developments. Indeed, a good chunk of the country believes it has been saddled by this administration with tax hikes. Back in mid-February, a full 24 percent of respondents to a CBS News/New York Times poll said that their taxes had increased under Obama. Fifty-three percent said they had stayed the same. Only 12 percent thought their taxes had gone down.

        http://www.huffingtonpost.com/2010/04/15/tax-day-2010-protesters-i_n_538556.html

      • I have no disagreements. The middle class must pay more taxes.

  3. PM…I said nothing about cutting taxes. What I said were taxes were too high back then and thank you for affirming that point. So not sure why the context reference. There are serious proposals for tax reform that Mr. Obama has chosen to ignore.

    • Actually, Obama proposed that tax reform be a part of the debt reduction deal.

      Boehner refused.

      • Obama has proposed little if any real tax reform….cutting all the myriad of deductions and moving to two or three simple brackets. You can call any proposal “reform” but it doesn’t make it so. And Mr. Obama is still the one pushing for higher taxes on the wealthy as his centerpiece of solving the deficit problem.

      • Sounds like the only thing that makes it so is if YOU think it is so….

        And the bottom line is that current law is that all of the Bush tax cuts are expiring in 2012–and what Obama is proposing is another significant tax cut from current law. He really is proposing tax cuts, not increases.

      • Re: The only real reform is “cutting all the myriad of deductions and moving to two or three simple brackets.”

        “All”?

        That sets the bar mighty high. By that measure, it’s not just Obama who is too timid to propose real tax reform, it’s every President in the history of the country, including President Messiah, whose 1986 reforms were no where near that sweeping.

      • Jim, this is a fantastic piece. It’s so good I want to reprint it:

        The Cult That Is Destroying America
        By Paul Krugman

        Watching our system deal with the debt ceiling crisis — a wholly self-inflicted crisis, which may nonetheless have disastrous consequences — it’s increasingly obvious that what we’re looking at is the destructive influence of a cult that has really poisoned our political system.

        And no, I don’t mean the fanaticism of the right. Well, OK, that too. But my feeling about those people is that they are what they are; you might as well denounce wolves for being carnivores. Crazy is what they do and what they are.

        No, the cult that I see as reflecting a true moral failure is the cult of balance, of centrism.

        Think about what’s happening right now. We have a crisis in which the right is making insane demands, while the president and Democrats in Congress are bending over backward to be accommodating — offering plans that are all spending cuts and no taxes, plans that are far to the right of public opinion.

        So what do most news reports say? They portray it as a situation in which both sides are equally partisan, equally intransigent — because news reports always do that. And we have influential pundits calling out for a new centrist party, a new centrist president, to get us away from the evils of partisanship.

        The reality, of course, is that we already have a centrist president — actually a moderate conservative president. Once again, health reform — his only major change to government — was modeled on Republican plans, indeed plans coming from the Heritage Foundation. And everything else — including the wrongheaded emphasis on austerity in the face of high unemployment — is according to the conservative playbook.

        What all this means is that there is no penalty for extremism; no way for most voters, who get their information on the fly rather than doing careful study of the issues, to understand what’s really going on.

        You have to ask, what would it take for these news organizations and pundits to actually break with the convention that both sides are equally at fault? This is the clearest, starkest situation one can imagine short of civil war. If this won’t do it, nothing will.

        And yes, I think this is a moral issue. The “both sides are at fault” people have to know better; if they refuse to say it, it’s out of some combination of fear and ego, of being unwilling to sacrifice their treasured pose of being above the fray.

        It’s a terrible thing to watch, and our nation will pay the price.

      • Krugman is a big death panel supporter. One of the great intellects.

      • Death panels?????

        come on, Erik, there are no death panels–and you are too intelligent to pretend to be so stupid.

        Why not be direct and honest and tell us what your point is?

      • Oh PM, I like the Crowd but this isn’t a place where conservatives are rewarded for making great observations. Too much epistemic closure.

        I’m a fan of truth, as understood somewhat binarily. It is or it isn’t. There’s not much in Krugman’s post that is true. O is not a moderately conservative President, for instance. There’s not more than a handful of sentences in there that are true.

        The overriding ridiculousness however is the assumption that liberals have the qualitative edge on motivations, morality, sanity, and intellect. These are all subjective judgments. It’s absurd on its face, and a product of ego. It’s post-modern baloney.

      • Well, if you think that Krugman is lying, why are you lying as well? Do you think that joining him in the gutter helps?

      • BTW, Erik, i appreciate your efforts to ensure that none of the readers here at the SRC are suffering from epistemic closure
        ;-)

      • PM:

        The inkhorn logician’s phrase, “epistemic closure,” has been all the rage with the conservative kids in the blogosphere for over a year now. It’s, like, so totally ten minutes ago.

        http://artsbeat.blogs.nytimes.com/2010/04/26/no-closure-in-the-epistemic-closure-debate/

      • Oh bullshit Jim. If i didn’t read TNR, Yglessias, and Klein daily I would have no grasp of the argument. Its a liberal meme.

      • I’ll grant you, Erik, old sock, it’s being employed all over cyber space by an array of the deep thinkers. Here’s something of a Whitman’s sampler of the proliferating EC posts all the rage out there on the web:

        http://2parse.com/?p=5117

      • But, Eric, you really can’t claim your fav’ phrase is an exclusive liberal meme:

        http://www.nytimes.com/2010/04/28/books/28conserv.html

      • I looked for a good Krugman hypocrisy or contradiction, and no doubt there are a few. But it all fits best just by noting he was on Enron’s payroll as an advisor. It’s understandable he’d love the government’s financials. This is a man of brilliance.

  4. We’re witnessing the global effects of liberalism. Right now Italy, Spain, France, Greece and the US are poised to implode the rest of the world economy due to runaway spending. The dominoes are lined up. The most irresponsible thing to do would be to raise the debt ceiling, thus catalyzing the global collapse.

    And what a joke that the very same people who DOUBLED the national debt in three years are calling for moderation.

    • Newt:

      Are you blind?* Did you see the graphic that opened this thread?

      Your approach is akin to shooting the patient to save them from an infection.

      * this was, of course, a rhetorical question, as we all know that there are none so blind as those who WILL NOT see.

      • I stopped reading the chart at the point it depicted a tax cut as a “cost.”

        Equally absurd is that Obama approved extension of the Bush tax cuts, but they remained entirely in the Bush column. And didn’t Obama approve Tarp II? Where is that in this chart?

        Judging how the NYTs is doing financially, its understanding of finance and economics is demonstrated nicely here.

      • Newt, I think that’s a fair point. Even more fair is that Obama has doubled down on the Afghanistan War, so some of that should be in Obama’s column.

        At the same time, Obama did push to end the Bush cuts to the rich, which would have saved $42 billion/year…trillions over the long run, but Republican opposition prevented it. And he is dramatically reducing the cost of Bush’s Iraq War.

        But I agree with you that Obama shouldn’t have extended the Bush tax cuts. I put the escalation of the Afghanistan War and the failure to let the Bush tax cuts expire as Obama’s biggest mistakes. He’s done a lot of good things – health reform, stem cell research, stimulus package, auto industry rescue, many others — but those two things are disappointments.

      • Tax cuts are absolutely a cost–they are money that is not going into the US treasury. So are loopholes, and tax breaks–referred to in Washington budgeting parlance as tax expenditures–they are spending in the form of special benefits for a particular group of people–homeowners, contributors to charities, etc.But they all belong on the cost/expenditure side of any accounting balance sheet, because they represent money going out, not money going in (income).

      • As for your points about where certain costs should be attributed–clearly they decided to place the various costs where the policy originated–they are the BUSH tax cuts, after all (and while you approve of the tax cut extension, you hardly ever give Obama credit for it–he is, after all, a huge tax increaser and spender, right?–if you give him credit for the extension of the tax cuts, then you have to admit that he really is not a tax and spend liberal/socialist).

        Oh, and we don’t want to give Obama credit for accomplishing what Bush never did–success in the war on terror, after all.

    • A world run by bankers is suffering “the global effects of liberalism”? It’s enough to make a fellow a militant socialist.

      I notice that Iceland is no longer on the list of terrible economies; I admit to not being able to grasp a lot of international financial news, but my impression is that the Icelanders, after some bad experience that got them classed with the Irish, decided that herring are a better economic resource than banking and are now pulling themselves out of the economic muck.

      • I agree – drive the money changers from the temple. Global banks have been a Stage IV cancer on world economics. Wouldn’t be terribly saddened to see an earthquake or meteorite hit Davos some year (Note to NSA monitors: These are NATURAL occurrences.)

      • Newt–do i detect some concern on your part about the totality of the security state we have erected in the name of the war on terror?

        Something else we agree on!

      • I’m not for a meteorite hitting Davos since it would inevitably kill a lot of waiters, greens keepers, cab drivers and other useful and decent people. In addition to getting rid of “too big to fail,” I’d also like to get rid of “too important to jail.” I would feel a lot better if Armani started making a line of orange jump suits.

  5. What really worries me is that just as the economy is stalling, our politicians are talking about cutting spending dramatically.

    This simply does not make sense. Why isn’t the unemployment rate more of a concern?

    http://www.salon.com/news/us_economy/index.html?story=/tech/htww/2011/07/29/debt_ceiling_gdp_and_the_economy

    • Because the politicians, pundits and media bigfeet are all employed and their kids are all going to get jobs through nepotism and cronyism, so there’s no problem. On the other hand, to people who make a million taxing people who make more than a million is a really serious concern. This explain the beltway.

      If the people who make the decisions had to suffer the consequences of their decisions, it would be a different world.

  6. I love how the dominant media and establishment politicians are wholly focused on the visible part of the iceberg (the debt ceiling) versus the remaining 9/10 of the iceberg (the debt).

    This deal offers nothing of substance, other than the fuzzy appearance of progress.

    The rest of the iceberg is present, and rapidly growing.

    • Well, Newt, that’s the little contrived crisis of the moment. The Gordian Knot that is the debt won’t be dealt with anytime soon. The debt ceiling will be voted on this week. First things first.

      But we’ve certainly heard plenty of dire keening from the right regarding their new-found religion about debt.

  7. Now Boehner may not have the votes – and he shouldn’t.

    And now we also discover that the “savings” in the bill amounts to 2 days of operation in federal government (spread over 10 years)! These establishment politicians need to go to a methadone clinic to ween themselves of the spending drug.

    P.S. There’s a good reason the S&P 500 is reacting so negatively to news of the budget deal.

  8. I don’t know, maybe for the same reason he shuts the door when he uses the john. Some things, though we realize you have to do them, we really don’t need to witness you doing the paperwork.

  9. Lenifelder hit the nail on the head: Signing the debt ceiling bill is akin to a bowel movement.

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