June 23, 2004

"Tax Shifts", Not "Tax Cuts"

Someone, somewhere, sometime has to pay for government spending--whether through normal taxes or through the extraordinarily disruptive and inefficient "inflation tax." It's for this reason that the press lies every time it refers to George W. Bush's fiscal policies as "tax cuts" instead of as what they really are: "tax shifts"--tax shifts onto tomorrow's taxpayers.

Gale, Orszag, and Shapiro make this point in something that now goes straight to the top of the pile:

DISTRIBUTIONAL EFFECTS OF THE 2001 AND 2003 TAX CUTS AND THEIR FINANCING

William G. Gale, Peter Orszag and Isaac Shapiro
June 3, 2004

Tax cuts are not free; they must be financed with some combination of tax increases or spending cuts. The central goal of this paper is to apply this standard insight from public finance to the analysis of the distributional effects of making the 2001 and 2003 tax cuts permanent. We estimate not only who benefits directly from the tax cuts, but also who benefits and who loses once the financing of the tax cuts is considered. We consider two scenarios: one in which each household pays an equal dollar amount to finance the tax cuts and one where each household pays the same share of income. In both cases, more than three-quarters of households end up worse off if the tax cuts are made permanent and financed. In addition, there are large aggregate transfers from the majority of low- and middle-income households to an affluent minority. These results show that, far from simply "giving people their money back," making the tax cuts permanent would impose significant losses on tens of millions of American households.

http://www.taxpolicycenter.org/publications/template.cfm?PubID=8888

Posted by DeLong at June 23, 2004 09:04 PM | TrackBack | | Other weblogs commenting on this post
Comments

the recent newsweek article "Why Your Tax Cut Doesn't Add Up" made the argument that the bush tax package was transforming the income tax into a salary tax--shifting the taxes from a shared burden, off of the wealthy and onto the workers.

http://www.msnbc.msn.com/id/4660655/site/newsweek/

is that an accurate characterization?

Posted by: rebecca blood on June 23, 2004 09:13 PM

____

Broadly, yes. There's also a desire to make the wage-and-salary tax less progressive as well...

Posted by: Brad DeLong on June 23, 2004 09:20 PM

____

Didn't some economist once show that tax revenues can increase after a reasonable tax cut because of a stimulation to the economy? Is greed the main factor driving Bush's tax cuts for the wealthy or are there deeper reasons, good or bad? Shouldn't dividends and capital gains be taxed more, not less, heavily because they are passive income? Thank you.

Posted by: guy green on June 23, 2004 09:54 PM

____

I prefer to think of deficits as a capital tax and the national debt as the national mortgage. Was a national debt ever payed off by any means other than a capital tax?
Certainly we payed off the US national debt in 1837 by selling off the biggest landowner's (the Indians) newly accessible (through the railroads) lands to settlers.

Posted by: walter willis on June 23, 2004 10:25 PM

____

There's a much, much bigger gotcha lurking in the out years. Does anybody see it coming?

Posted by: RonK, Seattle on June 23, 2004 10:38 PM

____

though totally simplistic, it's kinda what i've always said. gwb runs the government like the way he grew up. daddys gold card in the pocket and full speed ahead, consequences be damned.

Posted by: X @ on June 23, 2004 10:57 PM

____


I've argued that what we need is a way of quantifying this. Some way to say not just "George Bush shifted the tax burden toward the poor," but rather, "George Bush shifted taxes so that a $20,000-a-year worker will end up paying $875.43 more per year."

Here is a preliminary proposal to quantify it. It consists of defining (and heavily using) three terms:

Your Personal Share of Revenues - the amount of government revenues that you, personally, are responsible for. Divide your federal income taxes including payroll last year by the total government revenues last year.

Your Personal Share of the Debt - the amount of the national debt that you, personally, are going to have to pay off. Multiply your personal share of revenues times the national debt.

Your Long-Term Tax Load - the amount of money you're going to have to pay every year for the forseeable future just to maintain the government. The idea here is to erase short-term effects like deficits. Multiply total government outlays last year times your personal share of revenues.

Posted by: Josh Yelon on June 23, 2004 11:09 PM

____

This is a very strange way to treat the tax cut for a Democrat. The consensus on the Left is that Bush cut taxes partially to satisfy Republican base and partially to force cuts in services in the future. On the other hand, people who criticize Bush from the Right are saying that he adds new entitlements and than the next Democratic administration will just "squeeze the wealthy" to cover to costs.

Posted by: bubba on June 24, 2004 12:38 AM

____

I think a better frame for this is referring to the future costs as the "Bush Tax." The "tax shift" idea is too much for most people to get their heads around. I discuss research related to the paper Brad cites at the Bush Tax Journal:

http://bushtax.typepad.com/journal/2004/06/ultimate_burden.html#comments

Posted by: Bush Tax on June 24, 2004 01:28 AM

____

For years now I have been trying to get people to talk in terms of the BUSH TAX HIKE, not the BUSH TAX CUTS.

The Bush-inspired legislation is a "tax cut" the same way that charging expenses on your credit card is "saving money."

It is one more example of how the right wing controls the rhetoric in this country.

Posted by: Alan on June 24, 2004 03:33 AM

____

Josh --

I agree completely. If you can't measure something, then it's effectively impossible to bas a policy on it.

Coupla problems, though:

1. This is an *enormous* political football. Keeping it honest would be a major job.

2. "Tax load", to be meaningful, has to include state and local taxes. This gets complicated real fast.

Posted by: lightning on June 24, 2004 04:36 AM

____

The Bush Administration is not a `tax and spend'
administration, as people have complained about
the Roosevelt administrations, but a `borrow
and spend' administration.

In the past, Republicans argued that the Bush
Administration wanted to reduce overall
government spending. It was said that the
Administration had to increase military
spending, but would cut back on other types of
spending. However, its increases in drug
payments and farm subsidies disproved that
argument.

Posted by: Robert J. Chassell on June 24, 2004 05:11 AM

____

Guy Green - the authors address this supply-side argument quite well. Simple point being that a policy that increases the sum of private consumption and government consumption means less savings and less long-term growth.

This paper is alwaays available at CBPP and its opening paragraph should be on the wall of everyone who wishes to seriously discuss fiscal policy.

Posted by: Harold McClure on June 24, 2004 05:40 AM

____

another truth that is always hidden.

When a country runs a defiicit that debt is not free Someone has to pay for it.

there are 2 ways to pay for a deficit
high taxes
bonds.

so if you are rich person would you rather pay higher taxes or buy debt from government and MAKE money off a countries debt?

Posted by: smartone on June 24, 2004 05:41 AM

____

another truth that is always hidden.

When a country runs a defiicit that debt is not free Someone has to pay for it.

there are 2 ways to pay for a deficit
high taxes
bonds.

so if you are rich person would you rather pay higher taxes or buy debt from government and MAKE money off a countries debt?

Posted by: smartone on June 24, 2004 06:01 AM

____

This tax shift arguement implies that the national debt will be paid off at some point. I would argue that the United States without a national debt is unlikely in any of our lifetimes. And why should the government want to pay off the debt anyways? From an economic standpoint, as long as the government can borrow at what is essentially the risk free rate, they shouldn't pay off any of the debt. So, if the debt is continually refinanced is it really shifting taxes to later generations? Additionally, although I am not pleased with how unwilling Bush has been to hold the line on spending, perhaps during his second term he will be more focused on using the defecit as a reason to cut (or at least not grow) spending?

Posted by: wtf on June 24, 2004 06:48 AM

____

And I would add to smartone's comment about there being only two ways to pay off a debt. There is a third, inflation.

Posted by: wtf on June 24, 2004 06:51 AM

____

Smartone: "there are 2 ways to pay for a deficit
high taxes
bonds.

so if you are rich person would you rather pay higher taxes or buy debt from government and MAKE money off a countries debt?"

Both options remove resources from the investment pool and national savings, but which is a bigger drag on the national economy? My relatively shallow grasp of economics tells me that issuing bonds is a bigger drag since they must be repaid w/ interest. Higher taxes presumably eliminates the debt service. (I admit that the taxes paid by the investor on the interest income mitigate the debt service of the gov, but by how much isn't obvious to me.)


Posted by: Jon on June 24, 2004 07:15 AM

____

Thanks for repeating this. As long as we have budget deficits, there was no tax cut. There was only a tax delay.

Posted by: Oberon on June 24, 2004 07:37 AM

____

Add a fourth to the growing list of how to "pay" for the deficit -- default. Granted, the US has never done this, but historically it's been used, even by world powers. IIRC, it can be argued that France lost at least one of its wars with England because they had gone the default route too often, and England could borrow at MUCH more attractive rates than France.

Posted by: Michael Cain on June 24, 2004 08:22 AM

____

wtf assumes that the level of debt, in absolute dollars or as a percentage of GDP remains constant. In that case, surely we don't have to pay it off or much worry about it (if it is at a reasonable level), indeed we might be well advised to "recycle" it into new investment as we pay off the old debt.

The reality, however, is that if the level of debt is increasing there is a point at which we must pay it down or be overwhlemed by it. That paying down will have to come from future tax increases. Finally, there is an determination we ought to make about the nature of the investment we are making with our debt. Why ought we value investing that money now in tax breaks for high income earners, instead of infrastructure, paying for the war on terrorism, or any other of a number of other thing?

Posted by: pblsh on June 24, 2004 08:42 AM

____

"the recent newsweek article "Why Your Tax Cut Doesn't Add Up" made the argument that the bush tax package was transforming the income tax into a salary tax--shifting the taxes from a shared burden, off of the wealthy and onto the workers."

I can't recall where I saw it but I remember reading that one major objective for Grover Norquist and his Americans for Tax Reform is to shift the entire US tax burden to salaries and wages and off of capital. I'm no economist but it seems to me that would cause severe harm to the economy, unless the nation has become exclusively investors and there are no workers any longer. Has any economist done an analysis on the practicality of such a tax policy and what ramifications it could have?

Posted by: Mushinronsha on June 24, 2004 08:50 AM

____

pblsh is partially right that the debt cannot continue to grow forever. I think it can grow forever as long as it doesn't grow faster than overall GDP growth. Obviously this hasn't happened recently, so the current trend is not sustainable.

However, placing the blame for the current budget shortfalls on so called "tax cuts for the rich" is misguided. The tax cuts are a very minor portion of the shortfall and they lowered taxes for all taxpayers by reducing the rates in each tax bracket. The real problems are a natural and unpreventable periodic downturn in the business cycle (which is now showing signs of reversing) and the runaway spending.

If we really want to reduce the debt there is a clear answer that dwarfs all others: Cut Social Security and Medicare. Those two programs consume far more tax dollars than all others and they are going to grow much faster than GDP if things are not changed. So to amend pblsh's statement:

there is an determination we ought to make about the nature of the investment we are making with our debt. Why ought we value investing that money now in transfer payments to a politically active and connected and wealthy special interest group (retirees), instead of infrastructure, paying for the war on terrorism, or any other of a number of other thing?

Posted by: wtf on June 24, 2004 09:01 AM

____

Thank you, thank you, thank you. I've been arguing since 2001 that the term 'tax cut' is a lie, and should be replaced by 'tax shift'; I'm glad to see I'm in such good company in thinking that.

Posted by: Tom Hilton on June 24, 2004 09:10 AM

____

I'm sure someone else will respond more eloquently to wtf, but:

1) The projected deficits are large and structural, extending well beyond the current downturn.
2) The entitlements you cite as examples of "runaway spending" have had predictable rates of expansion for years.

Therefore, I don't really see how you can minimize the effect of the tax cuts on the projected deficits.

Posted by: boonie on June 24, 2004 09:20 AM

____

boonie,

on point #1, I don't disagree, however, I remember seeing a figure somewhere a few months ago that showed that the tax cuts were responsible for less than 25% of this year's defecit while decreased tax collections from an economic slow down combined with higher spending was responsible for the vast majority.

On point #2, you are rigth that these entitlements have predictible rates of expansion. And that is where the problem is. The predicted rate of expansion is at a pace that will make the current defecit look like a rounding error. Medicare and SSN are going to grow faster than GDP and as a result will consume a larger and larger portion of the economy.

Something will have to give, but ultimately, the tax cuts are minimal when compared to expected future outlays for these programs.

If people on this board were serious about reducing the national debt, they would stop blaming Bush and tax cuts for the problem and instead be in favor of an immediate cut to both Medicare and SSN, but that will never happen will it?

Posted by: wtf on June 24, 2004 09:28 AM

____

wtf:

Medicare may be a looming problem, as is the cost of health care in general. Social Security simply isn't. Not for a long time to come.

Posted by: boonie on June 24, 2004 09:36 AM

____

I disagree, "Over the long term, the actuaries of the Social Security Administration project that the cost of all benefits paid to current beneficiaries and promised to future retirees exceed Social Security revenues by almost $5 trillion. The Medicare shortfall is even worse at more than $13 trillion."

While $5 trillion is less than $13 trillion, it would still qualify as a "looming problem" in my mind.

Now compare those two figures to the cost of the recent tax cuts. That is why this whole cost/tax shifting discussion is so off base. If we want to talk about cost shifting, lets discuss how the future generations are going to pay for the entitlements that the older generations have voted themselves. So boonie and pblsh should these handouts be cut?

Posted by: wtf on June 24, 2004 09:44 AM

____

"If the people on this board were serious about reducing the national debt" they would simply agree with everything wtf says. Wow, why didn't we all think of that earlier? Oh, I know! It's because most of your analysis isn't. It's just assertion, and a bit of transparent trickery. Take for instance claiming that the majority of the recent deficit was the result of spending increases and economic conditions, while "sacred" tax cuts account for only a minority of the deficit. One could just as easily lump tax cuts with economic conditions and declare them the "majority" culprit, while virtuous, beneficial spending on underfunded projects accounts for only a minority of the deficit. Naughty, naughty.

Posted by: kharris on June 24, 2004 10:32 AM

____

The numbers I quoted about SSN and Medicare are from this link:
http://www.whitehouse.gov/omb/budget/fy2004/danger.html

I will find a link for the cost of the tax cuts.

So what is the transparent trickery? Do you think the numbers are wrong? If so what are the correct numbers? Are you claiming that if there were no tax cut then there would be a balanced budget this year?

Here is a link comparing the Bush tax cuts to others in the past and to spending:
http://www.taxfoundation.org/bushtaxplan-size.htm

It is obvious that the tax cuts are dwarfed by future spending.

kharris takes the approach of most liberals by insulting people who disagree with their viewpoints but kharris fails to provide supporting FACTS. Naughty, naughty

Posted by: wtf on June 24, 2004 10:46 AM

____

Here you go kharris:

http://www.taxfoundation.org/ff/taxcutsanddeficits.html

naughty, naughty

Posted by: wtf on June 24, 2004 10:49 AM

____

wtf wrote, "Here you go kharris:

"http://www.taxfoundation.org/ff/taxcutsanddeficits.html"

But the Tax Foundation puts out lots of baseless propaganda. (See e.g.:
http://www.cbpp.org/4-7-04tax.htm )

With just a quick skim, I picked up on one distortion: they only consider one fiscal year. It's important to consider more than one fiscal year, because (a) Bush's tax cuts are backloaded---in particular, the giveaway to those with high incomes and the rich (shouldn't confuse "rich," which refers to wealth, with "high-income") is more backloaded than "tax relief" for everyone else. And (b) one fiscal year looks at only one point in the business cycle.

Honest estimates should consider a 10-year cost.

See also:
http://www.cbpp.org/4-14-04tax-sum.htm
http://www.cbpp.org/1-26-04bud.htm


Posted by: liberal on June 24, 2004 11:11 AM

____

wtf wrote, "I disagree, 'Over the long term, the actuaries of the Social Security Administration project that the cost of all benefits paid to current beneficiaries and promised to future retirees exceed Social Security revenues by almost $5 trillion. The Medicare shortfall is even worse at more than $13 trillion.'

"While $5 trillion is less than $13 trillion, it would still qualify as a 'looming problem' in my mind."

Honest commentators all agree the Medicare problem is far worse than the Social Security problem.

"Now compare those two figures to the cost of the recent tax cuts."

Actually, the SS shortfall is less than that of Bush's tax cuts, when estimated over a 75-year planning horizon:

http://www.cbpp.org/3-5-03bud-fact.htm

Actually, that article makes an even stronger claim: that the cost of the Bush tax cuts is even higher than the *combined* shortfall of Social Security and Medicare, over the next 75 years.

Posted by: liberal on June 24, 2004 11:17 AM

____

wtf, the tax foundation is not exactly an honest source, and your cite demonstrates it: the issue is not 2004 alone. The issue is the long term, and the present value of the Bush tax cuts in the long term (over any term you care to figure that exceeds, say, 10 years) exceeds (as our host has noted in other postings that i lack the time to dig out and link to) the present value of social security or medicare.

Now, as someone noted above, it's also dishonest to link social security and medicare together; it's medicare where the real cost problems are.

Now, as for recycling the debt, all things being equal, that's fine, but the supply of capital in the world, while large, isn't infinite. At this stage, what has kept long rates down is the willingness of chinese and japanese bankers to provide a de facto export subsidy by buying our long paper, but someday, their interests will change....

Posted by: howard on June 24, 2004 11:24 AM

____

thank you liberal, for doing the work taht i was too lazy to do....

Posted by: howard on June 24, 2004 11:26 AM

____

So the Tax Foundation puts out lies but the extremely liberal Center on Budget and Policy Priorities is giving us a more accurate picture?

I did find one fact interesting in the first link you provided (http://www.cbpp.org/4-7-04tax.htm)

It claims that the middle fifth of Americans pays somewhere around 15% of their income to Federal Taxes. That figure seems to mesh with these figures:
http://www.taxfoundation.org/ff/zerotaxfilers.html

A lot of Americans pay no income tax as it is and the number who pay nothing is growing. How then do you cut taxes for people that don't pay any to begin with? And please don't resort to the line "they might not pay income taxes, but they pay high payroll taxes" Please look at this table first:

http://www.taxfoundation.org/ff/childcredit.html

One final point that I found interesting and I think reflects the mentality of a lot of people who don't like the Bush tax cuts, here is a quote from the Center on Budget and Policy Priorities website:

"The early returns on the effects of the tax cuts have not been good.
The Bush tax cuts have contributed to revenues dropping in 2004 to the lowest level as a share of the economy since 1950."

It seems as if a number of people here feel like it is the government's duty to attempt to maximize revenue collected. As if the federal government is Microsoft or Verizon or something.

I think that is the true source of a lot of disagreement on this board and in this country. There are those who want the government to collect as much revenue as possible, provide everything for everyone, re-distribute wealth, and provide a master plan for our society. Then there are others who want the government to get off of our backs and leave us the hell alone.

Posted by: wtf on June 24, 2004 11:29 AM

____

From the Economic Policy Institute:

http://www.epinet.org/content.cfm/issueguides_socialsecurity_socsecfacts *

Social Security is not going broke.
Each year, in early spring, the trustees of Social Security release their report. As required by law, the trustees present what can be described as their best guesses for three different scenarios for the future of Social Security. In their annual report for 2002, the trustees project that Social Security will take in more in income than it will pay out in expenditures until 2017. Between 2017 and 2027, interest income earned on the trust fund assets is forecasted to make up the difference between income and expenditures. After 2027, Social Security is expected to draw down its trust funds to pay for the expenditures that are not covered by income. Finally, in 2041, the trust fund assets are expected to be gone, and income is projected to be less than expenditures. However, the trustees project that Social Security will still be able to pay for more than 2/3 of its promised benefits from 2041 to 2076.

Social Security is not going broke. The trustees instead project a financing shortfall that may happen almost 40 years from now. These projections, however, are based on pessimistic assumptions. Real growth is expected to fall to between 1.7% and 1.8% over the long-run, which has never been the case for an extended period of time during the post-war years. Similarly, the trustees assume that in the long-run the economy will settle on an average productivity growth rate of 1.6%, which is again too low by historical standards. Higher productivity and consequently faster real wage growth -- which have both historically been about 2.0% -- would be more realistic and improve Social Security's finances.

One solution to the shortfall would be to increase Social Security's revenues.
It may seem prudent to increase the amounts available in the trust funds as long as the trustees provide a pessimistic outlook for the future. Eliminating the cap on earnings that are subject to Social Security taxes can cover three quarters of the shortfall. Currently, the cap is $84,900 per year. Earnings above $84,900 are not subject to the Social Security payroll tax. Eliminating this cap would provide Social Security with sufficient income to cover at least three quarters of the shortfall that Social Security's trustees expect based on their pessimistic assumptions.

* note that the estimates cited above are somewhat out-of-date, and the trust fund's solvency horizon has actually improved somewhat since then

Posted by: boonie on June 24, 2004 11:31 AM

____

wtf:

Having just read your last post, I think we're just coming from two different worlds here. If you advocate cutting benefits because you feel they're morally wrong, or you don't feel like paying for them, that's a valid stance to take. Just don't give us a lot of smoke and mirrors about how the tax cuts really don't make any difference. Fact is, they do. Fact is, most of the benefits do flow to the wealthy. Fact is, most people weren't that strongly in favor of them.

Posted by: boonie on June 24, 2004 11:43 AM

____

Brad, I think your title should be: "Tax Shifts," not "Tax Relief"--because the phonies shifted to that more soothing balm, some years ago.

Posted by: Lee A. on June 24, 2004 11:46 AM

____

I don't disagree that Medicare is the bigger problem and that Social Security is a smaller problem. Boonie, you may be correct that future productivity and GDP growth forcasts are too low. That would obviously be the best case scenario. But what you state about the SSN trust fund is missing a crucial fact....there is nothing in the trust fund. It has all be spent and replaced with "special" government bonds. There is no bank account full of cash waiting for 2017. As a result, the government will have to either raise taxes, reduce payouts, or issue debt as soon as they stop taking in more revenue then they are paying out. And to say that interest earned on the IOU's will make up the difference for about 10 years is also misleading. So yes, Social Security is not in as bad of shape as Medicare, but it is by no means solvent for the long term.

Eliminating the cap on SSN taxes would help but then the issue of fairness will come into play. SSN is really an unfair program as it is and eliminating the cap would only increase this unfairness. But, it depends on your objectives. If you want to re-distribute wealth from people who make more than $85,000/ year to retirees, then yes, lets get rid of the tax. However, I thought the intention of SSN was basically forced savings of a % of income that the government would return to you upon retirement as a lifetime annuity. As it stands right now, SSN favors white women over men and minorities due to differences in lifespan, do we really want to shift the benefits of the program even more?

Posted by: wtf on June 24, 2004 11:48 AM

____

"Having just read your last post, I think we're just coming from two different worlds here. If you advocate cutting benefits because you feel they're morally wrong, or you don't feel like paying for them, that's a valid stance to take. Just don't give us a lot of smoke and mirrors about how the tax cuts really don't make any difference. Fact is, they do. Fact is, most of the benefits do flow to the wealthy. Fact is, most people weren't that strongly in favor of them.
Posted by boonie at June 24, 2004 11:43 AM"

I would agree, we are coming from two different worlds. I don't think benfits are morally wrong but I do have a huge problem with them being forced down my throat. I would like nothing more than the ability to opt out of Medicare and SSN. The government doesn't have to provide anything to me and I won't pay anything in. They can keep what I have paid lifetime to date with no obligations on their part. I think that is a very fair trade but it is one that I will never have the freedom to make.

When this thread started, it was implied that the tax cuts were bad because they increased the defecit and required future generations to pay for today's tax give aways. That line of thinking would imply that high income earners today don't pay their fair share. While I do not dispute that the tax cuts have reduced government tax revenues, I whole heartedly disagree with the notion that high income earners don't pay their fair share. Besides, with the growing % of people who don't pay taxes, when it finally does come time to pay down the national debt, only the high income earners will be paying any taxes anyways!

Posted by: wtf on June 24, 2004 12:03 PM

____

"If you tally up the economic benefits to the top 1 percent that do not show up in income statistics--for reasons of written law and because of tax tricks--then the richest 1 percent are taxed more lightly than the middle class. The same data show that the poor are taxed almost as heavily as the rich are--and even more heavily than the super rich." --from PERFECTLY LEGAL by David Cay Johnston, p.11. And it gets worse from there.

Will somebody please tell wtf that payroll taxes were raised twenty years ago SPECIFICALLY to put Social Securty into surplus (--now until 2051--), and that surplus is being used, right now, to cut taxes mostly for the wealthiest 1%.

And also please tell him that a progressive income tax does not mean going all the way to socialism.

Next up: the wealthy are the most productive members of society, and decreasing their taxes makes capital formation the fastest, and a rising tide lifts all boats! Because only econ. 101 is true, and the actual evidence is unimportant.

Posted by: Lee A. on June 24, 2004 12:18 PM

____

but lee a, you've alrady done such a good job of pointing this out to wtf, who also seems confused about paying taxes: all wage earners pay payroll taxes.

but let's get back to wtf's big picture: if you want to support a smaller government and lower taxes, go for it. work to elect people who share your point of view. encourage them to be perfectly clear that a smaller government means cutting defense, social security, and/or medicare and see if you can get them a majority. That's all perfectly fine. (i mean, me, i'd start by bagging the ill-conceived, unaffordable medicare drug benefit, then cut a variety of silly pieces of military expenditures like the missile defense system, and of course i'd close a load of corporate welfare loopholes, and a variety of other things, but even then, we don't have enough revenue, so i'm perfectly happy to support candidates who acknowledge this and are prepared to work accordingly.)

Actually, wtf, there is something in the social security trust fund: the full faith and credit of the united states government. Even where we not spending the cash, it wouldn't be sitting in a special account; we would have used it to retire the federal deficit, but the full faith and credit of the US government would still be backing those checks. (and we don't let you "opt out" of social security for the same reason that we don't let you opt out of the costs of defense or any other program that you don't agree to: because we have a reprsentative government that makes choices about taxing and spending, just like it says in the constitution, and those choices are binding on you.)

But what started this post really is that george bush wants the pleasure of tax-cutting without the pain of cutting spending, and that is why we now have a structural deficit again: the complete irresponsibilty of george bush and the republican congress.

Posted by: howard on June 24, 2004 12:27 PM

____

If we are going to resort to quotes from such balanced sources as PERFECTLY LEGAL, then I will use refer to O'Reilly and Hannity.

"Will somebody please tell wtf that payroll taxes were raised twenty years ago SPECIFICALLY to put Social Securty into surplus (--now until 2051--), and that surplus is being used, right now, to cut taxes mostly for the wealthiest 1%."

I know they were raised. But they were never used to put SSN into surplus, they were used to allow run away spending that continues to this day. It is a shame, let's fix this by cutting spending so they CAN be used to fix SSN.

"And also please tell him that a progressive income tax does not mean going all the way to socialism."

Thanks for the clarification, I wouldn't have realized that without your supreme wisdom, liberals are so smart! Me, I big dumb conservative.

"the wealthy are the most productive members of society, and decreasing their taxes makes capital formation the fastest, and a rising tide lifts all boats! Because only econ. 101 is true, and the actual evidence is unimportant."

If you say so Lee A. I would argue that the government needs to take less from ALL Americans and THAT will lift all boats, but it is a free country and as such Lee, you are free to advocate reducing taxes on the wealthy.

Posted by: wtf on June 24, 2004 12:38 PM

____

wtf, now you are living in a complete fantasy world:

"I know they were raised. But they were never used to put SSN into surplus, they were used to allow run away spending that continues to this day. It is a shame, let's fix this by cutting spending so they CAN be used to fix SSN."

No, you are wrong. They were raised to put social security into surplus during the period prior to the mass retirement of the baby boomers. And, in fact, both candidates in 2000 swore fealty to the concept, which, in fact, was working fine through 2000, particularly under Clinton, who did not allow "runaway" spending (and i'm happy to give credit to the GOP congress, too).

It's under George Bush that we have the combination of runaway spending and destruction of the revenue base that is the source of the problem that began this thread.

Posted by: howard on June 24, 2004 12:51 PM

____

Howard cuts to the heart of the matter in that this is really a simple political trick to please the population--cut taxes while increasing spending. It's just dressed up with so much B.S. As a long term fiscal conservative, I adamantly believe in smaller goverment, but I can't justify supporting tax cuts while we spend more money. Its just not honest.

Posted by: Keith on June 24, 2004 12:58 PM

____

bless you, Keith: i knew there were some honest conservatives still out there (in addition, of course, to the honest conservatives at Cato).

Posted by: howard on June 24, 2004 01:08 PM

____

David Cay Johnston is a Pulitzer Prize winner (and a three-time finalist) who’s spent nine years covering the tax beat for the N.Y. Times. He knows more about the subject than just about anybody. And he is a registered Republican.

Posted by: Lee A. on June 24, 2004 03:00 PM

____

Orszag Shmorszag. BUSHONOMICS EXPLAINED.

Here's the deal:

Every day for the rest of eternity Chairman Greenspan prints out 10^9 one dollar bills and delivers 'em to King George for his delectation (it's important that ol' AL really have an infinite lifespan -- maybe we can send Al off to the beaches of Rio on Viagra oops that Varig for longevity). Now King George must reimburse him each and every day, but only 1 buck per day! And according to the scheme which I will explain in just a sec, at the end of eternity King George will have returned all the dough. THE BUDGET IS BALANCED!

Here's how it works. Old Al greenspan numbers ALL the bills consecutively starting at 1. Thus the numbering on day 1 starts at 1 and ends at 10^9. On day 2 the numbering starts at 10^9+1 and ends at 2 * 10^9 etc. Now all King George has to do is on the k th dayof his eternal reign, is to return the dollar bill marked k. So at the end of eternity Bush has returned all the dough and Bush has BALANCED THE BUDGET! Long live the King!

Posted by: CSTAR on June 24, 2004 03:55 PM

____

If I may go way back in this chain to the question about whether tax cuts might not increase revenue by stimulating economic growth. This refers to the Laffer Curve, well-beloved by supply siders. The problem with the Laffer curve, is that the positive revnue effect from tax cuts obtains only when high marginal rates are cut. Exactly how high the marginal rate must be for the effect to apply may vary from economy to economy and over time, but U.S. marginal tax rates have been well below that level for years if not decades.

Posted by: quartz on June 24, 2004 05:04 PM

____

WTF is a troll who's in over his head.

Posted by: Knut Wicksell on June 24, 2004 08:41 PM

____

CSTAR (originator of LaTeX, no?)
What ARE you saying?
Is there anything we can do to free you of this serial menace? Do you enjoy the challenge of expressing mathematics in this barren alpha-numeric landscape?
I know the brillance of your 'LaTeX' is hard to match/maintain, but I'm only getting a faint glimmer here, ( a nanolux).
Are you making fun of somebody upthread? What am I missing?

Posted by: calmo on June 24, 2004 09:53 PM

____

I suppose if Mankiw was upthread I'd be making fun of him. But more likely than being upthread I think Mankiw is up shit's creek or more accurately he's down shit's creek sending us up shit's creek.

Posted by: CSTAR on June 25, 2004 07:05 AM

____

"WTF is a troll who's in over his head."

YES! Please, more name calling because if someone doesn't agree with you, they must be an idiot.

Posted by: wtf on June 25, 2004 07:16 AM

____

When I saw Brad's title for the thread, I worried that he's become a convert to the Ricardian-cum-Barro view that deficits don't matter. But it's one thing to say that the dynamic budget must be balanced (except in the case where the interest rate lies below the growth rate) and another to say, as do Barro et.al., that the beneficiaries of present tax cuts, anticipating future tax increases, save the resulting tax cut to pay for either the tax increases later. No logical contradiction, but still if you want to argue both that tax cuts are no such thing AND that deficits don't matter, you must be supposing either myopic or borrowing constrained people, or people who don't care about their children - or so a critic might say. Brad?

Posted by: kevin quinn on June 27, 2004 10:42 AM

____

One element that seems to be completely overlooked is that there is another way for our government to fund the things we say we need, and that is by increasing tariffs.

I am only half way through Dr. Ravi Batra's book: "The Great American Deception - What politicians won't tel you about our economy and your future" but at least I can understand it. The "Free Trade" argument now appears to do one thing very well, and that is to concentrate wealth. The rich just keep getting richer while the other 95% of us are going in the opposite direction. Reminds of Ike's farewell address and "Deep Throat."

How much longer will it be until we have another "Tea Party"?

Posted by: Gordon Graham on June 28, 2004 09:33 AM

____

One element that seems to be completely overlooked is that there is another way for our government to fund the things we say we need, and that is by increasing tariffs.

I am only half way through Dr. Ravi Batra's book: "The Great American Deception - What politicians won't tel you about our economy and your future" but at least I can understand it. The "Free Trade" argument now appears to do one thing very well, and that is to concentrate wealth. The rich just keep getting richer while the other 95% of us are going in the opposite direction. Reminds me of Ike's farewell address and "Deep Throat."

How much longer will it be until we have another "Tea Party"?

Posted by: Gordon Graham on June 28, 2004 09:34 AM

____

http://www.analbondagegirls.com/on-the-very-finest-bloodypussy-japanesenude-cum-feet.html on the very finest bloodypussy japanesenude cum feet html http://www.analbondagegirls.com/see-hot-got-free-pornostars-pam-video-cum.html see hot got free pornostars pam video cum html http://www.analbondagegirls.com/the-videos-home-big-dick-pussyshots-buttplugs-page.html the videos home big dick pussyshots buttplugs page html http://www.analbondagegirls.com/keep-cumming-best-frenshporno-on-the-net.html keep cumming best frenshporno on the net html http://www.analbondagegirls.com/page199.html page199 html http://www.analbondagegirls.com/cunt-and-the-fucking-japan-site-hardcorethumbnails.html cunt and the fucking japan site hardcorethumbnails html http://www.analbondagegirls.com/privat.html privat html http://www.analbondagegirls.com/den-gefickt-arsch-in-kostenlose-bilder.html den gefickt arsch in kostenlose bilder html http://www.analbondagegirls.com/oral-porn-pics.html oral porn pics html http://www.analbondagegirls.com/chatte-et-nues-oral-de-sexo-anal-brunette-image.html chatte et nues oral de sexo anal brunette image html http://www.analbondagegirls.com/culo-grandes.html culo grandes html http://www.analbondagegirls.com/chatte-oral-sexe-sexy-nues-nu-sexo-et-mouillie-anal-filles.html chatte oral sexe sexy nues nu sexo et mouillie anal filles html http://www.analbondagegirls.com/h-bsche-asiatinnen.html h bsche asiatinnen html http://www.analbondagegirls.com/we-hermaphrodite-juicypussy-fucking.html we hermaphrodite juicypussy fucking html http://www.analbondagegirls.com/anal-buenas-meterselo-sexo-bonitas-fotos-de-orgias-que-gratis-fotografias-culos-eroticas-videos-tetonas.html anal buenas meterselo sexo bonitas fotos de orgias que gratis fotografias culos eroticas videos tetonas html http://www.analbondagegirls.com/sexe-x-triolisme-la-nage-a-des-filles-nues-baiser-faire-trois-erotique-adultes-de-bizarre-porno-pipe-m.html sexe x triolisme la nage a des filles nues baiser faire trois erotique adultes de bizarre porno pipe m html

Posted by: bondage best gayman animals toy facials lion woman male teens tit zoo bmp shawed net erotic penis gif on August 3, 2004 08:10 AM

____

http://www.analbondagegirls.com/on-the-very-finest-bloodypussy-japanesenude-cum-feet.html on the very finest bloodypussy japanesenude cum feet html http://www.analbondagegirls.com/see-hot-got-free-pornostars-pam-video-cum.html see hot got free pornostars pam video cum html http://www.analbondagegirls.com/the-videos-home-big-dick-pussyshots-buttplugs-page.html the videos home big dick pussyshots buttplugs page html http://www.analbondagegirls.com/keep-cumming-best-frenshporno-on-the-net.html keep cumming best frenshporno on the net html http://www.analbondagegirls.com/page199.html page199 html http://www.analbondagegirls.com/cunt-and-the-fucking-japan-site-hardcorethumbnails.html cunt and the fucking japan site hardcorethumbnails html http://www.analbondagegirls.com/privat.html privat html http://www.analbondagegirls.com/den-gefickt-arsch-in-kostenlose-bilder.html den gefickt arsch in kostenlose bilder html http://www.analbondagegirls.com/oral-porn-pics.html oral porn pics html http://www.analbondagegirls.com/chatte-et-nues-oral-de-sexo-anal-brunette-image.html chatte et nues oral de sexo anal brunette image html http://www.analbondagegirls.com/culo-grandes.html culo grandes html http://www.analbondagegirls.com/chatte-oral-sexe-sexy-nues-nu-sexo-et-mouillie-anal-filles.html chatte oral sexe sexy nues nu sexo et mouillie anal filles html http://www.analbondagegirls.com/h-bsche-asiatinnen.html h bsche asiatinnen html http://www.analbondagegirls.com/we-hermaphrodite-juicypussy-fucking.html we hermaphrodite juicypussy fucking html http://www.analbondagegirls.com/anal-buenas-meterselo-sexo-bonitas-fotos-de-orgias-que-gratis-fotografias-culos-eroticas-videos-tetonas.html anal buenas meterselo sexo bonitas fotos de orgias que gratis fotografias culos eroticas videos tetonas html http://www.analbondagegirls.com/sexe-x-triolisme-la-nage-a-des-filles-nues-baiser-faire-trois-erotique-adultes-de-bizarre-porno-pipe-m.html sexe x triolisme la nage a des filles nues baiser faire trois erotique adultes de bizarre porno pipe m html

Posted by: bondage best gayman animals toy facials lion woman male teens tit zoo bmp shawed net erotic penis gif on August 3, 2004 08:15 AM

____

Post a comment
















__