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December 16, 2003

2010 SHOULD BE A HELLUVA YEAR....Do you notice a trend in the following major pieces of George Bush legislation?

  • The Bush tax cuts produced deficits that everyone agrees were a useful short-term stimulus for a stalled economy. However, although the deficits should flatten a bit for the next couple of years, the CBO estimates that they will pick up steam starting in 2007 and will become catastrophic by around 2010. Using real-world estimates (the bottom line of the chart at right), we will begin running a steady $700-800 billion deficit every single year by 2010.

  • The No Child Left Behind Act, passed in 2001, gradually raises the minimum standards for schools to be deemed successful — with "unsuccessful" schools suffering severe consequences. These standards will start to become noticably harsh and unrealistic around 2007 or so, and will eventually require an absurd 100% compliance by 2014.

  • The weird — and probably unpopular — benefits structure of the Medicare bill just passed does not take effect until 2006. In addition, the much touted "competition" pilot projects — which are likely to be very unpopular — don't start until 2010.

Compare this to, say, Clinton's proposed health plan, or his welfare reform, which were designed to take effect almost immediately, or a program like AmeriCorps, which started up within months of the enabling legislation.

Now, I know that I'm naturally suspicious of my brethren across the aisle, but doesn't it seem odd that all these major pieces of Bush administration legislation, which Republicans assure us will prove that conservative methods produce real results, don't take effect until George Bush is either safely reelected or out of office entirely? It's almost like they're afraid they won't work. Or that people will hate them. Or something.

I wonder what they're afraid of?

Posted by Kevin Drum at December 16, 2003 09:37 AM | TrackBack


Comments

What, they will take effect during President Rice's first term? I can't see a problem with that.

Posted by: Gracho at December 16, 2003 09:50 AM | PERMALINK

Kevin...the train wreck at the end of the decade will eliminate the structural advantages that the Republicans enjoy at this time. (see Losing the South.) Too bad things have to "dysfunction" this way.

Posted by: Wren at December 16, 2003 09:54 AM | PERMALINK

Here's the plan:

While you got yourself an excuse to get bags of money from taxpayers (Iraq), and while there's low taxes, make all the loot you can while simultaneously rigging the system to be in your favor in 5 to 10 years.

This means no matter what happens, reelected or no, you've got yourself 5-20 years to really loot and pillage. So even if things swing more back to not-insane-policy land, you're going to be sitting pretty and in the financial position to strike whenever you see another opening to drive the country over a cliff for mere short-term profit.

It's the naked pursuit of short-term profit at all costs, with the long-term goal of being able to swoop in whenever it's politically feasible to do it all over again.

Worst case scenario for them is we get 8 years of a democratic president. By that time president Dean, or whomever it is, in the minds of the fat and stupid contingent will have murdered Vince Foster while getting a blowjob on the tarmac at LAX. Another pliable asshole will get propped up on stage and say things like “I’m a gonna’ bring some of that digity back t’ the white house”, and he’ll get elected (provided Scalia is still alive).

Sure, maybe there’d be a couple of lean years before the election for the plutocrats, but no doubt the asshole would start the cycle of rewarding the rich and screwing the poor and working class all over again…

It’s like the matrix, except worse. Cuz here there’s no plugging in or plugging- it’s just all shit.

Posted by: Tim at December 16, 2003 09:56 AM | PERMALINK

They fully anticipate that a Dem will win the Presidency in 2008 and will have to deal with all these problems, making him/herself very unpopular. Then the Repubs sweep to power in 2012 for another 8 year run by some turkey who will do the same damn thing all over again. Since this will be the third time, will the country learn? Not until it and the press develop a sense of history.

Posted by: Mimikatz at December 16, 2003 09:59 AM | PERMALINK

Clinton's proposed health plan, or his welfare reform

His welfare reform? You mean the GOP welfare reform. Clinton vetoed the same exact bill twice. Then Dick Morris advised him that he should sign it in the summer of 1996 as it would totally remove an issue off the table for the election. And it did.

He then proceeded to attempt to undermine everything that was in the bill over the next 3-4 years.

Posted by: Jay at December 16, 2003 09:59 AM | PERMALINK

Jay--good for him.

Posted by: susan at December 16, 2003 10:01 AM | PERMALINK

Oh yeah, I forgot to add- ruining the system of course makes it easier to blame dems for the problems.

Because, of course, the GOP is nothing but a bunch greedy, lying, opportunists.

Posted by: Tim at December 16, 2003 10:01 AM | PERMALINK

Kevin, not everyone agrees that the deficits that Bush has run were a good or necessary thing. Deficits, in general, can be good in downturns, but not all deficits are created alike, in terms of stimulus. Bush's were, as noted, about as bad as possible in this respect.

Posted by: MattB at December 16, 2003 10:08 AM | PERMALINK

Michael Kinsley's take on this is worth repeating.

His welfare reform? You mean the GOP welfare reform. Clinton vetoed the same exact bill twice.

This comment is so misleading and dishonest that it makes me nauseous.

Posted by: JP at December 16, 2003 10:08 AM | PERMALINK

We need to make SS and Medicare a need based catrastrophe net, not a wealth transfer. At the end of the day, that's the part of the budget that needs to be dealt with.

Posted by: spc67 at December 16, 2003 10:10 AM | PERMALINK

All designed to make President Dean's second term a nightmare, and secure the election of President Frist in 2012 . . .

Posted by: rea at December 16, 2003 10:11 AM | PERMALINK

Jesus will come back before the bills all come due.

Posted by: Davis X. Machina at December 16, 2003 10:11 AM | PERMALINK

Right, Republicans always say that government doesn't work and then they try their hardest to make that come true.

As for the recent Medicare "reform," I fully expect it to be repealed due to "budgetary constraints" sometime after about January 2005. Of course, someone will probably find a way to retain the welfare for insurance and pharmaceutical companies.

Posted by: Joe Bob at December 16, 2003 10:13 AM | PERMALINK

I more or less agree with Kevin's point. When these spending and tax cut programs start to fully bite, Congress and the President will have the unpopular choice of cutting other programs and/or raising taxes.

The budget really could be balanced without raising taxes. The 2008 projected deficit can be reduced from $800 billion to $400 billion just by holding discretionary spending constant, rather than letting it grow as fast as the GNP. I suspect there's another $400 billion of programs that the country could easily do without. However, removing them would cause uproar among special interest groups. A good place to start cutting would be the farm program, which pays an awful lot of money to rich people including Sam Donaldson.

I don't believe that Bush shrewdly plotted the delay in order to hit a future President. (a theory that contradicts the "Bush is a moron" meme) The tax cut was phased in by Congress in order to meet a certain 10-year budget standard. The Medicare reform was delayed because it takes time to work out all the administrative details.

Posted by: David at December 16, 2003 10:14 AM | PERMALINK

I think mimikatz is on to something. The GOP is like that really awful housemate (or spouse, teenager, etc.) that waits until you buy the groceries, and then eats everything in sight, leaves trash all over the place, and lets the laundry and dishes pile up. You hope they will clean it up, but they don't, and then when you finally have had enough they get out of the way to let you do the dirty work. Once clean, the cycle starts again. (Oh, and they were also taking money out of your wallet without telling you.)

As Howard Dean says, you cannot trust a Republican with your tax dollars! If you want good and efficient government, you need to elect Democrats.

Posted by: 537 votes at December 16, 2003 10:14 AM | PERMALINK

MattB: Yes, I agree that the deficits could have been structured better. My main point was just that no one really objected to the idea of running deficits during 2001-2004, but the plan should have been to tail them off after that. Bush is instead planning for a train wreck.

spc67: Maybe. But the problem is still with us even without the boomer retirement issue. That just makes Bush's actions even more irresponsible.

Jay: Doesn't matter. He promised to reform welfare, and he did. He signed the bill, and the bill took effect quickly. You end up in an analytical morass unless you're willing to give presidents credit for the bills they sign, regardless of why they signed them.

Posted by: Kevin Drum at December 16, 2003 10:16 AM | PERMALINK

Unless a Democrat is elected next year, I don't think they should run a candidate in '08--let the Republicans sit and stew in the shit they've created, or take credit for all the success as the case may be.

Posted by: Ringo at December 16, 2003 10:17 AM | PERMALINK

To answer Kevin's question, "I wonder what they are afraid of?" -- obviously nothing.

They do it because they can get away with it. Why be responsible when you suffer no consequences for being irresponsible, and being irresponsible makes you richer than being responsible?

Posted by: 537 votes at December 16, 2003 10:21 AM | PERMALINK

"All these projections assume a healthy average rate of real GDP growth, at 3% a year. Faster growth would improve the outlook, but would not eliminate the spectre of deficits. Contrary to the Bush team's rhetoric, America does not have a small, temporary fiscal problem. It has a large and growing one. "

One of the chief reasons why Bush's team is making these fiscal choices is because it believes the choices will allow our real GDP growth will outpace that 3% figure, right?

The assumption is that GDP growth is going to counteract the growing defecit.

Maybe it will, maybe it won't - I don't know. However, it seems disingenuous for the writer to address the subject with nothing more than "Faster growth would improve the outlook, but would not eliminate the spectre of deficits."

A bit Krugman-esque, right?

Posted by: Stone at December 16, 2003 10:22 AM | PERMALINK

With Bush we're seeing a weird mixture of "There is no tomorrow" and "Greed is good." Fobbing off the bills to future presidents and Congresses is a great way of avoiding the reality of what you're doing.

Make no mistake: The country is going to be in deep, deep shit come 2009 or so. Grover Norquist's vision of "starving the beast" will be within sight, but (unfortunately for him) it will be out of reach. Why? Because the two biggest entitlement programs will be approaching their maximums as the baby boomers retire. That's going to be one HUGE voting block. Worse, because of the way the boomers have handled their finances (and the way Wall Street has pilfered their retirement savings, and corporate America has done a slash-and-burn on retirement benefits), their reliance on SS and Medicare will the much higher than previous retirees.

So those programs will be politically untouchable. Defense, naturally, will also be untouchable. And since defense is ramping up as a percentage of Federal outlays, we'll be looking at a Federal budget with very little room to trim.

Which will bring us to some truly breath-taking tax increases. The only real question is where those tax increases are going to land: On workers and the middle class? On the rich? On corporations? Who will bear the brunt of the pain?

Let us hope that the politicians 6 years hence realize that, while corporations are very efficient at filling the campaign coffers, they really suck when it comes to filling the ballot box.

Posted by: Derelict at December 16, 2003 10:24 AM | PERMALINK

Jesus will come back before the bills all come due.

sticking non-believers with the bill.

(Krusty) "ahh CRAP!" (/Krusty)

Posted by: Troy at December 16, 2003 10:31 AM | PERMALINK

Plus, in 2010, we've got that joint U.S./Soviet Jupiter mission. How are we going to pay for that?

Posted by: Mike Kozlowski at December 16, 2003 10:34 AM | PERMALINK

Pleading ignorance here, but isn't the strategy of the Republicans to cause people to opt out of Medicare? Stay in Medicare and pay high premiums (de facto taxes) or opt out to private sector HMOs. What's the effect on the projected deficits if no one is left in Medicare, or for whoever is left the premium is risk adjusted (increased) to cover those still in the pool?

Posted by: poputonian at December 16, 2003 10:41 AM | PERMALINK

The Bush tax cuts produced deficits that everyone agrees were a useful short-term stimulus for a stalled economy.

I disgree to some extent. Most of the tax cuts were not a useful stimulus but were rather a permanent drain on the government with relatively little real stimulus.

The child tax credits in 2003 did help some. One could have easily envisaged a better stimulus package with more bite and less long-term ramifications.

Just wait until you see the long-term effects of the savings plans that they plan on unveiling. The plan is a perfect Bush looting scheme because all the costs extend beyond the 10 year horizon that the OMB and CBO use to score plans while it appears to show some minor positive effect on the deficit in the short-term.

Lerxst
An Economist for Dean

Posted by: lerxst at December 16, 2003 10:50 AM | PERMALINK

We need to make SS and Medicare a need based catrastrophe net, not a wealth transfer. At the end of the day, that's the part of the budget that needs to be dealt with.

Dream on. People pay into those programs their whole working lives. That's people who get paychecks, not dividends. They (we) are not going to watch as our standard of living falls while others (you?) rake in the bucks from non-wage income.

I don't know how else to say it. You mess with SS and Medicare, you make it something only the utterly indigent get, and you face a war at home. Which the geezers will win.

Posted by: tax shift, not cut at December 16, 2003 10:55 AM | PERMALINK

"You mess with SS and Medicare, you make it something only the utterly indigent get, and you face a war at home. Which the geezers will win."

You take a big leap that the "youth" (read those still working) will sit idly by and continue to pay into a system that is bloated and poorly run.

Explain to me again why Bill Gates. George Sores and Ross Perot will be getting SS checks??

Explain to me why I should be getting a SS check if I managed to invest and save 5+ million for my retirement?

Means testing is coming whether some here want it or not.

So do we freeze (or increase a nominal 1% or 2 %) discretionary income (and maybe non-discretionaly too) for just a year or two and see how much that deficit disappears.
Or do we manipulate and increase taxes to show a balanced budget - albiet a grossly fat and irresponsible one.

Fiscal responsibility? we don't need no stinkin' fiscal responsiblity. Just raise taxes!

Posted by: Black Oak at December 16, 2003 11:10 AM | PERMALINK

Black Oak: Explain to me again why Bill Gates. George Sores and Ross Perot will be getting SS checks??

Explain to me why I should be getting a SS check if I managed to invest and save 5+ million for my retirement?

Means testing is coming whether some here want it or not.

You make a good point, Black Oak, but one that I think is mainly rhetorical. OK, let's cut Medicare and SS from George, Bill, Ross, et al -- and anyone else who has at least $5 million in retirement savings. How much will that save? 1%, 2%? (I honestly don't know, but I suspect it won't be much.)

So what did you really have in mind?

Posted by: scottd at December 16, 2003 11:40 AM | PERMALINK

BO:
Since SS isn't a retirement plan, your rant loses a lot of meaning. Additionally, to say a program which has run a surplus in each and every year since its creation is 'bloated and poorly run' is kind of funny.

Posted by: JadeGold at December 16, 2003 11:41 AM | PERMALINK

You forgot to mention that the estate tax repeal ends in 2010. My mother's financial advisor has already recommended that she die in 2010 so she can prevent the government from stealing her well-inherited money.

Posted by: emptywheel at December 16, 2003 11:42 AM | PERMALINK

gunna be a lot of suspicous accidents sending elderly to the morgues in 2010...

Posted by: Troy at December 16, 2003 11:49 AM | PERMALINK

scottd,
If I truly had the answer, would I be sitting here at Calpundit or would I be in D.C.? It is designed to make you think. As Jadegold notes: it's not a retirement plan. I think it should be (call a spade a spade) - Bill Gates et al don't need the money, so why is the system set up that way? The paradigm needs to change. People need to look at it as a retirement vehicle. It's only a matter of time before it get's means tested. Despite what some of the head-in-the-sand people have to say.

jadegold:
"Additionally, to say a program which has run a surplus in each and every year since its creation is 'bloated and poorly run' is kind of funny."

If that's funny to you, then this is hilarious to me. You actually DON'T think that the SS system is bloated and poorly run because it has a surplus (nothing but the result of it being over taxed). Particulary when that same "surplus" is sitting in a dusty vault somewhere in D.C. and consists of a piece of paper saying

"I owe the SS system XXX billions of dollars to be paid later".

Do you have "obtuse" tattooed on your forehead?

Posted by: Black Oak at December 16, 2003 12:06 PM | PERMALINK

Kevin, I actually disagree even with that. I think I read an analysis once (Krugman?) that pointed out that spending just the projected surplus (even the reduced, post-bubble surplus) in a smart / truly stimulating fashion (well!) would have done more actual good than Bush's $500 billion deficits.

Posted by: MattB at December 16, 2003 12:14 PM | PERMALINK

Black Oak: My point was that it's easy to claim that a program is "wasteful" or "inefficient", but when it comes down to suggesting specific reforms, apparently the waste and inefficiency aren't so apparent.

Your point was that SS/Medicare are inefficient because they direct benefits to people who don't need them. I was just trying to quantify that inefficiency. If we can make the program more efficient by means-testing people with more than $5M in retirement savings, great. But if that only saves 1% (again, I don't know what the actual figure would be), then that would mean the program as it stands is 99% efficient. I'm all for improving government efficiency, but that just doesn't sound like it's the best target for reform.

What I really suspect you are looking for is to lower the means-testing threshold to a point where it really makes a difference. At that point we'll probably be including a lot of middle-class retirees who are moderately well-off, but who still rely on SS/Medicare to fund a substantial portion of their retirement. If that's really what you mean, just say it, and let's see how it floats as a political issue.

Posted by: scottd at December 16, 2003 12:21 PM | PERMALINK

BlackOak makes a tangential important point:

"I owe the SS system XXX billions of dollars to be paid later".

these charts don't count the SS borrowing that hides the true deficit, which grew $150B in just the first 3 months of FY2004:

http://www.publicdebt.treas.gov/opd/opdpenny.htm

IOW, we're already at the $600B line in the chart.

Posted by: Troy at December 16, 2003 12:26 PM | PERMALINK

Kevin:
The education standards seem pretty fair. How do you raise standards by not having a timeline? Do you really think that saying, "ok, all schools need to make code next year or be defunded" is fair? It's giving schools time to get in order and gradually ratcheting up the standards. Don't see how you can reasonably say, we're giving every school 2 years to work. Much easier to tell everyone on welfare, find a job(and has noted, that was more a conservative idea).

The Bush Tax cuts of 2001 would have been a good example. The slow phase-in period had tax cuts not taking effective for a few more years. 2003 enacted quicker tax cuts which my side of economics says will increase investment and growth fairly quickly and increase growth for the longterm.

Agree on Medicare. It's just awful and Republicans were idiots to pass it. I wish they had enacted it quickly so everyone could see what a problem it will be.

hoo

Posted by: hoo at December 16, 2003 12:43 PM | PERMALINK

scottd,
The examples and amount (5+ million) were anecdotal, but here's a shot in the dark:

Why don't we means test it by directly tying it to income, using something similar to the income tax tables that I (and probably you too) have to use.

The more money (and almost all of it counts as income) you saved/get (pension, savings, 401K), the less you get in SS. Details to be hammered out, but I'd lean towards a flat amount based on your GROSS income from your previous year's tax return. If you didn't file, no SS.


Posted by: Black Oak at December 16, 2003 12:52 PM | PERMALINK

Oak: the point is the "hammering out" part is where you distribute the pain. Good luck.

Posted by: Troy at December 16, 2003 12:54 PM | PERMALINK

Troy,
Could it be any more painful than what's coming down the line now? Means testing WILL happen. I can't see a continual rise in SS taxes as a viable fix.

We are coming to the point where these phantom surpluses will meet the IOUs. It coincides with a large chunk of the boomers retiring. Something's gonna break.

Ignoring this festering sore won't make the wound mysteriously heal.

Posted by: Black Oak at December 16, 2003 01:00 PM | PERMALINK

agree, but the real point is means-testing won't be significant unless it hits the middle class.

Your bill gates examples is demagoguery in this respect.

Posted by: Troy at December 16, 2003 01:02 PM | PERMALINK

ref: Gates. Agreed, it's anecdotal.

So is this. I love both my parents (who collect SS). They worked hard all their lives. My father now belongs to a country club he NEVER would have thought of joining until he retired. They snowbird in Southern CA (just off the beach near Oxnard) every winter, renting a place that runs between 1,300 and 1,800 a month.

They couldn't do this without SS. My question is: why should SS be funding this lifestyle? It shouldn't.

They will howl very loudly if their SS would get reduced. Yet my father paid in less in his lifetime, than I did in 10 years (and I have 20+ years to go - barring a lottery win).

This example is probably more comman than either of us think. The paradigm needs to change.

Posted by: Black Oak at December 16, 2003 01:10 PM | PERMALINK

Black Oak,

Do your parents vote? If so, I think the first thing you need to do is work on getting them to vote against their SS benefits.

Otherwise you are outvoted 2 to 1 right out of the gate.

Posted by: Tripp at December 16, 2003 01:13 PM | PERMALINK

Black Oak you said, "The more money (and almost all of it counts as income) you saved/get (pension, savings, 401K), the less you get in SS."

This creates disincentives to put money away from retirement. Easy to see a system where folks say I'll only put $2500 a year away b/c after that I lose too much in SS benefits. Creating this type of discentive to save is very tough.

Means testing should only be on immediate income and even then it creates incentives to work less and earn less.

hoo

Posted by: hoo at December 16, 2003 01:15 PM | PERMALINK

Oak: Thanks for the operational details, but I think Troy is closer to understanding the essential problem in your plan. At what level of income do you start cutting SS benefits? To be fair, I understand that you don't have access to the quantitative data needed to answer that precisely; I'm just looking for your gut feel. If you set that level high enough so that it only affects people for whom SS is a tiny part of their retirement income, then your plan won't hurt anybody (at least , not much), but it will be ineffective because it won't save much. If you lower the level enough to make a real difference, you will probably be socking it to people who are relying on SS to fund a significant portion of their retirement. Those people will still get by, but they are going to feel cheated when their comfortable retirement turns into subsistence living, esp. after all the years they paid into the SS/Medicare system. My contention is that this is going to be a large group.

We live in a democracy, so if one can get enough votes to make that idea float, we'll have to live with it. I just don't think that's a very realistic plan -- unless the idea is to hide the details.

Posted by: scottd at December 16, 2003 01:15 PM | PERMALINK

Tripp,
No shit. And I think I just saw a pig fly.

And it's much worse for those that are 20 or 30 years old as the boomers will all be collecting SS during their prime income producing years.

And they'll be outnumbered to boot.

Posted by: Black Oak at December 16, 2003 01:18 PM | PERMALINK

scottd,
It would not surprise me one bit if the final 'fix' for SS hides the details. The only problem with hiding the details is that someday, somewhere, the details will get found, and then there will be hell to pay.

Posted by: Tripp at December 16, 2003 01:25 PM | PERMALINK

guys, I'm just one guy at behind a computer. If I were King, God and Tyrant it's be easy. But then you'd have to call me Saddam.

The politicians (both sides) have been painting over this rotting board for years. The time is coming when the board will fail. We can keep painting it, hoping to "get by", or we can rip out the rotten board and replace it with a new one.

The problem is that there are a lot of seniors and politicians surrounding the rotten board, painting furiously, and we can't fix the board because of it.

Posted by: Black Oak at December 16, 2003 01:25 PM | PERMALINK

And they'll be outnumbered to boot.

this is an incorrect assertion. There are more 20-40 year olds than 60-100 year olds.

2001 Census:

15-19: 7.3%
20-29: 13.4%
30-34: 7.1%

15-34: 27.8%

55-64: 8.5%
65-00: 11.9%

55-00: 20.4%

Posted by: Troy at December 16, 2003 01:29 PM | PERMALINK

we can't fix the board because of it.

I think the SS problem is overhyped. It was fixed in the 80's.

I can balance the budget no problem with this:

http://www.nathannewman.org/nbs/longbudget04.html

Posted by: Troy at December 16, 2003 01:37 PM | PERMALINK

Relax, Oak. I'm sorry for the piling on -- I was just trying to understand your point-of-view, and I respect you for sticking around to defend it.

I'm not sure that the system is as rotten as you claim, but maybe that's a topic for another thread.

Thanks for the discussion.

Posted by: scottd at December 16, 2003 01:38 PM | PERMALINK

Troy,
What is the breakdown for 35-45 and 45-55?

That is the key demographic. I'm 41 and I believe I am in the last year of the boomers. I believe the boom went from 1947 to 1962. That means that about 45% of the population is going to retire over the 15 - 20 years. I think you'll see the 55 and over deomgraphic be up around 40-45% in about 15 years. Quite a bit different from today.

That's why you see SS getting in trouble in about 15 years.

Posted by: Black Oak at December 16, 2003 01:41 PM | PERMALINK

BTW, SS wasn't fixed. It got another coat of paint by having SS taxes raised.

Maybe SS isn't as rotten as I claim, but maybe it's not in as good as shape as some here seem to think too.

Posted by: Black Oak at December 16, 2003 01:45 PM | PERMALINK

I agree the 35-45 is the key demographic.

Under 5 years 7.2%
5 to 9 years 7.4
10 to 14 years 7.4
15 to 19 years 7.3
20 to 24 years 6.7
25 to 29 years 6.7
30 to 34 years 7.1

15-49 in 15 years: 49.8%

35 to 44 years 16.3

45 to 54 years 13.4
55 to 64 years 8.5
65 to 74 years 6.5
75 to 84 years 4.3
85+ 1.1

60+ in 15 years: 33.8%

the above assumes nobody dies in the next 15 years.

Posted by: Troy at December 16, 2003 01:49 PM | PERMALINK

Here's what Krugman says .

Posted by: Troy at December 16, 2003 01:52 PM | PERMALINK

Been fun. Gotta go

Posted by: Black Oak at December 16, 2003 01:53 PM | PERMALINK

PLEASE. Bush believes he will be taken up in the rapture prior to any of these bills coming due.

Posted by: jim at December 16, 2003 02:17 PM | PERMALINK

"My main point was just that no one really objected to the idea of running deficits during 2001-2004, but the plan should have been to tail them off after that."

Many, many responsible folks objected to the _level_ of the deficits, even in 2001-2004.

Posted by: Bill Skeels at December 16, 2003 02:45 PM | PERMALINK

$2.5 trillion per year in total government expenses, or 25% of the middle class income, taken from them by the threat of armed IRS agents; all of it predominately Democratic programs. The remaining 15% of our nation's economy, taken from the poor and middle class, come from programs supported by both parties.

In total, Kevin, on the left, and Jim Robinson, on the right, steal 40% of the income and prosperity that poor and middle class workers earn. Compare this to China, where 20% of total government spending is taken from their middle class; and they get a reward, 5% of our jobs, a and a $120 billion trade surplus with the US.

Listen to Kevin and we will see more poverty, more environmental destruction, and more immigration problems.

Posted by: Matt Young at December 16, 2003 02:58 PM | PERMALINK

Compare this to China

wow, there's a first-world country to compete with.

damn libertarians.

Posted by: Troy at December 16, 2003 03:09 PM | PERMALINK

Matt:

Here's the 2004 federal budget:

http://www.nathannewman.org/nbs/longbudget04.html

cut away.

Posted by: Troy at December 16, 2003 03:10 PM | PERMALINK

And Matt: this 40% goes RIGHT BACK INTO the economy!

I'm under no illusions that eg. cutting "defense" (really "offense") down to semi-rational levels ($200B/yr) will have enormous economic shocks to the economy.

Posted by: Troy at December 16, 2003 03:12 PM | PERMALINK

Here's my results:

Your new deficit is $-51.36 billion.

Oops!
You've cut so much that the federal budget now contains a substantial surplus. Many economists warn that this budget may help induce or prolong a recession, and ordinary citizens demand a refund. You might want to cut taxes or raise spending.

All I basically did was cut defense spending 30% (50% to procurement), and eliminate the Bush tax cuts for the upper 15%.

Posted by: Troy at December 16, 2003 03:21 PM | PERMALINK

"And Matt: this 40% goes RIGHT BACK INTO the economy!"

Now listen to this crap.

So explain why we just don't take all the wages we earn? I mean, why not just send in the armed IRS agents and take every last dime in every last bank account and give it to the big government maniacs?

Why not? This author knows perfectly well why not. If we took his lunatic advice massive starvation and universal destruction would result, AKA North Korea.


So, what is the appropriate amount that this author wants to steal from the middle class? Well, we know that at the levels of government spending we have now, China is taking 5% of our jobs, and this should increase to 10% as China becomes our primary supplier of transportation, electronics, and other manufactured goods.

Its great to see a country like China, spending 20% on government, and smart enough not to listen to bog government lunatics who say:

"And Matt: this 40% goes RIGHT BACK INTO the economy!"

Posted by: Matt Young at December 16, 2003 03:22 PM | PERMALINK

Matt: people in China make something like $1/day.

yay, let's emulate them.

There's a solid foundation for this saying:

An American House
A German Car
A Japanese Wife
A British Salary
A Chinese Chef

and not:

An American Wife
A German Chef
A Japanese House
A British Car
A Chinese Salary

Posted by: Troy at December 16, 2003 03:27 PM | PERMALINK

So Matt, tell us how to get there from here.

Posted by: Troy at December 16, 2003 03:28 PM | PERMALINK

Troy,

I generally hear that the true size of the Chinese economy is about $12 trillion, if the value of their currency and their financial markets were liberated. Add to that another $1 trillion in government costs they save, and bingo, you have the per capita income about $10,000, not the traditional $6,000 usually quoted.

Last I heard, Microsoft had moved a significant portion of their research division to China.

The standard of living in the coastal industrial cities compares favorably with American citites.


Don't live in the past. Chinese very smartly keep their cost of government down to the optimum level for maximum efficiency. The result is the fastest rate of poverty reduction in history.

Every American worker who loses a job, has a lower standard of living, is unable to support his family should look back and kick himself for everytime he said:

"There outta be a government program..."

Posted by: Matt Young at December 16, 2003 04:01 PM | PERMALINK

You're using Communist China as a stalking horse like Safeway is using Walmart's grocery operations.

Their income disparity is truly wonderful -- just pray you're born in a coastal city I see -- what a true model of the libertarian paradise -- luck of the draw.

"There oughtta be a government program..."

Don't be coy, tell us what to cut then. Me, I just cut $200B/yr from defense and undo the Bush cuts for the top 15% -- viola, balanced budget.

Posted by: Troy at December 16, 2003 04:20 PM | PERMALINK

"Don't be coy, tell us what to cut then. "

No problem.

The goal here is to bring prosperity to the poor, reduce environmental destruction, and eliminate the mass movement of labor across borders.

Solution:

Tax the hell out of the filthy rich, cut government to the bone.

What to cut?

Get defense down to $200 billion.

Means test on sociial security and medicare until those costs are down to $500 billion, permanently (federal costs).

Remove all industrial subsidies, auto, energy, agricultural, export, housing, consumption; all of it.

Legalize cash labor for every person within the borders regardless of status. Making it illegal for a poor person to trade labor for cash is a crime against humanity.

Allow anyone making less than $30,000 the opportunity to opt out of government taxation and government programs completely.

And, when some nutcase tells you that government bureaucrats need to manage our miserable lives, tell the person to drop dead.


Posted by: Matt Young at December 16, 2003 04:37 PM | PERMALINK

'Don't live in the past. Chinese very smartly keep their cost of government down to the optimum level for maximum efficiency. The result is the fastest rate of poverty reduction in history"

Now that I'm done laughing.. no wait... okay, now that I'm done laughing: are you honestly suggesting that the size of the Chinese budget is a product of judicious economic planning?

And, personally, I like having a rule of law, relatively low levels of corruption, and rural poverty rates that are, if too high, at least somewhat manageable. But maybe its just me.

Posted by: dh at December 16, 2003 04:37 PM | PERMALINK

Matt:

Let me see if I can summarize your points so far:

1) You don't like paying taxes.

2) You think China presents an economic model we should emulate.

I've heard #1 before, but I have to say #2 is something you don't hear very often.

BTW, Microsoft has not "moved" a significant portion of their research division to China. They have expanded it. As it turns out, there's a lot of computer science research going on in Asia, and China represents a potentially large new market for Microsoft's products. It makes sense to tap into that, but I'm not sure how it adds up to an indication of U.S. decline.

Most of Microsoft Research remains in the U.S. They also have a significant lab in Cambridge, U.K.

Posted by: scottd at December 16, 2003 04:40 PM | PERMALINK

Matt: OK, we're not so far apart then.

Being a social libertarian, I am somewhat sympathetic to anti-big-governmentism.

In 2004, the feds are spending:

$500B+ on defense
$80B on vocational employment services
$40B on unemployment payments
$250B on non-medicare health
$250B on medicare
$180B on welfare
$500B on Social Security

I think single-payer insurance can really rip the heart out of the fraud and overhead waste that we have in the current semi-private health system -- libertarian free-market darwinistic theory just doesn't apply to health services IMO.

Posted by: Troy at December 16, 2003 04:48 PM | PERMALINK

Actually, Matt is a lot of fun to read, i must say: it's been quite a while since i've heard the PRC referred to as heaven on earth, especially because of its low taxation!

some of matt's points make sense, but since he believes that there actually is a class of "bureaucrats" who try to tell people how to run their lives, and since he believes that taxation is theft, it's hard to take him too seriously.

The thing is, we used to live in a country a lot like Matt describes - america between, say, 1890 and 1930. And we don't live in that country any more because the people who lived in the 1930s saw the flaws in the matt young scheme of things and through the democratic process, changed them.

Meanwhile, for the rest of us, social security isn't that big a problem - there are many simple actions that can be taken on the social security front.

medicare, on the other hand, is an enormous problem, made worse by the bush program. When it comes to health issues, people want the best, and not to be means-tested for it.

But none of this is responsive to Kevin's original post: the reason that all the costs and problems of bush programs are put off into the future. Of course, kevin knows the answer: the election is now....

Posted by: howard at December 16, 2003 05:45 PM | PERMALINK

Howard,

Nice try, but we lived in my world from 1945 to 1965, a period in which income disparity was consistently being reduced and poverty reduced.

Then we entered your world, in 1964. When income disparity grew, the reduction in poverty stopped, 1.5 million Vietnamese slaughtered while people like you were bribed with entitlements taken from the poor and middle class.

Troy,

Troy pulls the old switcheroo, He wants to take money from the young worker and subsidize his favorite industry, medicine. Simple enough, all he has to do is pretend economic law does not apply to that industry, therefore, it is OK to socialize it.


Scotd,

Scotd thinks that the best way to deal with foreign competition, like China, is to pretend it doesn't exist. He will alos have to pretend that our trade deficit with China doesn't exist.

By the way, how has China solved its social security problem? Simple, they use the ignorance of the American worker, and loan him over 1 trillion dollars, growing by 120 billion dollars each year. Then when they think they have enough loans due, they raise the interest rates on the debt that American workers have assumed and live a nice, modest retirement while American workers are forced into urban slave camps, supporting both the pandered American left and the pampered Chinese retired.

dh,

dh would like to believe that the Chinese run their economy as ignorantly as the American worker runs his economy.

The answer is yes, the Chinese Communist party monitors government spending, they read the studies on poverty reduction and economic growth, they adjust, yearly, the level of government spending to ensure that dh will live in slavery for the rest of his life paying for the retirement of intelligent Chinese workers.

Yes, they actually do this, so does Russia, by the way.

Look here:

http://www.pbs.org/wgbh/commandingheights/lo/countries/cn/cn_spend.html

What you will see is the China has consistenly held government spending in check while growing at a rate of 8-10% each year.

Chinese have a brain that is not subject to much historical and social myth, probaby the result of 40 years of disasterous Maoism.

Posted by: Matt Young at December 16, 2003 07:47 PM | PERMALINK

see Matt, the main I difference I see here is that I lack your faith in the total good of the free market. The Invisible Hand's job is to fuck people over, especially wrt health care.

I've lived in Japan, and their single-payer 80% coverage system worked pretty damn well.

Posted by: Troy at December 16, 2003 08:22 PM | PERMALINK

Wow! There's a whole lot going on in here!

I'd like to tackle the original post - from a Bushie's point of view.

1. The tax cuts. It is interesting to me that a huge portion of the possible deficits in the years to come are attributed to "increase descretionary appropriations by nominal GDP." I believe that can be translated "increased spending". Let's just imagine the bottom line is only changed as a result of the other adjustments to the baseline shown in the graph. That would lead to a consistent $400B or so yearly deficit. This is much more than I would like, but compared to the GDP, it's actually less proportionally than the deficits we ran in the early 90's.

Now, let's say we're entering into another economic boom cycle. If so, the actual federal revenue amounts will exceed expectations by a considerable amount, most probably leaving a budget surplus in a couple of years - I'd say by 2007 at the latest. If you think this is hogwash, remember the late 90's. With Republicans in Congress holding spending down and our economy's performance far outpacing expectations, predicted deficits in the $300B range became surpluses.

Interesting to add that as soon as the economic cycle turned down again, deficits reappeared.

Posted by: Scott Elliott at December 16, 2003 08:36 PM | PERMALINK

Matt Young

Interesting post. I don't understand how the years 1945-1965 are related to your suggestions. In the postwar period, the US was the dominant industrial power, as other production centers had been devestated. There was no chance of running a trade deficit, as no one had the capacity to produce very much, except for the US. I also believe that there were high marginal tax rates until sometime in the Kennedy administration. Government spending was not cut to the bone, as the US sent large sums of money abroad to rebuild both Japan and Germany, and also prepared for the Cold War which followed.

After the period immediately following WW2, the US spent a considerable sum on the armed forces. The US was involved in both Korea and was in the early stages of a long term commitment to Vietnam. All of this required a great deal of government spending before the year 1964. This is not the world that you describe.

Can you explain this?

Posted by: Roland at December 16, 2003 08:43 PM | PERMALINK

Scott Elliot

You might be right. I agree that a surging economy will result in larger government revenues, but the question has always been to what extent this is true. It is also hard to imagine Congress holding down spending, even if it is controlled by the GOP. My suspicion is that the yearly deficits will probably not exceed $450B, but I don't think that they will ever be lower than $200B. I'm no expert though.

Posted by: Roland at December 16, 2003 09:18 PM | PERMALINK

let's say we're entering into another economic boom cycle

hope is not a plan

Posted by: Troy at December 16, 2003 09:30 PM | PERMALINK

Also you need to translate that graph down $200B, 'cuz that the annuall amount of IOU's were putting into the SS trust fund.

Posted by: Troy at December 16, 2003 09:31 PM | PERMALINK

Roland,
Neither am I! I do think there are 2 overriding principles to always keep in mind when contemplating federal fiscal matters.

1. The federal budget's eventual bottom line fluctuates wildly based on current economic conditions. A slight improvement in the economy produces a significant positive effect. Conversely, a minimal economic slowdown can have disastrous effects. We saw a great example of this principle in action this year. As spring moved into summer and the economic engine still idled, 2003 deficit projections increased - from 250B to 350B to 450B and above. Then, Bush's tax cuts :) began to get the economy's engine revving. The result: by the time fall rolled around the actual deficit came in at $374B - that's a $100B reduction in the projected deficit in just a month or two of positive economic momentum!

2. Based on principle #1, predictions of future budget deficits are practically worthless. :)

Posted by: Scott Elliott at December 16, 2003 09:37 PM | PERMALINK

Troy,

let's say we're entering into another economic boom cycle

hope is not a plan

Ok, let me rephrase that, then:

Since we're clearly entering into another economic boom cycle...

Posted by: Scott Elliott at December 16, 2003 09:43 PM | PERMALINK

I believe that can be translated "increased spending".

This is why Republicans can’t be taken seriously on economic issues (any more than they can on national security, but that’s on another thread). This is called, keeping up with your bills. If my rent goes up and I refuse to pay it, I get kicked out of my place; it isn’t increased “spending” on my part, it is increased responsibility.

As to the fantasy that a Clinton style boom is imminent, think again. And even if such an event were likely, reducing taxes to prevent our taking advantage of the boom is going to prevent your rosy scenario from playing out.

Posted by: Lori Thantos at December 16, 2003 10:07 PM | PERMALINK

"After the period immediately following WW2, the US spent a considerable sum on the armed forces"

Good idea, let's cut most of that also

Posted by: Matt Young at December 16, 2003 10:19 PM | PERMALINK

Japan:

Fertility rate, 1.5-1.6; making them one of the fastesd dying people in the world. How's that for good medical care?

Why are they dying?

The socialized medical doctors are killing them with a government burden that is on par with the worst of the dying European socialized countries. The greatest amount of resources are taken from young Japanese working families to pay for the socialized medicine.

Gas chambers are more efficient, they should just teach that in socialized medical school.

Posted by: Matt Young at December 16, 2003 10:28 PM | PERMALINK

Scott Elliott

I do not agree with the statement that all deficit forecasts are worthless. The forecasts you mention, although differing by several hundred billion, all reflect the fact that the government is engaging in deficit spending.

I think I posted this somewhere before. A year or so ago the Senate convened some sort of hearing on President Bush's budget. Before the committee members sat three economists: one from the Brookings Institution, one from Cato, and one from the Heritage Foundation. The one thing they agreed upon was that the US government was going to run deficits in the near future. I seem to remember the Brookings guy indicated over a ten year period the total would be somewhere over a trillion. The other guys seemed to think it would be about half that figure. Given this year's total, even moderate deficits over the next 8 or nine years put the total somewhere in between these projections.

I don't think deficit spending in the short run when the nation is confronted with an emergency is a bad thing, but institutionalizing the deficit seems irresponsible to me. There are generations of Americans yet unborn that will have to service the debt we accumulate.

Posted by: Roland at December 16, 2003 10:40 PM | PERMALINK

Lori Thantos,

Like I told Roland, I'm no expert. I just look at events and circumstances and try to draw conclusions from them.

Thank you for correcting me! :) Please don't deride Republicans' economic ideas simply because of my ignorant misinterpretation of an economic phrase.

It seems odd to me that increased responsibility from increases in GDP wouldn't be included in the baseline figures. Unless, these responsibilities are being added to a stagnant revenue base that doesn't reflect increasing federal revenues resulting from increases in the GDP. If that's the case then that would be like computing a rise in rent without a rise in wages, to use your analogy.

I could be wrong again, so I'll check back tomorrow to see if you have further clarification.

Thanks!

Posted by: Scott Elliott at December 16, 2003 10:42 PM | PERMALINK

Roland,

Last post - then to bed!

I believe the economy is going to be in pretty hefty growth cycle for several years. As a result, I'm predicting we won't see deficits within a couple of years.

One other thing: I totally agree with you that deficit spending is irresponsible except in the most extreme cases.

Good night all!

Posted by: Scott Elliott at December 16, 2003 10:46 PM | PERMALINK

Matt Young

I must admit, I am kind of confused. The US government spent that money several decades ago in an era that you hailed as ideal.

Also, what is point of the fertility rate analysis? Precisely what are you claiming?

Posted by: Roland at December 16, 2003 10:47 PM | PERMALINK

I think he's claiming the excellent public health system of Japan is the cause of women getting married later and usually having at most two children.

umm, yeah.

how that relates with Japan having the world's longest life expectancy:

http://www.who.int/inf-pr-2000/en/pr2000-life.html

is a mystery to me, but hey, the job of deconstructing libertarian bullshit is easier when the other side just abandons logic entirely.

Posted by: Troy at December 16, 2003 11:36 PM | PERMALINK

I'm late again, but as usual I'd like to suggest that the most paranoid interpretation is probably the best. Both crippling the next President, and using a state fiscal crisis to force structural changes in entitlements, etc. ("starve the beast") are goals.

And the federal police powers have been given a lot of tools during the Bush and Clinton administrations which they haven't had to use yet. The PATRIOT Act (etc.) can be used against domestic dissent, and in fact has already been used in cases which aren't related to terrorism of any kind at all. So if the 2008 remake of government creates unrest, they'll have the tools to deal with it.

Posted by: Zizka at December 17, 2003 06:32 AM | PERMALINK

It's clear that politicans' favorite excuse in 2010 - 2012 will be to blame it all on Gee Dub Shrub. And not unjustifiably. Bush will far outlive the Clenis as a source of excuses, lame and otherwise, and be *the* exemplar of bad policy for generations to come.

What a legacy!

Posted by: bizutti at December 17, 2003 07:59 AM | PERMALINK

Okay, I had nothing to say about the number crunching and shite before, but bringing the Japanese healthcare system in and attacking it (utterly speciously, I might add) with a terrible terrible strawman makes it personal.

Most theories are vague enough that if you really believe, you can see them supporting whatever you want them to--like astrology and tarot cards, really. There are plenty of them out there, even some where I would concede a point; but I think it's a bit shameful to resort to this kind of blatant fallacy.

Matt, if you really believe that Japan's fertility vs. mortality rate has anything to do with their medical infrastructure, and you will insist that this is true no matter what, stop reading now, because I'm only going to insult your intelligence.

If you are not mind-bogglingly stupid, then the most charitable thing I can conjecture is that you saw those numbers, thought they supported your hypothesis, and went off half-cocked. Otherwise, you KNEW that these numbers have no more to do with the state of Japan's medical infrastructure than, say, the Hanshin Tigers' batting averages have to do with global warming, and you are being deliberately misleading with them.

Have you ever dealt with Japan's medical system? I have, and can tell you that there is nothing wrong with it--it's certainly not "killing them," as you suggest, and the Japanese are on the whole quite happy with their government and tax rate. In fact, what most of the people I know are concerned about is that dealing with the US will force them, through trade pressures, to conform to our "system," in which the gap between rich and poor (not all that obvious in Japan today) will grow as wide as it is in the US.

The reason for the low population growth lies not in socialized medicine, as you well ought to know, but in an aging population with a low birthrate. It's happening here too, but Japan's "boom" population (like Europe's) is older than ours and the family size has been getting smaller for longer, not least because they (like Europe) have less space to work with. People die when they get old, after all, and young Japanese are getting married later and having fewer children. Mainly, the young are doing this out of a desire to live their own lives some before settling down, and when they do settle, not to strain the limited resources of their islands to the breaking point. We should all be so wise.

Posted by: alsafi at December 17, 2003 08:46 AM | PERMALINK

Thanks alsafi. Matt's last argument made it clear to me that at best he is a troll, and at worst just incapable of sustained logical thought.

These two aren't mutually exclusive I suppose.

Posted by: Troy at December 17, 2003 09:48 AM | PERMALINK

Why not remove the cap on SS contributions? Then, the wealthy, who stop paying SS early in their careers will actually pay in what they get out (note: even those that pay the current maximum are paying for less than 10 years of benefits). Why retain this benefit for the rich while people live longer?

Posted by: Mark at December 17, 2003 10:41 AM | PERMALINK

Matt Young, you are incorrect about the world from 1945-1965 (as well as decontexualized). Social security existed, a more steeply progressive tax system existed, high military spending existed, and a Cold War existed: we were nothing like china.

In addition, the accomplishments of the period from 1945-1965 are forever tainted by de jure segregation, and i for one have no interest in returning to that world.

But your remarks about stealing from other people to satisfy me are offensive and ill-informed in the extreme, and render the rest of your opinions irrelvant and meaningless, since your are clearly ideologically blinkered beyond redemption.

Posted by: howard at December 17, 2003 10:46 AM | PERMALINK

Matt, it takes up to 3 months to get an appointment for a gynocologist in our non-socialist medical system. The cue in Canada or England is much shorter due to socialized medicine. Our cue in America is wealth oriented, as the rich can always get an appointment or a treatment, but the middle class and poor have to wait months, or not have the treatment covered by their health insurance that employers no longer pay for (employees now pay most of the primiums). At least the cue in countries with socialized medicine is based on need and condition with everyone in the same line. Here, the rich have a much shorter line.

And you have to love all these breakthrough medicines who's are developed by scientists at government funded universities with government funded reasearch grants, that are then incorporated into pharmasutical companies to generate huge profits that they can spend on advertising and huge salaries for everyone in the pharmasutical industry including salespeople, who earn way to much. They all get rich off government funded research and have the audacity to charge huge profit margins to the general public. Heck, now because of Bush, the Federal Government does not even have the ability to negotiate with drug makers for the drugs that US taxpayers financed the development of!

Then, the only people that these new drugs or medical proceedures help are the rich, as they are rarely covered by employee funded medical insurance for the middle class and poor!

Posted by: Mark at December 17, 2003 12:16 PM | PERMALINK

Kevin (prolly too late here), I don't think Krugman (or DeLong) has yet really agreed that BUSH's tax cut deficits were a "useful short-term stimulus."

Next October you'll prolly try saying everyone 'agrees that Saddam is terrible and it was good Bush booted him'.

What is especially dishonest, by both Bush and his critics, is to try to claim credit (/lay blame), today, for sum estimates of the non-standard future (5, 7, 10, 11 years). How much tax cut in 2003? in 2004? estimated for next 5 years? next 10 years? OK, 4 distinct numbers, but we need some standardization to be understandable.

Your point about Rep fear of failure is excellent, and the charts are great. I hope the Dems can produce some similar charts of "their" suggested alternative -- but suspect they will prefer not to.

Posted by: Tom Grey at December 17, 2003 04:07 PM | PERMALINK

very enlightening...I rather enjoy listening to the banter instead of joining in. you fellas are on to something here. i'm not the econ kinda guy, and i usually pay a lot of attention to the strategics of the political stage. I must say however, that I've learned quite a bit.

Posted by: ezra at December 17, 2003 05:25 PM | PERMALINK

Another argument against term limits at every level. Bush only has to keep us fooled until November 2004. After that, he never has to face another election.

Posted by: Bill K at December 17, 2003 08:41 PM | PERMALINK

Wait a second - y'all serious want people to pay into SS and NOT get a benefit?

I thought history had already proven that Socialism and Communism doesn't work!

Let me simply opt out completely from Social Security - hey, let me cut my losses right now on this boondoggle "investment" scheme that doesn't hardly match inflation! I will sign a document stating I have no right over what I've already thrown away into the system and am ineligible for "benefits" under it in exchange for the ending of the drain on my paycheck!

And if you cut taxes, you encourage investment, which means more jobs, which means more paychecks, which means....you collect more taxes!

Tax revenue goes UP as the over-all tax rates go DOWN, particularly when those that actually pay the taxes get relief.

How much of the revenue collected by the Federal Government comes from the top 10% of earners?

Little hint - it ain't ten percent.

Posted by: Frank G at December 19, 2003 04:17 PM | PERMALINK

Frank,
Do you even bother to think? Certainly the top 10% of wage earners pay more than 10% of total taxes, but they earn more than 10% of national income too. In a flat tax system, the wealthy would pay more taxes than they do now. For instance, the top 1% of wage earners earn 21% of the national income (Note: That the 21% is far below their actualy % of national income as it does not include income that they hide over seas, through masked capital growth in companies, etc). Under the current tax system, they pay less than 20% of actual tax dollars (this includes income, payroll, and other taxes). When you add in the local and state levels, the percentage of taxes that they pay dropps even further in the neighborhood of 17%!

This leaves the middle-class to shoulders the majority of this nation’s tax burden, which is obscene. The rich should pay more, because they get more value from government and have more to lose then any other group. This includes over $400 Billion a year spent on tax breaks and corporate welfare and the trillions spent nationally on infrastructure, defense and law enforcement that allow the rich to maintain and grow their wealth (i.e. the public road in front of Wal-Mart is more valuable to its board of directors then me (their leveraged profit margin vs me driving slower)). It is the same reason that the insurance on a million dollar house is more than on a fifty thousand dollar house, replacement cost.

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