So, the Republican party "Pledge," issued yesterday by their Congressioinal leadership, calls for (1) extending all of the Bush tax cuts - permanently: and (2) balancing the balancing the Federal Budget.
Our current budget shortfall is $1.3 Trillion per year. If the plan involves a refusal to raise anyone's taxes, then it must involve a plan to cut spending to the tune of $1.3 trillion dollars (out of a budget of nearly $3.6 trillion in 2010). Here is how federal spending breaks down (approximate numbers):
Medicare, Medicaid, and Similar Programs - $1.18 Trillion (33%)
Defense - $720 Billion (20%)
Social Security - $756 Billion (21%)
Interest on the National Debt - $288 Billion (8%)
The Rest of the Federal Government - $648 Billion (18%)
Assuming that Republicans have no intention of cutting medicare, defense, or social security (they mentioned no such intention), and acknowledging that they have no ability to discontinue interest payments on the national debt, this sounds like one hell of a plan!
The Republicans are fundamentally unserious. They seek power for its own sake.
Joe H.
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It Is Accomplished
8 years ago
5 comments:
The intent of the plan is not to balance the budget right away, but to generate surpluses over the long-term by increasing revenues over time through tax cuts, freezing the discretionary spending, and the tackling the entitlement programs (first by repealing the Obama healthcare legislation, which will inevitably balloon up like SS, and then figuring out how to deal with the other entitlements, although they kind of sidestepped that in the Pledge).
This is the same formula that the GOP used in 1994, which did not lead to surpluses until 1998. Of course, they did not have two costly wars to deal with back then, and they were operating at the Clinton tax levels.
Here's what I would propose:
-Institute the Fair Tax, which will drastically the way that revenue is collected, and allow for a raise in taxes for corporations and wealthy individuals that is somewhat invisible. This will get rid of the loopholes that allow corporations and rich people to pay only only a small fraction of the tax bill relative to their earnings thereby evening the playing field, will allow us to actually collect revenues from illegal immigrants, and will encourage global corporations to do business in the United States. Let's face it- Obama's "Tax the rich" mission is a hollow initiative because it looks good at a surface level, but will not result in any meaningful rise in tax revenues unless it is accompanied by a shut down in some of the loopholes (They will probably open more loopholes to offset the rise in taxes for many of their financial supporters). The Fair Tax would also encourage more saving and investment, individual people to start more businesses, and would increase national productivity by removing so much of the bureaucracy associated with keeping receipts for tax deductions, etc. They could even make it an embedded tax like it is in Germany where the tax is already included in the price of the goods, as opposed to being tacked on later. This will also allow us to shift much of the IRS mission over to CBP to not only police possible smuggling activity to avoid paying the Fair Tax, but to combat the growing crime that is rampant on our borders.
-End the wars, or at least make Iraq and Afghanistan pony-up more resources to pay for them.
-Cut government spending, not in terms of money that goes directly toward paying for programs, but the overhead/bureaucracy that goes into managing these programs (i.e. personnel and equipment).
We may not agree on every other issue, but I hope that we could at least agree on that :)
Justin,
I agree that the plan is not to balance the budget right away. My point is that there is no plan at all. I certainly I don't agree that the plan is to increase revenues over time through tax cuts. Even conservative economists - including Allen Greenspan - concede that tax cuts do not pay for themselves. They cost the government money. Big money! The Republican leadership knows this, so that can’t be their plan. Moreover, “tackle entitlements” means cutting them, dramatically. If that’s their plan, good luck!
I don't recall Republicans doing any of the things you mentioned in 1994. They tried (and failed) to force Clinton to accept deep cuts in Medicare (government shutdown). Otherwise, none of the things you mention happened - so they couldn't have lead to surpluses in 1998.
With regards to your recommendation of the so called “fair tax,” I think we should stick with neutral language when we propose something. Whether a national sales tax is “fair” or not is subject to debate. Calling it “fair” is “begging the question,” which means you’re assuming what you need to prove. I don’t think a national sales tax is fair - it falls hardest on those who need to spend more of their income just to live. And that doesn’t even consider the practical problems of implementing a national sales tax – double taxation for older people whose income has already been taxed as income – avoidance behaviors distorting commercial transactions, and so forth.
I’m all for simplifying the tax code and eliminating the loopholes – which are mostly in place as the result of rich people lobbying for their own benefit. I think we would be well served by the relatively simple (or pure) progressive tax code that applies to the vast majority of people right now. A few sensible exemptions, deductions and credits, and nothing more, would suit me just fine. It would also make the tax code vastly simpler, which would save a lot of wasted time and money.
An embedded tax (or value added tax) would be far better than a national sales tax – it would get rid of the bureaucracy and would make avoidance behaviors impossible. But it is still highly regressive, so I think a simplified (purer) progressive income tax is the fairer way to simplify our tax code.
I don’t know what you mean by “growing crime that’s rampant on our borders.” The FBI recently issued crime statistics indicating that crime in our border states has dropped significantly.
I agree that we should end the wars – including the so called “war on terror.” I think the war in Afghanistan is pointless. Also, being in a perpetual state of war is destroying the rule of law as it applies to our political elites. That is a very dangerous thing.
Yes, I agree that we should wage a “war on government waste and corruption.”
Best wishes,
Joe
Justin,
I agree that the plan is not to balance the budget right away. My point is that there is no plan at all. I certainly I don't agree that the plan is to increase revenues over time through tax cuts. Even conservative economists - including Allen Greenspan - concede that tax cuts do not pay for themselves. They cost the government money. Big money! The Republican leadership knows this, so that can’t be their plan. Moreover, “tackle entitlements” means cutting them, dramatically. If that’s their plan, good luck!
I don't recall Republicans doing any of the things you mentioned in 1994. They tried (and failed) to force Clinton to accept deep cuts in Medicare (government shutdown). Otherwise, none of the things you mention happened - so they couldn't have lead to surpluses in 1998.
With regards to your recommendation of the so called “fair tax,” I think we should stick with neutral language when we propose something. Whether a national sales tax is “fair” or not is subject to debate. Calling it “fair” is “begging the question,” which means you’re assuming what you need to prove. I don’t think a national sales tax is fair - it falls hardest on those who need to spend more of their income just to live. And that doesn’t even consider the practical problems of implementing a national sales tax – double taxation for older people whose income has already been taxed as income – avoidance behaviors distorting commercial transactions, and so forth.
I’m all for simplifying the tax code and eliminating the loopholes – which are mostly in place as the result of rich people lobbying for their own benefit. I think we would be well served by the relatively simple (or pure) progressive tax code that applies to the vast majority of people right now. A few sensible exemptions, deductions and credits, and nothing more, would suit me just fine. It would also make the tax code vastly simpler, which would save a lot of wasted time and money.
An embedded tax (or value added tax) would be far better than a national sales tax – it would get rid of the bureaucracy and would make avoidance behaviors impossible. But it is still highly regressive, so I think a simplified (purer) progressive income tax is the fairer way to simplify our tax code.
I don’t know what you mean by “growing crime that’s rampant on our borders.” The FBI recently issued crime statistics indicating that crime in our border states has dropped significantly.
I agree that we should end the wars – including the so called “war on terror.” I think the war in Afghanistan is pointless. Also, being in a perpetual state of war is destroying the rule of law as it applies to our political elites. That is a very dangerous thing.
Yes, I agree that we should wage a “war on government waste and corruption.”
Best wishes,
Joe
Justin,
I agree that the plan is not to balance the budget right away. My point is that there is no plan at all. I certainly I don't agree that the plan is to increase revenues over time through tax cuts. Even conservative economists - including Allen Greenspan - concede that tax cuts do not pay for themselves. They cost the government money. Big money! The Republican leadership knows this, so that can’t be their plan. Moreover, “tackle entitlements” means cutting them, dramatically. If that’s their plan, good luck!
I don't recall Republicans doing any of the things you mentioned in 1994. They tried (and failed) to force Clinton to accept deep cuts in Medicare (government shutdown). Otherwise, none of the things you mention happened - so they couldn't have lead to surpluses in 1998.
With regards to your recommendation of the so called “fair tax,” I think we should stick with neutral language when we propose something. Whether a national sales tax is “fair” or not is subject to debate. Calling it “fair” is “begging the question,” which means you’re assuming what you need to prove. I don’t think a national sales tax is fair - it falls hardest on those who need to spend more of their income just to live. And that doesn’t even consider the practical problems of implementing a national sales tax – double taxation for older people whose income has already been taxed as income – avoidance behaviors distorting commercial transactions, and so forth.
I’m all for simplifying the tax code and eliminating the loopholes – which are mostly in place as the result of rich people lobbying for their own benefit. I think we would be well served by the relatively simple (or pure) progressive tax code that applies to the vast majority of people right now. A few sensible exemptions, deductions and credits, and nothing more, would suit me just fine. It would also make the tax code vastly simpler, which would save a lot of wasted time and money.
An embedded tax (or value added tax) would be far better than a national sales tax – it would get rid of the bureaucracy and would make avoidance behaviors impossible. But it is still highly regressive, so I think a simplified (purer) progressive income tax is the fairer way to simplify our tax code.
I don’t know what you mean by “growing crime that’s rampant on our borders.” The FBI recently issued crime statistics indicating that crime in our border states has dropped significantly.
I agree that we should end the wars – including the so called “war on terror.” I think the war in Afghanistan is pointless. Also, being in a perpetual state of war is destroying the rule of law as it applies to our political elites. That is a very dangerous thing.
Yes, I agree that we should wage a “war on government waste and corruption.”
Best wishes,
Joe
Joe,
The "Fair Tax" is just the term that was given to that particular Tax plan by it's creator. Obviously there is some marketing involved in the choice if the name, but I didn't come up with that name on my own.
I agree that it should be a VAT (like the German embedded tax, or MWST that I had mentioned) instead of a national sales tax. In addition, this would be implemented to replace our current tax code and would not result in double taxation- this is how it is laid out in the "Fair Tax" plan, which again is not something that I just made up on my own. The theory of the "Fair Tax" is that it it taxes consumption rather than income, which promotes different types of money behaviors in the populace, but does not necessarily result in higher prices for goods since corporations would not pay income taxes either, and would therefore pass the savings on to consumers.
As mentioned before, this will not result in double taxation, but will instead remove the double taxation double standard that is in place today where businesses get to buy stuff with before tax money, while normal working stiffs have to buy stuff with after tax money. That's not necessarily "Fair" is it?
I retract my statements on the 1994 "Contract with America" directly resulting in the budget surpluses from 1998-2000. What is interesting is that during those years, there was a marked increase in tax revenue, without any accompanying tax increases. Dot com boom anyone?
While conducting further research, I also found that the federal budget has increased .7 Trillion dollars under Obama in just two years (from 3.1 T to 3.8 T). That's close to the amount that Bush increased spending (.8 T) during eight years in office, with a huge jump occurring around 2006 (most likely an increase in war spending). Referencing the GOP "no plan" that proposes freezing discretionary spending at 2008 levels, I believe that would recoup a good portion of that . 7 T that has been tacked on to the budget.
In terms of economists saying that tax cuts do not increase revenue, I found an article on Fact check where economists said that the 2001 and 2003
tax cuts did not produce the revenue that we would have had without the tax cuts (obviously), not that tax cuts do not produce growth, which leads to increased revenue in the long term. I looked at a graph which showed no depreciable decline in US govt receipts during the tax cut era, except for the original Bush/Reid/Pelosi stimulus in 2007. What I do know is that now is not a good time to raise taxes at the expense of our fragile economy.
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