Republicans and the dreaded "D" word

[hivoltage]

In the 2004 debates, President Bush said that he would cut the deficit in half within 5 years.

After running up bills like Paris Hilton on Rodeo Drive, I was certain that the Republican Congress would not be able to stop gorging themselves at the public trough enough to counteract the fat tax reductions.

It appears now that I may have been mistaken. With the bounceback of the stock market, the real estate market, and corporate profits, this year's deficit is projected to be $100 billion less than last year's monster.

While there is always smoke and mirrors involved in deficit calculations, $100 billion is not the product of an extra zero or two.

Now about the $43 trillion of unfunded future obligations (medicare, pensions, and social security) that the government is ignoring...

[MrMacphisto]

*shrugs* I'm more worried about the trade deficit than the government budget. As we continue to consume way more than we produce, our currency decreases in value. If our currency keeps falling in value, we're fucked. The only upside to decreasing currency value is that the deficits you amass are literally worth less.

[ShadowTklr]

And to that point, one only need look at the housing market to see what your money will buy you these days. Simply incredible.

[Strider]

Anyone who trusts either major party on the defecit is a fool.

[hivoltage]

But a Democratic President and a Republican Congress recently (in the 1990's) made dramatic deficit reductions that gave George Bush billions to spend on the war, homeland security, and tax cuts.

However, it certainly doesn't look like there is any incentive for deficit reduction when one party holds Congress and the Presidency. It is just too tempting to buy the next elections.

[Strider]

A couple things;first,divided control over the branches of government will virtually always guarantee some sort of legislative logjam as each side attempts to undercut the others.

Second,the Dems seem to have all but forgotten the lessons of Clinton-style centrism,and the Republicans(with a couple obvious exceptions,ie:Ron Paul)seem to be moving back towards their welfare-statist roots.So don't expect anything drastic.

[MrMacphisto]

A couple things;first,divided control over the branches of government will virtually always guarantee some sort of legislative logjam as each side attempts to undercut the others.

Which is why government is futile to begin with. No matter how good the system is, it fucks up eventually. Yet, without government, humans are left to their animalistic tendencies. It's kind of a no-win situation.

Then again, dividing control over the branches of government is what this country was based on: checks and balances. With little Democratic power to counter the Republicans, a lot of bad shit will continue to occur.... But... it does make things very interesting. I'm curious to see what happens to America if we increase the Republican power margin. I have a feeling it will be the end of this era....

Second,the Dems seem to have all but forgotten the lessons of Clinton-style centrism,and the Republicans(with a couple obvious exceptions,ie:Ron Paul)seem to be moving back towards their welfare-statist roots.So don't expect anything drastic.

You say this like having no social programs is a good idea. Oh wait, I forget... You're libertarian. Trust me, when the corporations are allowed to act as they please as the poor suffer, things turn out even worse than they would under a police state. Finding a balance between governmental power and corporate power is key, but it would appear America is not interested in balancing things. If it doesn't change its ways soon, there will be nothing left for us to balance at all....

[Strider]

You're quite the defeatist.

[jpmtickle]

If everyone (including every child) will simply write their check for $145,000 we'll just take care of the deficit today. However, that doesn't take care of the huge monstrosity of social security, medicare, and veterans benefits looming in the very near future.

Great point about the trade deficit as well. With America's economy turning service-based, we will only continue to consume foreign products quicker and continue to get rid of manufacturing jobs here at home.

Seems rather backwards if you ask me, but nobody did. :evilha:

JP

[MrMacphisto]

You're quite the defeatist.

Defeatist, realist... it's all in the eye of the beholder. But hey, let's "starve the government." Perhaps, we'll discover the literal nature of that metaphor among those who are less fortunate....

[Strider]

Why are you taking it as a given that without an interventionist government people won't be able to fend for thesmelves?

[MrMacphisto]

Well, I never said that, Strider. People have obviously fended for themselves long before the creation of civilization. We can survive in the wild quite well if we are pressed to it, and America survived through the Gilded Age as well. I just would rather prevent us from entering another Gilded Age.

[Strider]

Up until industrialization of East Asia in the past 30 years,what's called 'the gilded age' was the single biggest burst of wealth creation in human history.That's a bad thing?

[MrMacphisto]

That "burst of wealth" you refer to was the capital accumulation that occurred among mostly the elite rich. The Gilded Age I speak of refers to the early 1900s in America. The top 1% of the country's rich had about 95% of the country's wealth. That's a burst of wealth alright, but not to the benefit of the average person. Industrialization began long before the Gilded Age, and the benefits of technology allowed many societies to raise their standards of living. I'm not against industrialization; I'm against the rich hoarding all the wealth for themselves.

For example, do you honestly believe Bill Gates is truly worth the billions he is credited with? Doesn't it seem far more logical to assume that a lot of the success he has had is the result of his workers implementing his plans? Corporate executives understandably earn more than most of us, but their workers should get a larger portion of the profits companies make. Without the workers, the company is worth nothing. A corporate board is but a small group of people that is abominably overpaid.

We are headed for the Gilded Age once again, as taxes for the highest brackets fall faster than that of the middle and working classes. The burden of governmental funding has shifted to our country's labor, while the elite rich make so much money it's ridiculous....

[Robace252]

Where as I can see both points of view I have a couple of things to say/ask on this subject. Ive heard of this "deficit" business since 1980 and Ive never seen any problems caused because of it. I have no idea how we can mention and mention something that seems to have no affect on anything other than the media and making people afraid that our money will somehow, someday might not be worth anything. Again for 25 years Ive been hearing it and nothing truly negative has happened.
Second..I read somewhere once that if we abolished all taxes and added instead a nationwide 2% tax extra on all goods and services we would not only cut the deficit in less than 2 years, within 10 years we would not only be able to have free health care in this country but pay off the foregin debt as well. Why hasnt this ever gotten serious consideration. Im not an economist, so maybe some of you that seem to have a better grasp on this subject could inform me...Im always looking to learn. Which if true, heck Id pay an extra 2 cents on the dollar for it.

[MrMacphisto]

Second..I read somewhere once that if we abolished all taxes and added instead a nationwide 2% tax extra on all goods and services we would not only cut the deficit in less than 2 years, within 10 years we would not only be able to have free health care in this country but pay off the foregin debt as well. Why hasnt this ever gotten serious consideration. Im not an economist, so maybe some of you that seem to have a better grasp on this subject could inform me...Im always looking to learn. Which if true, heck Id pay an extra 2 cents on the dollar for it.

It hasn't gotten serious consideration, because it's bullshit.

The simple truth of the matter is that good social programs require significant taxes. If you want lower taxes, you'll have to deal with less public amenities. Certain people in this country would love to ditch all social programs because they are either rich, or they just don't realize that, if there are no social programs, there is more crime.

Granted.... given the crime rates already present in America, maybe we should just dump social programs and let nature take its course. It certainly would serve as an effective form of population control....

[hivoltage]

The typical national sales tax rate given to replace the income tax and payroll tax would need to be in the neighborhood of 20-40% to break even (usually about 23% by its proponents):

http://www.foxnews.com/story/0,2933,131693,00.html

And it would have a very negative effect on spending. Save your money, and then leave the country to retire and spend your non-taxed savings elsewhere!

[Robace252]

Mr Macphisto, I figured it might have been BS, thats why I asked..Ive never been one to read the Wall St. Journal or Money magazine and I figured someone could tell me. Although the only thing that lead me to even think about it was the fact of all the people (me included) that usually recieve a tax refund bigger than what I put in every year, and the ammount of "millionarie rich eliteist" that get away with paying little or no taxes also. I figured that if there was a nationwide sales tax on everything that Bill Gates couldnt say..no Im not $1.08 for that coke, Im only paying $1.06. Those were the only things that led me to think that in away way it was a feasable idea.
Geesh I need to re-take an ecomonics class. Anyone teaching ROFL.
What do you make of that "Flat Tax" stuff that I heard a little about a few years ago. Again I dont understand that stuff, maybe someday I should learn a little more.

[MrMacphisto]

Rob, the flat tax is only feasible on a small scale. You couldn't effectively implement a federal flat income tax without cutting out most social programs and cutting the military budget to shreds. You can implement a flat income tax successfully on a state or provincial level, however...

A good example of a successful flat tax is Alberta's flat provincial income tax. Canada still has a bracket system for national income taxes, but Alberta created a flat tax for its province because of a number of reasons. First of all, Alberta only has about 3 million people (compared to say... our home state of NC, which has over 8 million people). Second of all, they wanted to encourage a lot of business growth in Alberta by implementing lower corporate taxes as well. Third of all, they have no provincial sales tax (I think it's the only Canadian province without one) and no PAYROLL tax (try finding that in America), so the perfect economic supplement to these is a flat provincial income tax. Oh yeah, and Alberta also has the lowest gasoline tax among all Canadian provinces (and yes, Canadians specifically tax gasoline like a lot of countries do -- America hopefully won't begin this practice). Anyway, Alberta's flat income tax is only 10%.

As a result of this flat tax (and having significantly lower taxes than the rest of Canada and even much of the U.S.), Alberta has become the fastest growing and most economically promising province of Canada. Of course, having a local oil supply also helps. Plenty of U.S. states could successfully implement a flat income tax if the proper percentage was set, and the funds were used properly. In fact, I think a few states have done this already. Whatever the case, a state level flat tax generally works a lot better than not having an income tax at all, because you'll notice that the states without an income tax generally have inadequate social programs (Texas and Tennessee come to mind).

[kurchatovium]

What people fail to realize about taxes is the difference between wealth and tax. Wealthy people always get around taxes by not claimiing income or diverting income by appropriate business losses. The average joe can only hope to become rich or "well off" by earning enough income to get into that category. Thus taxes do more to hurt people trying to work their way up the road to success than to those who are already wealthy. The trick is to quit trying to find ways to punish people for being rich as it just does not work. Just my humble opinion though. :D

[MrMacphisto]

What people fail to realize about taxes is the difference between wealth and tax. Wealthy people always get around taxes by not claimiing income or diverting income by appropriate business losses. The average joe can only hope to become rich or "well off" by earning enough income to get into that category. Thus taxes do more to hurt people trying to work their way up the road to success than to those who are already wealthy. The trick is to quit trying to find ways to punish people for being rich as it just does not work. Just my humble opinion though. :D

While I agree that rich people have plenty of ways to dodge taxes, you have to tax a certain amount in order to fund social programs. Without social programs, you have major poverty issues and increased crime.

[Robace252]

Thanks Mac, that did help a little...oh btw what do you think about our state FINALLY getting a lottery? Just Curious.

[MrMacphisto]

Thanks Mac, that did help a little...oh btw what do you think about our state FINALLY getting a lottery? Just Curious.

No prob... :) The lottery is a great idea... especially when you consider all of our neighboring states have had them for several decades. I figure that the religious right in NC finally pulled their heads out of their asses this time around. I wonder if they'll stay this way long enough to realize that hog farms have been turning their groundwater into sewage.

[Robace252]

I agree MacPhisto...its about time we had a freakin lottery...now to figure out how many tickets Ill buy the first day of sales...hmmmmmmmm
And the hogfarms will continue to thrive here...like we dont already have enough s**t in this state to being with...LOL

[Strider]

The Gilded Age I speak of refers to the early 1900s in America.

The 'Gilded Age' is usually considered by historians to begun in the last 30 years of the 19th century and have ended around 1900.

The top 1% of the country's rich had about 95% of the country's wealth. That's a burst of wealth alright, but not to the benefit of the average person.

Incorrect.Between 1860-1890 real manufacutring wages in the US climbed 50%,between 1890-1914,they climbed 37%.(1)By 1900,American workers already had a living standard far and away above their(much more heavily unionized)counterparts in Europe.No less a figure than Leon Trotsky was absolutely blown away by the living standards of the American working class when he spent time in New York during the 1910s.From his autobiography,describing "an apartment in a workers' district":

That apartment,at eighteen dollars a month,was equipped with all sorts of conveniences that we Europeans were quite unused to:electric lights,gas-cooking range,bath,telephone,automatic serivce elevator,and even a chute for the garbage.These things completely won the boys[his sons]over to New York.(2)

For example, do you honestly believe Bill Gates is truly worth the billions he is credited with?

Yes.

Doesn't it seem far more logical to assume that a lot of the success he has had is the result of his workers implementing his plans?

Certainly,and they're compensated accordingly.But what would they be doing if he hadn't come up with the plans to be implemented in the first place?And in that respect,shouldn't it be considered how much work he has to do to stay where he is?It's worth noting that the top 10% of income earners in this country work more hours per week than the bottom 10% of income earners.(3)It's also worth noting that Gates has voluntarily given away billions of dollars to charity without the gun of redistribution pointed at his head.

Without the workers, the company is worth nothing. A corporate board is but a small group of people that is abominably overpaid.

Why do you get to decide who's overpaid and who isn't?Wealth is not a static quantity and wealth creation is not a zero-sum game.Someone isn't poor because someone else is rich.What matters is how well off I am,not how well off I am when compared to Bill Gates or Ted Turner.The fact that those individuals have tens of billions of dollars doesn't hurt me in any way,shape,or form unless I allow myself to get envious that they can afford things I can't.The only reason someone could take issue with one individual being fabulously wealthy while another is completely capable of living a comfortable life is if they think wealth is a bigger problem than poverty.

(1)http://www.mises.org/fullstory.aspx?control=1685&id=74
(2)Leon Trotsky,My Life pg. 271(notation mine)
(3)The Economist,July 14th

[MrMacphisto]

Well... Strider, let me ask you this then. How would you propose solving the issues of poverty in America?