Timothy Geithner said what?

[Goatnapper'96]

This is my perspective:

1.) We generate less in tax revenue as a % of GDP as we have in a long time. This is caused by the recession as middle class and upper middle class incomes are more negatively affected by a recession. It is a short term problem that IMO makes our longer term systemic issues more pronounced and will hopefully be enough of a catylist to produce some long term meaningful change.

2.) I can accept that we need to abandon the Bush/Obama tax rates...for all income classes.

3.) There is no reasonable tax rate on the wealthy that will ever generate enough tax revenue to support our current spending obligations. Even returning to accross the board income tax rates before the "Bush" teax cuts will fail to generate the revenue needed. However, the "Bush" tax cuts is such an irrational and emotional issue to the Left that giving them a pointless, in that it really generates no revenue but will finally satisfy their irrational lust for the rich to pay their "fair share," such as ending accelerated depreciation for corporate jets makes sense to me. Sometimes I let my wife win arguments for the same reason. Reality is to fix our fiscal situation the government needs to tap the real sources of revenue which is the middle-upper middle class, but some type of emotional victory for the lefties will get them on board and corner them into the massive spending cuts which are more neccesary. The major adjustment will have to be on the spending side. I agree with Senator Inouye that the real cause is our mandatory spending or "entitlements." Further, there is no way to decrease our spending without cutting some benefits. If the rich are paying their "fair share" the Lefties are more likely to accept the painful cuts that will be neccesary.

4.) The progressives have a once in a lifetime chance for a full frontal assault to Defense Spending like no other. There is an interesting coalition of cut spending everywhere Righties and the Lefties have long felt that Ronald Reagan wasn't very smart and would accidently start WWIII pushing the wrong button when he really wanted his maid. It will be interesting how much muscle they take from the Pentagon.

[Jacob]

Second, regarding our race to insolvency, won't we have turned most of the baby boomers into soilent green by 2049? Why is there no downtick in the projected costs to reflect the demise of the boomers?

Good question. First of all, Projecting anything past 2050 is almost pointless. Even going that far is questionable. We don't know what the world looks like in 40 years.

But we do have current demographic information. And, while the babyboomers will eventually pass, the birthrate for the generations that followed were lower that the birthrate from before. So, while we may have less senior to support, we will also have significantly fewer workers to support them. I don't have the numbers, but I wouldn't be surprised to learn that the ratio of workers to retired persons doesn't much improve once we lose the boomers. It may even continue to get worse.

[Goatnapper'96]

It would be really nice for someone to come forward with a symbolic compromise of $1 of spending cuts for every $1 of tax hikes until we get on a path to repay our debt. Sadly, Obama seems a lot closer to this than the Republicans, but no one is very close.

I don't think that is the answer. I think even Obama realizes it has to be a lot closer to $5 cut for every $1 more in revenue. I think one of the reasons he picked the ridiculous accelerated depreciation schedule for corporate jets is to provide his base the emotional support it has needed, wrt taxes on the wealthy, ever since he made the current tax rates his own. The reality is that there is no way to generate the revenues needed, even after significant spending reductions, without tapping the revenue available from the folks making between $100,000-$250,000. I don't think President Obama is willing to go there before the 2012 election, and perhaps never............

[Jacob]

This is my perspective:

1.) We generate less in tax revenue as a % of GDP as we have in a long time. This is caused by the recession as middle class and upper middle class incomes are more negatively affected by a recession. It is a short term problem that IMO makes our longer term systemic issues more pronounced and will hopefully be enough of a catylist to produce some long term meaningful change.

You are right that during the past 2 years we have taken in less tax revenue as a % of GDP (15%)
But it is also true that historically, regardless of the tax rate, the best we've been able to sustain is 18%. http://www.taxpolicycenter.org/taxfa....cfm?Docid=205
Therefore, it would seem obvious that we need to keep spending to around 18% of GDP. That means big cuts, not big tax increases.
I'm fine with making tax reforms, including eliminating a lot of things like deduction for mortgage interest for homes worth more than 500k, farm subsidies, ethanol, and even a small increase in the top tax rate. But its true that we have a spending problem and a revenue problem. The revenue problem is likely fixed by ending the recession.

[Jacob]

It would be really nice for someone to come forward with a symbolic compromise of $1 of spending cuts for every $1 of tax hikes until we get on a path to repay our debt. Sadly, Obama seems a lot closer to this than the Republicans, but no one is very close.

That's a compromise?
First problem there is what is your spending baseline for determining the $1 in cuts? Are we going to use the 2010 budget which included hundreds of billions in stimulus, etc? The 2009 budget which included the same?
If we use the 2008 budget you've got a deal and republicans would jump on board.

[Uncle Ted]

This is my perspective:

1.) We generate less in tax revenue as a % of GDP as we have in a long time. This is caused by the recession as middle class and upper middle class incomes are more negatively affected by a recession. It is a short term problem that IMO makes our longer term systemic issues more pronounced and will hopefully be enough of a catylist to produce some long term meaningful change.

2.) I can accept that we need to abandon the Bush/Obama tax rates...for all income classes.

3.) There is no reasonable tax rate on the wealthy that will ever generate enough tax revenue to support our current spending obligations. Even returning to accross the board income tax rates before the "Bush" teax cuts will fail to generate the revenue needed. However, the "Bush" tax cuts is such an irrational and emotional issue to the Left that giving them a pointless, in that it really generates no revenue but will finally satisfy their irrational lust for the rich to pay their "fair share," such as ending accelerated depreciation for corporate jets makes sense to me. Sometimes I let my wife win arguments for the same reason. Reality is to fix our fiscal situation the government needs to tap the real sources of revenue which is the middle-upper middle class, but some type of emotional victory for the lefties will get them on board and corner them into the massive spending cuts which are more neccesary. The major adjustment will have to be on the spending side. I agree with Senator Inouye that the real cause is our mandatory spending or "entitlements." Further, there is no way to decrease our spending without cutting some benefits. If the rich are paying their "fair share" the Lefties are more likely to accept the painful cuts that will be neccesary.

4.) The progressives have a once in a lifetime chance for a full frontal assault to Defense Spending like no other. There is an interesting coalition of cut spending everywhere Righties and the Lefties have long felt that Ronald Reagan wasn't very smart and would accidently start WWIII pushing the wrong button when he really wanted his maid. It will be interesting how much muscle they take from the Pentagon.

With income taxes I would have no problem with letting the bush tax cuts expire as long as the bush spending was reduced back to where it was or even below that. The spending increases under bush were significant but obama is making him look like a fiscal conservative with his all his spending increases.

Note that actually the bush tax cuts shifted more of the tax burden toward the rich...



To raise significant tax capital by only raising taxes will need to be done with a significant tax rate increase on the middle class because of their numbers.

[ERCougar]

That's a compromise?
First problem there is what is your spending baseline for determining the $1 in cuts? Are we going to use the 2010 budget which included hundreds of billions in stimulus, etc? The 2009 budget which included the same?
If we use the 2008 budget you've got a deal and republicans would jump on board.

I think it's fair to talk 2008 budgets, as the stimulus was temporary. I still don't think we'd have a deal, although I could be wrong on that. I haven't heard any Republicans make the point that they simply want to return to 2008spending levels.

Obviously, I might not be following this closely enough. But doesn't that say something about how well they're communicating their message? I'm not the dumbest voter out there.

[Goatnapper'96]

I think it's fair to talk 2008 budgets, as the stimulus was temporary. I still don't think we'd have a deal, although I could be wrong on that. I haven't heard any Republicans make the point that they simply want to return to 2008spending levels.

Obviously, I might not be following this closely enough. But doesn't that say something about how well they're communicating their message? I'm not the dumbest voter out there.

I agree on the communication. The entire debate is shifting to whether or not to raise taxes. That is why I say give up the accelerated depreciation for corporate jets, the folks at HuffPo would have their victory and the Politicians can then move to cut spending significantly.

I will say that I recall that Republican were making the 2008 spending levels a battle cry when the out of control deficit began to get significant attention throughout 2009 and 2010, but the debate is shifting to role of tax increases.

[ERCougar]

With income taxes I would have no problem with letting the bush tax cuts expire as long as the bush spending was reduced back to where it was or even below that. The spending increases under bush were significant but obama is making him look like a fiscal conservative with his all his spending increases.

Note that actually the bush tax cuts shifted more of the tax burden toward the rich...



To raise significant tax capital by only raising taxes will need to be done with a significant tax rate increase on the middle class because of their numbers.

Interesting graph.
Your first sentence seems like a reasonable compromise. Why is no Republican saying that (at least in an effective way that the average non-junkie will hear it)?

[Jacob]

I agree on the communication. The entire debate is shifting to whether or not to raise taxes. That is why I say give up the accelerated depreciation for corporate jets, the folks at HuffPo would have their victory and the Politicians can then move to cut spending significantly.

I will say that I recall that Republican were making the 2008 spending levels a battle cry when the out of control deficit began to get significant attention throughout 2009 and 2010, but the debate is shifting to role of tax increases.

Do you really believe the corporate jet benefit is what's holding up a deal? It's $3B out of the alleged $400B that the president wants in tax increases. The corporate jets are a complete red herring.

[Goatnapper'96]

Do you really believe the corporate jet benefit is what's holding up a deal? It's $3B out of the alleged $400B that the president wants in tax increases. The corporate jets are a complete red herring.

My point is that I think the Republicans need to give this concession, of some type of tax increases, in order to assuage the bloodlust that the hard left has had for the rich ever since President Bush decreased personal income taxes. I don't think the issue is really financial to many in the hard left, it is purely emotional. I am not sure if legitimate spending cuts are going to materialize until the Left has some type of feeling of victory, especially in light of the extension of the Bush tax cuts last December. It is still a democracy and the left is really demorialized and any type of symbolic victory, even as meaningless as the numbers indicate the corporate jet is, where the lefties can convince themselves they are sticking it to the rich will help to get them on board to cut what needs to be cut.

[Jacob]

I think it's fair to talk 2008 budgets, as the stimulus was temporary. I still don't think we'd have a deal, although I could be wrong on that. I haven't heard any Republicans make the point that they simply want to return to 2008 spending levels.

Obviously, I might not be following this closely enough. But doesn't that say something about how well they're communicating their message? I'm not the dumbest voter out there.

When they talk about cutting spending, they are talking about cutting spending compared to how much is currently projected to be spend over the coming years. One of the objections to stimulus, etc was that it would create a new spending baseline and I think that's what has happened.

So, when they say they are cutting $1T, they are not cutting $1T, they are claiming they will save $1T over the next 10 years. Here are the total (projected) outlays in current dollars from 2008-2013
2008: 3T
2009: 3.5T
2010: 3.7T
2011: 3.8T
2012: 3.7T
2013: 3.9T
2014: 4.1T
2015: 4.4T
http://www.gpoaccess.gov/usbudget/fy11/pdf/hist.pdf
So we see that there wasn't much that was temporary about stimulus.
We also see that returning to 2008 spending would be an 800 billion dollar cut from the projected 2011 spending levels, not an amount saved over the next 10 years.

Even if we merely kept spending at the current 2012 projection over the next 5 years, we'd "save" $800B over 3 years based on how I believe they are counting these cuts! See how easy this really is?

So, when you say you want a dollar for dollar spending cut to tax ratio, you are really saying that you are fine with the spending continuing to increase and also want taxes to increase, based on the parlance that the political class is using.

So you can see that the democrats are winning the communications battle, because everybody is talking about corporate jets, and this has nothing to do with corporate jets.

[Jacob]

My point is that I think the Republicans need to give this concession, of some type of tax increases, in order to assuage the bloodlust that the hard left has had for the rich ever since President Bush decreased personal income taxes. I don't think the issue is really financial to many in the hard left, it is purely emotional. I am not sure if legitimate spending cuts are going to materialize until the Left has some type of feeling of victory, especially in light of the extension of the Bush tax cuts last December. It is still a democracy and the left is really demorialized and any type of symbolic victory, even as meaningless as the numbers indicate the corporate jet is, where the lefties can convince themselves they are sticking it to the rich will help to get them on board to cut what needs to be cut.

My point is that the Democrats don't really care about the corporate jets. The republicans would agree to the deal if it included mere tax increases on corporate jets and oil subsidies. That's not what the democrats want and they won't agree to it.

You say the Rs have to give something to the Ds. Why isn't the reverse true? Why cant the debt ceiling deal be just cuts? This deal isn't going to balance the budget. We can raise taxes later. This deal is just to kick the can down the road for another year.

[Goatnapper'96]

My point is that the Democrats don't really care about the corporate jets. The republicans would agree to the deal if it included mere tax increases on corporate jets and oil subsidies. That's not what the democrats want and they won't agree to it.

You say the Rs have to give something to the Ds. Why isn't the reverse true? Why cant the debt ceiling deal be just cuts? This deal isn't going to balance the budget. We can raise taxes later. This deal is just to kick the can down the road for another year.

I don't think the debt ceiling can only be just cuts because I don't think the Democrats will agree to that. However, much of what Obama is throwing out there is mostly just symbolic, so the reality will be of a very, very small increase in tax revenues and hopefully a massive cut to spending. Democrats get what they want because they can tell the Lefties that the rich are paying more, even if it isn't an appreciable amount, and the Republicans can get what they want which is a massive cut in spending. Then they can take all of next year to reform tax revenues.

[ERCougar]

When they talk about cutting spending, they are talking about cutting spending compared to how much is currently projected to be spend over the coming years. One of the objections to stimulus, etc was that it would create a new spending baseline and I think that's what has happened.

So, when they say they are cutting $1T, they are not cutting $1T, they are claiming they will save $1T over the next 10 years. Here are the total (projected) outlays in current dollars from 2008-2013
2008: 3T
2009: 3.5T
2010: 3.7T
2011: 3.8T
2012: 3.7T
2013: 3.9T
2014: 4.1T
2015: 4.4T
http://www.gpoaccess.gov/usbudget/fy11/pdf/hist.pdf
So we see that there wasn't much that was temporary about stimulus.
We also see that returning to 2008 spending would be an 800 billion dollar cut from the projected 2011 spending levels, not an amount saved over the next 10 years.

Even if we merely kept spending at the current 2012 projection over the next 5 years, we'd "save" $800B over 3 years based on how I believe they are counting these cuts! See how easy this really is?

So, when you say you want a dollar for dollar spending cut to tax ratio, you are really saying that you are fine with the spending continuing to increase and also want taxes to increase, based on the parlance that the political class is using.

So you can see that the democrats are winning the communications battle, because everybody is talking about corporate jets, and this has nothing to do with corporate jets.

No. The Democrats are winning the communications battle because the only thing I hear out of Republicans' mouths is that they won't consider any plan that raises taxes. Period. They come off looking like ideologues while Obama looks like the problem-solver.

You make some interesting points, but why am I not hearing them before now? I'd guess that I pay more attention to these things than your average voter. It's the Republican's job to at least make an effort to communicate some of this stuff, if they want my support. Apparently, they don't.