Deficit spending & Taxes.

[eliza61]

Lots of talk about which candidate will raise taxes, could some one explain some thing. I am soooo "economically challenged" (meaning I don't understand world economics and wall street as well as I probably should but I'm trying) so any answers geared toward the "for dummies" individual would be great.

Currently we are now at about a $5 trillion dollar hole, isn't the goal to reduce that? but it seems like we keep adding to it with bailouts and stimulus checks. How can we not raise taxes eventually? or do we keep writing bad checks as a nation and my great, great grandkids end up with a big mess?

 

[corndog]

Lots of talk about which candidate will raise taxes, could some one explain some thing. I am soooo "economically challenged" (meaning I don't understand world economics and wall street as well as I probably should but I'm trying) so any answers geared toward the "for dummies" individual would be great.

Currently we are now at about a $5 trillion dollar hole, isn't the goal to reduce that? but it seems like we keep adding to it with bailouts and stimulus checks. How can we not raise taxes eventually? or do we keep writing bad checks as a nation and my great, great grandkids end up with a big mess?

Reductions in tax rates always lead to increases in tax revenue.

More money in the free market results in more activity and production, and more creation of wealth, which both result in more jobs and more taxable income.

 

[boredtotears]

One suggestions is to streamline the wasteful gov. spending and stop the pork barrel crap always attached to congressional bills. If the gov. would be run just a little more efficiently we could save millions of dollars.

 

[eliza61]

Reductions in tax rates always lead to increases in tax revenue.

More money in the free market results in more activity in production, which results in more jobs and more taxable income.

But how come that didn't work this time Corndog. I ask this seriously, it seemed like big corps got huge tax breaks (the last couple of years) but it didn't stimulate the economy or they didn't hire like they were suppose to.

Is this where the corporate greed came into play?

 

[Colleen27]

Reductions in tax rates always lead to increases in tax revenue.

More money in the free market results in more activity and production, and more creation of wealth, which both result in more jobs and more taxable income.

That isn't true. The economic principle that illustrates the relationship between tax rates and revenues is called the Laffer Curve, and what it shows is that at either extreme (0 or 100% tax rates), there will be no revenue. The ideal balance lies somewhere in between, but there's no consensus on what number it represents.

It is also a fallacy that economic benefit "trickles down", particularly right now. For the first time in our history, wages are virtually disconnected from productivity. Productivity has been on the rise for quite some time, while wages for the working class have not only failed to rise but have actually fallen when you adjust for inflation.

 

[corndog]

But how come that didn't work this time Corndog. I ask this seriously, it seemed like big corps got huge tax breaks (the last couple of years) but it didn't stimulate the economy or they didn't hire like they were suppose to.

Is this where the corporate greed came into play?

Actually, it did work. It just hasn't been reported.

Even taking into account recent job losses, there have been about 6.5 million new jobs since the tax cut package was signed into law in May 2003. Additionally, each year since there have been double digit percentage increases in treasury revenues received. I understand that you might find this surprising, but it is the reality.

But, even though we've had these huge upticks in treasury receipts, they have not kept pace with with spending.

 

[corndog]

That isn't true.

The numbers prove otherwise.

 

[KarenC]

Actually, it did work. It just hasn't been reported.

Even taking into account recent job losses, there have been about 6.5 million new jobs since the tax cut package was signed into law in May 2003. Additionally, each year since there have been double digit percentage increases in treasury revenues received. I understand that you might find this surprising, but it is the reality.

But, even though we've had these huge upticks in treasury receipts, they have not kept pace with with spending.

6.5 million jobs since May 2003 pales in comparison to the 22 million jobs created between 1993 and 2000, when tax rates were higher.

To the OP, our national debt is actually in excess of $10 trillion. When we're having economic trouble it is probably best to focus on dealing with the trouble and not worry so much about the debt--as a percentage of GDP it is somewhat lower than it has been in other times in our history.

Too bad when times were good we loaded up the deficit.

 

[Colleen27]

But how come that didn't work this time Corndog. I ask this seriously, it seemed like big corps got huge tax breaks (the last couple of years) but it didn't stimulate the economy or they didn't hire like they were suppose to.

Is this where the corporate greed came into play?

Yep. People talk a lot about the impossibility of pure socialism or communism (with a small c, not the capital C Communism that bears no resemblance to Marx's theories) because they fail to take human nature into account, but the thing is, pure capitalism is equally impossible for the same reason. Unregulated capitalism sounds good on paper, but it assumes rational participants who act in the interests of the long term good, not out of short term greed. And as recent history has proven in a big way, that isn't a valid assumption.

 

[LuvDuke]

One suggestions is to streamline the wasteful gov. spending and stop the pork barrel crap always attached to congressional bills. If the gov. would be run just a little more efficiently we could save millions of dollars.

Millions will not do it.

 

[corndog]

For the first time in our history, wages are virtually disconnected from productivity. Productivity has been on the rise for quite some time, while wages for the working class have not only failed to rise but have actually fallen when you adjust for inflation.

This is also not true. Real dollar wage growth (which means it does account for inflation) for nonsupervisory workers since the tax cut plan was enacted has outpaced even the average wage growth during the Clinton administration. You'll never hear that on the 6 o-clock news, either, but the data is readily available.

Job and wage date is available from the Bureau of Labor Statistics and treasury revenue from the income tax is availabe from the IRS.

And, I'll throw in that "the rich" are currently paying a higher burden of income taxes than at any time in history, even higher than under Bill Clinton.

 

[boredtotears]

Millions will not do it.

Would you take millions or nothing? I'd still go for the millions!

 

[LuvDuke]

Would you take millions or nothing? I'd still go for the millions!

If it's just millions, don't waste the taxpayer's time and then crow about what a wonderful job you did.

Btw, having duck for dinner tonight?

 

[eliza61]

6.5 million jobs since May 2003 pales in comparison to the 22 million jobs created between 1993 and 2000, when tax rates were higher.

To the OP, our national debt is actually in excess of $10 trillion. When we're having economic trouble it is probably best to focus on dealing with the trouble and not worry so much about the debt--as a percentage of GDP it is somewhat lower than it has been in other times in our history.

Too bad when times were good we loaded up the deficit.

So the best objective would be to concentrate on stimulating the economy and not worry about the debt? Ok

Next question: (tell me to shut up guys if I start asking really ridiculous questions)
How come we don't make any thing anymore? Outside of grain products do we export any thing. I went to the American Pavillion in Epcot recently and nothing was made in the US. What kind of jobs are we suppose to be creating when it seems to me (I'm a rookie so that might not mean any thing) we import every thing and the only jobs left are low wage menial jobs?

 

[dvcgirl]

Lots of talk about which candidate will raise taxes, could some one explain some thing. I am soooo "economically challenged" (meaning I don't understand world economics and wall street as well as I probably should but I'm trying) so any answers geared toward the "for dummies" individual would be great.

Currently we are now at about a $5 trillion dollar hole, isn't the goal to reduce that? but it seems like we keep adding to it with bailouts and stimulus checks. How can we not raise taxes eventually? or do we keep writing bad checks as a nation and my great, great grandkids end up with a big mess?

Well, you say you're economically challenged but you're asking for good and basic questions that no one seems to bother asking anymore.

And currently our federal debt is 10 Trillion......and growing by the day. Our entitlement programs are 53 Trillion in the hole when you factor in promises we've made with respect to SS, Medicare and the Medicare Prescription drug program.

We have tax rates now at historic lows. And we're deeper in debt than we've ever been and about to enter a serious recession if we're not in one already.

We can't continue down this path thinking that we can actually *cut* taxes further.....and hope to hell that it trickles down to the rest of the population. Not only will taxes have to go up, but spending needs to be cut drastically.

 

[Reflection]

One suggestions is to streamline the wasteful gov. spending and stop the pork barrel crap always attached to congressional bills. If the gov. would be run just a little more efficiently we could save millions of dollars.

I read this information in another thread in which someone had posted the link.

Why Is The Planet's Wealthiest Nation In Debt?

Just like our hypothetical divorced father, the U.S. has two types of expenses: discretionary and mandatory. Discretionary spending accounts for one third of our budget and funds all the those nice little things that we want, but aren't required to fund. This encompasses most agencies you know about, like the Pentagon and the Departments of Agriculture, Education, State, Labor, Justice, Transportation, Commerce, and Homeland Security. All of it is nice, but if Congress wanted, it could quickly swing the legislative mace and kill off the FBI and the Navy.

Discretionary spending is also the source of those pork barrel projects that get Senator McCain in such a huff. Technically, pork barrel projects benefit the residents of one Congressional district—think of that spiffy new park down the street—rather than further any national aim. In a budget of nearly $3 trillion, they cost around $18 billion.

The vast majority of the federal budget is eaten up by the mandatory spending that funds our social safety net. The big entitlements are Social Security, Medicare, and Medicaid. The cost of entitlements is driven by the number of eligible citizens, rather than the annual Congressional appropriations process. To our divorced father, they are the court-ordered child support payments.

Congress has the ability to tweak entitlement program eligibility, or scrap them altogether, but politicians don't like futzing with our entitlements because it's one of the easiest ways to get fired.

Don't Mention The War!

You may have noticed, we're at war. The wars in Iraq and Afghanistan add to our national debt, but not to our deficit. How? Emergency spending. Congress doesn't have a rainy day fund like most responsible families. When the United States' car breaks or we have an unexpected health scare, Congress waives its few existing budget rules and appropriates emergency funds, adding to the debt like any normal expense. For those keeping track, the wars have added almost half a trillion dollars to the debt.

Even in peacetime the Pentagon guzzles nearly half a trillion dollars annually for its operating budget. The defense budget is so large that it was one of the only points of reference for the recent $700 billion bailout.

http://consumerist.com/5062233/how-can-we-save-our-debt+swamped-government

 

[boredtotears]

If it's just millions, don't waste the taxpayer's time and then crow about what a wonderful job you did.

Btw, having duck for dinner tonight?

Would saving the millions cut down on your redistribution check or something?

 

[LuvDuke]

Would saving the millions cut down on your redistribution check or something?

Good grief, I hope not.

 

[Mkgaapril]

I don't know much about this area myself but couldn't we reduce some of the debt by not doing our stupid spending? you know paying 3x's the value of something when you can send to sears for the same item..

 

[Colleen27]

This is also not true. Real dollar wage growth (which means it does account for inflation) for nonsupervisory workers since the tax cut plan was enacted has outpaced even the average wage growth during the Clinton administration. You'll never hear that on the 6 o-clock news, either, but the data is readily available.

Job and wage date is available from the Bureau of Labor Statistics and treasury revenue from the income tax is availabe from the IRS.

And, I'll throw in that "the rich" are currently paying a higher burden of income taxes than at any time in history, even higher than under Bill Clinton.

Wages have not kept pace with inflation in recent years. The only way to argue otherwise (which is a method often used) is to measure inflation by the core CPI index, which excludes food and energy. That's a meaningless measure, however, since there is no way to exclude increases in food and energy costs from the budgets of working Americans.

The rich are paying a higher share of taxes because of the dramatic increases in income inequality. They're also controlling a historically high percentage of our country's wealth. In terms of effective tax rate, however, the current rate for the top bracket is at a historic low.