Andrew Sullivan:

I backed Obama because he promised to resist the easy political calculus and do the right thing to grapple with our serious problems. If he ducks the debt test in his SOTU, if he fails to offer substantive measures to bring the debt and deficit and spending down now, then, to my mind, he fails a core test of his seriousness as a candidate and his integrity as a president.

Embrace [the] Bowles-Simpson [deficit commission’s recommendations], Mr. President. It was your commission. It would drastically change the economic climate, reassure international markets, and save the next generation from a debt burden that is simply immoral. Yes, tax reform can be part of this package, as Bowles-Simpson argued. But if Obama simply grabs tax reform and ignores spending, he will have bungled the key moment for his long-term success.

And the nation’s. Because, as all serious, grown-up participants in the conversation about our nation’s long-term fiscal health know (yes, I’m looking at you, Tea Party), you can’t fix this problem if you look at increased revenue and decreased spending as an either/or proposition. It’s a both/and. Nor, of course, can you fix the problem if you declare two-thirds of all federal spending — i.e., Medicare, Social Security and the military (and of course debt service) — off-limits.

Anyway, I generally agree with Sullivan, and I’m very interested and anxious to see what will happen Tuesday (as I mention in the podcast). This is very likely the most important speech of Obama’s presidency, both for his political fortunes and for the nation’s, well, national fortunes. It is a moment of great opportunity fraught with extreme peril. Rise to it, Mr. President.

Bookmark and Share  |  Categories: Elections & Politics (U.S.)

Comments on "Sully throws down the gauntlet"

32 Responses to “Sully throws down the gauntlet”

  1. David K. Says:

    I don’t think he should embrace the Bowles-Simpson commission whole heartedly. With a struggling economy and housing market, cutting the mortgage tax deduction would be horrible. Home owners are already struggling.

    Spending cuts are important but they should be smart cuts.

  2. Brendan Loy Says:

    The deduction would undoubtedly be phased out over time. No law that suddenly and totally eliminates it tomorrow, or next year, would have any chance of passing, nor should it. And that’s fine, because — as much as conservatives want to pretend otherwise — it’s the long-term structural deficit that we need to address, not the short-term fact that we’re trying to get out of a huge economic hole and thus there’s been a lot of spending and a lot less revenue since late 2008. The short-term spike in the deficit will fix itself naturally as the economy recover. The long-term structural deficit won’t. But fears about the long-term structural deficit going unaddressed could, in the much nearer term, spook the markets enough to seriously screw with the recovery and even throw us back into full-on recession, creating a vicious cycle. That’s why we need to take concrete steps now to address the long-term deficit, even if those steps don’t start to take effect for a number of years.

    “Smart cuts” are all well and good, but we need a helluva lot of them. I don’t know enough about the Bowles-Simpson report to say that every recommendation should be adopted, but if a measure is rejected, then we need to replace it with an alternative measure that would have the same effect on the bottom line. We can’t just adopt the most popular 25% of their recommendations and call it a day.

  3. Brendan Loy Says:

    By the way… as a newish homeowner, I personally love the mortgage tax deduction, and am in no hurry to see it go away. But I also know we just can’t afford to keep dumping money into a giant hole. Something’s gotta be done, something big. Going through the budget with a “scalpel” won’t do it, raising taxes on the rich won’t do it, tweaking (but not wholesale reforming) entitlements won’t do it. We need to do a lot of things at once — a lot of big things. And if 2011 isn’t the year to make a serious start on this daunting project, then when? Certainly not 2012, a presidential election year. 2013? 2014? Maybe if Obama is re-elected (so he’s a second-termer and doesn’t need to worry about running again), or if Mitch Daniels somehow gets the GOP nomination, but otherwise… #PANIC

  4. Joe Mama Says:

    Well if you’re serious about cutting spending, then perhaps you should sit on your condescension for a moment and indeed be looking at the Tea Party.

  5. Alasdair Says:

    1) Is a genuine President’s duty and responsibility to the US or to his own (and his party’s) re-election ?
    2) Is a genuine Congresscritter’s duty and responsibility to his constituents or to his own (and his party’s) re-election ?

    Yup – simple questions – yet the answer matters …

    Next – it’s not Obama’s *speech* that matters – it’s what he actually *does* … who he nominates and what *they* do … what instructions he-as-President gives the various parts of his administration … so, for example, DOJ major FAIL with the less-than-colourblind nature of his administrations policies …

    I am entertained by Mr Sullivan ‘returning to the fold’ with the apparent realisation that “It’s the SPENDING, stupid !” … I will be more convinced that the recovery of sanity on Sully’s part is long-term as and when he also addresses the responsibility for the past 4 years in DC that is appropriately assigned to Majority Party Senator Obama (2007-2008 both Houses of Congress) and then President Obama (2009-now) … how’ has he done, again, actions/votes, not just mere words ???

  6. Brendan Loy Says:

    Joe, I tweeted that Rand Paul story this morning. Good for him. Curious to see the details. That said, I stand by my point about Tea Party supporters in general. The overwhelming rhetoric from the Tea Party, and the Right generally, has been that we should ONLY be looking at spending cuts, NOT at increased revenue (i.e., taxes). If anything, they want to lower taxes. Do you seriously dispute this? For goodness sake, the “T.E.A.” in Tea Party stands for “Taxed Enough Already.” I’m not spouting some sort of elitist anti-“Teabagger” hate here (I do that elsewhere!). These are just facts.

    Alasdair, Sullivan has been scrupulously consistent on this issue. He’s not “returning” to any “fold.” He abandoned the GOP in large part because of its fiscal irresponsibility, which he was decrying way back during the halcyon days of the Bush Administration & GOP Congress, when — condescension alert! — most (not all!) of the folks now calling themselves “Tea Partiers” and “deficit hawks” and “fiscal conservatives” were happily going with the flow, and not speaking out. Sullivan has consistently said that he believes Obama was right to spend more in the short-term, because of the unique economic and financial calamity he had to manage, while simultaneously pledging to address the deficit in the medium- and long-term. Sullivan has also consistently said that he believes 2011 would be a key turning point, when those “pledges” need to start becoming more substantive and moving toward action. This has been Sullivan’s position throughout basically the entire Obama presidency. You can disagree with it, and that’s fine, but when you act like Sullivan is somehow having a come-to-Jesus moment here, with a “realisation” and a “recovery of sanity,” you simply paint yourself as ignorant of the topic about which you speak.

    The whole point is that Sullivan is sticking to his guns, NOT changing his mind, NOT backing off or giving Obama an “out” — as Sully-bashers, who believe he has no principles beyond adoration for Obama, would doubtless expect him to. Contrary to their expectations, he’s holding the president’s feet to the fire on this issue, now, exactly as he always said he would.

    Now, as you say, Obama’s actions — and, to the extent we’re judging Sully, Sullivan’s responses to them — matter. They matter a lot. Words alone won’t solve anything… obviously. But Obama’s speech Tuesday will set the agenda and the tone for the rest of the year. It is by no means insignificant. Seriously tackling the deficit in his SOTU is a necessary, though not sufficient, condition for being serious about the deficit in terms of his actions in 2011.

  7. Alasdair Says:

    Brendan #6 – unless I am mistaken, a significant part of the “spending cuts” championed by the TEA Party folk are not actually cuts, but are rather choosing to *NOT* have spending increases, COLAs, added/expanded programs, etc beyond, for example, the end-of-2008 numbers …

    As for Sullivan and “fiscal respnsibility”, it is positively NewSpeak (as is shown in NewsWeak, but I digress), to claim that Sullivan has been consistent (with implications of equal-opportunity-critical of both parties) in his criticism/opposition to federal budgets …

    Take a look at Annual Federal Budget Deficits here – note that the blue shows the annual deficit … it peaked at around $400B for 2004 and was on its way back down again when Congress changed hands with the results of the 2006 election … if Sully found a $400B deficit to be offensive, how the $%@% did he manage to claim that $1200B+ of annual deficit is a ‘Good Thing’ that should be allowed to show how effective it can be ? The 2008 federal deficit was higher than *any* of the GOP Congresses’ deficits under Bush – and the 2009 deficit is proven to have been $1400B or so, is it not ?

    How does Sully rationalise that $800B (Dems) deficit is “good” while $400B (GOP) deficit was “bad” ? (Is it NewsWeak NewSpeak ?)

    Rational folk realise that “It’s the SPENDING, stupid !” …

  8. Brendan Loy Says:

    I won’t too much time on this, since I know you won’t listen to viewpoints that don’t fit into your preconceived notions, but:

    1) The GOP & Bush took a number of actions, both in terms of taxes and spending (in particular Medicare Part B) that increased the long-term structural deficit, even if they did not have a drastic short-term impact that would show up on your handy-handy chart. All experts agree that long-term deficit is the real problem. The GOP & Bush made it worse. When Obama & the Dems ultimately make it worse, or better, remains to be seen, and is precisely what Sullivan is talking about here. Your chart doesn’t speak to this point.

    2) As I already said, Sullivan believes, as do I, that running short-term deficits in the midst of an unprecedented (since the Depression anyway) financial and economic crisis has been justified and necessary, and will not cause overmuch long-term harm, provided that such short-term spending is coupled with a plausible commitment to medium- and long-term deficit reduction. It’s that plausible commitment which is now coming due, and Sullivan is demanding that Obama follow through on. I already explained all this. Pay attention. If you disagree, then disagree, but don’t act like you’re asking me some new question that I haven’t addressed and that I couldn’t possibly address because you’re so obviously and self-evidently right and Sullivan is clearly an idiot. This is not an argument between “rational people” (you) and irrational ones (those who disagree with you). This a debatable issue on which smart people disagree. Sullivan’s position, even if you think it’s wrong, is plausible and defensible, and has been consistent.

    3) While discretionary spending has indisputably skyrocketed since the financial crisis hit, the deficit increase on your chart is, of course, greatly exaggerated because a huge recession also means a great deal of lost tax revenue (fewer people working, making less income to tax; fewer capital gains to tax; etc.), and also increases in “automatic” spending that happens due to the fact that we have a social safety net, which doles out more benefits in tough times than in boom times, and which — and I know this may shock you — Barack Obama did not single-handedly create. So, even if you disagree with the premise that the short-term increase in discretionary spending is justifiable, it is obviously, indisputably unfair to blame Obama for the entirety of the deficit increase, just because he happened to come into office at the precise moment when the economy was imploding, and thus tax revenue was cratering and automatic expenditures soaring, due to the 2007-08 financial crisis. (Which you’ll now tell me was entirely Nancy Pelosi and Harry Reid and Barney Frank’s fault, blah blah blah.) Not to mention the increased spending that was the result of Bush Administration policies like TARP. So, at most, it’s fair to blame Obama for part of the short-term deficit increase, not all of it. And again, it’s not the short-term deficit that’s the primary issue here. It’s the long-term structural deficit that really matters.

  9. Alasdair Says:

    Brendan – it’s not *my* “handy-handy chart” – it’s Wikipedia’s, I suspect based upon the CBO’s own chart(s) of finalised numbers for annual federal deficits … so who is it that “… won’t listen to viewpoints that don’t fit into […] preconceived notions …” ?

    That same chart *does* show what the Dem Congress (including Senator Obama) did to the deficit for which said Dem Congress was responsible – look at the 2009 final numbers – were those not set/caused by the budget that is the responsibility of the Dem Congress … yup, Bush signed it, presumably – and what was he supposed to do ?

    Take a look at this Treasury Statement … notice how the deficit for 2007 (from GOP budgeting under Bush) was approx. $161B – steadily decreasing from the Bush/GOP high of $400B … the 2008 (from Dem budgeting, signed by Bush) deficit was $454B …

    So – a decreasing trend was suddenly reversed – at the same time as the folk who created the Federal Budget were suddenly reversed …

    Coincidence ? I think not …

    Oh – and, just in case you hadn’t noticed, I am persistently consistent in assigning responsibility for budgets to the responsible legislative body … well, in the Dem Congresses’ case, the irresponsible legislative body …

    The President can influence, but it remains the Congress who are responsible …

  10. Brendan Loy Says:

    Alasdair, I am not questioning that the chart is numerically accurate. Of course it is. Nor am I suggesting that you invented the numbers. Don’t be ridiculous. My reference to “your handy-dandy chart” was just a rhetorical flourish, much like your constant use of puns and bad jokes. Pointing out the obvious fact that it came from Wikipedia, and is based on real numbers, does nothing to respond to my comment. What I’m arguing — as I made very clear — is that you are inaccurately characterizing this statistically accurate chart as somehow proving your point with respect to issues (like the long-term structural deficit) that it simply does not speak to, while also ignoring a variety of causes of the recent spike in the chart’s deficit/debt numbers that have nothing to do with discretionary spending decisions by Obama and the Democratic Congress (like the inevitable recession-driven decrease in tax revenue and increase in “automatic” safety-net spending). I expressed myself very clearly on this points, even repeating myself when you didn’t pay attention the first time. But you still aren’t paying attention. It’s not just that we disagree; it’s that you didn’t respond to a single substantive point I made. It’s like I’m talking to a wall. So, feel free to continue talking to yourself about how right you are, but I’m done with this conversation. Anyone else care to chime in, and perhaps say something meaningful?

  11. David K. Says:

    Yeah those Tea partiers sure are in favor of fiscal responsibility, eh Al?

  12. David K. Says:

    I’d also point out that Alasdair has a convenient way of making Congress solely responsibly for things when appropriate to lay blame on Democrats but is more than willing to give the President credit when it suits him as well. And you wonder why you are considered a troll Al?

  13. Brendan Loy Says:

    David, bitching about salary increases of top executive staff — or of legislators, for instance — is sort of like GOP bitching about pork. Sound and fury, signifying nothing. This is poor symbolism by Haley, not politically astute, but it’s not really relevant to anything of substance. Her staff could be working for free and it wouldn’t make a dent in the budget; likewise, their salaries could be doubled and it wouldn’t have much of an impact. The numbers are just too small to substantively matter. I don’t know enough about South Carolina politics to really assess the right and wrongs of the increases; maybe these positions had be denied cost of living increases for a while, or maybe the salaries were too low vis a vis the private sector to attack top talent, or maybe Haley’s move is dumb and unjustified, but regardless, this really says almost nothing about “fiscal responsibility.”

  14. Joe Mama Says:

    Brendan, the reason that “the overwhelming rhetoric from the Tea Party” is focused on spending cuts instead of tax increases is because they correctly realize that the debt crisis can only be addressed in any serious way through the former. As much as liberals want to pretend otherwise, the tax burden in this country is simply too high and too disproportionate for a significant part of the adjustment to occur anywhere except on the spending side in order to bring the debt under control. As Alasdair correctly points out, cutting spending is key, particularly to entitlement programs. Reducing the debt-to-GDP ratio in a meaningful way requires spending cuts at least twice as big as any tax increases, according to many (if not most) economists who are not insufferable bomb throwers for the NYTimes. Moreover, increasing tax rates also increases the risk of a double-dip recession. So while I might agree that Tea Partiers who automatically dismiss any tax increases at all as part of an ultimate debt reduction package (and your assertion of “fact” that the Tea Party as a whole is absolutist in this regard needs to be challenged) are perhaps being unserious, they are clearly focusing on the proper pressure point, which neither party — but especially the Democrats — has been willing to address.

  15. Brendan Loy Says:

    Reducing the debt-to-GDP ratio in a meaningful way requires spending cuts at least twice as big as any tax increases

    I haven’t run the numbers, obviously, but I’m willing to accept this as a plausible hypothesis. However, let’s just say that, if you wanted to make a bet with me that a majority of self-described “conservatives” and “Tea Partiers” would support a package that’s 2/3 spending cuts and 1/3 tax increases (all phased in over time, obviously, so as to hopefully avoid the double-dip recession that we all recognize is an inherent risk of doing deficit reduction at such a delicate time), I would take that bet. I don’t believe such a package would get anything approaching majority Tea Party support. Keep in mind, if one-third (or hell, even a quarter or a fifth) of the necessary long-term deficit reduction package were in the form of tax increases, that’d still be a big tax increase. If Obama were to come out on Tuesday and propose such a package, I believe it would be roundly condemned by the Tea Party Right as a Job-Killing Crushing, Freedom-Destroying, Socialism-Advancing Tax Increase of epic proportions, and supporting or opposing it would instantly become a litmus test for Republicans who don’t want to face a primary challenge in 2012. I’d be delighted to be wrong about this, but like I said, the thrust of the conservative / Tea Party argument has been that, if anything, we should be cutting taxes (which many on the Right fancifully argue will automatically, necessarily, permanently, magically increase revenue), and by no means raising them. So I think I’m on solid ground here.

  16. Sandy Underpants Says:

    I agree. Alisdair presents one of the most dishonest conclusions to the statistics that I can remember seeing for a long time.

    The budget deficit actually decreased in the first year of the Democrats controlling congress, and then the economy collapsed due to Republican rule of the House and Senate for 12 years, coupled with Bush as president for 8 of those 12. Great results to prove that you really don’t want Republicans in these positions. Remember, Bush’s war spending was not included in any of the fiscal year budgets during his presidency.

    I’ve always been a big Ron Paul fan, but not much of a fan of his son. However, if what the article Joe Mama linked winds up being true, then I’m all for him. Let’s see what the cuts are.

    Doing away with the mortgage write-off would destroy the US economy. The only reason I own is because of that, otherwise, what’s the point?

  17. dcl Says:

    At the risk of going completely off topic, one of my biggest disappointments with the Obama administration has been his failure to reverse the trend towards more authoritarian government and granting police powers that blatantly transgress the Constitution and Bill of Rights.

    It’s hard to pinpoint when this started, the Hoover FBI comes to mind as some really blatant transgressions and its not hard to see it long before then, but in the wake of 9/11 the problem at least seems to have accelerated massively. More people die from traffic accidents in (if recollection serves) an average 3 month period in the US than died on 9/11 and yet we’ve cut spending on highway safety progressively since 9/11 and created whole new bureaucracy around anti terrorism with attendant massive spending and spying on citizens.

    The risk calculation and cost benefit analysis is off the wall. And yet under Obama we’ve continued to sacrifice essential liberty, e.g. the fifth amendment etc., for temporary security… and not even really that.

    I’d hoped to see Obama reverse at least some of the more blatant issues of that trend… But thus far seems to be letting DHS run amuck as much or more than Bush did.

    Perhaps I’m just being nostalgic for a time that never existed, or some naive perfect vision of the promise of the Bill of Rights.

    But I have to say, the anti-athoritarian nature of the Libertarian movement is quite attractive.

  18. Alasdair Says:

    Sandy U #16 … disingenuous ‘reasoning’ (not to mention not even spell-checked) …

    The first year that the Dems retook Congress (2007) the federal deficit was indeed lower than 2006 … of course, the budget for 2007 was set in 2006 by, you, you guessed it, the GOP … the first budget results for which the Dems are responsible is the 2008 deficit … and, yup, you got it again, the 2008 deficit was *already* higher than *any* of the prior Dubya/GOP deficits …

    It is interesting how you seem to actually believe that the economy held off on collapsing over the “12 years” until the Dems took over … (grin) …

    Still, Sandy, for *you*, that was a good try …

  19. AMLTrojan Says:

    I reject the lazy notion that getting ourselves out of this debt mess will entail raising taxes in addition to cutting spending. It’s a very lazy logic: Dems are loathe to cut spending; the GOP is loathe to raise taxes; ergo, both will have to happen for there to be any real movement.

    At a minimum, if we start with even half of Dick Armey’s suggestions, we can make a massive dent in the federal deficit. And looking at the historical figures (not just for the federal budget but also for various state budgets), it’s quite obvious that the disconnect between revenue and spending has been almost solely due to unjustifiable increases in rates of spending (the GOP gets plenty of blame for this), and if spending had been held in check, the economic collapse in 2008 would not have created such a massive deficit. But the Obama / Dem reaction of doubling down on spending in the time of crisis was arguably even worse — not just spending money that we definitely didn’t have, but taking money out of the private economy to spend on government projects that ended up not contributing almost any growth to employment or GDP (as largely predicted by conservative critics).

    The other key to zero in on is that raising taxes will slow the rate of GDP growth. Growing our revenue base (i.e. expanding private wealth and capital, from which we draw tax revenue) is a much better path than raising tax rates, which stultifies job creation and economic dynamism. We can argue all day long about where we are on the Laffer Curve, but I can guarantee you which direction raising taxes pushes us.

    The final frontier for undoing this mess is taking Obama at his word when he says his administration will now start applying cost-benefit analysis principles to regulations and executive orders. Absolutely, complying with any rule is going to cost money, and that should be weighed with the purported benefits. The same thought ought to apply to our tax structure, which should drive reforms that not only could be revenue-neutral but spur significant investment and growth. But here’s a hint: Any approach that targets “Evil Big Business / Wall Street” and intends to “make the rich pay their fair share” is going to take us in the exact opposite direction of growth and cost more than it benefits.

  20. Alasdair Says:

    Brendan #10 – try these numbers from here for federal total revenue and expenditure for 2005-2009 … in $Billions

    1999 Receipts 1827.5 Outlay 1701.8 Deficit/Surplus 125.6 –

    2000 Receipts 2025.2 Outlay 1789.0 Deficit/Surplus 236.2 – so revenue up by $197.7B, spending up $87.2B … GOP Congress budget under Clinton – spending increased by less than revenue increased …

    2001 Receipts 1991.1 Outlay 1862.9 Deficit/Surplus 128.2 – so revenue down by $34.1B, spending up $73.9B … GOP Congress budget under Clinton – spending increased, revenue decreased, 9/11 was a significant modifier …

    2002 Receipts 1853.1 Outlay 2010.9 Deficit/Surplus -157.8 – so revenue down by $138B, spending up $48B … GOP Congress budget under Bush II – spending increased a greatly decreased amount, revenue decreased, still 9/11 aftereffects …

    2003 Receipts 1782.3 Outlay 2159.9 Deficit/Surplus -377.6 – so revenue down by $70.8B, spending up $149B … GOP Congress budget under Bush II – spending increase up, revenue decrease down …

    2004 Receipts 1880.1 Outlay 2292.9 Deficit/Surplus -412.7 – so revenue up by $197.8B, spending up $133B … GOP Congress budget under Bush II – spending increased by less than revenue increased … coming out of 9/11 after-effects …

    2005 Receipts 2153.6 Outlay 2472.0 Deficit/Surplus -318.3 – so revenue up by $273.5B, spending up $179.1B … GOP Congress budget under Bush II – spending increased by less than revenue increased …

    2006 Receipts 2406.9 Outlay 2655.1 Deficit/Surplus -248.2 – so revenue up by $253.3B, spending up $183.1B … GOP Congress budget under Bush II – spending increased by less than revenue increased …

    2007 Receipts 2568.0 Outlay 2728.7 Deficit/Surplus -160.7 – so revenue up $160B+, spending up <$7B … GOP Congress budget under Bush II, passed in 2006 – spending increased by less than revenue increased …

    2008 Receipts 2524.0 Outlay 2982.6 Deficit/Surplus -458.6 – so revenue fell by a whole $34B while spending went up by a further $254B … first Dem Congress budget – spending increased by significantly more than revenue increased (yes, it was a small decrease in revenue, actually) …

    2009 Receipts 2105.0 Outlay 3517.7 Deficit/Surplus -1412.7 – so revenue down a further $419B while spending went up a staggering *further* $535.1B ! … second Dem Congress budget … – spending increased, staggeringly, by significantly more than the prior year's spending increase, and in spite of decreasing revenue …

    So – some of us see a pattern here … GOP Congress budgets have spending increases less than revenue increases when events like 9/11 don't intervene … note also that these final budget revenue and spending numbers *include* the effects of the Iraq and Afghanistan Wars …

    The numbers also include the effects of the 2001 (pre 9/11) and 2003 (post 9/11) Bush Tax cuts … interestingly, the chart also shows that, as a percentage of GDP, the GOP seems to like to keep spending at about 20% or a little less … the Dems seem to be favouring around 25% or so for the budgets that we know about, so far – and this is without paying attention to the percentage of GDP that is coming in as revenue …

    The numbers pretty much show that a GOP Congress (under Clinton or Bush) tends to keep the US out of recession …

    and a Dem Congress (under Bush or Obama) not so much … the recent Dem leadership in DC seem to mostly be learning from Presidents Hoover and Roosevelt – not a reassuring pair of role-models, economically …

    Brendan – thank you for prodding me to do the number-ascertaining … it is indeed instructive …

  21. Sandy Underpants Says:

    Alice, you’re saying that the Democrats “cratered” the economy within 8 months of taking office? If that’s believable to you, then stick with it. I think you’re giving the Democrats a lot of credit though, considering every economist said that it was the results of years, not weeks. Republicans were running both houses for the prior 12 years, I don’t know who else in government you could hold responsible. If that’s what you’re in to.

    On your deficit/national debt link there are 2 years of Democratic congress budgets which took place during the worst economic times in America since the great depression vs. 7 years of GOP led congress during some of the most prosperous times in US history. If you think that is an honest comparison, you’re wrong, and I’ll leave it at that.

    Furthermore, the Republican congress was deficit spending like crazy. Yet you assign no blame to them and the 6 consecutive years of budget deficits that added up to about $2 trillion, which was dumped on Americans and the innocent Democratic Congress when the Republicans were kicked out at the end of 2006.

    The tax cuts were suppose to be temporary, and if they had remained in place throughout the last 10 years, there would be virtually no deficit at all. Instead the tax cuts are extended another year because wealthy interests have greenhorns, like yourself, up in arms about raising taxes on millionaires like you’re a part of that club. It’s against yours and America’s interest to extend the tax cuts.

    In conclusion, you’re wrong and Democrats are angels who go straight to heaven when they die. Ain’t that right St. Teddy?

  22. Alasdair Says:

    Sandy #21 – you *are* arithmetically-challenged, as well as in other ways, it seems …

    We already knew you were fact-challenged, since the GOP didn’t control both houses for 12 years … I leave it to you to find out during which years they didn’t control which House of Congress … (hint: Jeffords) …

    The total addition to the US NAtional Debt of the annual federal deficits during the 1996-2006 years for which the GOP Congresses were responsible for the federal budgets sums to $-1085.3B …

    As a contrast, during the immediately preceding years of Dem Congresses from 1990-1995, the sum of those deficits is $-1402.8B …

    So 12 years of GOP House of Representatives added $1085B to the US National Debt, where the immediately prior 6 years of Dem House of Representatives added $1402B to the US National Debt …

    You are correct, it seems, Mr Underpants – the GOP are mere pikers compared to the Democrat skill of adding to the National Debt !

  23. gahrie Says:

    I’d like to step back from the bickering over numbers and responsibility for a second to ask a foundational question or two:

    1) How did we get into this problem of the National Debt? Was it because we are taxed too little or because we spend too much? How does the rise in national spending compare to the national inflation rate?

    2) How much taxation is too much? When does an income tax become a form of involuntary servitude to the state? 50%? 75%? How about 100%?

    3) What is the proper role of government? Should the federal government have control of every facet of our lives?

    4) If the government can mandate the purchase of a service, what are the limits of government power?

  24. Rebecca Loy Says:

    gahrie, the government has already mandated the purchase of a service. You are paying for people to get health care in the least efficient manner possible Right Now. Right Now, there is some guy sitting at home not going to the doctor because he doesn’t have insurance. In two weeks, that guy will go the ER, far sicker than he was, and You, Mr. Taxpayer, will pay the bill. Twice, in fact. Once in higher taxes and again in higher insurance premiums. Welcome to our incredibly inefficient system. Increase the efficiency, decrease the cost.

    @Andrew, most of the super egg-heady economists I’ve been reading point to the drastic differentation of wealth in the US as a big problem. Fact is, super wealthy people don’t spend their money on goods and services that stimulate the economy in a meaningful way. We’re better off taxing the wealthy and giving the money to the poor, who will spend it on food, hair cuts, and most likely crap that will stimulate the economy far better than Britney Spears buying a CD. The rise of the super wealthy–people who make more than $10m/year–needs to be addressed at some point. At least make those blokes pay SS tax on ALL of their income.

  25. gahrie Says:

    Welcome to our incredibly inefficient system.

    Couldn’t agree with you more.I know what I think the reason is…why do you think the system is inefficient?

    Increase the efficiency, decrease the cost.

    Cute…can you provide an example of a national health service in which this does not mean rationing health care?

    Do you think it is an accident that the elites of all those countries with national health care come here for treatment instead of staying in their homeland?

    Do you think it is interesting that the Massachusetts health care system (widely touted as a model for Obamacare) still has not covered all of the State’s residents, is beset by rising costs (more than the national average) and is creating a shortage of providers?

    We’re better off taxing the wealthy and giving the money to the poor, who will spend it on food, hair cuts, and most likely crap that will stimulate the economy far better

    Grant for the sake of argument that your proposition is true.

    What gives us the moral authority to do this?

    What gives us the legal authority to do this?

    You do realize that you are arguing that the State should confiscate a person’s property because …they have more than you do?

    Just what percentage of the total income tax collected should the “superwealthy” pay? In 2008, the top 10% of taxpayers paid over 69% of income taxes paid. The top .01% paid over 18%. The bottom 50% paid 2.7% of the income taxes collected.

    The top-earning 5 percent of taxpayers (AGI over $159,619), however, still paid far more than the bottom 95 percent. The top 5 percent earned 34.7 percent of the nation’s adjusted gross income, but paid approximately 58.7 percent of federal individual income taxes.

    Aren’t we already milking them enough?

  26. Brendan Loy Says:

    Do you think it is an accident that the elites of all those countries with national health care come here for treatment instead of staying in their homeland?

  27. gahrie Says:

    Nice article. However, that was about ordinary Canadians coming to the US for health care. The argument wasn’t that ordinary people were coming here for care. They can’t afford to. The argument is that the elites are coming here for care they cannot receive from the systems in their countries. Countries with nationalized health care truly have two systems, one for the rich, and one for the ordinary people.

  28. gahrie Says:

    Why won’t anyone answer my questions in #23? I honestly asked them in good faith..not to start a flame war, but to try and reach a common ground we can start a discussion from.

  29. dcl Says:

    AML, the only way you get rid of the deficit / debt without raising taxes is to slash military spending far deeper than “the DOD shouldn’t be exempt from scrutiny” You are not going to get there going after waste or more efficiency. You get there by moth balling 3/4 the Navy, and similarly deep cuts in the Army and Air force. Probably more if we actually do the F**ing math.

    Also, tax cuts do not encourage business re-investment. Especially small businesses, you want to make small business re-invest in the business, you raise the personal income tax not cut it. You make it expensive to take money out of the company and cheep to leave it in the company and do something with it. If it’s cheep to get the money out of the biz and the future is uncertain, you are going to take it out and make a personal investment with it.

    And cutting rich people’s taxes doesn’t re-start the economy because it remains in long term investments it doesn’t get spent. Sure cutting middle and lower income tax rates tends to help the economy, but the benefits drop of quite quickly as you go up the income scale. The math, the economics, and the history simply do not bear out the idea that low taxes for the rich spurs the entire economy. Low taxes for the rich leads to only one thing, massive wealth inequity. You can make whatever ethical arguments you want on that in regards to general fairness, or social equality, or whatever. But it doesn’t really help the economy as a whole. Not nearly as much as a similar $ value tax cut to the middle and lower income brackets.

  30. AMLTrojan Says:

    @Andrew, most of the super egg-heady economists I’ve been reading point to the drastic differentation of wealth in the US as a big problem. Fact is, super wealthy people don’t spend their money on goods and services that stimulate the economy in a meaningful way. We’re better off taxing the wealthy and giving the money to the poor, who will spend it on food, hair cuts, and most likely crap that will stimulate the economy far better than Britney Spears buying a CD. The rise of the super wealthy–people who make more than $10m/year–needs to be addressed at some point. At least make those blokes pay SS tax on ALL of their income.

    Becky, this paragraph illustrates your reliance on a number of questionable presuppositions and assumptions. Let’s look at them one by one:

    1) Money spent on basic goods and services is what stimulates the economy in a meaningful way.

    This is classic demand-side economics, and ignores how demand and wealth are created. Buying toothpaste does not stimulate the economy. Investing capital in a new toothpaste that cures cavities would stimulate the economy. How? The new toothpaste would replace the old toothpaste, people would have better teeth, more people would commit to brushing their teeth, money spent on dentists would go down and could instead be used on e.g. iPads. Theoretically, dentists end up as the losers in this scenario, but in reality, not having to treat cavities allows them to spend more time on services higher up the value chain, consequently lowering their cost and stimulating demand. This cycle is called creative destruction, and it’s what makes capitalism tick so effectively. Stimulating the economy by giving everyone money to buy iPods doesn’t work; altering taxation to better allow the efficient flow of capital to develop the next-gen iDevice would stimulate the economy.

    2) The choice is between a rich person buying useless, unnecessary things, and a poor person buying “food, hair cuts, and … crap that will stimulate the economy”.

    This displays an incredible amount of ignorance about how the rich use their money. Obviously, Britney Spears buying a CD helps keep someone employed at the music store, just as a poor person buying food keeps someone employed at the supermarket. One form of consumption is not really more “stimulative” than the other, except for the narrow comparison of asking, “Who is actually more likely to spend the $10 in their pocket: the rich, the middle class, or the poor?” No, what drives the economy is when Britney Spears invests $10M in a muni bond that helps Los Angeles build additional port capacity, $10M in Apple which gives them the necessary capital to develop their next iDevice, and $10M in a venture capital firm which invests in a small, fledgling technology company with the expectation that the new technology will take over the world and make the firm a shitload of money. All of these things grow GDP far more effectively than a bunch of people buying food and toothpaste, and since the wealthy are the ones who have the money to invest, we are disproportionately reliant on them to make wise investment decisions to drive the economy. That, in a nutshell, is why Wall Street matters so much, even though we naturally detest the idea of a Goldman Sachs banker sitting around, making a few phone calls, pressing a few buttons on a computer, and taking home a million-dollar cut on a Facebook private stock issue to favored investors.

    And really, don’t you find it just a wee bit too convenient the idea that a poor person spending money stimulates the economy more than a rich person investing? And if that were the case, isn’t the logical end of that, er, communism? I mean, why tolerate anyone making more than per capita (Any money you make above average should be distributed to those making less than average)? If consumption of basic goods was the primary stimulative driver of economic growth, not only would communism be the most equitably just political / social system (“equality of outcome”), it would also be the most effective economic system — but not only is communism not an effective political system, it fails economically as well. Ergo, there is something seriously wrong with the presumption that consumption of basic goods is what drives economic growth.

    3) We don’t tax the wealthy enough, as evidenced by the growing disparity between rich and poor.

    First off, as gahrie asks, what is “enough” when it comes to taxing the rich? 50%? 70? 90%? You guys never have a clear metric, the answer is just always “More!”

    Second, as gahrie quotes, “The top 5 percent earned 34.7 percent of the nation’s adjusted gross income, but paid approximately 58.7 percent of federal individual income taxes.” Isn’t there something fundamentally wrong with that picture morally? In a bubble, shouldn’t 35% of the gross income provide the base for 35% of the tax revenue — regardless of who is receiving the income and then paying the taxes? I’m not saying this is the only metric we should use, but if we’re going to toss around the terms “fair” and “equitable”, I don’t see how you can call any system that places 59% of the tax burden on 35% of the income as “fair” and “equitable”.

    Third, this statement exhibits complete ignorance about how the wealthy make their money. There are very, very few “rich people” who make, say, $1M a year in annual salary. The richer you get, the more likely you are to derive your income from dividends, bond income, capital appreciation, and the like. So long as you’re going to disproportionately tax high income levels, the incentives will be to get around that. Thus, the “working rich” take the hit — i.e., the ones who run small companies (i.e., the ones who do the most to create jobs and grow the economy) and pay taxes through personal taxes vs. paying corporate income taxes. Meanwhile, the trust-fund babies live off of tax-free muni bonds, and if you try to sock it to them by taxing that income, suddenly muni bonds aren’t so popular and your average local government entity has a much harder time raising capital for major projects, while the rich simply shift their wealth into some other, less taxable form of income. The bottom line is, this “soak the rich” mentality is counterproductive and incentivizes counterproductive economic behavior because capital allocation becomes driven more by incentives to avoid taxation than where that capital will drive the most growth.

    Fourth and finally, the disparity between the rich and poor is a worldwide problem, and while some European countries with high progressive taxation have less of a disparity than we do, for pretty much every country out there, for the past few decades the trend has been going in the same direction: more disparity. This fact strongly suggests that the underlying cause of economic disparity is not taxation, and it further suggests that progressive taxation is an imperfect solution that does not really solve the underlying problem. Thus, disparity is is not a useful indicator of how equitable your tax system is — whether you are taxing the wealthy “enough” — and nothing short of pure communism / extreme socialism will eliminate the disparity. I am open to trying to tackle the disparity, but upping taxes on the rich to solve that problem is like trying to hammer a screw into a 2×4. Yeah you might make progress in getting the screw partway into the wood, but it’s an incredibly destructive, laborious process.

    4) The super-wealthy are part of the problem.

    If you look at the ranks of the “super-wealthy”, they are disproportionately wealthy because they founded and owned significant shares in a particular company (e.g. Larry Ellison and Oracle, Bill Gates and Microsoft), got their wealth through sports and endorsements (e.g. Michael Jordan, Tiger Woods), or became a power player through Wall Street maneuvering and investing (e.g. T. Boone Pickens, Steven Cohen of SAC Capital). They did not become wealthy because they worked for a Fortune 500 firm and drew a $10 million salary for a bunch of years. I’m not sure how Michael Jordan, T. Boone Pickens, or Steve Jobs are part of any problem — they definitely earned their wealth. So maybe your real target are trust-fund babies and those who inherit wealth? If so, are you going to call for the abolition of trusts? Good luck with that! And I think the Waltons and Fords would take issue with some arbitrary taxation policy that says, just because their parents made the wealth by building huge corporations, the children can’t inherit it and instead the government will take most of it. The bottom line here is, the super wealthy got to where they are at because they managed to create their wealth; they certainly didn’t become wealthy by stealing from anyone or stepping on poor welfare moms in the inner city. They built their wealth fair-and-square and by providing a value to the economy. The only wealthy people who are part of any problem are the oil tycoons in places like the Middle East and Russia who acquire their wealth through political influence and corrupt oligarchical / monarchical governments. I’m not sure how that has any bearing on U.S. tax policy.

    5) Raising the cap on Social Security taxes is a fair and equitable way to tax rich people.

    First, go see #3 above. Rich people by and large don’t draw massive salaries; hiking the FICA taxes is really targeting the upper-middle class and small business owners.

    Second, the original intent of SS was to be a universal safety net; everyone paid in, and everyone received benefits in close correlation to what they paid in. It was NEVER intended to be a welfare system and would never have been accepted if proposed as such. In addition, Dems have always opposed means-testing, and they know they are playing with fire if they try to raise the cap on FICA because they are playing with fire as far as the universality and intended equity of the system. The problem with SS is that it is not set up to be sustainable. When SS was originally set up, there were more than 10 workers for every retiree, the average lifespan was in the mid-60s, and current taxes easily supported current benefits. We are now quickly moving to only two workers for every retiree, and people are living on average into their late 70s. This is simply not sustainable even if you effectively change SS to a welfare plan by means testing and taxing the rich more. The only way to fix SS is to convert it to a system whereby one’s current taxes are used to pay for one’s future retirement. This is how nearly every other country sets up its government retirement “safety net” system, and we are completely retarded for not transitioning sooner to this model.

    Now that we’ve looked at some of your presuppositions, your argument starts looking pretty flimsy. What you’ve said is just an iteration of standard liberal ideology unperturbed by any serious analysis of empirical data showing how economics, capitalism, and wealth creation actually work. Get back to me when you can do something more than spout 80-year old lib-Dem talking points.

  31. AMLTrojan Says:

    Ditto dcl @ #29.

  32. Alasdair Says:

    AMLTrojan #30 – bravo !

    Succinct, while skilfully detailed … the davidkians will *hate* it … I can hear the two-stroke noises from here … “but … but .. but …” …

    Back in the UK, in the 1970s, Margaret Tahtcher changed the previously-free school milk policy tio a means-tested one … the Labour folk had kittens, and started chanting “Thatcher, Thatcher, Milk Snatcher” … in an early verion of Rove-a-Dope, she allowed the protests to run for several weeks, until Labour had invested themselves in the “Milk Snatcher” meme, and then she gave the simple explanation – the money saved by no longer automatically giving free school milk to *everyone* (instead giving it to those whose income was less than a certain amount, and the prosperous had to pay for it), that money was put into opening a bunch of colleges (equivalent to US community colleges, as I recall) … end of “Milk Snatcher” campaign, although dyed-in-the-wool Labour folk still try to resurrect it – without the additional colleges opened part of the explanation, of course …

You must be logged in to comment. (Why?)

Please register with The Living Room Times, or log in using your Facebook, Google, OpenID, Twitter, AOL or Yahoo account, or your existing Living Room Times account.