A question for Republicans

[gonewt2012]

Should the idle rich, who don't work, pay taxes at a lower rate than people who do work?

If you think you can get them to pay more, then fine, go ahead. No matter what you do they'll figure out a way to protect themselves. Even if you took everything they had you'd still have your hand out for more. What happens then?

I'm not going to defend the upside-down tax system of this country that, despite collecting most of the rent from the rich, still puts what is an actual burden (there's no burden to someone worth 10+ million ... make up a number there, how much is enough?) on small business owners and productive educated people. It's reprehensible, no doubt.

But if we get to the point, that we are approaching, where more than half the people actually load down the system instead of paying into it, how will we ever find a democratic road to fiscal sanity?

In the meantime, perhaps it might make sense to live within our means. I'm telling you, if you resist this idea it's only because you have underestimated the scale and gravity of the problem that our debt is for us.

If interest rates were to climb up to even half the way from the historic average from the where we are now (and all it would take would be for the Chinese to sell half of the 11% of the debt they hold) it would mean utter and complete economic chaos the likes of which we've never seen. Not even in the '30's.

Wake up.

 

[ilia25]

Claiming that we spend too much is contradicted by showing exactly how much we spend?
Please explain further.

Explaining as I would to a first-grader -- sorry, I don't know simpler than that.

You can't say that X trillions is too much or too little. You can only do so by comparing those X trillions with another number.

So if US are spending too much, it is too much relative to what number?

If I were in debt...and my wife came to me and said "lets take a trip to Aruba"....I would say it is too expensive...having no idea what the cost is. Expensive is a relative term to ones worth.

T ome, a 250K car is too expensive.
To a multi billionaire, it is not.

SO I dont know where the heck you are coming up with this "new way" to determine if something is too expensive.

I'm not inventing, I am asking what is your way of deciding what is expensive and what is not. So sure, let's see how US compares to other advanced countries. Here is spending vs GDP:

UK: 47%
Canada: 40%
Japan: 37%
Germany: 43%
Finland: 49%
Israel: 42%

USA: 39%

Do you see how the US has overspent everyone else? I don't.

 

[gonewt2012]

Do you see how the US overspend everyone else? I don't.

Have you seen what has been going on over in Europe? In Greece? In the U.K.?

The relative comparison you are looking for (if you really are honest in such an inquiry) can be found on this chart --> US Government Spending As Percent Of GDP United States 1903-2010 - Federal State Local Data

The real danger is the % of our yearly outlay that goes toward interest in the debt. If we have to start paying a higher rate (if the price of our bonds goes down), we'll be forced to make some hard choices real quick, and the more the debt piles up, the more this is leveraged.

We can get away with printing money as long as the dollar is the world reserve currency, but the gulf states and China have already started to move in a direction to call the future of that situation into question.

These are facts, the rest is childish make-believe.

And don't let the numbers on Japan fool you ... that debt is all held internally (they don't borrow from other countries).

 

[ilia25]

Should the idle rich, who don't work, pay taxes at a lower rate than people who do work?

If you think you can get them to pay more, then fine, go ahead. No matter what you do they'll figure out a way to protect themselves. Even if you took everything they had you'd still have your hand out for more.

Is it me, or your last sentence contradicts the one before last?

I'm not going to defend the upside-down tax system of this country that, despite collecting most of the rent from the rich, still puts what is an actual burden (there's no burden to someone worth 10+ million ... make up a number there, how much is enough?) on small business owners and productive educated people. It's reprehensible, no doubt.

It is reprehensible to think that our society treats a CEO making millions per year unfairly. Do you think he would live the same life if all the little people were not there for him?

But if we get to the point, that we are approaching, where more than half the people actually load down the system instead of paying into it, how will we ever find a democratic road to fiscal sanity?

Technological advance make most of the national income going to the few top earners. There is nothing unfair in making them share their luck.

In the meantime, perhaps it might make sense to live within our means.

We are living within our means, we just do not collect enough taxes to pay for very basic services we want the government to provide.

If interest rates were to climb up to even half the way from the historic average from the where we are now

It could only happen after the US economy recovers and the government revenues recover with it, drastically reducing or indebtedness. However, in the long term we will have to either collect more taxes from the rich, or disband the army, or stop providing the social security to our seniors. You decide what is fair.

(and all it would take would be for the Chinese to sell half of the 11% of the debt they hold) it would mean utter and complete economic chaos

Actually the US begged Chinese to do that for the past decade, sometimes threatening China with sanctions. Well, to be honest our demands were much more modest -- not selling the debt, but at least stop buying it by the truckloads. 'Cause this is how China depreciates its currency and gains an unfair competitive advantage over the US companies.

 

[ilia25]

Do you see how the US overspend everyone else? I don't.

Have you seen what has been going on over in Europe? In Greece? In the U.K.?

Somehow you forgot most of the countries I listed -- like Japan, Germany or, the worst offender -- Finland.

European problems are not the result of too much spending. They started because the common currency did not let them to correct the internal euro-zone imbalances (similar to the way China pegging its currency to US dollar preserves the imbalances between the two countries). Then European leaders made it worse by trying to cut the spending, although it was not the cause of the imbalances.

So yes, the Europe woes are a perfect example of what would happen in the US if we follow your advice.

The relative comparison you are looking for (if you really are honest in such an inquiry) can be found on this chart --> US Government Spending As Percent Of GDP United States 1903-2010 - Federal State Local Data

Yes, spending to GDP jumped in the and of 2008 because GDP contracted severely and it remains below the trend ever since. Trying to cut spending in response to a recession only makes it worse -- both recession, and the deficit. That is what Europe has been doing recently.

we'll be forced to make some hard choices real quick, and the more the debt piles up, the more this is leveraged.

No we wont -- just look at the interest rates. You think it just a dumb luck that the more debt the US piles up the lower interest the investors agree to accept for the privilege?

We can get away with printing money as long as the dollar is the world reserve currency,

US dollar is not a reserve currency since the late 60s, when de Gaulle formally asked to exchange some of France's dollar reserves for its denomination in the gold and we told him to fuck off. Boy, that felt good!

but the gulf states and China have already started to move in a direction to call the future of that situation into question.

We'd rather they stop piling up our dollars and start spending them. But if they so insist, then yes, we have a printing press to satisfy their urges.

And don't let the numbers on Japan fool you ... that debt is all held internally (they don't borrow from other countries).

What difference does it make? US is not going to default on it debt no matter who holds it. And neither is Japan.

 

[Liability]

Explaining as I would to a first-grader -- sorry, I don't know simpler than that.

You can't say that X trillions is too much or too little. You can only do so by comparing those X trillions with another number.

So if US are spending too much, it is too much relative to what number?

Are you capable of grasping the fundamental notion that we are spending VASTLY more than we actually have to spend?

We can have more than enough, dickhead. It is the Republicans who keep eroding the budget revenues by cutting taxes, and they are doing it mainly to make the dickheads like you screaming that we spend more than we "have".

Honestly, is it too hard to get that if we do not collect enough taxes, spending will be greater than the revenues no matter how LITTLE we actually spend?

You shit heads simply have no ability to GRASP the most fundamental concepts.

It's amazing and tragic.

No. You fucking dickweed idiot. "We" cannot "have" 'more than enough' when what that actually means is that turds like you imagine that you have some (valid) claim to what everybody makes. Schmucks like you can't be trusted with plastic sporks. Who the FUCK is going to trust YOUR "judgment" on matters like determining what portion of the income and wealth I have YOU may confiscate?

This is one of the large reasons WHY we HAVE a limited government, you imbecile. Your access to my paycheck, wallet and bank account determines just what "programs" YOU seek to impose on us and when you're busy spending OPM and don't even feel constrained by THAT natural limit ("hey. no prob. just borrow!"), your irrationality and immaturity and general lack of discipline threatens the productive capacity of everyone.

YOU have no legitimate claim to the wealth of others. It's not yours to spend EXCEPT, as we have already agreed, within the limits TO WHICH we have already agreed.

so stop your jackass caterwauling. You are simply (but massively) WRONG. And even if you did have some fantasy based claim to our wealth (without constraint) there IS a real-world limit to even that. You can't TAKE more than 100%, shithead. Yet morons like you love to BORROW in order to spend more than even YOU can greedily grasp from the wallets of others. Fuck off. Your claim to my wallet is LIMITED by the AGFREEMENT we have -- the CONSTITUTIONAL limit which schmucks like you seek to evade and ignore all the fucking time.

And the money you greedily grasp DOES remove it from the economy and stagnates it and forces a downward spiral. So truly: fuck off.

 

[ilia25]

Are you capable of grasping the fundamental notion that we are spending VASTLY more than we actually have to spend?

We can have more than enough, dickhead. It is the Republicans who keep eroding the budget revenues by cutting taxes, and they are doing it mainly to make the dickheads like you screaming that we spend more than we "have".

Honestly, is it too hard to get that if we do not collect enough taxes, spending will be greater than the revenues no matter how LITTLE we actually spend?

You shit heads simply have no ability to GRASP the most fundamental concepts.

It's amazing and tragic.

No. You fucking dickweed idiot. "We" cannot "have" 'more than enough' when what that actually means is that turds like you imagine that you have some (valid) claim to what everybody makes.

That is not what it means, so go fuck yourself.

 

[Liability]

We can have more than enough, dickhead. It is the Republicans who keep eroding the budget revenues by cutting taxes, and they are doing it mainly to make the dickheads like you screaming that we spend more than we "have".

Honestly, is it too hard to get that if we do not collect enough taxes, spending will be greater than the revenues no matter how LITTLE we actually spend?

You shit heads simply have no ability to GRASP the most fundamental concepts.

It's amazing and tragic.

No. You fucking dickweed idiot. "We" cannot "have" 'more than enough' when what that actually means is that turds like you imagine that you have some (valid) claim to what everybody makes.

That is not what it means, so go fuck yourself.

You truly are too fucking stupid to breathe, ya twatwaffle.

And yes, that IS what it means. So eat shit and choke.

 

[ilia25]

You shit heads simply have no ability to GRASP the most fundamental concepts.

It's amazing and tragic.

No. You fucking dickweed idiot. "We" cannot "have" 'more than enough' when what that actually means is that turds like you imagine that you have some (valid) claim to what everybody makes.

That is not what it means, so go fuck yourself.

You truly are too fucking stupid to breathe, ya twatwaffle.

And yes, that IS what it means. So eat shit and choke.

Actually, I stand corrected, you might have a point -- I just had trouble seeing it under the layers of crap that you cover everything you say with.

So yes, if by turds and "schmucks that can't be trusted with plastic sporks" you mean the majority of Americans, then yes -- we do have access to your paycheck and your wallet. They also call it "democracy", the rule of majority, he he In particularly, the majority ultimately decides what are the appropriate taxes that someone should pay for the privilege of pursuing his happiness in the US of A.

That is what taxation WITH representation means, by the way. And that is true whether you like it or not. And yes, in case you don't, my advice still holds true -- go to an inhabitant island and fuck yourself.

 

[gonewt2012]

It is reprehensible to think that our society treats a CEO making millions per year unfairly. Do you think he would live the same life if all the little people were not there for him?

Yes, I agree, the current level of income inequality is likely unsustainable. Good luck trying to fix it with taxation.

Technological advance make most of the national income going to the few top earners.

That might be part of the story. An overall structure that favors aggregation coupled with laws that make it legal to form small clubs that control large swaths of the economy is another factor ... as is the relative length of the last stable run of our economy brought about in no small part by the momentum of globalization.

It might be argued that Adam Smiths premise should be revisited. There's not much scarcity ... we can make what we need. There seems to be a shortage of organizational entropy.

We are living within our means

... part of wonders if you are just being perverse.

we just do not collect enough taxes to pay for very basic services we want the government to provide.

Collect more and you'll spend more ... show me ONE historical period anywhere on the planet when this wasn't the case.

It could only happen after the US economy recovers and the government revenues recover with it, drastically reducing or indebtedness. However, in the long term we will have to either collect more taxes from the rich, or disband the army, or stop providing the social security to our seniors. You decide what is fair.

You left out the obvious alternative scenario, a breakdown of the Union. That's what happened to the Soviets. I wonder if our military will show the same restraint if it should come to that?

Actually the US begged Chinese to do that for the past decade, sometimes threatening China with sanctions. Well, to be honest our demands were much more modest -- not selling the debt, but at least stop buying it by the truckloads. 'Cause this is how China depreciates its currency and gains an unfair competitive advantage over the US companies.

Captain obvious says: it's not the bond market that the Chinese use to do this, it's the forex market.

If they dumped our bonds every other interest rate paid would suddenly spike across the board. The large broker-dealers would be forced into re-tranching billions of dollars in positions that would in turn cause major overshoot and result in billions lost. Any business that was leveraged would suddenly have to cut itself in half ... and that's just the starting line, because as I mentioned, the amount of federal outlay on the interest on the debt would suddenly start ballooning and feeding back onto itself (we'd have to borrow more at higher rates just to pay the interest).

This is not a question of IF, it's a question of WHEN.

 

[gonewt2012]

Do you see how the US overspend everyone else? I don't.

Have you seen what has been going on over in Europe? In Greece? In the U.K.?

Somehow you forgot most of the countries I listed -- like Japan, Germany or, the worst offender -- Finland.

Your original point was that since the Europeans are spending more than 39% of their GDP that we were comparatively not overspending.

Well that's fine. If you like riots.

My guess is that you like riots.

European problems are not the result of too much spending. They started because the common currency did not let them to correct the internal euro-zone imbalances (similar to the way China pegging its currency to US dollar preserves the imbalances between the two countries). Then European leaders made it worse by trying to cut the spending, although it was not the cause of the imbalances.

By your logic no amount of spending is too much. Hell, why not match GDP 100%? What would be wrong with that?

Yes, spending to GDP jumped in the and of 2008 because GDP contracted severely and it remains below the trend ever since.

If we didn't have this huge debt we could speak in Keynesian terms ... it's too late for all that. The damage is done. If not now, when?

You think it just a dumb luck that the more debt the US piles up the lower interest the investors agree to accept for the privilege?

We can't count on flight to safety forever. The longer we keep printing money the more likely the run for the exits becomes. The Arabs and the Chinese have been squirming around for alternatives to US treasuries for a decade now ... the EU crisis and the uncertainty about the Euro have only postponed the issue, as the Euro was seen as a pillar in the strategy to throw together a basket of currencies as an alternative to the dollar.

Once again, not a question of IF, but of WHEN.

US dollar is not a reserve currency since the late 60s, when de Gaulle formally asked to exchange some of France's dollar reserves for its denomination in the gold and we told him to fuck off. Boy, that felt good!

The last time I looked the world price of oil was still determined at the NYMEX. In dollars. Same with Gold. Everyone else has to convert to dollars to do business with each other. That's the operational definition of "world reserve currency".

but the gulf states and China have already started to move in a direction to call the future of that situation into question.

What difference does it make? US is not going to default on it debt no matter who holds it. And neither is Japan.

The point is that Japan could default and it wouldn't impact their position in the world. Not so for us. Once again, all it takes is the cascading effect of a negative market move in U.S. treasury's to make the problem of the debt eminently apparent in everyday life ... something that is not entirely within our control.

 

[ilia25]

It is reprehensible to think that our society treats a CEO making millions per year unfairly. Do you think he would live the same life if all the little people were not there for him?

Yes, I agree, the current level of income inequality is likely unsustainable. Good luck trying to fix it with taxation.

Luck? We have been doing this for ages with progressive tax scale. We just have to make it more steep.

We are living within our means

... part of wonders if you are just being perverse.

I showed in an earlier post that US does not spend more than most other advanced countries. We just not collecting enough taxes to cover those modest spending.

Collect more and you'll spend more ... show me ONE historical period anywhere on the planet when this wasn't the case.

We had balanced the budget about 15 years ago, hadn't we?

It could only happen after the US economy recovers and the government revenues recover with it, drastically reducing or indebtedness. However, in the long term we will have to either collect more taxes from the rich, or disband the army, or stop providing the social security to our seniors. You decide what is fair.

You left out the obvious alternative scenario, a breakdown of the Union.

You are joking right? 'Cause that's a tough one -- return tax rates that we had under Clinton, or let the USA going down the drain. Or maybe you are not joking -- how many Republicans, given this choice would would accept a tax hike? Not too many, methinks.

Actually the US begged Chinese to do that for the past decade, sometimes threatening China with sanctions. Well, to be honest our demands were much more modest -- not selling the debt, but at least stop buying it by the truckloads. 'Cause this is how China depreciates its currency and gains an unfair competitive advantage over the US companies.

Captain obvious says: it's not the bond market that the Chinese use to do this, it's the forex market.

Ah, it's the forex! Then maybe the Captain can enlighten us as to what exactly Chinese did with the trillions of dollars they have bought on forex? You think they've been stuffing them under a specially designed mattress?

If they dumped our bonds every other interest rate paid would suddenly spike across the board.

Like I said -- before trying to estimate the effects of Chinese bond dump, why don't you do some research and find out what problem they were trying to solve by buying the US debt in the first place. Not that I haven't explained it already

 

[Toddsterpatriot]

That is not what it means, so go fuck yourself.

You truly are too fucking stupid to breathe, ya twatwaffle.

And yes, that IS what it means. So eat shit and choke.

Actually, I stand corrected, you might have a point -- I just had trouble seeing it under the layers of crap that you cover everything you say with.

So yes, if by turds and "schmucks that can't be trusted with plastic sporks" you mean the majority of Americans, then yes -- we do have access to your paycheck and your wallet. They also call it "democracy", the rule of majority, he he In particularly, the majority ultimately decides what are the appropriate taxes that someone should pay for the privilege of pursuing his happiness in the US of A.

That is what taxation WITH representation means, by the way. And that is true whether you like it or not. And yes, in case you don't, my advice still holds true -- go to an inhabitant island and fuck yourself.

The majority decided we shouldn't raise taxes during a recession. Moron.

 

[Toddsterpatriot]

It is reprehensible to think that our society treats a CEO making millions per year unfairly. Do you think he would live the same life if all the little people were not there for him?

Yes, I agree, the current level of income inequality is likely unsustainable. Good luck trying to fix it with taxation.

Luck? We have been doing this for ages with progressive tax scale. We just have to make it more steep.



I showed in an earlier post that US does not spend more than most other advanced countries. We just not collecting enough taxes to cover those modest spending.



We had balanced the budget about 15 years ago, hadn't we?



You are joking right? 'Cause that's a tough one -- return tax rates that we had under Clinton, or let the USA going down the drain. Or maybe you are not joking -- how many Republicans, given this choice would would accept a tax hike? Not too many, methinks.

Captain obvious says: it's not the bond market that the Chinese use to do this, it's the forex market.

Ah, it's the forex! Then maybe the Captain can enlighten us as to what exactly Chinese did with the trillions of dollars they have bought on forex? You think they've been stuffing them under a specially designed mattress?

If they dumped our bonds every other interest rate paid would suddenly spike across the board.

Like I said -- before trying to estimate the effects of Chinese bond dump, why don't you do some research and find out what problem they were trying to solve by buying the US debt in the first place. Not that I haven't explained it already

You are joking right? 'Cause that's a tough one -- return tax rates that we had under Clinton, or let the USA going down the drain.

That's an excellent idea.
We'll return tax rates to the Clinton numbers but first we have to reduce expenditures to the Clinton numbers.

 

[logical4u]

Explaining as I would to a first-grader -- sorry, I don't know simpler than that.

You can't say that X trillions is too much or too little. You can only do so by comparing those X trillions with another number.

So if US are spending too much, it is too much relative to what number?

Are you capable of grasping the fundamental notion that we are spending VASTLY more than we actually have to spend?

We can have more than enough, dickhead. It is the Republicans who keep eroding the budget revenues by cutting taxes, and they are doing it mainly to make the dickheads like you screaming that we spend more than we "have".

Honestly, is it too hard to get that if we do not collect enough taxes, spending will be greater than the revenues no matter how LITTLE we actually spend?

"Tax income" to the federal gov't increases as taxes DECREASE (probably because people don't mind giving a little to the gov't, and more people will pay taxes when they are low). "Tax income" to the federal gov't decreases as taxes INCREASE (probably because anyone doing a "cash" business will suddenly lose money/receipts/tax forms, and the ones that can afford it will move their money into tax loopholes or hide it from the feds). Doing a very short term tax raise could possibly generate more income, but only if it is not left in place long enough to get around it.

Spending too much cannot be fixed by continually raising taxes. It can only be fixed by CUTTING SPENDING.

 

[ilia25]

Have you seen what has been going on over in Europe? In Greece? In the U.K.?

Somehow you forgot most of the countries I listed -- like Japan, Germany or, the worst offender -- Finland.

Your original point was that since the Europeans are spending more than 39% of their GDP that we were comparatively not overspending.

Well that's fine. If you like riots.

I hope we are clear that the riots have nothing to do with overspending.

By your logic no amount of spending is too much. Hell, why not match GDP 100%? What would be wrong with that?

What logic? I defended the level of government spending that most developed countries find both acceptable and necessary in a civilized society -- which is a notch above what US spends.

But I hope you don't need me to explaining why a planned economy does not work too good?

If we didn't have this huge debt we could speak in Keynesian terms ... it's too late for all that. The damage is done. If not now, when?

That is very debatable. By historical standards the current debt levels are perfectly sustainable -- US had them after WII, Britain had even bigger debt around 60s, Japan has the twice debt than we have. And no one had to default. And no one had to pay it off either -- if you know what I mean. If you don't, you get get a hint by looking at the nominal debt numbers.

We can't count on flight to safety forever.

What I'm saying is that the moment we could not count on flight to safety, we would not need to.

US dollar is not a reserve currency since the late 60s, when de Gaulle formally asked to exchange some of France's dollar reserves for its denomination in the gold and we told him to fuck off. Boy, that felt good!

The last time I looked the world price of oil was still determined at the NYMEX. In dollars. Same with Gold. Everyone else has to convert to dollars to do business with each other. That's the operational definition of "world reserve currency".

The fact that one had to buy dollars to pay for oil does not bear any significance, because the oil seller can sell those dollars for any other currency almost immediately. Nobody has to hold dollar reserves anymore (not after de Gaulle received that grave insult).

but the gulf states and China have already started to move in a direction to call the future of that situation into question.

What difference does it make? US is not going to default on it debt no matter who holds it. And neither is Japan.

The point is that Japan could default and it wouldn't impact their position in the world.

I'm not sure about their position in the world, but I'd say that after defaulting it would be the last thing Japanese would worry about. And having hot water in their dwellings would not be their first priority either.

In any case -- whatever happened during WWII notwithstanding, they are not that suicidal. So nobody really considers the possibility of Japan defaulting and so they continue to lend Japan for even lower interest than they do to US.

If you want, here is how it works. A country that borrows in it own currency and has a printing press cannot default on its debt. It is simply impossible, so get over it. The worst thing that could happen is high inflation because the printing press is working too hard -- I won't argue with that.

But then, in case of US and Japan (or UK or any other country with a similar setup) there is a good indicator of what inflation the investors predict -- again, look at the interests US had to pay on its debt. We can borrow for 30 years at 3% and for 10 years at 1.93%.

 

[percysunshine]

A question for Republicans Should I work?

Definatly. You should work until you can come up with more than one question in any one week period.

 

[ilia25]

"Tax income" to the federal gov't increases as taxes DECREASE

That is the very proposition that George Bush Senior called "voodoo economics" -- even before Reagan was elected. Unfortunately for him he had to inherit that mess, and he paid with his second term for an attempt to fix it.

Spending too much cannot be fixed by continually raising taxes. It can only be fixed by CUTTING SPENDING.

The US government spending is less than that in most advanced countries. Unfortunately the US collects way less in taxes than those countries -- or what it collected during the roaring 90s. So it must be pretty obvious what the fix should be.

 

[Full-Auto]

Only fools "believe" in things they cannot substantiate. And they do it at they own peril.

What a stupid retort.

Look at the numbers and then try to pretend we don't overspend.

We clearly do.

How did you came to such a conclusion?

Government - Interest Expense on the Debt Outstanding

Government - Historical Debt Outstanding – Annual

 

[ilia25]

That's an excellent idea.
We'll return tax rates to the Clinton numbers but first we have to reduce expenditures to the Clinton numbers.

Like we needed another proof of your dishonesty.

What baffles me is what the Republicans are really after? It is obvious that they don't care about the debt. They only use it as a pretext for dismantling the welfare state. But why? Why would they need the US government to stop caring for seniors and the poor?

I think it is because of people Krugman calls "political entrepreneurs". The sell a message -- and so they invent a message that would sell well. But they really don't care about the message itself -- the policy that the message promotes and the implications of actually implementing that policy.

So if political entrepreneurs notice that some message is resonating among many voters, they start promoting it even though they know that it will hurt those very people, and the US as a country. That would not be their problem.

Add the fact that so many Americans got fooled by their card companies, and we are looking at a pretty grim picture.