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Oh - a Krugman post. Darrin will be in here soon.
The New York Times
July 14, 2011
Getting to Crazy
By PAUL KRUGMAN
There aren’t many positive aspects to the looming possibility of a U.S. debt default. But there has been, I have to admit, an element of comic relief — of the black-humor variety — in the spectacle of so many people who have been in denial suddenly waking up and smelling the crazy.
A number of commentators seem shocked at how unreasonable Republicans are being. “Has the G.O.P. gone insane?” they ask.
Why, yes, it has. But this isn’t something that just happened, it’s the culmination of a process that has been going on for decades. Anyone surprised by the extremism and irresponsibility now on display either hasn’t been paying attention, or has been deliberately turning a blind eye.
And may I say to those suddenly agonizing over the mental health of one of our two major parties: People like you bear some responsibility for that party’s current state.
Let’s talk for a minute about what Republican leaders are rejecting.
President Obama has made it clear that he’s willing to sign on to a deficit-reduction deal that consists overwhelmingly of spending cuts, and includes draconian cuts in key social programs, up to and including a rise in the age of Medicare eligibility. These are extraordinary concessions. As The Times’s Nate Silver points out, the president has offered deals that are far to the right of what the average American voter prefers — in fact, if anything, they’re a bit to the right of what the average Republican voter prefers!
Yet Republicans are saying no. Indeed, they’re threatening to force a U.S. default, and create an economic crisis, unless they get a completely one-sided deal. And this was entirely predictable.
First of all, the modern G.O.P. fundamentally does not accept the legitimacy of a Democratic presidency — any Democratic presidency. We saw that under Bill Clinton, and we saw it again as soon as Mr. Obama took office.
As a result, Republicans are automatically against anything the president wants, even if they have supported similar proposals in the past. Mitt Romney’s health care plan became a tyrannical assault on American freedom when put in place by that man in the White House. And the same logic applies to the proposed debt deals.
Put it this way: If a Republican president had managed to extract the kind of concessions on Medicare and Social Security that Mr. Obama is offering, it would have been considered a conservative triumph. But when those concessions come attached to minor increases in revenue, and more important, when they come from a Democratic president, the proposals become unacceptable plans to tax the life out of the U.S. economy.
Beyond that, voodoo economics has taken over the G.O.P.
Supply-side voodoo — which claims that tax cuts pay for themselves and/or that any rise in taxes would lead to economic collapse — has been a powerful force within the G.O.P. ever since Ronald Reagan embraced the concept of the Laffer curve. But the voodoo used to be contained. Reagan himself enacted significant tax increases, offsetting to a considerable extent his initial cuts.
And even the administration of former President George W. Bush refrained from making extravagant claims about tax-cut magic, at least in part for fear that making such claims would raise questions about the administration’s seriousness.
Recently, however, all restraint has vanished — indeed, it has been driven out of the party. Last year Mitch McConnell, the Senate minority leader, asserted that the Bush tax cuts actually increased revenue — a claim completely at odds with the evidence — and also declared that this was “the view of virtually every Republican on that subject.” And it’s true: even Mr. Romney, widely regarded as the most sensible of the contenders for the 2012 presidential nomination, has endorsed the view that tax cuts can actually reduce the deficit.
Which brings me to the culpability of those who are only now facing up to the G.O.P.’s craziness.
Here’s the point: those within the G.O.P. who had misgivings about the embrace of tax-cut fanaticism might have made a stronger stand if there had been any indication that such fanaticism came with a price, if outsiders had been willing to condemn those who took irresponsible positions.
But there has been no such price. Mr. Bush squandered the surplus of the late Clinton years, yet prominent pundits pretend that the two parties share equal blame for our debt problems. Paul Ryan, the chairman of the House Budget Committee, proposed a supposed deficit-reduction plan that included huge tax cuts for corporations and the wealthy, then received an award for fiscal responsibility.
So there has been no pressure on the G.O.P. to show any kind of responsibility, or even rationality — and sure enough, it has gone off the deep end. If you’re surprised, that means that you were part of the problem.
Oh - a Krugman post. Darrin will be in here soon.
His knees bees a-twitchin'
WC will say something about Krugman's taking Repug's insanity out of context.
So, WC can't answer these two questions, which I asked serveral times, several pages back:
Yet, he is getting bent out of shape because no one will answer his stupid question about what would happen if we taxed at 100% above some level of income.
I'll go ahead answer, so that maybe he'll finally answer my questions.
If we all earnings above $X at 100%, then no one would work to earn above $X.
The labor supply curve is upward sloping, like all supply curves - but it important to note that it has a unique characteristic in that it eventually bends backwards as those making higher incomes can more readily afford to subs ute leisure for work, and thus need to work less as wages increase. Read more here.
It is absolutely true that an increase in taxes will lead to a decrease in the supply of labor (just as an increase in the price of anything leads to a decrease in the demand).
So, if we increase the tax rate (at any level) it would, theoretically lead to a decrease in the supply of labor (people would choose to work less).
To say, however, that would automatically lead to a decline in tax revenues is as false as saying an increase in the price of toothbrushes will lead to increased revenues for the toothbrush manufacturer (it may... or it may not). Elasticity matters.
In the case, the question is: at what level does an incremental increase in tax rate result in a greater decrease in the supply of labor thus lower wages earned thus a lower tax base thus lower tax revenue. Is it going from 35% to 36%? Probably not. 35% to 100%? Definitely. 35% to X%? Well we really don't know.
This, of course, is the entire theoretical basis for the Laffer Curve. The Laffer Curve holds true, but it is only apparent where it holds true at its extremes. We can easily see how a 0% tax rate would result in the same level of revenue as a 100% tax rate above a certain level of income.
Where the Laffer Curve falls short, is that it isn't sophisticated enough to tell us where the peak of the curve is (tax revenue maximization) or even where any modern levels of taxation fall on it because, quite frankly, that is rather difficult function to attempt to compile - hence, why no one has done it. (Note, you also cannot take a superficial look at empirical data and say "in 19xx rates were XX and revenue was XX and in this other year... yada yada yada... too many exogenous factors at play).
Of course, the next question that needs to be asked is: is the tax revenue maximizing rate even where we want to be? Most economists would agree the answer is no, because the tax revenue maximizing rate creates deadweight loss. So what *is* the optimal tax rate? Well, no one can answer that, because that is where subjective differences come into play.
So, there you go Wild Cobra. Can you answer my questions now?
Upon re-reading, looks like I missed his point.
I agree with you.
It's a half truth because someone else paying taxes using revenue from you is not the same thing as you paying taxes. By your logic, it would be a lie to say that GE paid no taxes because their employees paid taxes on the wages they got from GE.
If it is a half-truth, then what exactly is the half of the truth or bit of context that is left out of that statement?
One might not be directly paying taxes, but they are quite surely indirectly paying income taxes on everything that they buy.
Because I look at the receipts after the tax cuts, and notice revenue went down. Meaning that prior to the tax cuts, those people were paying more in taxes.
Any other stupid question you have?
Despite your question being stupid, it was answered. Multiple times by multiple posters.
You 100% tax premise is stupid because that's not currently being advocated.
I already wasted my time answering your stupid question, I'll refrain from wasting more time entertaining your stupid premise.
I think we have both. I'll be more than happy with leaving the current taxation rates on the top 5% IF every single one of the tax loopholes they use is closed (that's trillion of dollars right there). Then we would need to hike taxes a bit across the rest of the 95%, and cut spending.
What y'all forget is that when you talk about historic tax rates (and how low they are now relative to then) You forget that the 86 tax laws changed deductions dramatically and eliminated a load of deductions (like consumer and credit card interest).
You REALLY want to close ALL the tax "loopholes"? Like mortgage interest for example? You will DECIMATE the construction industry and make us a nation of renters in two generations.
I'm talking loopholes, not tax credits. The loopholes that are used to keep trillions overseas waiting for some form of 'tax holiday'. Or the loopholes GE has been using to avoid paying billions in taxes for business done in the country. I'm not holding my breath, but realistically it has to happen. Otherwise, the other 95% are always the suckers.
I mean, on paper this is a great offer. I'm not even asking to raise taxes on the dividends.
I have explained that before, and is why my question went to the next tax cycle afterwards. If you raise taxes, you will get an uptick. If you lower taxes, you will get a downtick. They then settle to where they will settle at. the up or down is temporary.
Scott has the right idea here. LGN pointed out the zero tax rate. My whole point of the question is to make people consider something. From zero, you get increased revenues as you increase tax rates. However, you top out at taxing collecting zero revenue as you increase tax rates. Since you cannot draw an upward slope to zero, at what rate does the trend change from up to down? Nobody really knows. Some of us believe we are already at the top with the lower marginal rates on the up slope trend and the higher marginal rates on the down slope trend.
What if the 35% rate is on the down slope trend people?
Both zero and 100 are extremes, but anyone with half a brain realizes the trend changes direction at some point.
Not true. Review your own numbers and stop asking stupid questions.
Unless you can prove what the Laffer curve peak point is (and you can't, since it varies literally all the time), your contention remains stupid.
House Republicans brace for compromise on debt
Republican leaders in the House have begun to prepare their troops for politically painful votes to raise the nation's debt limit, offering warnings and concessions to move the hard-line majority toward a compromise that would avert a federal default.
For weeks, GOP conservatives, particularly in the House, have issued demands about what they would require in exchange for their votes to increase the debt limit. In negotiations with the White House, Republican leaders have found those demands were unattainable. Unwilling to risk the economic and political consequences of a federal default, which could come as early as Aug. 2, they have started the difficult process of standing down.
At a closed-door meeting Friday morning, GOP leaders turned to their most trusted budget expert, Rep. Paul D. Ryan of Wisconsin, to explain to rank-and-file members what many others have come to understand: A fiscal meltdown could occur if Congress fails to raise the debt ceiling.
http://www.latimes.com/news/nationwo...23,print.story
Paul Ryan Has to Baby Tea Party Freshmen on Debt Ceiling, Forced to Use "Star Wars" Analogy to Underscore Gravity of Situation
Perhaps we should all adopt Death Star metaphors to communicate more effectively with Tea Party Republicans. It appears to be somewhat effective. In any case, we're seeing precisely what I told you we would see. Boehner had to capitulate. Cantor got to play the role of bad cop. Now basic reality kicks in, and Boehner needs to explain to his caucus that if he has to rely on Pelosi for votes, he's going to have to give on taxes, too, making it that much more painful for Republicans to walk the plank. In an effort to avoid a double defeat, he has scheduled some stupid, pointless votes for the next week that he hopes will satisfy his craziest members.
http://www.alternet.org/module/print...ndviews/635095
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Barry called the Repug/tea bagger bluff, and they had nothing in their hand.
The House Repugs are still furiously defunding, killing tons of stuff like environmental, employee regulations, financial regulations and so are still doing maximum harm to Human-Americans as to protect, enrich Corporate-Americans and capitalists.
Within small ranges, they do.
Sorry you didn't like my answer. I guess I'll be more complete. I advocate #1 which should yield more money to a small extent also. I am also on the record as saying the government is already spending too much money. I did essentially answer the problem with #3 even though it isn't the way you wanted me to answer. Over the course of time I answered all on them to some degree.
This essential means we can raise or lower the rate as needed to raise revenue, but hopefully we can lower it and collect enough.It could be said these happen with any tax system change. the 17% does not need to be set in stone, and one key point is that if there is a rate change, everyone is affected. Not just one class.
You have to remember. Changing from a marginal rate of 35%/39.6%, to a 17% flat tax with no deductions will tax many rich more money than today, and only some less. It's all the damn loopholes and deductions that allow those with the right cir stances to pay so little.
We have to take a serious stance here. If we want to generate more revenue, we have collect the money from those who cannot shelter it, and already unfairly pay less than some of their peers. Some people would say the single are subsidizing the families. The current tax system is not fair now, and we need to fix it. I say a person should get taxed by income, not by person situation.
If you are one of the unlucky or foolish that has most your money taxable, then yes. I believe you should pay less. Honestly. Once you take all your write-offs, and pay taxes from tax, what percentage of your gross it it anyway? I say, if it's more than 25%, it's way too much. If it's above 20%, maybe not too much. Some rich people because of the tax structure, only pay around 12%. Now i say this is to little.
I have stated numerous times in the past, one way or another, that I believe all people should pay taxes that are subject to increase or decrease. Nobody should be exempt from taxes. The bottom line it I believe in having a form of a poll tax. I believe anyone who votes for local to federal issues should have skin in the game, from the giving side. Not just the taking side. I know this is impossible with our system, so I at least want to get as many voters paying taxes as possible. If you would prefer to have an actual poll tax, then I say OK, lets set the no tax line anywhere you want, as long as the takers of social welfare cannot vote to get more.
Here's something to consider. We all know the rich shelter money. Many are in the position to be paid in assets rater than money also. Who wouldn't shelter from the 39.6%/35% if they could? How much ready cash do you think would come out of hiding if now, it was only taxed at 17%? I believe this would be part of a stimulus we need.
You're the stupid one.
Why would I even try to prove a "what if?"
"what if"
.... tax rate of 0% or 100%
Then the revenue would be zero."what if"
.... tax rate of 0% or 100%
Do you not understand why I posed the question?
That type of a "what if" is a no-brainer.
I'm pretty sure advocating a poll tax isn't very libertarian...
That's your premise, that's why the one that has to substantiate the claim is you.
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