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Two years ago, faced with soaring unemployment and large budget deficits -- both the consequences of a severe financial crisis -- most advanced-country leaders (Europe) seemingly understood that the problems had to be tackled in sequence, with an immediate focus on creating jobs combined with a long-run strategy of deficit reduction.
Why not slash deficits immediately? Because tax increases and cuts in government spending would depress economies further, worsening unemployment. And cutting spending in a deeply depressed economy is largely self-defeating even in purely fiscal terms: any savings achieved at the front end are partly offset by lower revenue, as the economy shrinks.
So jobs now, deficits later was and is the right strategy. Unfortunately, it's a strategy that has been abandoned in the face of phantom risks and delusional hopes.
"the poor must accept big cuts in Medicaid and food stamps; the middle class must accept big cuts in Medicare (actually a dismantling of the whole program); and corporations and the rich must accept big cuts in the taxes they have to pay. Shared sacrifice! "
Since last August, the outlook for the ten-year budget deficit has deteriorated by $1.4 trillion (see Table A-1 on pages 106-7). Note that more than 100% of the deterioration is due to revenue losses; projected federal revenues over the (fiscal years) 2011-20 period declined by $1.9 trillion–a net $713 billion due to recent legislation (the lame-duck deficit-financed tax cuts), but a larger $958 billion due to negative revisions to the economic forecast and the interaction of those economic changes with our less-than-adequately-robust-or-resilient income tax base.
the claim that lower taxes mean higher revenue — is still very much there. The Heritage Foundation projection has large tax cuts actually increasing revenue by almost $600 billion over the next 10 years.
A more sober assessment from the nonpartisan Congressional Budget Office tells a different story. It finds that a large part of the supposed savings from spending cuts would go, not to reduce the deficit, but to pay for tax cuts. In fact, the budget office finds that over the next decade the plan would lead to bigger deficits and more debt than current law.
Originally posted by meeneecat
what I understand the least, is how some people, regular Americans, can support this type of policy, against their own economic interest.
As of 2007, income inequality in the United States was at an all-time high for the past 95 years, with the top 0.01% -- that's one-hundredth of one percent -- receiving 6% of all U.S. wages, which is double what it was for that tiny slice in 2000; the top 10% received 49.7%, the highest since 1917 (Saez, 2009). And the rate of increase is even higher for the very richest of the rich: the top 400 income earners in the United States. According to another analysis by Johnston (2010a), the average income of the top 400 tripled during the Clinton Administration and doubled during the first seven years of the Bush Administration. So by 2007, the top 400 averaged $344.8 million per person, up 31% from an average of $263.3 million just one year earlier.
How are these huge gains possible for the top 400? It's due to cuts in the tax rates on capital gains and dividends, which were down to a mere 15% in 2007 thanks to the tax cuts proposed by the Bush Administration and passed by Congress in 2003. Since almost 75% of the income for the top 400 comes from capital gains and dividends, it's not hard to see why tax cuts on income sources available to only a tiny percent of Americans mattered greatly for the high-earning few. Overall, the effective tax rate on high incomes fell by 7% during the Clinton presidency and 6% in the Bush era, so the top 400 had a tax rate of 20% or less in 2007, far lower than the marginal tax rate of 35% that the highest income earners (over $372,650) supposedly pay.
Trickle-down theory also predicts a positive correlation between inequality and economic growth, the idea being that income disparities strengthen motivation to get ahead. Yet when researchers track the data within individual countries over time, they find a negative correlation. In the decades immediately after World War II, for example, income inequality was low by historical standards, yet growth rates in most industrial countries were extremely high. In contrast, growth rates have been only about half as large in the years since 1973, a period in which inequality has been steadily rising.
Originally posted by charles1952
reply to post by meeneecat
Thanks for putting up all that information. I'm not sure that it proves what you think it does, but if the thread gets interesting I may come back for another peak.
Congress is planning to spend $3.7 trillion this year. Let's see how we can pay for it:
Tax every household making more than $250,000 100% of what they make - take it all = $1.4 trillion
Tax the corporate profits of every Fortune 500 firm at 100% - take all their profits = $ .4 trillion
Now confiscate all of the property; homes, everything of the 400 richest Americans = $1.3 trillion
Spend $3.7 Trillion, Take in $3.1 Trillion = $600,000,000,000 defecit added to the debt in one year.
Do you still think the problem is too little revenue? And what will you take the next year?
Then on Monday, the Government Accountability Office publicly released a study showing that, as of the end of fiscal year 2010, roughly $330 billion in federal taxes had never been paid -- an amount that, if collected, would represent nearly nine times the amount of savings as the budget itself.
Originally posted by macman
Both sides are a crock.
The budget needs to be cut across the board, period.
I don't spend more then what I make. What makes the Govt think they are special?
And taking more away from people to provide for others is BS anyway you look at it.
The Tax Foundation has released a fascinating report showing which states benefit from federal tax and spending policies, and which states foot the bill.
US 50 States MapThe report shows that of the 32 states (and the District of Columbia) that are "winners" receiving more in federal spending than they pay in federal taxes -- 76% are Red States that voted for George Bush in 2000. Indeed, 17 of the 20 (85%) states receiving the most federal spending per dollar of federal taxes paid are Red States.
Originally posted by Achaetes
I am not sure you know what a liberal vs. A libertarian is. A liberal is generally for spending on social programs, fair pay for workers, equitable taxes, and less military spending among other things. A libertarian is generally for less regulation (food safety, state licensing like drivers licenses, fishing licenses etc...), less corporate regulation, and more personal freedom to do anything they want.. Republicans usually want to tax corporations less, despise any federal or public assistance to the most vulnerable members of society, and don't like workers to have any power (unions, minimum wage, OSHA standards etc...). They also heavily support eliminating any government regulations or over sight on "big" business. What you have described in your post is more libertarian/hard right republican than it is liberal.
Neoliberalism describes a market-driven approach to economic and social policy based on neoclassical theories of economics that stresses the efficiency of private enterprise, liberalized trade and relatively open markets, and therefore seeks to maximize the role of the private sector in determining the political and economic priorities of the state.
The term "neoliberalism" has also come into wide use in cultural studies to describe an internationally prevailing ideological paradigm that leads to social, cultural, and political practices and policies that use the language of markets, efficiency, consumer choice, transactional thinking and individual autonomy to shift risk from governments and corporations onto individuals and to extend this kind of market logic into the realm of social and affective relationships. Philosopher Mark Lila refers to the "The forces of globalized nation that have given us a 'neoliberalism' that people everywhere associated with unregulated markets, labor exploitation, environmental degradation, and official corruption."