Editore"s Note
Tilting at Windmills

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March 24, 2006
By: Kevin Drum

BALANCING THE BUDGET....This slipped off my radar screen for a couple of days, but Andrew Sullivan has responded to my post suggesting that he hadn't done a very good job of identifying spending cuts that would balance the federal budget:

In my original post, I wrote about balancing budgets. What I meant was addressing our underlying fiscal imbalance; not balancing the budget for the next fiscal year now....I'm certainly not trying to be dishonest. Au contraire. I'm trying to keep conservatives honest about what keeping the tax cuts would realistically require.

In a followup post he says he plans to gather up suggestions and return to this topic in a couple of weeks. That's fine with me, and I'm looking forward to it. However, a few suggestions:

  • I'm not actually a huge deficit hawk, so I'm all in favor of focusing on long-term fiscal imbalances. That said, however, the long-term deficit is built on top of the current deficit, which means you need to address that too. Your entire program can't be built on speculative savings a decade down the road.

  • If Andrew is open to some tax increases, that's great too. I only ask that they be scored reasonably. If the proposal is vague ("eliminate corporate welfare"), don't pretend it's worth more than it really is.

  • The plan really needs to focus on hard program reductions. The line item veto might well reduce the deficit, but putting a number on it is simply impossible.

My goal is the same as Andrew's: to keep conservatives honest about what keeping Bush's tax cuts would realistically require. The difference lies in what we think the result of this will be. For example, Andrew thinks we should raise the Social Security retirement age to 72. I think that (a) this is nuts, (b) it's politically impossible, and (c) the vast majority of Americans agree with me.

In fact, that's what I think about this whole exercise. If Republicans really started putting programs on the table in the quantities needed to balance the budget, it would keep them out of office for the next century. So bring 'em on.

Kevin Drum 1:21 PM Permalink | Trackbacks | Comments (92)

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Comments

Andrew (and many posters here) also likes to say that liberals want to raise taxes and spend money for its own sake. As soon as he erects that particular strawman, I lose interest in the rest of his points.

Posted by: craigie on March 24, 2006 at 1:26 PM | PERMALINK

We need to tax poor people more. Like Al says, it is the only way to motivate them to work harder and stop bankrupting this country with their lazy welfare-sucking ways!

And please, ignore that Clinton turned Bush I's record deficits into record surpluses. This is all about conservative values, that have done such a great job the past five years!

Posted by: Freedom Phukher on March 24, 2006 at 1:30 PM | PERMALINK

Raising the retirement age to 72 just allows for the siphoning of more money from payroll taxes, so nix to that unless the payroll tax is lowered accordingly.

Posted by: David W. on March 24, 2006 at 1:30 PM | PERMALINK

If Republicans really started putting programs on the table in the quantities needed to balance the budget, it would keep them out of office for the next century.

So true. Most of what Andrew proposes reduces to "raise taxes on the middle class, and send the money upward." Which is precisely what Bush has been doing, but without the honesty of saying so.

Posted by: craigie on March 24, 2006 at 1:31 PM | PERMALINK

This is why I love the blogosphere.

Posted by: worm eater on March 24, 2006 at 1:32 PM | PERMALINK

I agree with craigie. Too often Sullivan and others on the right contend that all liberals are "tax and spend" evangelists. They suggest we want to bring citizens and business to their knees with huge tax increases for the fun of it.

This is, of course, a lie, but allowing conservatives to repeat it unmolested is a serious problem.

Posted by: Austin_Will on March 24, 2006 at 1:32 PM | PERMALINK

nor is sullivan honest about his argument: he wants to roll back the estate tax, he wants to legalize marijuana and tax it, he wants to eliminate most deductions, he wants to raise the gas tax, which is to say, he doesn't favor the bush tax cuts. he, in fact, is fully prepared to raise taxes.

so am i, but i don't fetishize smaller government or pretend to support the bush tax cuts.

why are we taking sullivan seriously about this?

Posted by: howard on March 24, 2006 at 1:32 PM | PERMALINK

We need to tax poor people more. Like Al says, it is the only way to motivate them to work harder and stop bankrupting this country with their lazy welfare-sucking ways!

As I like to point out, according to conservatives, the way to motivate rich people is to pay them more; and the way to motivate poor people is to pay them less.

Posted by: craigie on March 24, 2006 at 1:33 PM | PERMALINK

It's a no-brainer - Slash the defense (read, war) budget in half. Most wasteful government spending there is and we would not be one iota less safe. When the United States only real enemy is a loose collection of rag-tag extremists who use low-tech weapons like hijacked airliners, what the f*ck are we spending hundreds of billions of dollars, borrowed from our children by the way, on Star Wars and aircraft carriers for?

It's time for the infantile boys who like to paly Army man to grow up and do something constructive with their lives and our tax dollars. National health insurance would be a start.

Posted by: Stephen Kriz on March 24, 2006 at 1:34 PM | PERMALINK

There was once a honest Bush supporter and a conservative.

Stop it. You are killing me.

Posted by: lib on March 24, 2006 at 1:35 PM | PERMALINK

I know this won't work. But Andrew Sullivan makes me want to vomit. Please don't link to him. I whole heartily agree with Eric Alterman on this one.

He destroyed what used to be a decent magazine - TNR.

He gave prominent coverage to that racist tract the Bell Curve.

He accused me - a coaster - of being a fifth column after 9-11

He smeared Al Gore mercilessly in the 2000 election.

etc.

Kevin, You're an excellent analyst - Sullivan isn't. So please stop wasting your time thinking about whatever stupid drivel he pumps out.

Posted by: Samuel Knight on March 24, 2006 at 1:38 PM | PERMALINK

During the Italian Renaissance net worth, not income, was taxed.

Let's roll back the tax cuts and redouble taxes on those who benefited most: the top 1%.

After all, we still outnumber them, don't we?

Posted by: skimble on March 24, 2006 at 1:41 PM | PERMALINK

Me, I'm for taking Sully for a drag 'round the town square tied to my bumper. Id suggest an Abu Grhaib style photo-op pyramid with the rest of the trash in the Bush administration (Rice in full throttle dominatrix kit in the Lyndie England role), but I'm sure he'd enjoy it.

Everyone needs to be a budget hawk excepting infrastructure investment. Cut the military by 25%, all the corporate welfare, which includes all the subsidies that go to agri-business and not independent farmers, and obscene earmarks, and you'd balance the budget and start paying down the debt again in a couple of years.

Posted by: JeffII on March 24, 2006 at 1:41 PM | PERMALINK

We need to find some money to build a lot more submarines. Al Queda may develop gills.

Posted by: eckersley on March 24, 2006 at 1:42 PM | PERMALINK

the long-term deficit is built on top of the current deficit, which means you need to address that too.

Do you mean "the long-term debt is built on top of the current deficit?" What do you mean?

Posted by: jerry on March 24, 2006 at 1:42 PM | PERMALINK

he wants to legalize marijuana and tax it

hey, let's not be too quick to dismiss this guy. Sounds like more of a true libertarian than all the trolls who drag their filthy asses on the carpet around here.

Posted by: just sayin' on March 24, 2006 at 1:44 PM | PERMALINK

I think raising the retirement age is a great idea--lets be reasonable folks, people have longer productive lives than they did in the old days. Why not raise the retirement age?

Posted by: Jon Karak on March 24, 2006 at 1:46 PM | PERMALINK

Geez Kevin. I can't believe you waited until your second comment on Sullivan's response to note that raising the retirement age to 72 is nuts. Is Sullivan so divorced from the realities of the average American that he thinks that would be at all fair?

Posted by: keptsimple on March 24, 2006 at 1:50 PM | PERMALINK

If only we still had hereditary monachies untrammeled by parliamentary checks on power, and if only Andrew were the heir to such a throne, then he could think up and implement his interesting strategies all on his own. Unfortunately for the rest of us, Andrew doesn't get to dream up/suggest/and implement as sole decisionmaker for the realm.

Posted by: Marylou on March 24, 2006 at 1:51 PM | PERMALINK

Did you read all his follow-ups? Such as this baby:

"My whole point is to put middle-class entitlements on the table and to cut them substantially." (http://time.blogs.com/daily_dish/2006/03/kevin_changes_t.html)

I think he's really said enough. When he says "spending cuts" he means "cut social security and medicare 'substantially.'"

Thanks for clarifiying.

Posted by: Mike S. on March 24, 2006 at 1:54 PM | PERMALINK

just sayin', for the record, i agree with several of sullivan's tax-hike proposals, including legalizing and taxing marijuana: he's just not a serious source of ideas.

Mike S., what's even sicker about Sullivan's desire to cut social security and medicare is that - as we know - they have their own funding sources and are not contributing to the deficit.

Posted by: howard on March 24, 2006 at 1:58 PM | PERMALINK

I guess you see that line, since you quote from the post and link to it. But really, I think this exercise was brilliant. And is over.

I'm just surprised how quickly Sullivan admitted 'well, of course it requires killing a few sacred cows and I'm a moron if I suggest this is politically feasible, but when people challenge me, "It's interesting, though, that the big government left is so hostile to small government conservatives. It's as if they really don't believe we exist or are sincere."'

Yeah, I can't imagine why people might think Sullivan's not sincere.

Posted by: Mike S. on March 24, 2006 at 2:03 PM | PERMALINK

It seems to me that the tax cuts need to come back. That's as a conservative lean who voted for Bush in 2000. Tax cuts when you have a surplus are different than tax cuts when you have a deficit. The beauty of Bush is he has proven where I was wrong on issues. I don't the people on this board are going to agree with where I think I was wrong. But this has clearly proved to be one of them. I believe in the Laffer curve and I'm pretty sure I know which side of the slope of the curve this country currently is.

If the low cost projection comes true, we are good. If not, changes will have to be made.

Some combination of defense spending going down, Medicare or Medicaid cuts, or actually tax increases have to occur.

Posted by: Chad on March 24, 2006 at 2:07 PM | PERMALINK

Chad: The beauty of Bush is he has proven where I was wrong on issues.

I think this ought to be available embroidered on a pillow. We could sell millions of them throughout the country.

Posted by: craigie on March 24, 2006 at 2:12 PM | PERMALINK

The thing about the retirement age is that it depends on your job. My father would start to break down and surely die sooner if we made him work until he was 72. He's a carpenter. A physcial job. If you are Sullivan and make a living typing on the keyboard, then, sure, make those people work until they are 75 (or at least don't pay them Soc Sec until then). Of course determining the retirement age of specific jobs would be a game I doubt the government would want to get into, thus we should keep the retirement age as low as we can.

Retirement is a good thing. Why not reward ourselves for a lifetime of productive work and instead tax the people in the top 5% whose income has gone from an inflation adjusted 135,000 in 1980 to 260,000 in 2001 while seeing their taxes fall. I'm pretty sure they can afford it and if they don't like the higher taxes, they can quit trying to make money.

Posted by: kj on March 24, 2006 at 2:22 PM | PERMALINK

kj -

It's not even that simple. As anyone who is over 50 can tell you, it's not easy to have a job past a certain age, regardless of how physically difficult it is. If you are 60 and get laid off, you are done, pal.

Posted by: craigie on March 24, 2006 at 2:34 PM | PERMALINK

Didn't the Supreme Court invalidate the line-item veto in 1998?

Why then are we still talking about it as an option?

Posted by: dan on March 24, 2006 at 2:36 PM | PERMALINK

We could also raise the cap for soc sec taxes so that the rich, who benefit disproportionately from all the tax breaks etc, would actually pay more soc sec taxes. Maybe we could also give some kind of rebate to the working poor and not so poor middle class.

Posted by: Carol on March 24, 2006 at 2:38 PM | PERMALINK

It would be nice if "conservatives" were willing to be honest about the consequences of the ideas, or the policies, they propose. But by and large, they aren't, so I agree with the comments upthread that this is likely to be a waste of time substantively, if not politically.

I also think that very few "conservatives" actually care about the ideas or policies they claim to support, except as demagogic tools. They're for redistributing wealth upward, and beyond that they're for staying in power so they can continue to redistribute wealth upward. Their claims about supporting "market" economics, or "shrinking government" are obviously false when you look at the immense sums of wealth that they routinely handed over to their rich, well-connected cronies via non-market and governmental mechanisms. (The military budget, among others, comes to mind. See under "Halliburton" and "Carlyle Group.")

By and large, Sullivan and his ilk are either liars or fools. Attempting an honest dialogue with them is hopeless.

Posted by: bleh on March 24, 2006 at 2:41 PM | PERMALINK
Didn't the Supreme Court invalidate the line-item veto in 1998?

Why then are we still talking about it as an option?

The same reason South Dakota banned abortion, which the Supreme Court has also dealt with previously.

Posted by: cmdicely on March 24, 2006 at 2:45 PM | PERMALINK

"Andrew thinks we should raise the Social Security retirement age to 72."

In other words, a 100 percent tax on Social Security income for people between the ages of 65 and 71?

Sounds like a winner to me. Go with that, Andy.

Posted by: Quaker in a Basement on March 24, 2006 at 2:46 PM | PERMALINK

> It seems to me that the tax cuts need to
> come back. That's as a conservative lean
> who voted for Bush

Nice system the Radicals have there: grown-up Democratic Presidents and legislators generate a surplus and generally clean up the budget and implement good policies. Radicals then run against "high taxes" imposed by "tax-and-spend liberals", get into office on that platform, cut taxes for their friends and proceed to wreck and loot. Eventually things get so bad Democrats are voted back in, whereupon they raise taxes, clean up the budget.....

What if the Dems don't play this time?

Cranky

Posted by: Cranky Observer on March 24, 2006 at 2:54 PM | PERMALINK

"Andrew thinks we should raise the Social Security retirement age to 72."

Typical. Sullivan is a well-compensated fellow who, if he chose, could probably retire in comfort at 55, even if Social Security didn't exist. OTOH, should he choose to work into his eighties . . . well, the most strenuous part of his job is walking over to the computer.

So as far as he's concerned, everybody else can go suck eggs.

Posted by: penalcolony on March 24, 2006 at 2:57 PM | PERMALINK

Couple points:

1) Not that he doesn't have the right to make his own proposals, keep in mind Andrew Sullivan in not a US citizen. (He has retained his UK citizenship although he has resident alien status.)

2) As has been pointed elsewhere, the budget and tax changes he suggests in no way directly affect him. (Among other things, he owns neither a home nor a car).

Posted by: hopeless pedant on March 24, 2006 at 2:58 PM | PERMALINK

Have Pelosi/Reid/Kennedy/Dean proposed any spending cuts?

Just asking!

Posted by: FrequencyKenneth on March 24, 2006 at 2:59 PM | PERMALINK

"I believe in the Laffer curve and I'm pretty sure I know which side of the slope of the curve this country currently is."

Chad- And which side is that? Supply side economics was thoroughly disproven with Reagan- even he abandoned it. Ask David Stockman.

On another point, I wonder what the unemployment rate would be if the annual budget was actually balanced? How much of the federal deficit is propping up the employment rate? And how many small businesses are completely dependent upon government contracts, which seems to be a significant growing segment of the "private sector"? And when a small business is completely dependent upon government contracts, doesn't that really make them a defacto adjunct of the Federal Government, and not really "private"?

Posted by: DavidLA on March 24, 2006 at 3:00 PM | PERMALINK

Here is a quick summary of Kevin Drum's post:

"Republicans need to tell the voters the spending cuts they propose. That way, the voters will reject Republicans at the polls."

Does anybody agree with me that this post by Drum is sophomoric ??

Posted by: Paddy Whack on March 24, 2006 at 3:03 PM | PERMALINK

sanity for the US would be some combination of tax increases for the wealthy and severe cuts in the bloated $450 billion spending on unneeded military toys. But since we all know neither of those is going to happen, what's left is plain ole navel gazing and faux hand-ringing. Have at it Kevin with that dim-witted egotist andrew sullivan.

Posted by: gak on March 24, 2006 at 3:06 PM | PERMALINK

Don't expect very much. I'm sure that Sullivan's "in a couple of weeks" will stretch on to an eternity.

Posted by: raj on March 24, 2006 at 3:09 PM | PERMALINK

Does anybody agree with me that this post by Drum is sophomoric ??

No. Or at least I don't. Your summation of it is sophomoric.

Look, why doesn't the GOP run on the pain to be caused by the spending cuts required to permit the tax cuts they do run on? Because getting stuff is fun. Not getting stuff isn't fun. The current GOP dance enables people to just get stuff and never have to give stuff up. The fact that voters fall for it is sophomoric. The fact that the GOP continues to peddle it is dishonest and reprehensible.

Posted by: Rick on March 24, 2006 at 3:11 PM | PERMALINK

Our defense budget should be 10% higher than any single country. I think that would put us at 99 billion a year.

Posted by: Neo on March 24, 2006 at 3:12 PM | PERMALINK

Its always worth looking at the data...

http://www.whitehouse.gov/omb/budget/fy2007/sheets/hist01z2.xls

As much as spending as a percentage of GDP from Clinton's last year in office to 2005, tax collections fell by quite a bit more.

(Another thing you get from this table... it seems the deficit started to fall as soon as Clinton took office - so if Newt and the Republican Revolution had an effect, it was retroactive.)

Posted by: cactus on March 24, 2006 at 3:13 PM | PERMALINK

I don't think Kevin Drum is serious about cutting spending.

You want to see a blogger who is serious about spending cuts?? I'll give you two:

Look at Glenn Reynolds' Instapundit. He has been running a "Pork Busters" campaign for months. He seems to actually be serious about cutting spending.

And look closer at Andrew Sullivan.... he says he wants to propose some spending cuts. He will lay his ideas on the table.

This post by Drum has no point other than to bash Republicans.

I hereby declare Kevin Drum is the Harry Reid of the Blogosphere, folks.

Posted by: Bark At The Moon on March 24, 2006 at 3:16 PM | PERMALINK

Raising the retirement age to 72: This is called being out of touch. Andrew Sullivan sits on his butt writing clever columns. Most folks work at a job that wears the body out over the years. Does he really want police, firemen, garbage collectors, freight loaders, etc., to work to 72?

Posted by: Hedley Lamarr on March 24, 2006 at 3:17 PM | PERMALINK

Can't wait to watch a Football game with a bunch 0f 70 year old players. or a 70 year old kobe trying to slamdunk.Yes andy we don't all have cushy jobs that we can do untill we are 70.

Posted by: Right minded on March 24, 2006 at 3:20 PM | PERMALINK

Or A battallion of 70 year old paratroppers being dropped on to a battle field.

Posted by: Right minded on March 24, 2006 at 3:22 PM | PERMALINK

I don't think Kevin said he wanted to cut spending,the topic was what's required to keep the tax cuts.

Kevin said "My goal is the same as Andrew's: to keep conservatives honest about what keeping Bush's tax cuts would realistically require. The difference lies in what we think the result of this will be." And he asked if Republicans and conservatives are willing to tell the voters what this will require.

Clearly conservatives are not willing to be honest. They'd rather create red herrings by putting words in other peoples mouths.

President Bush, are you listening?

Posted by: zak822 on March 24, 2006 at 3:24 PM | PERMALINK

The thing to understand is that the Republicans are playing macroeconomic chicken with the welfare of the country -- if you talk this way, then you end up seeming like a tax-raiser, and the real question is whether one of the two parties is willing to make the electorate face is fiscal music and tell them, "We have to either raise taxes or cut programs, or the country will sooner or later experience a massive currency devaluation and inflation." No politician wants to say this, and at this point the Bushies figure they'll just kick the can down to the next administration. "Apres moi, la deluge."

And the way the Bushies figure it, every year that this strategy works means another year where the rich are keeping their tax cuts -- and if it turns out that all those reality-based ankle-biters are right, well, that'll be a bummer, but let's face it, you'll be okay as long as you live in a gated community and own a yacht.

Posted by: Nils on March 24, 2006 at 4:13 PM | PERMALINK

you'll be okay as long as you live in a gated community and own a yacht.

Actually, in the long run, that's not true. I've been to countries where you either lived like this, or lived in a tin shack - and being in the gated community won't help you when the people in the tin shacks decide they've had enough.

Posted by: craigie on March 24, 2006 at 4:29 PM | PERMALINK

Retirement is a good thing. Why not reward ourselves for a lifetime of productive work and instead tax the people in the top 5% whose income has gone from an inflation adjusted 135,000 in 1980 to 260,000 in 2001 while seeing their taxes fall. I'm pretty sure they can afford it and if they don't like the higher taxes, they can quit trying to make money. Posted by: kj on March 24, 2006 at 2:22 PM

Nooo, kj! All that is good and wise flows from these people! They are the fountainheads of creativity!

But everyone else are just moochers who are looking to suck the lifeblood of these gods-who-walk-the-earth. Of course they need to be paid less. Anything beyond the minimum needed to keep them working at their jobs is just charity.

And as Saint Ayn said, that is the root of all evil.

Posted by: Dr. Morpheus on March 24, 2006 at 4:33 PM | PERMALINK

The line-item veto has already been proposed, signed, and found unconstitutional, so the savings from a line-item veto proposal are $0.

Posted by: Joe Buck on March 24, 2006 at 4:36 PM | PERMALINK
I've been to countries where you either lived like this, or lived in a tin shack - and being in the gated community won't help you when the people in the tin shacks decide they've had enough.

Well, by itself it won't. You've got to get the timing down, and, at the right time, be the one to point to the other gated communties and blame them; if your clever, and agree to split their stuff with the crowd, you can sometimes make out quite well when the crowd gets upset at the inequities.

Of course, you gotta hope no one else has better timing.

Posted by: cmdicely on March 24, 2006 at 5:02 PM | PERMALINK

Kevin:

When Andy gets around to addressing this topic again (although I believe he is punting), you should ask him to conform his proposals according to the following:

A) The federal budget deficit is NOT $400 billion, but more like $800 billion, soon to be approaching ONE TRILLION DOLLARS annually, as the Bushies are using the trust funds to mask the real size of the federal budget deficits. Not just the Social Security and Medicare Trust Funds, but the Airport Trust Fund, the Transportation Trust Fund, the Military Retirement Trust Fund, etc.

Not to mention the hundreds of billions of off-budget appropriations for 9/11, Homeland Security, Afghanistan, Iraq, Katrina, and more.

B) Because of the four rounds of Bushie tax cuts for the Rich & Corporate, federal income tax revenues, according to the CBO and U.S. Treasury, have plummeted to 1959 levels. How does he propose we operate a 2006 federal government on 1959 revenues ?
.

Posted by: VJ on March 24, 2006 at 5:06 PM | PERMALINK

The plan really needs to focus on hard program reductions.

cut the rate of indexing cost of living adjustments to federal entitlement programs by half. Let adjustments be worked out annually along with all spending adjustments. Tax collections will continue to increase even if rates stay the same (assuming no more cuts in tax rates), so increases in tax rates are not necessary, but re-instating the estate tax would be a good idea.

Posted by: republicrat on March 24, 2006 at 5:31 PM | PERMALINK

bark at the moon demonstrates the pathetic inability of the right wing to even understand the basic math of the budget. Professor Instanitwit can bust all the pork he wants: it's chump change. you don't get close to balancing the budget just by eliminating pork, not close.

the fact is, as someone has already noted, the level of spending is not espeically high under bush (the distribution of spending is awful, but that's different). it's the level of taxes that are too low.

republicans and right-wingers who want smaller government have an obligation to tell us how they are going to make government smaller, which is to say, what they are going to do to cut federal spending to match taxes at 17% GDP.

failing that - as they have for years now - they demonstrate that they are profoundly dishonest in their belief in small government: what they want is to defer taxes to a future generation.

Posted by: howard on March 24, 2006 at 5:38 PM | PERMALINK

I predict that Sullivan will fail.

The math is not on his side and, as Stephen Hawking says, after a while, it gets hard to argue with math.

Posted by: little ole jim from red country on March 24, 2006 at 5:53 PM | PERMALINK

I believe in the Laffer curve and I'm pretty sure ..

I believe that anybody who believes in a curvy line drawn hastily on a discarded napkin is a moron.

Posted by: lib on March 24, 2006 at 6:03 PM | PERMALINK

Still waiting for any Democrats to say what spending programs they want to cut.

Anyone?

Anyone?

Bueller?

Anyone at all?

Posted by: Bark At The Moon on March 24, 2006 at 6:03 PM | PERMALINK

bark at the moon, don't be a blithering ass.

first off, dems virtually unanimously opposed the bush prescription drug benefit because it was too expensive since it took negotiating with the drug companies off the table.

second, many dems would support the murtha approach of rapidly drawing down our forces in iraq, which would be a big spending cut.

third, most dems oppose the inane strategic missile defense system.

fourth, most dems oppose the restoration of agricultural supports under bush and delay.

just as a start.

but the point is, as you seem determined to not notice because you seem so limited in your understanding, spending on an absolute basis is simply not especially high. it's tax revenues that are low.

fifth, dems unanimously (if i'm remembering correctly from last week) supported paygo.

now, if you want to criticize dems for not making a bigger deal about how we need to raise taxes, fine, then you got something. but deep down, most dems know that taxes are too low and are prepared to roll back most of the bush tax cuts, so they are at least offering an intellectually sound approach.

what the bush-delay government favors is a tax shift to the future generations, which they hope to offset by stiffing social security recipients. deal with that, why doncha?

Posted by: howard on March 24, 2006 at 6:13 PM | PERMALINK

"For example, Andrew thinks we should raise the Social Security retirement age to 72. I think that (a) this is nuts, (b) it's politically impossible, and (c) the vast majority of Americans agree with me."


What is it about true believers that causes them to label people who disagree with them as having a mental disorder. This seems quite a common thread.

Posted by: mark on March 24, 2006 at 6:37 PM | PERMALINK

Since Kevin/liberals believe that we are woefully undertaxed. Here's your chance.

IRS
Kansas City, MO

UN
NY, NY

How hard would it be for someone to mail in a check to the above? As a reminder US per capita income is about $35K per year. World per capita income is about $3500 per year.

All you would have to do is send in any amount of your net earn over $35K per year to the IRS and then any amount you earn over $3500 per year to the UN.

Walk the talk. Should only take about 15 minutes and the checks could be in the mail. We're all equal and against excess consumerism is bad. Prove it.

Posted by: mark on March 24, 2006 at 6:45 PM | PERMALINK

The debt is real, its consequences will be binding.
Interest on past military spending helps an honest look at tax spending see that half of one's tax dollar goes to the military.

Joseph Stiglitz's conservative estimates of Iraq spending exceed a trillion dollars, and this does not take into account many "collataral" costs. Unless we are out in five years and pay off all the deficit-funded the interest component multiplies.

Pity the real conservatives out there. I know of at least one, my wonderful grandmother who has not known who to trust for years.

Posted by: Cassandro on March 24, 2006 at 6:46 PM | PERMALINK

sheesh, mark, is this what they teach you in propaganda robot school? idiot arguments like yours?

democrats believe in progressive taxation sufficient to cover the costs of government, not that the government should rely on voluntary contributions.

today's republicans believe that revenues and spending are completely unrelated, thereby sentencing the taxpayers of the future to higher taxes and slower growth.

them's the facts (the UN, of course, has nothing to do with anything in this context).

Posted by: howard on March 24, 2006 at 7:21 PM | PERMALINK

BTW, have it's proponents ever apologized for the "tax cuts will pay for themselves" claims that don't wash? (in the true, make up the difference sense, as opposed to the flabby partial makeup of the linear loss.)

Posted by: Neil' on March 24, 2006 at 8:04 PM | PERMALINK

Does anyone know where the tax cut money went? I understand that the extra money needed to finance the war was loaned to the government by overseas investors, which otherwise would have been claimed from domestic sources. If this is true, then there is a pile of untaxed cash sitting in private accounts here at home (assuming that we had the money to pay for the war in the first place).

Posted by: James S. on March 24, 2006 at 9:02 PM | PERMALINK

James, the answer is we didn't have the money in the first place: the initial (and biggest) bush tax cut was sold on the premise that the surplus was so vast that the government could "refund" its "overcharging" while still affording every other obligation and maintaining the lockbox.

that of course was bu(sh)it.

so the war is merely increasing the size of the deficit.

and yes, given that the bulk of the deficit is being financed by foreign central bankers buying our paper, the war is being "financed" by overseas investors.

now, the "pile" of untaxed cash of which you speak is a bit of an oversimplification, but yes, if tax rates had never been cut from those of the clinton era, then we'd have much more tax revenue and conceivably the budget would be in balance, even including the war.

Posted by: howard on March 24, 2006 at 9:12 PM | PERMALINK

"The line item veto might well reduce the deficit"

The line item veto only works if you assume that the President is a neutral arbiter and not a politician like the rest of them. In actuality it would simply give the president a serious whip to keep the congress in check. Imagine an congressional committee who's members had to worry that their pet projects were at the whim of any vote they cast or any question they asked. And you could forget about ever seeing an oversight committee again.

Posted by: Mike on March 24, 2006 at 9:25 PM | PERMALINK

Howard,

I think there is a contradiction in your argument. You say that we had enough money to finance the war without the tax cuts, however, you also state that we never had the money in the first place. Which statement is true?

Posted by: James S. on March 24, 2006 at 9:41 PM | PERMALINK

James, perhaps we're talking by each other.

when i say "we" didn't have enough money for the war, i mean after the bush tax cuts, and the "we" i'm talking about is the public purse.

when i say we could have had enough money - i'd have to do some calculations and make some assumptions - i mean if the tax rates in effect on january 1, 2001, were still in effect.

or possibly you're talking about a related question: why do we need foreign investors to buy our bonds? this is a question that economists have been discussing for a few years now, but a short form answer is this: american investors aren't interested in the crummy rate of return that the US long bond has been offering. foreign investors have been. it's not that the US economy collectively lacks the money to have financed the war if owners of capital were interested in loaning it to the government.

does that clarify?

Posted by: howard on March 24, 2006 at 9:57 PM | PERMALINK

Mark:

Don't be so goddamned simple-minded. It isn't about be undertaxed, it's about conservatives wasting the taxes we do pay on pointless things like aircraft carriers and thier gutlessness in matching tax cuts with spending cuts. Is it that hard to understand? Don't give rich people tax breaks unless you find programs to cut that the majority of people agree to cut. The majority don't want Social Security or Medicare cut, so what are you going to cut? Comprende`? Or do I need to draw you pictures with crayons?
Sheesh you conservatives are dense....

Posted by: Stephen Kriz on March 24, 2006 at 10:09 PM | PERMALINK

Howard,

You sound like a supply side economist. If American investors can get a higher rate of return from domestic sources, then the net effect is a faster growing economy here at home. An expanding economy produces a larger source of revenue for the government.

It seems to me that foreign governments like Japan need to maintain a low exchange rate to sell their products in the United States and Europe, but they also require safe shipping lanes to transfer goods across the globe.

The low rate on long term treasury bonds is really a combination of exchange rate control and a "terror factor" tax. In other words, a big unspoken reason why long term rates remain low is foreign governments like Japan "loan" the United States government money to secure the planet.

Posted by: James S. on March 24, 2006 at 10:47 PM | PERMALINK

james, i have no idea why you think i sound like a supply-sider, but let's clarify a few things.

stock market returns do not correlate with economic growth in any kind of direct way: indeed, stock market returns are often higher at times when the economy is weak, because the market is a forecasting mechanism and it looks ahead to growth. similarly, in times when economic growth is solid, market returns can be poor as investors position themselves for a potential turn for the worse of one form or another.

nor does an "expanding economy produce a larger source of revenue for the government," at least on its own. that's a function of the economy and of tax rates. we've had an expanding economy for 17 quarters now, and odds are it will continue to expand for at least another quarter or two, and yet as a percentage of gdp, tax revenue is at lows not seen in decades.

actually, the japanese don't need a low exchange rate to sell their products (although they don't argue); the chinese are much more interested in low exchange rates in order to subsidize the tremendous shift of people from the countryside to the city.

i don't know what you mean by "exchange rate controls," since they don't exist.

and the Japanese do not "loan" the us government money to "secure" the planet. indeed, foreign central banks are buying fewer long bonds (they're buying more stocks and corporates) and yet the planet is any more secured than it was 2 years ago.

now, all of this is rather far afield from your initial query, and i'm not sure why we've gotten here. the basic point remains, though: we could have "afforded" the war in iraq under certain tax regimes, but we don't have those tax regimes. as a result, we need to borrow the money to fight the war with.

meanwhile, if you're seriously interested in international capital flows, a couple of blogs written by economists who actually specialize in this area are here:

http://www.rgemonitor.com/blog/roubini/

and here:

http://www.econbrowser.com/

Posted by: howard on March 24, 2006 at 11:28 PM | PERMALINK

Howard

You make my point about modern liberals.

They just talk about helping the poor.

When it's suggested that a modern liberal actually practice what is the key tennent of liberalism, the transfer of wealth to those less well off, you come up with rationalizations.

As an example, for a household to live on $75K a year, 30 households somewhere around the world have to live on $350 per year.

Can the $75K household be considered liberal?

Why is it Bush's fault for not forcibly taxing you more so you can do what you consider to be right? Just do it.

Posted by: mark on March 24, 2006 at 11:52 PM | PERMALINK

Howard,

It seems to me that the government is buying short term domestic social tranquillity by borrowing large sums of money to finance the war. The low tax rates do not present a material burden on American citizens who express their distaste of the war by agreeing to participate in random telephone polls, rather than picketing the ramparts.

Posted by: James S. on March 24, 2006 at 11:55 PM | PERMALINK

goodness, mark, you really are, in bugs bunny's immortal phrase, a "morooooon."

your suggestion was that if we felt we were undertaxed, we could send a check to the IRS or the UN. what does that have to do with your "helping the poor" notion?

among the things that liberals believe is the preamble of the constitution - you know, the one that says that that we the people formed this here union in order, among other things, to provide for the general welfare. individual charity is well and good (and as it happens, bigmouth, i give a nice chunk of money to www.heifer.org every year) but is not a substitute for utlizing the power of the state, which liberals are perfectly willing to do.

but what in the world does that have to do with anything? the issue at hand is that the republican government that we currently have wants to spend at north of 20% gdp and tax at 17% gdp, which is unsustainable, will reduce our standard of living in the future and harms our national security. The American "poor" only come into this insofar as the republican government likes to cut programs for the poor, but even if they didn't, the budget gap would remain.

as for the poor around the globe, there is only one group of poor people that the republican government claims to care about, and that would be the poor people of iraq, whom we privilege above all others.

your nonsense about how it is the personal responsibility of liberals to take on a vow of personal penury in order to provide for the billions of poor people around the world is just plain tripe and completely non-responsive to the actual topic of this thread.

as i say, it's amazing what they teach you in college republican propaganda robot school.

Posted by: howard on March 25, 2006 at 12:06 AM | PERMALINK

James, to tell ya the truth, i have no idea what your point is. bush did his primary tax-cutting before we even had the war in iraq. he and cheney and rove and delay have made it perfectly clear that it is an article of faith with them that there is no such thing as a set of circumstances that justify a tax increase, but even if we had rational people running the country, a tax increase on the upper 2% of income earners plus the restoration of the estate tax would hardly constitute a material burden on the bulk of the 120M households in america.

and americans could hardly despise this war more than they already do.

so if you're saying that the bush-delay regime is choosing to fight this war with borrowed money because they fear that restoring clinton era tax rates would cause the populace to rush to the ramparts to protest the war otherwise, i simply don't agree.

if your point is something else, i simply don't understand.

Posted by: howard on March 25, 2006 at 12:15 AM | PERMALINK

What point did Howard make for you Mark? I thought modern liberals were about minding their own business. Here's a few examples. Wanna do drugs that's your business. Want to have a gay sex relationship fine that's your business. Don't want to eat meat fine go for it. We also know we can't save the world. But fair labor conditions for all would be nice. Get the picture. So when you elitest conversative types come around, we treat you like the morons that you are.

Posted by: Neo on March 25, 2006 at 12:22 AM | PERMALINK

neo, excellent point as well!

Posted by: howard on March 25, 2006 at 12:25 AM | PERMALINK

Thanks Howard, nice work on the budget and tax comments. Do you ever read Brad Seters Blog or Calculated Risk? Good stuff at both.

Posted by: Neo on March 25, 2006 at 12:30 AM | PERMALINK

Neo, i should, in fact, have mentioned brad setser's blog in my list for James, and i look at Calculated Risk as well as Angry Bear and my actual favorite, because of the diversity of his links and references to speeches and papers, Mark Thoma's Economist's View.

i also like Barry Ritholtz' Big Picture and prof delong's semi-daily journal (although that's only sometimes an economics site), and i check out max sawicky regularly too.

and with that, as pepys would say, to bed!

Posted by: howard on March 25, 2006 at 12:39 AM | PERMALINK

During World War 2 the government asked the American public to sacrifice for the war effort. The citizens who were not conscripted to fight were taxed at a maximum marginal rate of 90 per cent.

During the present day war, the government continued a tax cut rate policy, with a much lower marginal rate. The result of the lower taxation and borrowing plan of the government during wartime means citizens here at home can spend money today on personal items which mitigates the material pain that would be felt by higher taxation.

We get to buy our toys which provide a distraction of the real pain felt by our soldiers fighting the war.

Posted by: James S. on March 25, 2006 at 12:44 AM | PERMALINK

mark seems impressed by bush's "tax cuts." but like elaine's orgasms (in a seinfeld episode) those tax cuts are fake, fake, fake. we all gotta pay, through the nose, starting tomorrow, and for the rest of our lives. they suck! we're paying interest on the interest of the last tax cuts. whatever "conservative" used to mean, it doesn't mean that anymore. now it means "say whatever sounds good, do whatever feels good."

take "small government"? where's the small government? it's all just fake empty promises. there's been no cuts in spending. angry bear (blog) had some stats recently on discretionary spending under bush and it turns out it increased 14% during 2001 - 2006. but that's inflation adjusted, per-capita spending!

the commentary at angry bear was that 14% isn't so much. i don't see it. for a true conservative, real per-capita spending should have gone down. otherwise why not just keep it level? why do we need a 14% increase? because it sounds good to talk about "tax cuts" and "small government" but it feels good to increase spending and put it all on the taxpayer's tab.

i guess mark, like many conservatives, think it's a wonderful bargain when you buy on credit instead of pay cash. just like getting it "free"! sorry mark, bush is forcibly taxing you, and you will pay. probably sooner than you think.

and, obviously, the point of setting policy to balance taxes and spending is to avoid bankrupting the country. for a few do-gooders to send a bonus check to the IRS might be a nice gesture but will have zero impact on the damage being done to our future prosperity.

Posted by: mikey on March 25, 2006 at 12:47 AM | PERMALINK

>>instead tax the people in the top 5% whose income has gone from an inflation adjusted 135,000 in 1980 to 260,000 in 2001 while seeing their taxes fall.

These are the same pitiful folks screaming about their 'tragedy' of falling under the provisions of the AMT.

The only real reason the AMT is kicking in on these poor, poor people is *not* inflation as they claim since their incomes, adjusted for inflation, have almost doubled.

It's precisely that their maginal tax rates have fallen dramatically while their deductions for mortgage and other interest have sky-rocketed allowing them to reach that nirvana of zero (or even negative - due to tax credits and carry-forwards) tax.

Costs for 'fixing' (that is to say 'rigging') the AMT for 200,000 or so taxpayers are around $14.5 BILLION in reduced revenue over 5 years.

That's a lousy $1450 per taxpayer per year. That's what these poor mistreated folks making at least $150k/year (most make substantially more of course) are causing such a fuss over.

That's less than they spend on a plasma TV for crying out loud.

Oh, and I love the whole 'middle-class' poor mouthing, too, coming from folks making at minimum 3X the median.

Posted by: CFShep on March 25, 2006 at 8:39 AM | PERMALINK

James, just for the record: the war in iraq isn't world war ii; the slightly higher taxes that would pay for the war in iraq would be inconsequential to most people; and it wasn't the surtax applied for the war in vietnam that resulted in people opposing it.

Posted by: howard on March 25, 2006 at 11:13 AM | PERMALINK

Watch out Jay your ethnocentrist attitudes are pouring through that thin redneck veneer. Do the Iraqi insurgents scare me? As long as they stay over there, no. They look like some tough ombres to me. I would not want to be in their sights. Then again we have no business over there anyway.

Posted by: Neo on March 25, 2006 at 1:18 PM | PERMALINK

opps wrong thread

Posted by: Neo on March 25, 2006 at 1:19 PM | PERMALINK

I thought I'd read somewhere that a large part of the Bush tax cuts haven't even gone into effect yet. If that's the case, then all of a sudden we're not talking about cutting the budget by $400 billion, we're talking about $600 billion or so. Anyone out there with hard data on this?

Posted by: Ghebs on March 25, 2006 at 1:45 PM | PERMALINK

Kevin's comment that the program cuts necessary to sustain the Bush tax cuts would put the Republicans out of office for the next 100 years is right on the money. What's astounding is that so few people are aware of, much less talk about, the fact that avoiding the spending cuts commensurate with their tax cuts is precisely how the Republicans have gotten and maintained themselves in office in the first place.

The tax cuts have of course kept the right wing fired up. But because those cuts were funded with borrowed money, the free lunch effect has also kept the non-wingers from marching on the White House with pitch forks and torches. By using borrowed money, the positive effect the tax cuts is real, while negative effect is abstract, essentially hidden from the public.

One of the ways the Republicans have kept themselves in power is by borrowing mind boggling amounts of money, and spreading the largess across the political spectrum. And the reason they have been able to get away with it is that our national media continues to neglect it's duty to inform the public of the true nature of what is going on.

Sadly, just like global warming, the abstract nature of a potential fical disaster leaves the public confused if not outright apethetic. It requires someone in a position of authority to counter the Republican rhetoric, and wake the electorate to the reality of the danger. But as long as our national media continues to seek a false balance in it's reporting, in spite of facts that overwhelmingly support only one side, the Svengalis of the right will continue to work their magic on public opinion.

Posted by: Stephen Abbot on March 25, 2006 at 3:22 PM | PERMALINK

Howard,

The present administration of our government has decided to finance the war by selling treasury securities rather than raising taxes.

In addition to selling treasury bonds, state and local governments are leasing public assets to foreign corporations to pay for local government services.

For example, the state of Indiana is leasing the state toll road system to a European company for seventy five years. The city of Chicago also decided to negotiate a long term lease of a public toll road to a corporation in Spain for billions of dollars.

The point I am trying to make is that the American public is content to allow our leaders to float paper and lease public assets for tremendous sums of money to pay for present day government services, including a war that poses a threat to life and limb.

Posted by: James S. on March 25, 2006 at 3:55 PM | PERMALINK

James, i don't disagree for a second that the bush admininstration is behaving irresponsibly (i'm less familiar with the state of indiana and city of chicago deals you cite, which may or may not be irresponsible).

but there's a big difference between the public being willing to accept deficits and saying that the bush regime is deliberately borrowing to pay for the war in order to avoid public protest and saying that the bush administration is behaving irresponsibly.

to put it another way, the scale of the bush deficits is, roughly, when counted accurately (meaning, without the social security surplus) something like $1.5 - $2.0T. The cost of the iraq war to date is a little north of 10% of that value. the war isn't the story behind the deficits, it's an adjunct to the story, which is that bush et al simply don't care about fiscal irresponsibility.

Posted by: howard on March 25, 2006 at 10:50 PM | PERMALINK

That's a lousy $1450 per taxpayer per year. That's what these poor mistreated folks making at least $150k/year (most make substantially more of course) are causing such a fuss over.
That's less than they spend on a plasma TV for crying out loud.

Yes, but that's one more plasma TV I have to do without.

Posted by: Stefan on March 26, 2006 at 10:22 AM | PERMALINK




 

 

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