by wj
At the moment, there is some (OK, substantial, and rising) doubt as to whether Congress will get its act together and raise the Federal debt ceiling by the end of the month. The obvious question would be: So what?
Skip over, for the moment, the obvious impact on the “full faith and credit” of the United States. Look instead at who would and would not get paid. Or, if you prefer, who could and could not get paid.
The Federal government has gotten by, since sometime last spring, basically on accounting tricks. For example, money in accounts for funding Federal pensions, nominally in Federal bonds, has been pulled out to fund on-going expenses. But when those tricks run out, what happens?
Basically, the government can only spend each day what they take in that day. The current estimate is that we hit that point between November 3 and November 5. (Note that, if the earlier date is correct, the impact of November 10 below would be a week earlier.)
There are a bunch of big bills which come due at various moments. There are also a variety of payments due every day: Medicare and Medicaid ($3 billion), payments to military vendors ($1 billion), etc. You can try to prioritize, and short some or all of them.
But here are the biggies that can’t be finessed:
— November 10: $14 billion in Social Security benefits. Income: $6 billion
— November 16: $30 billion in interest on Treasury securities (plus $3 billion in salaries for military personnel). Income $27 billion.
The list goes on and on.
The big kicker, politically, is November 10. If Social Security benefits don’t get paid on time (and they cannot be, if the debt ceiling isn’t raised) there is no real question but that there will be political hell to pay. And does anybody think that the Republican’s refusal to act can be successfully blamed on the Democrats? I mean, no doubt they will try, and try hard. But, as we saw last time the government got shut down, that doesn’t seem likely to work out as they expect/hope.
The political fallout for actions, and inactions, in Washington generally seems to be smaller and less long-lasting than those who live inside the beltway expect. But if the Social Security checks don’t come in on time across the country? Somehow I suspect that won’t be forgotten, or forgiven, any time soon.
That said, the bigger impact (if things get that far) will be November 16. Because Treasuries are not just obligations used by lots of individuals and things like pension funds. They are also, due to their supposed absolute security, the basis for much of the global financial system. And thus for the economies of most countries are at risk — including the economy of the United States.
Mere missed Social Security payments can be made up later. People will suffer, sure, and be furious as a result. And you can argue over which party would get the blame. But the harm to the overall economy will be transitory. A crash the global economy, on the other hand, which missed payments on November 16 would cause? It would make the Great Depression seem like just a temporary ripple.
The $30B in debt isn’t that big a deal, because as the bonds mature, they reduce the debt, allowing them to be re-issued below the ceiling. There’s obviously a timing problem (you have to pay the bondholder before the rollover can occur), but I think that just means that you pay the bonds first, out of your incoming revenue stream, deferring non-debt payments until you’ve made the debt payments.
The real problem is still the IT problem. Shutting down the various payment systems in the right order–and then turning them back on–is almost impossible.
I’m still assuming that everybody’s slightly less crazy when the cameras aren’t rolling, but then I assumed that they’d have been able to elect a Speaker in good order, too.
The federal pension I am due goes into processing on November 3.
It looks like I’ll have to dip into savings to buy weapons and ammo.
I think it depends on just how the Treasuries in question are set up. If they are just “pay when mature”, the rolling them over should be possible. But if they require interest payment at intervals before they mature, rolling over is not an option.
Unfortunately, I don’t know just which kind the report I was reading, Debt Limit Analysis, is referring to.
This is one time I’m glad my lifelong Republican, Alzheimer’s-ridden mother is no longer cogent enough to understand her SS checks and medicare payments will cease arriving.
President Obama needs to declare martial law and order the arrest and execution of Republican leaders, Congressional members and Republican media f*cks cheering this debacle on.
Subhuman, sadistic vermin filth.
Their children too.
Now Count, you know better than to blame the children for the sins of their parents.
wj @here—
Good point on the maturities–I forgot that not everything is zeros. Looks like average duration was 60 months in June 2015 (Table FD-5). So, naively (don’t know if the duration is weighted by number of each type of outstanding bond or not), you could roll over only half a billion.
Never mind!
wj,
why can’t the SSA just sell some bonds from the trust fund to meet the november 10 benefits payment?
If I’ve understood correctly, SSA holds, and is required to hold, it’s trust funds in special bonds. When they are needed to pay benefits, the Treasury redeems them — i.e. pays money to SSA for them. But, apparently, these are “non-marketable” securities. That is, they cannot be sold to anyone but the Treasury.
And therein lies the problem. SSA needs to have the Treasury redeem the bonds, so they can send out the benefit payments. But the Treasury will have no money with which to redeem them.
http://finance.yahoo.com/news/house-gop-hatches-harebrained-debt-220800616.html
Bullets over sense.
And therein lies the problem.
WRT SS, I see the problem this way.
For 30 years, working people have been paying in at a rate greater than outflows. The treasury bought the surplus, with the promise to repay it when the predictable actuarial reality made it necessary.
That time has arrived. However, Treasury can’t pay, because nobody wants to pony up.
Everybody who has worked for a living for the last 30 years should consider themselves rogered. Because, they have been rogered.
If you borrow money, you gotta pay it back.
And therein lies the problem. SSA needs to have the Treasury redeem the bonds, so they can send out the benefit payments. But the Treasury will have no money with which to redeem them.
Why couldn’t the Treasury just give them to the Fed, and the fed could then just credit the government cash account? The Fed could hold them as a asset, just like they are holding “assets” under the quantitative easing program?
If I have understood correctly, the Department of the Treasury, and only the Treasury, can buy the Social Security Trust Fund’s special bonds. That is, the Fed is not, legally, allowed to buy them either, because it is not the Department of the Treasury.
In short, the Fed can just create money to/by buying other kinds of bonds, thus putting more money into the overall economy. But not this kind of bonds.
From what I could find, the bonds are held by the Treasury on behalf of the Trust Funds. So they already have them. So I am thinking of a collateralization, not a sale.
In theory, the Fed could hold them forever.
wj,
I’m just kicking the tires here….info on the actual nuts and bolts of the mechanics to redeem these bonds is a bit elusive.
TRM,
A quibble: maturity and duration are different things. Table FD5 gives maturity.
I don’t think it helps at all to selectively pay certain obligations. All that does is say that Congress considers itself free to pick and choose what to pay, subject to the political winds of the moment.
That doesn’t inspire confidence even if you are one of the lucky ones who gets paid this time. What about next time, which is what you have to consider when lending money?
These House Republicans really are fools, and dangerous ones.
Byomtov, it appears that the alternative being considered is to simply wait until enough income has accumulated to cover a particular set of bills. Which might be a good idea for something like Social Security payments, since otherwise someone has to pick which individuals (or, perhaps, individuals in which Congressional districts) get paid and which do not. Imagine the political implications of that!
The GOPsters even thought about a bill that would put this kind of selectivity into written law. It became known as the ‘pay China first bill’ because it made the priorities clear: first the foreign obligations, the social programs last. Iirc this was also intended to undermine the public trust in those programs even more, so privatization* would gain popularity.
*lat. privare = to take away, rob; in military context also: to plunder, devastate (bereave of use).
It was H.R.807, officially named the ‘Full faith and Credit Act’ and was passed by the House on May 9, 2013 (it never got through the senate).
Again in September, “on a party-line vote today [September 10], the [House Ways and Means] committee approved a copy-cat bill that would give Treasury the ability to borrow money to service bondholder debt and Social Security trust fund payments without raising the debt ceiling.” — Politico
As with the bill from the spring of 2013 Hartmut refers to, this bill is going nowhere. At best, it provides a talking point for when Social Security payments get missed.
Of course, this would essentially prioritize those payments ahead of others, such as salaries for federal workers, veterans’ benefits, etc. Somehow I doubt that failure to pay those, especially military salaries (the military being Federal workers) and veterans’ benefits, would be great politics — even if not quite as explosive as missing Social Security checks.
I keep coming back to this assessment of *Bill Clinton’s* ill-considered attempt to provoke a Kurdish rebellion:
Note the date of publication.
That’s not hindsight; that’s foresight.
Wrong thread, dangit!
wj,
it appears that the alternative being considered is to simply wait until enough income has accumulated to cover a particular set of bills.
That sounds worse. As long as you are in deficit the wait is going to get longer and longer, and the political pressure to change the priorities will grow, and the country’s credit will still decline, because no one will be sure how long they will have to wait to be paid. And how are you going to ever hire anyone?
It’s insane.
Byomtov, All of the alternatives being considered are insane. But those who refuse to agree to raising the debt ceiling don’t care. Their ideology demands that they take the stance that they do. The fact that it would massively damage the country, the economy, and the incomes of their constituents — all irrelevant details.
What they actually want, as near as I can tell, is precisely to damage (better yet destroy) the government. No matter what the cost. Because only that way can they start over and achieve their vision for the world. It wouldn’t work, but again the real world is irrelevant to their ideology-driven vision.
From a European perspective, you’re all completely nuts.
On the other hand, I come from a nation where a radio ventriloquist once had an audience exceeding 15 million people…
https://en.m.wikipedia.org/wiki/Archie_Andrews_(puppet)
Hey, we had one of those too
https://en.wikipedia.org/wiki/Edgar_Bergen
“From a European perspective, you’re all completely nuts.”
I’m beginning to doubt your UK creds, Nigel, because the proper term should be “barking mad”.
wj,
I understand that all the proposals are insane. What puzzles me is why the proponents don’t understand that. Are they hopelessly stupid, hopelessly destructive, what?
I doubt that a default would even accomplish what you say they hope for. It would simply be something between a very bad problem and a catastrophe. But it wouldn’t destroy the government.
What I think is really going on is that those refusing to raise the ceiling think they are incredibly clever, and have discovered a wondrous strategy to get what they want. Same thing with shutdowns, endless repeals, and so on. Idiots.
“Are they hopelessly stupid, hopelessly destructive, what?”
Three doors:
Door #1: Yes, Hopelessly Stupid
Door #2: Yes, Hopelessly Destructive, Malevolent, Sadistic, Haters of the First Water, but ever so sincere, and it’s the sincere ones, like ISIS, for example, that you need to watch.
Door #3: What? I think “What?” is What is going to happen to them, and it’s not going to be an election.
Are they hopelessly stupid, hopelessly destructive, what?
Some of them are, indeed, hopelessly stupid. And some are hopelessly destructive — as in they believe that destruction is necessary in order to save the world.
But most are simply hopelessly fanatic: true believers. That is, there is something that they believe in. Any fact which contradict it, anybody pointing out the totally predictable negative consequences of their belief, just gets ignored. One might even say, religiously ignored.
Think of it as determinedly closed minded. They aren’t stupid, they just refuse to believe anything which would require them to think differently. They could think, but decline to (a problem I have seen before in politicians). They aren’t (necessarily) destructive, they just refuse to believe that anything negative could happen as a result of their beliefs being implemented — even abruptly.
True believers in what?
“True believers in what?”
True believers that the fiscal structure of the US government is hopelessly bloated and corrupt, and can only be rectified by massive destruction, followed by a return to “gold-based” currency. Or perhaps giant stone wheels, I forget.
Yes, I oversimplify, but their program is not exactly ‘nuanced’.
True believers in their particular political/economic philosophy. An unlikely (at least to my mind) combination of fundamentalist Christianity, rabid capitalism, extreme libertarianism, and nativism. (Plus, I suspect, in my more suspicious moments, some of them blend in a hefty dose of straight racism.)
The combination leaves them believing that anything that gets done in Washington is, by definition, bad. And anything favored by President Obama is, also by definition, somewhere between a horrible leftist idea (notwithstanding the fact that Obama is actually, on any objective analysis, a center-right politician) and a direct attempt to deliberately destroy America. (Why he would want to do so is generally assumed to be too obvious to even discuss.) The combination, obviously, is flat-out synergistic.
http://finance.yahoo.com/news/lew-worry-could-debt-limit-110558741.html#
counting on the nihilist anti-democratic children to not destroy America’s finances every 12 months seems like a shitty way to run a country.
heckof a job, GOP voters.
If their economic perscriptions are so great, why aren’t they all moving to Kansas? Then they could live with the real-world results of an actual implementation.
The Savior wants to be crucified on HIS terms, not theirs:
http://www.washingtonmonthly.com/political-animal-a/2015_10/on_your_knees058181.php
This blue-eyed lover of Ayn Rand’s purple- prosed instructional manuals for murdering the poor and the elderly (including his own younger self who inserted his parasitical proboscis into the nurturing bloodstream of Social Security survivor benefits, not to mention his many salaried and health-insured government positions on my dime since then, knows that there are perfectly legal, legit ways to carry out the genocide Rand relished without blowing up the 1 percent’s bond and stock portfolios.
That this truly dangerous individual might save us temporarily from the John Birch cabal attempting their financial terrorism against the full faith and credit of the United States provides me no comfort.
Again, the President of the United States should be preparing to invoke martial law nationally the second the Treasury is forced into default.
Recall troops from abroad to help us defeat this act of domestic terrorism.
also, the GOP really needs to get its head out of 1999.
Their heads are farther up the wayback machine than that:
http://crookedtimber.org/2015/10/18/lockes-road-to-serfdom/
https://www.jacobinmag.com/2015/10/locke-classical-liberalism-treatise-nozick-constitution/
Once immigration is halted, they will have American workers under Locke and key.
So, what are the awesome, principled, far-sighted, wise, benevolent and so on Democrats doing to save the country from those f’ing motherf’ers?
BTW, on whose watch were SS taxes relegated to the general fund?
Russell said:
For 30 years, working people have been paying in at a rate greater than outflows. The treasury bought the surplus, with the promise to repay it when the predictable actuarial reality made it necessary.
That time has arrived. However, Treasury can’t pay, because nobody wants to pony up.
Everybody who has worked for a living for the last 30 years should consider themselves rogered. Because, they have been rogered.
If you borrow money, you gotta pay it back.
I would tweak the above: Treasury can’t pay because it doesn’t have any money. It can only borrow more money.
Otherwise, what is the Democratic plan to pay back what has been borrowed AND meet all of the country’s entitlement, etc obligations?
To find out what the Democrats’ plans are (if any) it would be best to ask them. Although someone here may have checked it out.
But mostly what we can reasonably expect here is people giving
a) their personal proposals on how the country could/should deal with it
b) their personal plans for how they personally plan to deal with it.
Me, I figured out back when I first started paying into Social Security (early 1960s) that it was just another tax, and I shouldn’t expect to ever see a dime back. So I save accordingly.
It actually seems like I may (in a couple of years) actually see some money back. Live and learn. But I’m covered anyway.
McT,
What f’ing MF’s are you referring to?
And what exactly do you mean when you say SS taxes were “relegated to the general fund?”
Otherwise, what is the Democratic plan to pay back what has been borrowed AND meet all of the country’s entitlement, etc obligations?
To the extent that existing revenue is inadequate to meet obligations incurred (which obligations were initially authorized by Congress, let’s not forget) you can borrow more or raise taxes. Simply refusing to pay is childish.
Simply refusing to pay is childish.
Especially, but by no means exclusively, among our politicians, acting childish is a core competency.
Bernie,
McTX dismisses the raise-taxes-to-pay-the-damn-bills option because he has told us his “marginal rate” is 49% already. I haven’t figured out yet how that could actually be true, but it probably doesn’t matter.
–TP
Otherwise, what is the Democratic plan to pay back what has been borrowed AND meet all of the country’s entitlement, etc obligations?
I don’t know what the (D) plan is.
My plan is to go back to Clinton tax regime, and look to reduce national debt over a 20 to 25 year period of time. Not overnight.
For SS I would raise the FICA wage cap. I don’t know how much, I am not an actuary. And yes, I know that will raise taxes for higher earners. It will raise my taxes, personally.
The really scary piece of the entitlement picture is the medical side, not SS, so I, personally (not the (D)’s) would start moving toward single payer for basic health care. Private insurance as add-ons if you want Cadillac.
That, or a really systematic reform of the relationship of payer to payee. No, I don’t have details, it’s not my wheelhouse, it’s just clear that what we do now is broken.
And yes, I realize that you pay a hell of a lot of taxes, and I’m sorry that that is so.
The FICA wage cap never made any sense.
Sorry, but it doesn’t. I admit it was nice to have a little more take-home pay in the latter part of the year. But I just can’t see the rationale for it.
But then, I don’t understand the rationale behind setting a lower tax rate for capital gains either. Income is income.
The argument of “it will give more money to those who will invest it” only makes sense if you don’t think about it hard. If it were true, after all, we should set the marginal tax rate for high incomes (from whatever source) at zero. That would also leave more money in the pockets of “those who would, in theory, invest it.”
russell, to McKinney: And yes, I realize that you pay a hell of a lot of taxes, and I’m sorry that that is so.
It should be some consolation that the main reason for a large tax bill is a large income.
Now, if people in McKinney’s income range were annoyed by the fact that the likes of Donald, Mitt, and Carly pay a smaller fraction of their (really large) incomes in taxes than hard-working lawyers do — well, I could sympathize with that.
–TP
BTW, on whose watch were SS taxes relegated to the general fund?
Reagan’s? But that does not matter. By law, they could go nowhere else. If all that extra revenue had been turned into cash and allowed to rot in the basement of the Treasury, the general fund would still have had to go out and borrow vast sums to pay for all the other goodies provided by the feds (defense, endless war, etc.).
Maybe, do nothing and grow out of it:
http://www.latimes.com/business/hiltzik/la-fi-mh-the-u-s-government-in-debt-20151019-column.html
If all that extra revenue had been turned into cash and allowed to rot in the basement of the Treasury, the general fund would still have had to go out and borrow vast sums to pay for all the other goodies provided by the feds (defense, endless war, etc.).
Of course.
Why this is so hard to understand baffles me. You have excess cash. You are going to invest it. One of your choices is Treasury bonds, and in this case the law requires you to invest in them and nothing else. If, instead, the Trust Fund had been allowed to buy private securities then the Treasury would have had tp borrow money elsewhere.
SS has held its assets in treasury bonds since day one.
And normally, when the Federal budget runs a deficit, Treasury sells bonds to finance the deficit, and they count the bonds as part of the Federal debt.
IIRC, the ‘change’ was to exclude the bonds that Treasury sells to the SS trust fund as ‘Federal deficit financing’: a purely imaginary accounting fiddle, to make the ‘Federal deficit’ look smaller.
Brought to you by the folks that value PR over reality, whenever someone figures out who should get the blame.
The FICA wage cap never made any sense.
Politically, it makes a good deal of sense. Insofar as benefits are capped, but contributions would not be, you get a situation where high income earners are more readily seen to be subsidizing low income earners (which they actually do, but whatever). This would put the program at political risk for being portrayed as a ‘soak the rich’ scheme rather than a program of social insurance.
You gotta’ give credit where credit is due. The folks who put this thing together were political geniuses.
God bless you Frances Perkins.
So, what are the awesome, principled, far-sighted, wise, benevolent and so on Democrats doing to save the country from those f’ing motherf’ers?
Did someone write those things about the Democrats? How did I miss that?
Let’s assume there is no plan to save the country from the segment of the GOP willing to burn it down. Does that somehow absolve the arsonists?
It’s not a very high bar to say that the Democrats are better than the loons in the Freedom Caucus (or whatever they’re calling themselves at any given moment), but it is very much the truth. Total effing chaos today isn’t a good solution to potential long-term problems, even when other solutions may be lacking.
“We’ve found a small tumor, which may eventually kill you. Since we don’t know exactly what to do about it just yet, we’ve decided to chop your head off and throw your body into a vat of acid.
It is a very aggressive approach, but what else is there?”
Where to begin?
First, me: 39.6 + 3.8 + 6 = 49.4.
Second, we are at the Clinton tax rates for the top marginal rate.
Third, cap gains are smart and necessary for truly capital assets, such as the profit realized one time and one time only from the sale of a business. The problem with cap gains today is that holding a security for 1 year and 1 day makes it a capital asset. Lower tax rates for capital put at risk encourages a reasonable degree of risk taking. We want that. We could and should have two cap gain rates: assets held 2-5 years taxed at 20% of gain and assets held more than 5 years taxed at 15%.
Fourth, uncapping FICA raises the marginal rate for self-employed people like me from 49 to 61%. That is BS.
Raising the FICA rate on middle wage earners is just raising their marginal rate. They don’t get anything for it, not a higher pay back when they retire. You’re just taking their money because they are outnumbered.
Fifth, it was under LBJ that the feds quit sequestering FICA. It made their spending look less irresponsible.
Sixth, I’ve never been angry with people who make their money off of capital gains paying cap gains rates. I don’t envy the uber wealthy. I don’t understand why that much money is necessary to a happy life, but I don’t want to live in a country where one group gets to tell another group how much they can or cannot have.
Seventh, we are past Clinton level tax rates. We are borrowing like maniacs. Promises of free family leave, fee college, free this and free that fill the air. Something’s gotta give. Take all of the uber wealthy’s money tomorrow and you’re still tits up. Plus, that’s the end of the private sector in the US, so it isn’t happening. The cow is pretty close to being out of milk. The Left, the Democrats, the Progressives, whatever name is appropriate is going to have to prioritize the benefits government will bestow.
Eighth, no one other than Russell has offered a plan. I get your general outline. Single payer is a beast that, once let loose, is never going back in its cage. Even relatively small countries like the UK and Canada are running huge single payer deficits. Health care is being rationed. We are 5-7 times the size of the UK. I don’t think we can manage a system that large.
Health care is being rationed.
Counselor, pretty much everything is rationed (blog comments may be an exception. I am putting together a grant proposal on that). This is called “economics”. Some things are rationed by market prices, other things, not so much.
I don’t think we can manage a system that large.
I see no problem in that regard. Q.E.D.
Third, cap gains are smart and necessary for truly capital assets, such as the profit realized one time and one time only from the sale of a business.
If I were king, he said, channeling Burt Lahr, I would draw the line between capital gains / not capital gains at the point where your investment actually is an investment.
Net new capital to whatever it is you’re investing in.
What falls outside of that line is something like me “investing” in Worldwide Widgets by virtue of purchasing WWW stock on the assumption that I will be able to sell it for more money later.
My doing that adds $0 to the pool of WWW’s working capital.
Like McK, I don’t get angry at people who live off of “capital gains” in the sense of return on money invested in equities or bonds.
I just don’t know if all of those things qualify as capital investments.
Fifth, it was under LBJ that the feds quit sequestering FICA. It made their spending look less irresponsible.
Pure, unadulterated crap.
More.
uncapping FICA raises the marginal rate for self-employed people like me from 49 to 61%. That is BS.
Because, after all, it hurts your ability to support yourself and your family so much more than the (lower) rate paid by someone working a minimum wage job.
Sorry, but you just aren’t going to get much sympathy on that one. At least from anyone who looks at actual after tax income, rather than percentages.
We are borrowing like maniacs.
Who is? The 2014 deficit was about 2.8% of GDP, which is utterly unremarkable if you look at deficits/surpluses over the last 40 years or so. And it’s projected to be 2.7% for 2015.
See here.
The accumulated debt is the big number in the sky we’re all told spells doom, but nothing ever happens over it (except self-imposed congressional tantrums).
“deficits don’t matter”
someone said that.
Raising the FICA rate on middle wage earners is just raising their marginal rate. They don’t get anything for it, not a higher pay back when they retire. You’re just taking their money because they are outnumbered.
I completely agree that it is just raising the tax rate. See my previous note about seeing FICA as just another tax.
But no, we are not just taking their money because they are outnumbered. Rather, because they actually have money — and, increasingly, it’s a bigger percentage of the money than it was.
First, me: 39.6 + 3.8 + 6 = 49.4.
What do the “3.8” and “6” terms represent?
Also:
Second, we are at the Clinton tax rates for the top marginal rate.
Correct. They kick in at a higher number, but in constant dollars it’s actually about the same.
Back to the drawing board.
As far as FICA income cap, I would assume that if we totally removed the cap, we would also adjust the rate DOWN.
But basically I think removing the cap completely is a political non-starter.
Right now it’s (I think) $118,500. If you made it even something like $150K (which is not likely), the maximum increase out of pocket would be not quite $2K, if my math is right ($32K x .062).
Which, I think, falls in the category of “sucks”, but not quite in the category of “grab the pitchforks”.
Double that for self-employeds, which I think is where McK gets bit.
I will point out that we recently went through the exercise of lowering the rate, then raising it back again, and I don’t think most folks noticed unless it was pointed out to them.
And not to put too fine a point on it, but the money is actually owed to all of the folks who have paid into SS for the last 30 years at a rate greater than was needed to fund the program.
We don’t walk away from other sovereign debt, we shouldn’t walk away from that.
I do understand that single-payer plans elsewhere run in the red. The difference I see is that our total expenditure is much, much larger. Last I looked our per-capita public expenditure was not all that different from other OECD, but then we pay that much again from private money.
Health care here is rationed, the rationing is just done by private entities. If you have Cadillac coverage or a concierge deal, not so much, but most folks don’t.
In any event, my real plan is the same as it always is: pay working people more.
Then they’ll buy their own stuff, and won’t need to ask for it from Uncle.
Promises of free family leave, fee college, free this and free that fill the air. Something’s gotta give.
Nothing’s free, including not providing these things. The question is what’s better for the country (and even the economy) – providing these things or not? It’s not a simple matter of “if we don’t provide these things, we don’t have to pay for the, therefore there’s that much more money for other stuff.” This isn’t your household budget. The macro economy is a dynamic system with second-, third-, and who-knows-how-many-order effects.
Do you forego investing simply because you have to put out some amount of money to do so? If not, why not?
Promises of free family leave, fee college, free this and free that fill the air.
not exactly free: paid for by the country as a whole, because it benefits the country as a whole.
e pluribus something or other.
The top marginal personal tax rate in the United Kingdom is 45% on income over ~160,000 pounds. 40% on income over ~42,000 pounds. Just for comparison sake. They also have a 20% VAT.
There’s plenty of room to raise taxes in the US.
If I were king, he said, channeling Burt Lahr, I would draw the line between capital gains / not capital gains at the point where your investment actually is an investment.
Net new capital to whatever it is you’re investing in.
It’s a fair point to note that buying GE isn’t taking a huge risk. I happen to own some stocks that are very risky. The problem–and it is a big problem–is characterizing what is a capital vs a non-capital investment. If I buy a capital asset, or wish to raise capital by offering stock, the stock is worthless if, when sold, it loses its capital character. Ditto a capital asset. One person’s gamble/risk is another’s speculation.
Extending holding periods will go quite a way to making an asset “capital” instead of “short term”. It would also hopefully be part of moving our private sector mentality away from our current fixation on quarterly performance. I don’t mind having a so-so or even not so great year if two years hence, I’m going to have great year (unless WJ takes 60% of my hoped for great year, then screw it, I’m not going to bother).
Right now, everyone in the publicly traded sector builds for the next quarter, not the next decade. That’s an overstatement, but the point’s valid.
Because, after all, it hurts your ability to support yourself and your family so much more than the (lower) rate paid by someone working a minimum wage job.
I would hang it up before working as hard as I do to pay that much to the gov’t. So would a lot of other people. 60% is confiscatory. I have a major issue with people who think they have the unlimited right to dictate what someone else ought to be allowed to keep out of what they earn.
The problem with conceding the principle of progressive tax brackets is that there are always those who want to “progress” right up to the point of confiscation. Being reasonable gets you nothing but getting screwed.
What do the “3.8” and “6” terms represent?
Medicare/Medicaid + ACA tax = 3.8
State Income Tax Imputed to me = 6
Nothing’s free, including not providing these things. The question is what’s better for the country (and even the economy) – providing these things or not?
Then there is no limit on what we should be giving ourselves.
Who is? The 2014 deficit was about 2.8% of GDP, which is utterly unremarkable if you look at deficits/surpluses over the last 40 years or so. And it’s projected to be 2.7% for 2015.
We owe 13.2 trillion, and the 2015 deficit is 426 Billion. Less than in past years, but so what? We continue to borrow; we aren’t paying anything back. The cumulative load is unsustainable.
I’m not much interested in percentages of GNP. That is a one year snap shot using a misleadingly small number (2.8) as a dodge for not acknowledging the actual numbers.
There’s plenty of room to raise taxes in the US.
Sure there is. And the economy will boom!
Sure there is. And the economy will boom!
conservatives haven’t earned the right to mock anybody else’s economic plans. even when they’ve tried maximal versions of their ideology, they’ve failed to do anything they promised (except to lower taxes, of course).
Then there is no limit on what we should be giving ourselves.
How do you figure? What I’m saying is that providing things, via the government, is a question of whether or not doing so is worthwhile (i.e. it’s better than not doing so). I don’t think that suggests fiscal nihilism. I would be against filling everyone’s mouths with gold teeth, for instance.
Cleek, are you talking about Kansas? Or is there another example of implementing the conservative plan for the economy that is even worse?
Kansas, indeed.
I’m not much interested in percentages of GNP. That is a one year snap shot using a misleadingly small number (2.8) as a dodge for not acknowledging the actual numbers.
Yes, because raw numbers are so much more informative. It doesn’t matter that my grandfather’s weekly wages in 1940 wouldn’t buy the two of us lunch in a reasonably nice restaurant today or that there are two and half times as many people living in the country now. It all apples to apples with raw numbers. That’s the best way to analyze something meaningfully.
In any event, my real plan is the same as it always is: pay working people more.
Yup. Rubber, meet road. If you set up a system with rules, regulations, and social mores that funnels most of the claims on future resources to a select portion of the population, well, that is “giving” just as much as “welfare” is.
“First, me: 39.6 + 3.8 + 6 = 49.4.”
“What do the “3.8” and “6” terms represent?”
I’m assuming the 3.8 is Medicare and the 6 is the employee’s half of Social Security.
http://www.adp.com/tools-and-resources/adp-research-institute/insights/insight-item-detail.aspx?id=F5E4F8C7-0887-4C94-AFEB-21C7B25DD3BF
This doesn’t include state income taxes, which are moot because Texas doesn’t collect those, though I understand McTX pays state income tax in other states which collect a levy. But he pays sales and property taxes.
Also, McTX doesn’t own his law firm any longer, so he, as an employee, doesn’t pay the additional 6.2% of the employer’s share of SS, though he did for many years, I gather.
Correct me if I’m wrong about that.
The three percentages add up to 49.4% of McKT’s income. Except, can we “spell” marginal, kids?
Let’s not muddy the waters with capital gains taxes.
Without taking anything away from McTX’s tax grievances, the income tax number 39.6% is a marginal rate levied on whatever number of last dollars McTx earns. I think the 3.8% Medicare levy includes 2.9% on income up to a certain point and then an extra .9% is tacked on for income above that level.
Conversely, the SS is a marginal rate as well, but in reverse and in his favor compared to someone who earns less than the income cap, 6.2% up to @118.000 per individual employee annually — zero on dollars earned above that.
I don’t expect McTX’s pain levels to be reduced by pointing out that 49.4% of his overall dollar income does NOT go to taxes at the federal level, but something less than that.
“Marginal” being the operative word here.
At any rate, thank you for your hard work and success, McKT.
I’d also like to thank myself and my ex-wife in this regard for our combined hard work and success – hers much more than mine, since I’ve worked in the private sector as well– working for the Federal Government, since I realize that labor contribution by definition is considered mere theft by many and worthy of some of our betters spitting on the floor.
Not referring to McKT here.
My ex-wife retires in two weeks with a good pension, just in time for those payments to be halted when the debt limit goes kablooey.
She enjoys her scientific work so much that she’s signed up to work in emeritus status for the Dept of Interior, so that she can finish a couple of projects promised to the taxpayers, who can then expectorate in return.
Emeritus — meaning volunteer.
Marginal tax rate on that labor == 0% == so she’s even on that deal.
To be clear. She’s not complaining.
That’s my job.
McT,
There’s plenty of room to raise taxes in the US.
Sure there is. And the economy will boom!
Well, it did after the Clinton tax increase. Now, I’m not going to claim that the tax increase had much of anything to do with that, but I will point out, for the umpteenth time, that the GOP doomsayers had a fit, predicting all sorts of financial catastrophe. None of which happened. Go back and check out Gingrich’s comments at the time.
I will further say that noting conservatives say about deficits and taxes etc. should be given credibility. These are the guys who kept telling us tax cuts would be self-financing, and create a huge boom, like in Kansas. And that austerity is the solution to a recession, and so on. So I’m not interested.
We continue to borrow; we aren’t paying anything back. The cumulative load is unsustainable.
Talk to your friend W. Things were improving nicely on that front until he decided to blow things up for no reason.
I see I was corrected. McTX’s 6% is state income tax, not SS.
“The problem with conceding the principle of progressive tax brackets is that there are always those who want to “progress” right up to the point of confiscation. Being reasonable gets you nothing but getting screwed.”
Well, there’s a lot of room between Eisenhower’s 91% top bracket tax rate and today’s 39.8%. Also dozens of intermediary higher rates all the way through the income scale.
Progressive screwing, we could call it. Not even Bernie Sanders wants to go back to 91%.
I concede that there are always those who want to regress right up to the point that no taxes will be collected under a Federal Income Tax rate, but at least those guys have radio shows.
Agree with McTX pretty much on capital gains holding periods.
I have no problem with confiscatory levels of taxation on annual income above, say, $5M (just off the top of my head), assuming anything above 50% would be considered confiscatory. (I don’t know how much higher I’d go than that – probably not much.)
If the only reason someone wants to do something after that point is money, I’d prefer to discourage it. The ones who do any good for anyone else aren’t in it for the money once you get up that high income-wise. They’re trying to accomplish something worthwhile or rewarding for other reasons. (Greed isn’t actually good, Gordon Gekko notwithstanding.)
Strictly speaking, people making over $5 million per year aren’t doing it for the money per se. But some of them are doing it for the money as a status indicator.
That is, if I make $10 million a year and you only make $8 million, clearly I am better and deservedly have higher status than you. It’s not the money itself — I can’t spend that much anyway. But it’s what making that much says about me, in the circles in which I move. It means I am more important.
Note that this is seperate from the motivation of those folks who are doing a job that they love doing. Those include the guys like Warren Buffett, who keeps doing what he does because, for him, it’s fun. (Note also that this occurs at far lower levels of income, too. I see it all the time among my peers in the IT industry.)
If somebody is pulling down over a a billion/year, a 98% marginal rate above that level is a necessary adjustment to the balance of the social order, not confiscation.
Context matters.
Also, McTX doesn’t own his law firm any longer, so he, as an employee, doesn’t pay the additional 6.2% of the employer’s share of SS, though he did for many years, I gather.
Correct me if I’m wrong about that.
I am a partner, ergo an owner, ergo self-employed. I pay the full load. I did not include that in my marginal tax calculation or property or sales tax. Just income tax.
I don’t expect McTX’s pain levels to be reduced by pointing out that 49.4% of his overall dollar income does NOT go to taxes at the federal level, but something less than that.
My marginal federal rate, not including the 14K in self employment tax, is 43.4%.
I will further say that noting conservatives say about deficits and taxes etc. should be given credibility.
Deficits under Bush II, but before the Dems got congress weren’t so bad. After, they got worse. I don’t give either party high marks for managing government spending, W in particular. If that makes anyone feel any better.
Things were improving nicely on that front until he decided to blow things up for no reason.
While I understand the sentiment, sort of, you do recall, I hope, that there was an attack, a debate and a vote? Not like Clinton in Kosovo, not like Obama in Libya.
If the only reason someone wants to do something after that point is money, I’d prefer to discourage it. The ones who do any good for anyone else aren’t in it for the money once you get up that high income-wise. They’re trying to accomplish something worthwhile or rewarding for other reasons. (Greed isn’t actually good, Gordon Gekko notwithstanding.)
Most of the uber rich I know–with several big exceptions–aren’t my kind of people. I don’t feel the need to express my displeasure by taking their money just because they have a lot of it.
That said, if we had a consensus that earned income in the US would be taxed at 35% up to 1mm, 40% up to 2mm, 45% at 3mm and capped at 50% at 4mm and above, and everyone would stick to the numbers, I’d sign off.
It’s a fair point to note that buying GE isn’t taking a huge risk.
If the point of raising the issue of risk is to argue for rewarding risk-taking via the tax code, I would disagree.
The reward for risk-taking in investment is generally built in via the pricing mechanism. Higher-risk stuff generally yields more if it succeeds.
If you’re risk-averse, you don’t buy that stuff. If you’re not, you might.
Preferential tax treatment is not needed.
I can see providing tax incentives for people to make investments in productive enterprises. I.e., investments that actually create new capital for the enterprise to use.
Other than that, I don’t see it. Let income be income.
To touch on other stuff:
Some of the things we’re talking about providing “for free” are arguably investments. College tuition, notably. Investments are not the same thing as handouts.
The other thing that I can never understand is how countries, otherwise similar to us, that have legal, social, and economic regimes that are enormously more favorable to labor, still manage to be pretty prosperous.
Why aren’t their economies going off the rails?
To my eye, the choices we (the US) make about these things are driven more by social and political motivations than by economic ones.
I don’t feel the need to express my displeasure by taking their money just because they have a lot of it.
The question isn’t one of how much money they have; it’s one of how much they’re pulling in during a given year. And it’s not displeasure at their deciding they want to make however much so much as not caring if they decide to forego making more than N dollars in a given year because they don’t think the after-tax income is worth it beyond that.
If someone doesn’t want to make their $5,000,001st dollar, why should I care? It doesn’t change my thinking on the marginal rate for that income. Someone at a lower marginal rate can go out and make that dollar if it’s out there to be made.
Almost everyone pays taxes of some kind or another. It’s pretty much unavoidable. I, myself, pay taxes. I’m okay with that, and not because I’m mad at myself for having some amount of accumulated or incoming money.
While I understand the sentiment, sort of, you do recall, I hope, that there was an attack, a debate and a vote? Not like Clinton in Kosovo, not like Obama in Libya.
Sorry I was unclear. I intended “blow things up” figuratively, to refer to the deficit, not literally, to refer to military operations.
My marginal federal rate, not including the 14K in self employment tax, is 43.4%.
This confuses me. The top marginal rate is 39.6%.
How do you get to 43.4%?
Also, regarding folks making nosebleed-level incomes, I’m fine with marginal rates in the neighborhood of 50% for folks making multiple millions of dollars per year.
If you make $5M / year, you are making $100,000 per week.
I’d also be fine with very high surcharges on extremely expensive luxury goods.
Multiple houses, cars and boats (not working boats) with six-figure-plus prices, private aircraft. Etc.
The founders did it, why can’t we?
If someone doesn’t want to make their $5,000,001st dollar, why should I care?
Yes.
This, I think, gets at the point. It’s unlikely, or at least much less likely, that taxing somebody ~50% on their 5-million-and-first dollar is going to have any serious impact on the health of the economy as a whole.
People are unlikely to refuse to engage in productive work because they only get to keep 50 cents of the 5-million-plus-one dollar. At that point, they’re doing it for other reasons.
Countme-In: Without taking anything away from McTX’s tax grievances …
… consider a self-employed MA resident with income just under the FICA cap. That person’s marginal tax rate is:
28.0% Federal
12.6% FICA
02.9% Medicare
05.2% State
—————-
48.7% “all in marginal tax rate” on his 117,999th dollar.
Compare to McKinney’s 49.4% “all in marginal tax rate” on (what has to be something like) his 406,751st dollar. An extra 0.7% (marginal) on an income almost 4X larger. Gawd! is McKinney getting screwed, or what?!
–TP
Here are deficits by percentages of GNP:
2000 2.3
2001 1.2
2002 -1.5
2003 -3.3
2004 -3.4
2005 -2.5
2006 -1.8
2007 -1.1
2008 -3.1
2009 -9.8
2010 -8.7
2011 -8.5
2012 -6.8
2013 -4.1
2014 -2.8
I can’t believe I pulled that off.
This confuses me. The top marginal rate is 39.6%.
How do you get to 43.4%?
It’s like putting the frog in the pot of warm water and slowly turning up the heat. You give the taxes a different name.
39.6 is the “income tax”
3.8 is Medicare/Medicaid/ACA
They add up to 43.4% of every marginal dollar.
I’d also be fine with very high surcharges on extremely expensive luxury goods.
Multiple houses, cars and boats (not working boats) with six-figure-plus prices, private aircraft. Etc.
They tried this on domestically produced yachts–wound up putting all the folks in the shipyards out of work and the ubers bought their yachts overseas. People with the kind of money to buy that stuff figure out how not to pay the penalty.
The realized tax income is de minimus and the cost of penalizing luxury goods usually outweighs what you take in. Let Al Gore have 10 houses–that’s 9 more houses that the construction trades get to build. Why worry about that? Why care if someone flies around in a jet, or has a big boat? Hell, those are stimulative. The maintenance on jets and big boats is horrific. They are job creators. The more, the merrier.
Ideally, the ubers would buy a lot of stuff that has a high service/maintenance component. The tax code should encourage this.
39.6 is the “income tax”
3.8 is Medicare/Medicaid/ACA
OK I see where you’re getting it.
Usually Medicare is lumped with SS, but if I understand correctly it’s not capped, so you’re putting it with income tax.
Hell, those are stimulative.
The relative stimulative value of .01% of the population buying million dollar boats, vs (for example) 10%, or 5%, or even 2% more of the population going to college, is an open question IMO.
Likewise, whether Al Gore builds 10 houses, or 100 people get to build one.
trickle down has had 35 years to demonstrate its effectiveness.
how much more time do we need to give it?
If you look at the last 40 years, the current deficit as a % of GDP looks even less remarkable.
1975-01-01 -3.15247
1976-01-01 -3.92693
1977-01-01 -2.57234
1978-01-01 -2.51146
1979-01-01 -1.54728
1980-01-01 -2.57921
1981-01-01 -2.45930
1982-01-01 -3.82592
1983-01-01 -5.71183
1984-01-01 -4.58750
1985-01-01 -4.88435
1986-01-01 -4.81955
1987-01-01 -3.07441
1988-01-01 -2.95431
1989-01-01 -2.69790
1990-01-01 -3.69650
1991-01-01 -4.36084
1992-01-01 -4.43963
1993-01-01 -3.70784
1994-01-01 -2.78002
1995-01-01 -2.13922
1996-01-01 -1.32628
1997-01-01 -0.25421
1998-01-01 0.76211
1999-01-01 1.30023
2000-01-01 2.29699
2001-01-01 1.20729
2002-01-01 -1.43710
2003-01-01 -3.28030
2004-01-01 -3.36237
2005-01-01 -2.43129
2006-01-01 -1.79116
2007-01-01 -1.11000
2008-01-01 -3.11547
2009-01-01 -9.79761
2010-01-01 -8.64968
2011-01-01 -8.37480
2012-01-01 -6.72821
2013-01-01 -4.07811
2014-01-01 -2.79340
The average over that time is -3.13480. Don’t even go looking at the WWII numbers. That’ll give you a ribonucleic-acid freak-out.
Compare to McKinney’s 49.4% “all in marginal tax rate” on (what has to be something like) his 406,751st dollar. An extra 0.7% (marginal) on an income almost 4X larger. Gawd! is McKinney getting screwed, or what?!
I pay the same marginal rate at that level, including tax on income imputed from MA. Everyone who makes more than the FICA/Self Employment cap realizes the same degree of tax relief.
The delta comes when you get past the max level for FICA/self employment tax. Federal tax payers get a bit of a break until they hit the next tax bracket.
But, if you want to make the point that it could always be worse, I agree. It could. If you are making some ass-backwards point that it isn’t far to charge the SE tax to people making 115k and not to people making 250K, that is a different thing altogether. You are not giving the 250K earner a better SS pay out.
It would be nice if we had a national consensus on max taxes and then lived within our means. That isn’t going to happen. Flat taxers think 15% is magic, many Progressives would go past 50%. Too bad we can’t find a middle ground and stick to it.
How much more time do we need to give it?
Until the trickling starts and then the Fed will raise interest rates and put a stop to that.
On further inspection, McKinney’s sample over the last 15 years yields and even worse average of -3.56301.
Kudos to Barack Obama for finally righting the ship! ;^)
Usually Medicare is lumped with SS, but if I understand correctly it’s not capped, so you’re putting it with income tax.
It looks that way on a W-2, but the SS tax is separate from the Medicare/Medicaid/ACA.
The relative stimulative value of .01% of the population buying million dollar boats, vs (for example) 10%, or 5%, or even 2% more of the population going to college, is an open question IMO.
Likewise, whether Al Gore builds 10 houses, or 100 people get to build one.
It isn’t a zero sum. If Ms Uber doesn’t buy a yacht because of your surcharge, her money just sits around gathering capital gains. No one gets paid to build the yacht and college enrollment doesn’t go up because she didn’t buy the yacht. College enrollment might go up if a student’s parent was making a living building yachts.
A 100 people don’t get to build homes because Al only builds one home. There is room for all of the homes. Al’s are more labor intensive, thus they put more people to work. Good for the economy. It’s called consumption. It’s what we want and need.
It’s called consumption. It’s what we want and need.
Only if we don’t question the broader context in which we want and need them, but I get your point.
You are not giving the 250K earner a better SS pay out.
Perhaps my memory is failing. But I thought that SS was not designed as a retirement program — which is what it would have to be for it to make a difference how much you put in.
Rather, it was designed as a program to keep old people from living in poverty. It probably would have been more reasonable, from an accounting perspective, to have just raised the tax rates and provided for a guaranteed minimumm income (for the elderly!). But I suppose it was easier to sell the way it is.
Of course, the way it is also contributed to the number of people who could have saved for their own retirement, but didn’t. Because they figured to retire on Social Security — usually with no real awareness of just how little that would amount to, compared to what they are accustomed to living on.
You are not giving the 250K earner a better SS pay out.
a 250K earner makes more than enough money to set aside for a very comfortable retirement.
but, should Mrs 250K earner invest and then lose all her savings the next time the banksters feel lucky, she will still be kept out of abject poverty in her retirement, just like everybody else.
the safety net works for everyone.
HTML, on the other hand, is fickle
But I thought that SS was not designed as a retirement program — which is what it would have to be for it to make a difference how much you put in.
It was sold as a retirement supplement, not a redistribution scheme.
f’ing italics
How is a retirement supplement not a redistribution scheme? It is pretty clearly redistributing money from those who made lots to those who barely scraped by.
It may not have been sold as a redistribution scheme. But anybody looking at it ought to be able to figure out that it is.
It isn’t a zero sum.
Yes, I understand that one person not buying a yacht doesn’t send some other set of people to college.
Or, Al Gore not building one house doesn’t automatically make 100 other people build one.
The point I’m making is that the policy choices we make result in a particular set of outcomes.
If you have policies that favor the accumulation of vast wealth in a small percentage of the population, you end up with a really robust luxury goods market, and a less robust market for ordinary consumer goods.
If you have policies that favor a broader distribution – not RE-distribution – of wealth, you have the converse.
The luxury goods market in the US is somewhere around $75B, and in general is quite robust. The folks who participate in that market are not particularly price-sensitive.
If they are willing to pay $200 for a bottle of wine, $225 is not going to make them change their mind.
If they are willing to pay $2M for a boat, $2.2M is not going to dissuade them, by and large.
In some cases, it may even be an incentive. See how rich I am!
There is always some point at which an additional expense makes someone say no, but the place where that is least so is in the luxury goods market.
We did have a federal luxury tax regime in the 90’s, under Bush 41. It wasn’t particularly successful, and we dropped it.
The level of income and, especially, wealth inequality at this point in time is much greater than it was 25 years ago. It might be an appropriate policy now.
Just out of curiosity, what fraction of the luxury goods market is imports? I’m actually in favor of free trade. But if that stuff has a large portion of imports, it rather undermines the “the extra money of the rich will stimulate the US economy” position.
It’s called consumption. It’s what we want and need.
Wait a minute. I thought we needed investment, so we offered favorable tax rates on capital gains to encourage that. Suddenly it’s consumption that we want instead.
Actually, consumption – demand – is very important. You can give people all the tax breaks you want, but no one is going to build a factory if there are no customers buying the products. That’s a big flaw in the whole “job creators” notion.
And of course, it is also the idea, simplified, behind Keynesian stimulus. If no one else is buying the government steps in and buys. Why is the government paying workers to repair a bridge a waste, while the Mr. Uber paying a mechanic to tune his Ferrari a wonder of capitalism?
Bain & Company are a good resource for information about the luxury goods market.
I have no idea if they are related to Bain Capital or not, but I guess it would make some kind of sense if they were.
And of course, it is also the idea, simplified, behind Keynesian stimulus. If no one else is buying the government steps in and buys. Why is the government paying workers to repair a bridge a waste, while the Mr. Uber paying a mechanic to tune his Ferrari a wonder of capitalism?
Well, an economist could do a better job with this one, but: Uber to Mechanic payment places zero load on the public purse. The bridge might be necessary and if it is, the citizens can vote to tax themselves for the bridge. Most people are ok with necessary bridges. Agreeing to a bridge doesn’t mean you have to agree to unlimited Keynesian-ism.
But, on balance, people are more free if they get to keep and spend their money as they please. Freedom/liberty has an intrinsic value of its own.
I would rather consume as I see fit, not as someone else would have me consume.
The level of income and, especially, wealth inequality at this point in time is much greater than it was 25 years ago. It might be an appropriate policy now.
Russell, people were buying yachts back in the day, just not yachts made in the US. Is the idea to express disapproval of luxury items, to pick a class of goods and services and saddle it with special taxes and fees, or to raise income? If it’s the latter, why not just jack up the marginal rate one point?
Bain & Company and Bain Capital are wedded at the hip.
https://en.wikipedia.org/wiki/Bain_%26_Company
I would rather consume as I see fit, not as someone else would have me consume.
Oh tosh. If that’s how you really, really, really feel then come out of the closet and demand that all taxes and public spending be done away with.
Otherwise, you are just another wimpy statist.
😉
Well, an economist could do a better job with this one…
Indeed. You seem to be arguing that if the economy is stuck well below its potential output, that we should do nothing.
(1.)From an economics standpoint, that is a waste of resources; and (2.) most of the time it is a political non-starter.
You seem to be arguing that if the economy is stuck well below its potential output, that we should do nothing.
That would depend on how/why it was stuck? Too much regulatory and tax burden? Paying employees to stay home? Satellite litigation over what “same work” means killing off smaller business and depleting resources from larger concerns?
Paying employees to stay home?
The bridge might be necessary and if it is, the citizens can vote to tax themselves for the bridge. . . .
But, on balance, people are more free if they get to keep and spend their money as they please.
So, if I understand correctly, it’s OK if people vote to tax themselves to build a bridge. Even though, if the vote is less than unanimous, at least some people are being forced to pay for something that they don’t want. So it makes them less free . . . but it’s OK?
Whereas if people vote to tax themselves to, for example, provide universal medical care? Which also makes those who voted No less free . . . and so it is not OK?
Somehow, I’m not seeing the distinction. Except, I suppose, that those who would vote For the first, and Against the second, could see it that way — but that’s simply a matter of “When we collectively do what I want, that’s OK; but if we do the same for something I, personally, don’t want, that’s an unacceptable loss of freedom.”
Or am I missing some subtlety somewhere?
That would depend on how/why it was stuck?
Possibly.
Too much regulatory and tax burden?
Possibly. If, for example, the federal government ran a persistent budgetary surplus, that action would reduce consumption and suck money out of the economy. Economic activity would be reduced accordingly.
Regulatory burdens are simply a cost of doing business. If businesses do curtail their activity due to regulations, then presumably those now idle resources can be employed elsewhere.
Paying employees to stay home?
hahaha(not). If they are “staying home” then they are presumably not employees. However, if a business decides to pay people to sit on their ass, that’s OK. (See just about every corporate board of directors, for example.) However,they may not be very competitive as a result. Paying people who are unemployed is not only the right thing to do, it promotes consumption.
If they are employees Satellite litigation over what “same work” means killing off smaller business and depleting resources from larger concerns?
The overwhelming majority of small businesses fail. They kill themselves off with startling regularly. Other than that, I am unfamiliar with your example.
There is a subtle difference. Or not so subtle really.
OK, Marty, enlighten me. Seriously. I’d really like to know what I’m missing here.
Well, an economist could do a better job with this one, but: Uber to Mechanic payment places zero load on the public purse. The bridge might be necessary and if it is, the citizens can vote to tax themselves for the bridge.
Or, the government can borrow the money to pay for the bridge repair, which borrowing might be profitable for two reasons:
1. The social return on the repair may exceed the rate at which money is borrowed. That is, the repair is, from a social point of view, a positive NPV project.
2. The multiplier effect of the increased spending may stimulate a lot of economic activity, just as Uber’s spending, in your previous comment, generates economic activity.
Note that in a recession the bridge repair is essentially using idle resources for productive purposes.
hsh,
Thanks for presenting these figures.
It would be interesting and illuminating (for some) to plot them on a graph where the vertical axis represented your figures, and the horizontal axis showed Presidents in office.
Is the idea to express disapproval of luxury items, to pick a class of goods and services and saddle it with special taxes and fees, or to raise income? If it’s the latter, why not just jack up the marginal rate one point?
The point is to raise income.
The approach is Adam Smith’s, which is to tax folks who make a lot of money at a higher rate than folks who earn less money, because the use value of the wealthy person’s last dollar is less – often significantly less – than the use value of the less wealthy person’s last dollar.
I’m fine with raising the top marginal rate a point, if we can get if freaking done.
What I’m after over all in this thread is pointing out that if we want to lower our level of debt, one of the entirely reasonable approaches to addressing that is to increase revenue.
That will likely involve raising taxes.
If you don’t like income taxes, taxes on folks buying stuff will do the job. We don’t want to make it harder for folks to buy groceries, so if you’re going to tax expenditures, luxury items seems like a reasonable place to start.
If you want to cut stuff, the big ticket items are Social Security, DoD, “overseas contingency operations” aka GWOT, Medicare, Unemployment, Medicaid, and the interest on the debt.
Cutting SS is, frankly and blatantly, unfair. The program is only in significant trouble if we decide to simply not repay the notes that 30 years of surplus was invested in.
DoD and GWOT, good luck trying to make cuts there.
Medicare and Medicaid are a problem because our approach to paying for medical care is profoundly FUBAR. You aren’t going to get a handle on those programs without addressing the general up-f***edness of the medical industry in all of its forms.
You can cut unemployment, but then people don’t eat or have a place to live.
Can’t default on debt service.
The rest is basically noise.
Everybody keeps saying they are going to get rid of “fraud waste and abuse”, but those things seem to be always with us. That’s a game of mole whack.
So if the debt bugs you, you need to find really significant places to cut, or raise more money.
“Raise more money” means taxes.
wj, not so subtly, you don’t sign up to pay for the construction of the bridge forever. You actually build something, no one is required to use it, but you can charge a toll that is paid by those who do choose to use it. Or not.
Universal health care is an indeterminate forever cost that provides little for 85% of people except a cost if they choose not to use it, forever.
I can see a not too subtle difference in those things.
The people who are committing the fraud and the waste, such as doctors and nurses scamming Medicare are Americans, by any other name.
Their excuse is, according to conservative orthodoxy, that they are incentivized to cheat, lie, and steal.
So to avoid this scamming, we must stop supplying healthcare to the American people.
Because we don’t want to hurt the feelings of the entrepreneurs who are incentivized to steal from Medicare and sh*t on their patients.
Marty, about this.
Every time you pay to cross a bridge and pay a toll, you receive a complimentary colonoscopy, or a cholesterol lab measurement, whichever is more invasive.
Conversely, if you are diagnosed with cancer, no bridge crossing or tunnel drive-throughs for you.
Airports will be off limits. AMTRAK, no more.
This should lower the cost of both public subtleties. Well, by 85%, according to the experts.
Universal health care is an indeterminate forever cost
As opposed to a special interest driven extremely overpriced and ineffective and inefficient private system that can’t deliver the goods like, since forever?
A ‘no’ to a sane system of public health is a policy choice. A really bad one.
Some numbers which may be of interest.
FRED at the Fed tells us that US federal debt is now just over 100% of GDP. About 25% of that is intragovernmental debt, most of which I assume is SS. The rest is owed to other countries, and to private investors.
I’m not totally freaked out by the county carrying debt as a regular practice, but 100+% of GDP does seem to be a sobering number. To me, anyway.
The top marginal federal tax rate is now 39.6%, effective income tax rates are lower – they max out at a bit more than 20%, give or take.
Income tax is not the whole story, and our pal Pete Peterson provides this helpful analysis. With payroll taxes (SS + Medicare) factored in, top payers have effective rates in the higher 20th percentiles.
Peterson then allocates estate tax and federal corporate tax across the brackets and finds that the very highest earners have an effective rate of about 35% of income.
I will leave the soundness, or not, of Peterson’s number-crunching to the green eyeshade crowd. We don’t, as it were, share a world-view, but to my relatively unsophisticated eye his numbers seem reasonable.
Peterson has his top bracket – the top 0.1% of earners – beginning at a bit over $3M a year. To put that in numbers most of us can grasp, that’s about $60K a week, $12K a day.
If you make $3M a year, Peterson says you keep $2M, uncle gets $1M.
Confiscatory or fair share will be in the eye of the beholder.
Universal health care is an indeterminate forever cost that provides little for 85% of people except a cost if they choose not to use it, forever.
Can you explain what the hell this means, Marty? Are you saying 85% of people wouldn’t use a single-payer system (and that they would live forever)? And is not-universal health care somehow free, or at least significantly cheaper (with comparable outcomes)?
i believe Marty’s “85%” refers to the fact that 85% of people already had insurance before the ACA went into effect.
you don’t sign up to pay for the construction of the bridge forever
except, you do – maintenance and repairs aren’t free. but they are required as long as you want to have the bridge. it’s a longer timescale than health insurance, sure.
and, speaking of Open Thread:
nobody is talking about all the white churches that have been set on fire recently. so this isn’t news.
So by Marty’s logic, we should abolish Medicaid.
i believe Marty’s “85%” refers to the fact that 85% of people already had insurance before the ACA went into effect.
And, for people under 55, the need for healthcare is limited.
Confiscatory or fair share will be in the eye of the beholder.
A third at that level isn’t confiscatory.
If you wanted more money from corporations (I do), you’d lower the tax rate to 15% or so and require companies to pay tax in the US on US profit.
nobody is talking about all the white churches that have been set on fire recently. so this isn’t news.
When we know who is lighting the fires, then maybe it will be news.
Marty’s comment about “building bridges” is especially relevant considering the decrepit state of US infrastructure, after decades of GOP tax-cutting and neglect.
But I’m sure the folks that died in the I-35W collapse were comforted by their low, low tax burden.
for people under 55, the need for healthcare is limited
what the what?
And, for people under 55, the need for healthcare is limited.
People age, unless they die first.
That’s one thing I never understood about the argument that younger people today are paying for today’s older people’s health care. People’s ages aren’t fixed. Young people become old people, short of dying young. Isn’t it just as valid to say that young people are paying for their older selves’ future health care? Isn’t it simply spreading the cost over a lifetime if the insurance system in question is enduring?
Alternatively, isn’t that what risk pooling is all about? Isn’t that how health insurance works?
McTX: If you are making some ass-backwards point that it isn’t fair to charge the SE tax to people making 115k and not to people making 250K, that is a different thing altogether. You are not giving the 250K earner a better SS pay out.
First, let’s just keep our facts straight: $250K is in the 33% bracket, not your 39.6% one.
Second, my point was not about unfairness but about whining. (Also I have to ask: is your ass frontwards, or what?)
Third, I’m sure you have heard it as often as I have: a stunning fraction (1/4? 1/2?) of “all taxes” is paid by a tiny percentage(1?, 5?) of the population. Invariably this right-wing talking point is based on excluding FICA from “all taxes”. I’m glad you implicitly renounce such talking points by speaking of “the SE tax”.
Now: I am willing to stipulate that taxing “the 250K earner” at the same rate as “people making 115k” for the same (capped) benefit is straight-up income redistribution. So is taxing high-frequency trades to pay for working-class kids’ college tuition. So is taxing 39.6-percenters to pay for poor people’s medical care. “Income redistribution” is not a dirty word to me. It’s what government — any government — does: it collects money and it spends money, and it’s ridiculous to expect that every penny it collects from me must be spent on me.
For what it’s worth, the only limitation I would place on income redistribution is this: “redistribution” should preserve the rank-order of “income”. That is, if you make more than me, pre-tax, you should end up with more than me, after tax. This preference of mine is probably violated most at the low end of the income spectrum, where various “means-tested” programs can phase out in ways that amount to a 90+% “marginal tax rate”.
–TP
If you wanted more money from corporations (I do), you’d lower the tax rate to 15% or so and require companies to pay tax in the US on US profit.
Companies are currently required to pay tax in the US on US profit. A 15% tax rate on corporations would be great – I would stick all my income earning investment assets in a corporation and pay only 15% on the interest and dividends, rather than 39.6% on interest and 20% on dividends.
That is, such a disparity between the corporate rate and the highest individual rate means the return of the corporation as a tax shelter.
It’s what government — any government — does: it collects money and it spends money, and it’s ridiculous to expect that every penny it collects from me must be spent on me.
Not to mention that it’s overly simplistic to look at who the money is spent on to figure out who benefits. The poor kid who got to go to school and turned out to be genius at writing software, for instance, is making lots of other people a butt-load of money, not to mention potentially improving the lives of countless others who bought that software.
Malnourished, uneducated, unhealthy people aren’t very productive. The more of them you have, the more wasted human potential there is. Who’s that good for?
it’s good for the Haves. Have Nots let Haves know that they’re the Haves.
Relative position in society means more to people than absolute.
you don’t sign up to pay for the construction of the bridge forever.
What cleek said at 9:11 AM.
One of the serious problems we currently face is all the folks who have been, and still are, “balancing” budgets by deferring maintenance of our existing infrastructure. All that gets you is a significantly bigger expense down the road of replacing it under emergency conditions when the infrastructure collapses as a result. (Not to mention the costs of dealing with those injured or otherwise damaged as a result of the collapse.)
The country owes a lot of money.
Nobody wants to pay more taxes.
Nobody wants to give up anything they currently receive from the public sector.
Even with the current level of spending, there are lots of social and economic issues that aren’t being addressed very well.
With no invidious ethnic slurs intended, this is a Mexican standoff.
Isn’t it just as valid to say that young people are paying for their older selves’ future health care? Isn’t it simply spreading the cost over a lifetime if the insurance system in question is enduring?
Alternatively, isn’t that what risk pooling is all about? Isn’t that how health insurance works?
HSH, that’s how life insurance works, too. You pay early on, when you probably don’t need it (that’s why insurance companies can afford to set premiums so low), so that you (or more accurately, your heirs) can collect on it later.
I’m sorry Russell but the disclaimer certainly doesn’t negate the derogatory and clearly racist underlying meaning of your statement. It is a shame that in this day and age we have to resort to such insensitive language to make a simple point.
“Income redistribution” is not a dirty word to me. It’s what government — any government — does
Some governments redistribute money from the higher income folks to the lower income folks. Ours, for example.
But others do not. The result of which is, eventually, a revolution. After which, the new government will either be one that does so or (as we have seen, for example in Russia early in the last century and China around the middle) a really nasty dictatorship. Either way, the wealthy lose out big time.
Which is to say, redistribution is actually in the interests of those with lots of money. Because otherwise they can look forward to losing not just some of their money, but all of it. And possibly their lives besides. So think of it as a form of insurance payment as well.
All that gets you is a significantly bigger expense down the road of replacing it under emergency conditions when the infrastructure collapses as a result.
Even short of catastrophic failure, poorly maintained infrastructure has costs. In the case of roadways, think of the added wear-and-tear on the cars and trucks riding on them. A more subtle effect is reduced gas mileage. A more acute effect is a blown-out tire, which could lead to an even more damaging accident. And there’s lots of stuff in between.
Any large system of infrastructure you can think has analogous costs associated with poor maintenance.
There’s just no line item in anyone’s budget for these costs, so very few people bat an eye them.
All that gets you is a significantly bigger expense down the road of replacing it under emergency conditions when the infrastructure collapses as a result.
Even short of catastrophic failure, poorly maintained infrastructure has costs. In the case of roadways, think of the added wear-and-tear on the cars and trucks riding on them. A more subtle effect is reduced gas mileage. A more acute effect is a blown-out tire, which could lead to an even more damaging accident. And there’s lots of stuff in between.
Any large system of infrastructure you can think has analogous costs associated with poor maintenance.
There’s just no line item in anyone’s budget for these costs, so very few people bat an eye them.
Well, an economist could do a better job with this one, but: Uber to Mechanic payment places zero load on the public purse. The bridge might be necessary and if it is, the citizens can vote to tax themselves for the bridge. Most people are ok with necessary bridges. Agreeing to a bridge doesn’t mean you have to agree to unlimited Keynesian-ism.
One more point on this. You argued above that the various Bush wars were voted on, etc.
So is money for bridges and other infrastructure. Now, you can’t have a vote every time a pothole needs to be fixed, so these votes generally allocate sums for a large variety of projects, but it’s a vote nonetheless.
And potholes and bridges are real, unlike the WMD that did so much to create support for the Iraq War.
“I’m sorry Russell but the disclaimer certainly doesn’t negate the derogatory and clearly racist underlying meaning of your statement. It is a shame that in this day and age we have to resort to such insensitive language to make a simple point.”
Let us all keep a straight face.
We don’t need no stinkin political correctness round here.
Regarding infrastructure (and sensitivo bullsh*t Republicans) to address the sincere concerns of immigration opponents in border states, did you here what Donald Trump said when it was proposed that a Chinese Wall of sorts be built along the southern border, something along the lines of the Chinese Wall the banks constructed to separate their banking and investment entities to mitigatehaha the destruction of Glass-Steagal, which would be very much cheaper since, you know, it would cost nothing on account of the fact that it wouldn’t exist?
Trump: “That was all very good for fooling the American people in order to rob them blind, you suckers, but any wall I build to keep Mexican rapists out of the US will have no chinks in its armor.”
Ben Carson chimed in that if anyone has any problems with HIS murderous plans for the border they should point their guns at the guy wearing the paper hat at the counter serving fried chicken, not at him.
I prefer the term “bribe”.
Tilting the playing field increasingly toward the already well off only encourages them to tweak the rules further to provide them even more advantages. This is a self-ratcheting effect, and the end result is a parasitic aristocracy, like that in pre-revolutionary France.
The rich have no shame. They have no guilt. They are brazen in their endless greed. If you want to maintain the system of private property and “free” markets, they will have to be brought to heel. This will require countervailing social institutions (strong unions, etc.), financial reform, a broader social safety net, higher taxes on high incomes, a sane intellectual property rights policy, and other policies that are guaranteed to drive conservatives absolutely out of their minds.
“The rich have no shame. They have no guilt. They are brazen in their endless greed. If you want to maintain the system of private property and “free” markets, they will have to be brought to heel. This will require countervailing social institutions (strong unions, etc.), financial reform, a broader social safety net, higher taxes on high incomes, a sane intellectual property rights policy, and other policies that are guaranteed to drive conservatives absolutely out of their minds.”
And maybe mandate that they read “Capitalism for Dummies” which states that in the event of a labor shortage it might be smart to voluntarily raise long-depressed wages and benies to entice demand among the workforce, including among those who have stopped looking for work, for the jobs that are available, which will also prevent the government from stepping in:
http://www.eschatonblog.com/2015/10/more-shortages.html
http://www.shiftgig.com/articles/restaurants-are-facing-shortage-chefs
But this is not going to happen. Capital, which of course is all very fine and good in and on balance in a civilized society, will immediately punish those who succumb to raising labor inputs. See Wal Mart’s 30% plunge in its stock price after wage hikes to some of its workforce were instituted and earnings took a hit as a result.
Worker hours were immediately cut as a result.
We can either rationally shift this disparity in wealth that has been deliberately installed over the past 35-40 years, which may mean accepting somewhat lower returns on equity, or we can continue to let the gap widen between those at the top and those on the bottom.
If the second course is chosen, then a social cataclysm unlike anything this country has ever experienced will be in the offing.
The American people are not going to put up with working brutal hours and then being advised to buy a cheap rice cooker.
Some governments redistribute money from the higher income folks to the lower income folks. Ours, for example.
I would say that the direction of distribution of public money goes in a variety of directions.
Even more so if you include public laws, institutions, and policies that influence the DISTRIBUTION of money in the first place.
On the general topic of federal getting and spending, this discussion seems pretty good, and pretty fair-minded.
“Did you “hear” …. not here.
Companies are currently required to pay tax in the US on US profit. A 15% tax rate on corporations would be great – I would stick all my income earning investment assets in a corporation and pay only 15% on the interest and dividends, rather than 39.6% on interest and 20% on dividends.
Hmmm, then what is transfer pricing? Because I’m pretty sure GE paid no taxes a few years back using some sort of transfer pricing mechanism. Second, you are a tax guy. If you put your assets in a corporation, they will be taxed at the lower corporate rate, that is true. However, if you take any of the gain out, you pay tax a second time, and depending on your marginal rate, you could pay 15% on the front end and then 39.6% on the back end.
That is, such a disparity between the corporate rate and the highest individual rate means the return of the corporation as a tax shelter.
My understanding of a tax shelter is that income is “sheltered” by some off-setting device such as depreciation. You can operate as a corporation and not distribute any money to yourself, and only pay tax once. Once distributed, the income is taxed a second time. Corporations are not tax shelters in the since that you indicate.
Third, I’m sure you have heard it as often as I have: a stunning fraction (1/4? 1/2?) of “all taxes” is paid by a tiny percentage(1?, 5?) of the population. Invariably this right-wing talking point is based on excluding FICA from “all taxes”. I’m glad you implicitly renounce such talking points by speaking of “the SE tax”.
Yes, I am aware of the statement you allude to and yes, I agree it disregards FICA and Medicare tax which, all up , is about a 9% load that everyone carries. I don’t consider wage earners who only pay the 9% to be freeloaders or anything of the sort. I would like to know, maybe someone has a chart, if there is a breakdown as to how “all federal tax” revenues are distributed over the wage-earning population.
Russell’s link above indicates 1.1 trillion in payroll taxes, including the employer match (which is not a one to one ratio due to SE taxes). We can guesstimate that maybe 45% of 1.1 trillion comes from all wage earners. How that shakes down by percentile exceeds my very limited mathematical skills.
Which is to say, redistribution is actually in the interests of those with lots of money.
Really? We had no redistribution to speak of prior to 1933 and no revolution.
The rich have no shame. They have no guilt. They are brazen in their endless greed. If you want to maintain the system of private property and “free” markets, they will have to be brought to heel. This will require countervailing social institutions (strong unions, etc.), financial reform, a broader social safety net, higher taxes on high incomes, a sane intellectual property rights policy, and other policies that are guaranteed to drive conservatives absolutely out of their minds.
Discounting the hyperbole, as colorful as it is, BP, do you have an existing model where your plan has worked? Venezuela has strong unions. How’s that working out for everyone? Cuba? Argentina?
Even more so if you include public laws, institutions, and policies that influence the DISTRIBUTION of money in the first place.
Yes. Many mistakenly take this for granted. It was not handed down from on high on stone tablets.
Regarding tax inversions:
http://finance.yahoo.com/video/icahn-financial-muscle-fight-tax-153716613.html
Also, Icahn:
http://www.cnbc.com/id/45575078
He’s a lifelong Democrat I believe, but highly critical of Obama.
Really? We had no redistribution to speak of prior to 1933 and no revolution.
We had a pretty big redistribution and concentration of financial wealth from the 1870’s to the onset of the Great Depression.
It was accompanied with a great deal of labor strife and violence. We had an actual socialist (Debs) running for the presidency and getting a significant number of votes.
You might read up on the history. That revolution was possibly closer to happening than you think.
Venezuela has strong unions.
So do, as examples, the GDR, France, and most or all of the Scandinavian countries, I believe.
They do OK.
do you have an existing model where your plan has worked?
Come on, Tex. How many times are you going to ask that one? There are some pretty obvious answers of current countries that do not have such vast disparities of wealth as we do and a healthy social safety net. You know which ones they are as well as I do.
But here’s one for you: How many societies in history have thrived and survived under circumstances where the top 1% owned everything and ran everything? How about those paradises in central America?
For some reason, you never cite them as success stories.
Try reading Kevin Phillips’ “Wealth and Democracy” for starters. Thanks.
Bobby, you might also mention the Progressive movement at the beginning of the last century. If memory serves, some years after he was President, Teddy Rooseveldt ran for President on the Progressive Party ticket. And got nearly 30% of the votes.
We can guesstimate that maybe 45% of 1.1 trillion comes from all wage earners.
The actual number is (drum roll please): 100%
We’ve had redistribution since 1933 and not only no revolution, but the United States emerged as the strongest economy on the face of the Earth.
And, yes I realize there are plenty of complicated factors that explain that, but steeply progressive marginal tax rates persisted through much of the high-growth periods since.
So, no revolution, no Galt’s Gulch, as predicted at 91% top rates.
It wasn’t until top rates declined to 28% under Reagan and went somewhat higher in a zigzag pattern since that we started to hear threats from conservative media personalities and conservative politicians regarding armed revolution against the Federal Government if ANY of the difference between today’s rates and say, rates in 1955 is closed, and further, if taxes are not cut to below Reagan’s 28% or below, there will be dire revolutionary consequences.
We’re probably closer now to armed revolution from the top and their southern and western white sympathizers and their paramilitary forces, including the NRA, than we were to armed revolution from the bottom in 1932.
Capitalism, and the middle class, thrived in the United States while Unions were strong.
I don’t know why we ourselves can’t be cited as an example of a success story.
Unfortunately, more of today’s right wing in the U.S., and England, view unionization with the same contempt and oppressiveness as Soviet (now Russian), and Chinese Communists do.
Yes. It’s as if the 40’s, 50’s, 60’s and well into the 70’s never happened.
Let’s go to the source:
http://www.politico.com/agenda/story/2015/10/grover-norquist-tax-interview-000288
He trumpets violence:
“GN: I wrote a book called ‘End the IRS Before It Ends Us’ that’s actually a history of taxation in America. In 1774, Americans were paying 1 percent or 2 percent income taxes. The Brits thought about raising it a bit and the guns came out. The Civil War, aside from slavery, was partly about taxes. In the 1830s, South Carolina called out its militia over the tariff. People brought the guns out, so they rolled back the tariff. It was viewed as a tax on the South. Historically, it’s always been a huge part of U.S. politics.”
When he starts it, he’s mine. I will hunt him down.
Bullets can go in both directions.
It’s Republicans now who constantly threaten violence if they don’t have their way.
That’s another gap between conservatives and liberal constituencies that will be closed.
It’s as if the 40’s, 50’s, 60’s and well into the 70’s never happened.
But Bobby, that’s all before Reagan. And as everybody knows, only the coming of Reagan saved the country from the disaster it had been since the mid-nineteenth century.
This is incredible:
http://finance.yahoo.com/news/knives-come-paul-ryan-gop-173000940.html
Keep beating on them, whitey:
http://www.balloon-juice.com/2015/10/21/this-is-what-gentrification-looks-like/
Given this promised attack on religious liberty in the U.S.:
http://talkingpointsmemo.com/livewire/donald-trump-close-mosques-isis
…the kid’s family is making the right move:
http://abcnews.go.com/US/wireStory/texas-teen-arrested-homemade-clock-move-qatar-34618002
He and his family are less likely to be victims of violence in Qatar than they are here from conservative vigilantes in and out of government.
So do, as examples, the GDR, France, and most or all of the Scandinavian countries, I believe.
They do OK.
Each has its own set of problems (economic growth, unemployment) and none are comparable to the US in size or societal diversity. I wonder if anyone has done a like-to-like peer-reviewed study comparing US economic quintuples to Western European quintuples using metrics from size and cost of living abode to health care access to cost of education and so on.
The income (or wealth–the two are not the same) inequality thing is pure longitudinal, comparing gaps in the US to gaps in the EU. What about horizontal? What if someone in the US 4th quartile was, on balance, better off than the 4th quartile in France or the UK–would that make the longitudinal metric irrelevant?
We’ve had redistribution since 1933 and not only no revolution, but the United States emerged as the strongest economy on the face of the Earth.
And, yes I realize there are plenty of complicated factors that explain that, but steeply progressive marginal tax rates persisted through much of the high-growth periods since.
Well, there are one or two missing pieces here. Circa 1939 we were not the strongest economy on the face of the earth. We were on 9/1/45, but that was a result of the rest of the industrialized world, other than the UK, being bombed into smithereens. The UK unioned up after WWII and proceeded to function as an economic cripple until Thatcher came along (incoming!).
We were anything but redistributionists in the 50’s and 60’s. Medicare wasn’t passed until ’63 (’64?). It didn’t start to bite into the economy for decades (see frog in pot of warm water metaphor).
You like strong unions? How’d that work out for Detroit? The rest of the rustbelt?
No doubt, there can be a balance between the depredations of capital and the depredations of overly rigid unionization.
Or we can just declare capital the total winner and low comparative wages for the vast majority of workers the eternal status quo and continue to allow the differential between the big winners and everyone else to widen.
You mentioned somewhere up thread that money and the choice of what to do with one’s own wealth is a large component of a free society.
Money affords more options and thus more freedom, true. Nothing wrong with that. In which case, possessing less money closes options down for the vast majority and therefore curtails their freedom.
The option of purchasing the 30 foot vessel or the more expensive 50 foot ocean going cruiser is a nice thing to have.
The option of affording health insurance for one’s family or going without and courting medical and financial catastrophe is a whole nother horse of a different color.
When those two situations persist with vast differentials over periods of time, I predict peril.
And look here, even Paul Ryan is demanding free family time:
http://talkingpointsmemo.com/livewire/joan-walsh-doug-heye-family
For himself only, of course, which keeps him within the constraints of “Atlas Shrugged”, paragraph 7081.
The law as Vampire:
http://www.dailykos.com/story/2015/10/21/1436574/-Alabama-judge-can-t-pay-fines-pay-in-blood-or-go-to-jail
What’s next, forced organ harvesting?
Each has its own set of problems
As do we.
There are lifestyle differences between folks here and folks in the EU countries. That is driven by differences in culture as much as, or more than, anything else.
Smaller house, but 6 or 8 weeks of vacation. You could talk me into that trade fairly easily.
In general, folks in the countries I named are pretty happy with what they have. There is not a huge influx of emigration from the GDR, France, the Scandinavian countries, or most EU countries for that matter, to the US.
Ireland, maybe, and Eastern Europe. Not the countries I named.
Net/net, you presented Venezuela as a poster boy for a country with strong unions.
There are other countries with strong unions, and strong traditions of robust representation of labor in government and industry, that do quite well.
You like strong unions?
I don’t care one way or the other about unions per se.
I like folks who work for a living getting paid well enough to make a decent life for themselves. Without having to sign up for food stamps, and without working for 40 or 45 years and ending up with nothing to show for it.
Unions are one way to help make that happen.
If you don’t like unions, we could simply restructure the relationship of capital to labor via law.
Unions would become irrelevant.
How’d that work out for Detroit?
It worked pretty well for a while.
How is right-to-work working out for Mississippi?
The problems of the auto industry in Detroit go well beyond unions.
Money affords more options and thus more freedom, true. Nothing wrong with that. In which case, possessing less money closes options down for the vast majority and therefore curtails their freedom.
Count, I think you are conflating freedom to choose how to spend your money with money can buy a lot of stuff that let’s you do a lot of stuff, particularly if you are free to do so.
Two are quite different.
PS–check your inbox.
Net/net, you presented Venezuela as a poster boy for a country with strong unions
Actually, I was tweaking BP.
One significant factor in comparing EU countries to the US is relative levels and quality of educational achievement. A sizable portion of our society does much worse in school, and thus we have a larger un- or under-educated slice of the population. Wages stay lower with a higher number of un- and semi-skilled looking for work–or not looking for work as the case may be.
You like strong unions? How’d that work out for Detroit? The rest of the rustbelt?
Unionization is one of those issues where both ends of the spectrum are bad. Having massive union domination (as in Detroit; not to mention the public sector) is bad. Total lack of union clout is bad, too.
In my opinion, you need enough unionization to keep the owners honest. But not so much that the workers are not kept honest. “Honest,” in this context, meaning “aware of, and accepting of, the value of the other.”
Because if either one gets too strong, things will get bad. First for the weaker party, but eventually for everybody.
Circa 1939 we were not the strongest economy on the face of the earth.
The metric “strongest” cries out for some kind of meaningful definition.
One metric: US GNP was more than twice that of Imperial Germany, its closet gross economic output competitor, by 1913.
We were anything but redistributionists in the 50’s and 60’s
The economic pie was much more evenly split as between labor and capital during that period then it is now. A fact which everybody here but you seems to be aware of. cf Paul Krugman “the great compression”.
It didn’t start to bite into the economy for decades…
What bit into the economy was the rapid increase in private health care costs. Now one could argue that without medicare (which is just a public insurance company reimbursing the private sector for medical costs) there would have been less cost, but that would have only occurred by having less healthcare to go around. Is that the policy outcome you support?
When you say that medical care should be private and prices set by market signals, you are just saying you are willing to deny healthcare to the less well off and the poor.
How’d that work out for Detroit? The rest of the rustbelt?
It worked out great for nearly 40 years. Then we decided that ours had to be the strong reserve currency for the world (making imports cheaper), and our selective trade policy pitted our auto workers directly against low cost labor elsewhere (‘free’ trade).
Interestingly, there was not similar public policy to push down the incomes of attorneys (reducing legal fees and raising everybody else’s standard of living). In fact, our policy was the reverse. We used public policy to make the legal profession pretty much a closed shop.
So you see McKinney, you benefit more from labor solidarity than you appear to be willing to admit.
Pretty much any profession which requires a license from the state is basically a semi-closed shop. It doesn’t matter if it is law or hairdressing — if you have to have a license from the government** to do it, the state is artificially increasing your income by reducing the number of people who can supply the service.
** Of course, if you have to get the license from a “professional association” to do it, that’s even worse. At least with a state license there is some chance of a non-self-interested decision about admitting new practitioners.
I wonder if anyone has done a like-to-like peer-reviewed study comparing US economic quintuples to Western European quintuples…
You’re into odd time signatures, too, huh?
We used public policy to make the legal profession pretty much a closed shop.
So you see McKinney, you benefit more from labor solidarity than you appear to be willing to admit.
De-regulate the legal profession! Caveat emptor!
One significant factor in comparing EU countries to the US is relative levels and quality of educational achievement. A sizable portion of our society does much worse in school, and thus we have a larger un- or under-educated slice of the population.
Maybe, but is that cause or effect?
wj,
It more than just the barrier to entry created by a license requirement. The law profession is more like a cartel.
(incoming)
Regulations are bad!
PS–it’s Miller Time
It should probably be over in the Two Nations thread. But no Brit would agree that Miller (or most other US beers) really are beers.
Figure of speech. Having scotch no 2 w my son in law.
Definitely an improvement! Enjoy your evening.
Drink up, boys.
Murderers are at the ready:
http://www.dailykos.com/story/2015/10/22/1437024/-Open-thread-for-night-owls-NRA-promotes-article-fantasizing-about-civil-war-killing-Democrats
There are at least 40 of these vermin, probably more like 100, in the House of Representatives.
The link:
http://mediamatters.org/blog/2015/10/21/the-nra-is-promoting-an-article-suggesting-radi/206318
There is going to be killing in this country unlike anyone has ever f*cking imagined.
They predict it.
If I were Paul Ryan, I wouldn’t patronize the theater any time soon, because there are heavily armed Tea Party assassins lurking in the corridors behind the box seats:
http://talkingpointsmemo.com/livewire/ryan-freedom-caucus
However, he would be able to enter the Lincoln pantheon of martyrs, securing his legacy.
Brilliant tacticians they ARE:
http://www.motherjones.com/kevin-drum
Attempted murder is an expensive proposition.
I like that the hit men at least pay for the privilege.
Bibi Netanwhattheeff joined Ben Carsonogen the other day in more politically correct Hitler rehabilitation (hey it wasn’t Hitler’s idea to murder the Jews, but he did think up Obamacare) by turning Godwin inside out:
http://talkingpointsmemo.com/news/universal-outrage-greets-netanyahu-s-hitler-apologism
Germany had to step in and remind Bibi that, yes, indeed, Hitler did the deed.
David Barton, who works for Ted Cruz, got right on it and demanded school history books recognize Hitler as one of the American Founding Fathers, along with Moses, Yosemite Sam, and Connie Francis.
Hey! Yosemite Sam doesn’t belong in that pack of reprobates.
Besides, his biscuits’r’burning also, too.
We join the long list of nations that encourage cold-blooded killers to run for President:
http://www.newsworks.org/index.php/new-jersey-more/item/87425-christie-nearly-made-thousands-of-disabled-residents-homeless?utm_source=dlvr&utm_medium=twitterauto&utm_campaign=social-inbound
Unhappily for Christie, the professional murderers are out-polling him.
The Sidney Blumenthal connection, courtesy of Patriot Adam Schiff of California (via DKos):
Questions …
“•On Blumenthal’s alleged business activities in Libya: more than 270 questions
•On Blumenthal’s relationship with Clinton: more than 160 questions
•On the Clinton Foundation: more than 50 questions
•On David Brock/Media Matters: more than 45 questions
Here’s what didn’t matter:
•On the Benghazi attacks: less than 20 questions
•On security in Benghazi: only 4 questions
•On the U.S. presence in Benghazi: 0 (zip, nada) questions
•On Ambassador Stevens and other U.S. personnel in Benghazi: 0 (zip, nada) questions.”
Curiously, Hillary Clinton was not asked to strip down at today’s “”hearings” so her dress could be analyzed for traces of Blumenthal’s semen stains.
However, several maggoty Republican, subhuman pieces of sh*t on the panel had Vince Foster’s rotting corpse exhumed and the tastiest bits of it served to them during the questioning as nourishment.
Trey Gowdy, the former gay porn star (turned put later he was a fraud in that pursuit too, he’s straight and has only French-kissed his sisters), whose on-screen specialty was calf-roping Southern blacks and then giving the rodeo clown a vigorous tongue-lashing for pulling him off them, dropped trow to reveal that he still wears a butt plug he claims was one of many such ornaments decorating the Clinton’s White House Christmas tree during the 1990’s.
Former right-wing anti-American hogsh*t who worked for the CIA reportedly passed the ornaments on to Rethugs as momentos of better times in the Nation’s history.
Gowdy asked Monica Lewinsky to take dictation during the hearings, but she declined because she is a sensible woman, and she objected to the to tip jar placed at her recorder’s desk by Republicans who had already decided they weren’t going to pay her for fudging Clinton’s testimony in their favor, and besides, she might have received health insurance as part of the bargain, and we can’t f*cking have that, can we?