US Debt Battle

You realize that the more you make, the more you pay. The upper one percent is in the 35 percent tax bracket, which is more than anyone else pays (or doesn't pay). Like I said before, there's more to the revenue problems than just a company dodging taxes or households paying nothing. It's a complicated issue and just raising taxes or taxing another class isn't going to solve anything faster. The more taxes you implement, the more breaks that are invented, making shit that much worse.

I realize they're supposed to pay more, too bad on average they only pay 16.6%, less than just about everyone else that pay taxes. If they actually paid that 35% I think we would be much better off. Maybe not perfect, but better certainly. I'll definitely agree it's complicated, however.
Why are more breaks necessary for more taxes? Or is that just because politicians are politicians?

Why are more breaks necessary for more taxes? Or is that just because politicians are politicians?

Well, what I mean is that if you introduce new taxes, lobbyists will inevitably claim the tax code isn't fair and clamor for a special break. That's the sort of thing I mean.

Then I agree.

Incomplete list of a decade of US big-government "stimulus", the mantra for those in favor of socialist spending sprees ... is there any kind of stimulus the US did not try in the last 10 years?

• You had 1% interest rates from Greenspan fueling housing.
• You had wars from Bush and Obama fueling defense industry employment.
• You had two rounds of Quantitative easing from the Fed.
• You had cash-for-clunkers.
• You had two housing tax credit packages.
• You had an $800 billion stimulus package from Congress for "shovel-ready" projects.
• You had stimulus kickbacks to states.
• You had HAMP (Home Affordable Mortgage Program).
• You had bank bailouts out the wazoo to stimulate lending.
• You had Small Business lending programs.
• You had central bank liquidity swaps.
• You had Maiden Lane, Maiden Lane II, and Maiden Lane III.
• You had Single Tranche Repurchase agreements.
• You had the Citi Asset Guarantee.
• You had TALF, TARP, TAF, CPFF, TSLF, MMIFF, TLGP, AMLF, PPIP, and PDCF.
• You had so many programs the Fed must have run out of letters because they were not given an acronym.

Other than bailing out bondholders what exactly do you have to show for any of it? The one-word answer is "debt" ... epic fail of Keynesian economics.

[to be fair: Europe is even worse]

Is it better to do nothing and sink into the shitter? I'd say at least trying something is better than just doing nothing. Just keep in mind, doing nothing is what was planned for the Great Depression in the late 20s and early 30s. We didn't come out of it until shit got done.

Is it better to do nothing and sink into the shitter? I'd say at least trying something is better than just doing nothing.

What about demanding some fiscal responsibility from the federal government, and from some of the state governments, too?

First, they need to cut spending, drastically, programmatically. I’m not talking about the basket of illusory cuts Congress has so far offered. I mean real cuts ... the culture of entitlement should take a long vacation.

Second, they need to stimulate some healthy economic growth, or even better just a sustainable economy that does not burst every seven years. You don't do that with fake stimulus programs in which the government spends money it doesn’t have to reward unions and other special interests which in turn contribute to the politicians who have generously taken money out of other peoples’ pockets and lavished it on them.

I agree with you completely, but it's not really that simple. It's going to take a real effort from both camps to make any actual progress.

To be fair, Keyensian economics will only work if the government cuts costs when times are good - which is a bit of a problem, since no president/government will want to cut costs in good times, out of fear for their reelection going down the drain. So political interests and economics are directly opposed here, which is another reason why Keynesian economics will either only work in economic textbooks, or in a dictatorship where no government will have to worry about reelections.

Spot on ... Keynes ... Hayek

I agree with you completely, but it's not really that simple. It's going to take a real effort from both camps to make any actual progress.

Difficult yes, but not impossible. It does require honest politicians with both backbone and balls, like in Wisconsin:

Over the past six months, Wisconsin has been nothing short of a miracle. Newly elected Governor Scott Walker and the Republicans in the majority in Madison got just about everything they wanted during the past legislative session, and a state facing a projected $3 billion budget shortfall with no end in sight now has a projected $300 million budget surplus. The amazing successes in Wisconsin have emboldened the legislatures and political leaders of other states, who have seen the wonders resulting from a little political backbone and fiscal common sense.

After being held hostage by 14 AWOL Democrat senators, Walker succeeded in passing his budget repair bill, “Act 10,” which instantly fixed the $137 million deficit by requiring public employees to contribute just a little bit toward their pensions and health care, and by limiting their ability to collectively bargain. Wisconsin also ended the ludicrous automatic pay and benefit increases for public employee unions each budget year — closing a cash sinkhole which is eating states like California and Illinois alive. Last month the Wisconsin legislature passed its biennial budget, which Governor Walker promptly signed in a no-frills ceremony.

The repeal of much of Wisconsin’s collective bargaining law has already improved the quality and lowered the cost of Wisconsin government exponentially. ...

read it all at Pajamas Media: Hey, Who Wants to Talk About Wisconsin’s Economic Miracle?

Edited by Námo, 07 August 2011 - 02:02 PM.

I'm against ridiculous union deals that makes it a hell to get rid of idiots that you've accidentally hired. There are some sayings, "nine out of ten have to watch the tenth", and "20% of the employees does 80% of the work". Once you get laws that allows people to go around acting like jerks all the time with no danger of losing their job, things implode and turn into black holes for cash.

But unions have their uses in moderation. American unions seems to be more about bribing the leaders to do stupid things that destroys the entire union.

Still, I dunno if the Wisconsin economic situation can be verified at this time, its just been 6 months, somewhat hard to show evidence of the economic situation improving right off the bat.

...$3 billion budget shortfall with no end in sight now has a projected $300 million budget surplus...
[...]
...which instantly fixed the $137 million deficit...

These numbers are not making any sense for me. 3billion down, then 300mill up, and 137 mill down in education. that means that the article is somewhat ignoring 3.263billion of cuts. Where those cuts just as happy and sparkly successful as the ones in education?

The "$137 million deficit" is related to pensions and health care, the article also mentions "the ludicrous automatic pay and benefit increases for public employee unions each budget year" among other tings, and the "$300 million budget surplus" is a projected number ... anyway this video clip explains it extremely well:

http://www.youtube.com/watch?v=s5EuiNXmUIk

A balanced budget, without stimulus and "magic accounting tricks", and without increasing taxes, creating lots of new jobs, and important in relation to future job-creation: the emphasis on keeping an education system of high quality ... and important in respect to a successful implementation of necessary cuts: a good communication with the population in general, and with those concerned in particular.

You almost hear her say "Yes, we can!" with the conviction of knowing that as a fact, by actually having proved it in reality.

Apropos Wisconsin, and on solving all problems by taxing the rich:

http://www.youtube.com/watch?v=661pi6K-8WQ

Taxing the rich has also an averse effect on the economy, namely that they don't bother to work anymore... After all, most of it gets taxed anyway. And it's the rich people that keep the economy going by creating jobs. I presume they failed to take that into account as well.

I've just seen the NY market today. It looked like a funeral...

Yeah, I've followed it, too ... but it's not the time for funerals (yet), just a few casualties (mostly big banks and investment companies, like Bank Of America, Citigroup and Berkshire Hathaway Inc.) ... S&P seems hellbent on downgrading most of the US, from top to bottom, I guess someone really pissed them off.

The funerals will come later, in the wake of the race to the bottom.

Strangely, after the historic downgrade of the USAA+, the investors are rallying to Treasuries, fleeing from Stock; the market is completely dominated by Bears.

Obama will convey The Teleprompter's thoughts on the S&P downgrade, live later today ... summary: "It's all S&P's fault".

Edited by Námo, 08 August 2011 - 05:44 PM.

Its strange how the market can handle bad news better than uncertainty.

On the topic of that dude in that firewall thingie about "eating the rich", it seems he makes the assumption that all this cash will be thrown into an incinerator once its been "hijacked", as if it suddenly became nothing better than toiletpaper after a single use. That is for me the only flaw I really need to point out. if its the government or private corps that pays the wages, those wages still goes back into the system 99,99% of the time. Exceptions to money recycling include hiring foreign labor to do your jobs, outsourcing production to low-wage countries, transferring production surplus money into non-production stocks and firms. I'm no economist, But I believe frighteningly few others are as well. They are more like priests figuring out that their flawless god is naught but a golden calf, trying to hide it from their believers.

Things are looking somewhat grim right now though, its annoying really, I was hoping for better times. But I guess this battle of ideology needs to harrow the fields for a few more years before people figure out whats wrong and whats right.

Edited by duke_Qa, 08 August 2011 - 09:18 PM.

Taxing the rich has also an averse effect on the economy, namely that they don't bother to work anymore... After all, most of it gets taxed anyway. And it's the rich people that keep the economy going by creating jobs. I presume they failed to take that into account as well.

Another good point.

I've just seen the NY market today. It looked like a funeral...

The market has actually seen worse days.

They did a fine job back in the 70s with 40-60 times as much pay as the floor-workers, are they (600/40~60) times more effective today? If I pay 36% taxes on my wage, and a rich guy has to pay 45% of his personal wage, he still gets much more cash onto his account than I ever would.

But I don't think you really need to tweak the taxes that much. Just get rid of all the exceptions and loopholes. Make any firm that has the right for tax exceptions pay normal taxes and let the government pay them back what they should have, not the other way. That the US haven't cleaned up their sales tax and turned it into a more universal VAT system is in my eyes very strange.

Fuck the VAT system. I don't want to see that implemented here because it would do more harm than good. From what I've seen, VAT is always above 15 percent and it's something like 20 percent in the UK. If I had to pay 20 percent more on top of my purchases, I'd be more broke than I already am. A huge VAT would seriously hurt those who have the least amount of money.

I love my VAT, 25% extra to my firm's bills, which I then can spend on new computer stuff and licenses and other things that are relevant (but fun) part of my business. I send a bill of 2000, adding 500 in VAT, then i buy something for 1600+400vat, spending 400/500 VAT of what I have acquired through work. I then end up with 400 surplus that, if i don't use it that year on my firm, have to tax as personal gain, and 100 worth of VAT that the government also gets, leaving me with about 300 after taxes depending on the percentage.

If i wasn't registered for VAT, I'd have to send a bill for 2000 without vat, and buy the thingie for 2000 with no possibility to subtract the VAT from my own VAT account, leaving not a penny for me. 300ish vs nothing is an easy sell imo.

As long as you are not the end user, VAT is a highly motivational way to keep the money flowing down to the end user. The government gives subsidies and lesser percentages of VAT(14%) on foodstuff and other items to keep the poor less poor. There are also services and items that have no VAT: health services(dentists, psychologists, chiropractors etc etc.), social services(kindergarden, private retirement homes, home-help services), education(private schools, driving schools etc.), cultural services( theater, opera, ballet, circuses, concerts etc), financial services(insurance, financing services, monetary transactions, stock trading etc etc.), lottery services(the public ones I guess, since they are the only "legal" ones), ceremonial services(funerals etc), public authority services(passports and driver licences), and some small private property and renting out private property transaction thingies.


Besides, most western nations have some sort of VAT system in order, but they are usually very weird and filled with loopholes. I like it when the rule is not the exception.